Personal Income Tax Guide (for foreigners) Thailand

[TigerCat]

42 minutes ago, UKresonant said:

A. So Are the source of funds created overseas before or after 1st Jan 2024?

B. Were you / will you be Thai Tax Resident when you derived the funds.

 

The Land Office tax is for all and I'd different from the issue of the tax on bring funds into Thailand.

The source of the funds were created in 2023, and years prior. I have been here more than 180 days (10 years) so I assume that makes me a Thai Tax Resident when I received the funds? 

[JimGant]

8 minutes ago, TigerCat said:

The source of the funds were created in 2023, and years prior. I have been here more than 180 days (10 years) so I assume that makes me a Thai Tax Resident when I received the funds? 

 

Yeah, but the monies remitted are pre 2024, so they are not assessable/taxable as income. That you have to pay a purchase tax to the land office is a completely different matter.

[Mike Lister]

And the answer to Point K on the list of unknows/unclear issues is:

 

K) - How will the taxation (or clearance) of imported overseas funds into Thailand, needed to buy Thai real estate, be handled.

 

Imported funds to buy real estate will be addressed in the same way that imported funds for any purpose will be, there's nothing special about the fact those funds are buying property versus anything else.

 

The document will be updated as follows:

 

17.5 The Thai Revenue Department does not consider the purpose of the funds that are imported, only whether the funds are assessible or not. For example, funds imported to buy real estate will be addressed in the same way that imported funds for any purpose will be, there's nothing special about the fact those funds are buying property versus anything else.

[topt]

29 minutes ago, Mike Lister said:

And the answer to Point K on the list of unknows/unclear issues is:

 

K) - How will the taxation (or clearance) of imported overseas funds into Thailand, needed to buy Thai real estate, be handled.

 

Imported funds to buy real estate will be addressed in the same way that imported funds for any purpose will be, there's nothing special about the fact those funds are buying property versus anything else.

 

The document will be updated as follows:

 

17.5 The Thai Revenue Department does not consider the purpose of the funds that are imported, only whether the funds are assessible or not. For example, funds imported to buy real estate will be addressed in the same way that imported funds for any purpose will be, there's nothing special about the fact those funds are buying property versus anything else.

I don't disagree with that interpretation based on what is known currently however, unless I have missed or misunderstood something have you not been suggesting (even fairly recently) that you could not see money for property purchases being included in this tax "grab"? (a view with which I agreed)

Especially as our new esteemed leader made his money in property........

Has something changed?

Edited February 15 by topt
added question

[Mike Lister]

3 minutes ago, topt said:

I don't disagree with that interpretation based on what is known currently however, unless I have missed or misunderstood something have you not been suggesting (even fairly recently) that you could not see money for property purchases being included in this tax "grab"? (a view with which I agreed)

Especially as our new esteemed leader made his money in property........

Has something changed?

 

A couple of things came together for me,

 

The first was that I started to think about the issues from a different angle and to divide the inbound transactions into two parts. The first part is the tax treatment (or lack of) of funds in the home country, the second part is the Revenue's expectation of those funds once they are remitted.

 

The Thai RD doesn't care whether the inbound funds were earned through working in a job, sale of an asset or other investments, all they care about is whether or not they are excluded, assessible or taxable and whether or not they have already been taxed.  As poster @JimGantquite aptly reminds us also, the RD doesn't care either what the purpose of the incoming funds are for, only that they meet certain tax criteria, i.e. exempt, assessible or taxable. There is no reason to believe that there should be a special class of funds, resulting from the sale of real estate in the home country, imported to Thailand to buy real estate here and that that class of funds should be tax exempt.

[Mike Lister]

Some posters still not getting what assessible income is.....try this....there are three stages:

 

1) Remitted or transferred Income - these are any funds sent to Thailand from overseas, for any purpose.

 

2) Assessible Income - this is income that must be declared on a tax return. It excludes income that the RD says is not assessible, it excludes income earned before 1 January 2024 and it excludes any income specifically excluded under the terms of the DTA.

 

3) Taxable Income - this is assessible income from above, but minus TEDA (Tax Exclusions, Deductions and Allowances).

 

You can have Remitted Income 1) above that is not Assessable 2) and not Taxable 3), savings would be a good example of this.

 

You can have Remitted Income that is Assessible but not Taxable, any income that has already been taxed in your home country is an example.

 

You can have Income that is Remitted, Assessible and Taxable but no tax is payable, this  is because it falls below the level of the Thai TEDA (or Personal Allowances) equivalent.

 

 

 

 

[Mike Lister]

Another concept that is helpful for readers to understand is that the purpose of funds in the home country is of no interest to the Thai RD, other than to understand the level of tax on those funds and whether they  were taxed or not.

 

Similarly, the Thai RD doesn't care what the purpose is of your remitted funds that are brought into Thailand. All the Thai RD wants to know is how much, were those funds taxed or exempt and is tax now due on those funds in Thailand. The fact that those inbound funds might be used to buy a condo, a car, for living expenses or whatever, is irrelevant to the tax picture.

[Mike Lister]

A brand new shiny version of the document!

 

Duplication removed

Headings inserted for easy of finding relevant sections (index to follow)

Latest conclusions and facts incorporated

Reordered flow for ease of reading.

Added: CG, Crypto, Dividends, Inheritance, Gift, Real Estate Purchase.

 

Note: The document is based on our current understanding and displays links where appropriate. Inevitably, the document, in the absence of hard facts, includes some assumptions.

 

Feel free to comment as necessary.

 

[ExpatOilWorker]

On 2/16/2024 at 3:19 AM, Mike Lister said:

Some posters still not getting what assessible income is.....try this....there are three stages:

 

1) Remitted or transferred Income - these are any funds sent to Thailand from overseas, for any purpose.

 

2) Assessible Income - this is income that must be declared on a tax return. It excludes income that the RD says is not assessible, it excludes income earned before 1 January 2024 and it excludes any income specifically excluded under the terms of the DTA.

 

3) Taxable Income - this is assessible income from above, but minus TEDA (Tax Exclusions, Deductions and Allowances).

 

You can have Remitted Income 1) above that is not Assessable 2) and not Taxable 3), savings would be a good example of this.

 

You can have Remitted Income that is Assessible but not Taxable, any income that has already been taxed in your home country is an example.

 

You can have Income that is Remitted, Assessible and Taxable but no tax is payable, this  is because it falls below the level of the Thai TEDA (or Personal Allowances) equivalent.

 

 

 

 

Is rental income from a condo in Thailand taxable income?

I have yet to hear about a landlord paying taxes on rental income, both Thai and foreign landlords.

[Mike Lister]

6 minutes ago, ExpatOilWorker said:

Is rental income from a condo in Thailand taxable income?

I have yet to hear about a landlord paying taxes on rental income, both Thai and foreign landlords.

Yes it is, very much so and from what the RD people I know tell me, it's right in the middle of their radar. But there again, they have just been trying to frighten me so who knows. But for sure, yes, it is assessable income.

[dinga]

35 minutes ago, Mike Lister said:

Yes it is, very much so and from what the RD people I know tell me, it's right in the middle of their radar. But there again, they have just been trying to frighten me so who knows. But for sure, yes, it is assessable income.

Rental Income in Thailand

All rental properties are subject to a House and Land Tax, which is 12.5% of the annual rental income. On top of that, the rental income is taxable, and owners will have to pay Thai income taxes on the money. Thai income taxes are calculated using a progressive scale ranging from 0-37%.

[freeworld]

1 hour ago, ExpatOilWorker said:

Is rental income from a condo in Thailand taxable income?

I have yet to hear about a landlord paying taxes on rental income, both Thai and foreign landlords.

Yes it is taxable income and I think there is an additional requirement to file a tax return twice a year.

[freeworld]

4 minutes ago, TigerCat said:

Does the 60,000 or less include bank interest?   

Interest is passive income, it is included in the assessable income.

[Mike Lister]

Updated Para 24 - awaiting link conformation but now have three separate confirmations:

 

PROPERTY RENTAL INCOME

 

42) Most property rental income that is remitted to Thailand is considered to be assessable income and is taxable here, unless of course it has been taxed in the home country and/or the DTA prohibits its taxation (which seems improbable).

 

"All rental properties are subject to a House and Land Tax, which is 12.5% of the annual rental income. On top of that, the rental income is taxable, and owners will have to pay Thai income taxes on the money. Thai income taxes are calculated using a progressive scale ranging from 0-37%".

[Mike Lister]

The view of the tax professionals - Grant Thornton in this case, from their information link:

 

"We find that the tax authority stills needs to further address several issues relating to how this new rule will be enforced.  For instance, the applicable tax rates (whether there will be any flat tax imposed, different tax rates specifically applied for foreign-sourced income, or at the standard progressive tax rate), how to distinguish between principal (funds from legacy investments, inheritance, original investment principal) versus earnings (interest, dividends, renumeration) from comingled funds, determination of applicable foreign currency exchange rates for tax assessment, etc."

 

https://www.grantthornton.co.th/insights/tax-alerts/

[Mike Lister]

Added Point K) to the list if unknown issues etc at the end of the document:

 

K) - confirmation as to how to distinguish between principal (funds from legacy investments, inheritance, original investment principal) versus earnings (interest, dividends, remuneration) from comingled funds, determination of applicable foreign currency exchange rates for tax assessment, etc.

[ExpatOilWorker]

11 hours ago, Mike Lister said:

Yes it is, very much so and from what the RD people I know tell me, it's right in the middle of their radar. But there again, they have just been trying to frighten me so who knows. But for sure, yes, it is assessable income.

I think your source is right that RD is homing in on taxing rental income.

When the new real-estate tax was rolled out a few years ago, people's primary residence were exempt from taxation, so people came forward in droves to claim residence. 

RD can now focus on the remaining condos. Sure, some are just empty, used as occasional city dwellings, but many are probably rentals.

How will RD establish which are rentals? They don't have access to banking data, at least not yet.

[Mike Lister]

5 minutes ago, ExpatOilWorker said:

I think your source is right that RD is homing in on taxing rental income.

When the new real-estate tax was rolled out a few years ago, people's primary residence were exempt from taxation, so people came forward in droves to claim residence. 

RD can now focus on the remaining condos. Sure, some are just empty, used as occasional city dwellings, but many are probably rentals.

How will RD establish which are rentals? They don't have access to banking data, at least not yet.

Probably on a block by block basis and probably via the Management Company or site manager, electricity usage stats maybe....dunno, guessing.

[Mike Lister]

I stumbled across this and thought it was a nice concise summary which may help some people who still don't understand what's happening on the tax front. It's from a well regarded multi-disciplinary investment company in the region:

 

This provision requires a person to pay income tax to the Thai Revenue Department under the following conditions:

 

Individuals, who are categorized as:

1)  Thai citizens;
2) A Thai resident who filed taxes in the previous tax year; or
3) Foreigners who reside in Thailand for one or more periods with at least 180 days in one tax calendar year.

 

 

Receive income inside or outside Thailand via:

 

1) Income from employment (wages, salaries, remuneration, etc.) assessable under    Section 40 of the Revenue Code;

2) Income from business operations is assessable under Section 40.

3) Passive or property income (interest, dividends, rental income, goodwill, etc.)       based on Article 41 paragraph 2 of the Revenue Code.

 

https://www.aseanbriefing.com/news/taxation-of-foreign-sourced-income-in-thailand-begins-in-2024/

 

Note that the above does not mention pension income, which may or may not be significant.

[Mike Lister]

In case anyone is having withdrawal symptoms, fear not, we're still on the case!  :))

 

We check the major tax consultancies daily and also do a news search several times a week, when anything new is announced, we'll let you know straight away.

[Mike Lister]

1 hour ago, CharlesHolzhauer said:

There must be a precedent on the gift tax issue mentioned in the thread titled "Expat Tax Twists in Thailand[...]", and it wouldn't be too far-fetched to assume that major tax accounting firms have dealt with this before. Could you specifically request their opinion, taking into account the perspective expressed by poster Dogmatic?

 

Sherrings, PWC and Mazars all acknowledge the current Gift Tax rules and these have been posted previously, the PWC verbiage and link were incorporated into the document some time ago and are copied below.

 

Despite those things, I continue to be apprehensive about the blanket adoption of this rule by everyone.  The RD did not devise a complex anthology of tax rule detail, only to see it over ridden by one very simple but large tax loop hole. Even Mazars wrote when the rule was first established in 2016, "the introduction of such tax may prove difficult to implement and will be open to abuse". I wrote earlier that application of the rule is likely to depend on custom and tradition and may be applied unevenly across the population and geographically. My suspicion, and it is purely that, is that wealthy Bangkok families who make periodic gifts to relatives may be viewed differently from foreign retirees seeking an easy way to escape paying tax on funds transfers. In other words, the supermarket owning scion in Bangkok is likely to receive different tax treatment from Percy the pensioner who lives in Nakon Nowhere!

 

For those who take comfort in the written word, the Gift Tax is well documented. But for those looking for a fool proof escape from potential tax on remittances, some caution is perhaps best advised, especially in light of the way this subject has been addressed previously in other countries.

 

The PWC quote, from the Simple Tax Guide

 

43) "PIT is levied on gifts given by persons who are still alive. The tax is collected on the assets or the amount given to parents, ascendants, descendants, spouse, or others based on the value of the gift that exceeds a prescribed threshold, which depends on the type of gift and donor. Assets or amounts given that do not exceed the threshold are exempt from tax.

 

44) The following gifts are exempt from PIT:

a) Income derived by a parent from the transfer of ownership or possessory right in an immovable property without any consideration to a legitimate child, excluding an adopted child, in the amount not exceeding THB 20 million throughout a tax year in respect of each child.

 

b) Maintenance income or gifts from ascendants, descendants, or spouse, in the amount not exceeding THB 20 million throughout a tax year.

 

c) Maintenance income derived under a moral obligation or gifts made in a ceremony or on occasions in accordance with established custom from persons who are not ascendants, descendants, or spouse, in the amount not exceeding THB 10 million throughout a tax year.

 

d) Income from gifts in the case where the person who receives the gifts will use them for religious, educational, or public benefit purposes according to the intention of the donors under the criteria and conditions referred to in the Ministerial Regulations.

 

45) Gifts in excess of the above thresholds will be subject to PIT at the rate of 5% and will not need to be included together with other income when computing the annual PIT liability.

 

46) For ascendants/dependants the threshold is THB 20 mill, nor non-ascendants/dependants it's THB 10 mill".

 

47) https://taxsummaries.pwc.com/thailand/individual/income-determination

 

Sherrings and Mazars Links below:

 

https://sherrings.com/gift-tax-law-in-thailand.html#:~:text=Tax Payable on Assessable Gift Income&text=an adopted child)-,On the amount of the gift received in excess of,transfer of the immovable property.&text=or a spouse-,On the amount of the gift received in excess of,a personal income tax return.

 

https://www.mazars.co.th/Home/Insights/Doing-Business-in-Thailand/Tax/Introduction-of-Inheritance-and-Gift-Tax

 

 

[JimGant]

4 hours ago, Mike Lister said:

As said previously, that 20,000 baht is the amount of interest that can be paid before banks start to deduct 15% with  holding at source. 

 

Actually, starting three years or so ago, banks started withholding on all interest paid to accounts with a foreigner's name attached. Thus, I started having withholding on my 800k retirement account, plus on the joint account with my wife ('cause the account had a foreigner's name included). But, no such tax wthheld from my wife's bank accounts, which only had her Thai ID attached, as she hadn't been required to mention her dual citizen US ID. This is blatant discrimination according to the DTA between US and Thailand -- but who's to complain?

 

4 hours ago, TigerCat said:

Do you by any chance know if If a person pays the United States tax on Thailand bank interest with FBARs, does the Double Tax Treaty make them exempt from having to pay taxes on Thai bank interest in Thailand? 

 

FBAR reporting is completely divorced from taxable interest on foreign accounts. If you send $10001 to Thailand, then you had over $10000 in the Thai banking system for at least one day -- and you're required to file a FBAR. But if you took that $10001 out of the bank the next day, to buy a car, then you earned no interest on that -- thus no FBAR related earned interest for the year. That you had to report your foreign interest on Schedule B, which also asks about any FBAR filing requirement -- is incidental, as this is just a way for them to have you acknowledge your FBAR filing requirement. Only if you had $400,000 in Thai banks on Dec 31 would you have to file an income related form on your 1040 filing (filing jointly), under FATCA (not FBAR) filing instructions. A situation most of us aren't in...

 

You indicated in an earlier report that you had between 20k and 60k baht of interest from Thai bank accounts. My recommendation would be to let the Thai 15% withholding at source remain, then when you file your US tax return, take this as a tax credit against your US taxes. If above $600 filing jointly, which it sounds like you are, you'll need to file a Form 1116, which is no big deal -- and allows for a carryover, for any disallowed interest. Yes, the rules say, "If you can get the foreign taxes refunded, then you're required to do that." However, if you can't get a Thai TIN, because you don't have a work permit (or whatever) -- and which you need to get a tax refund -- you can just quote denials for TINs from expat forums like this. That some have gotten TINs is nice -- but in the unlikely situation where you get an IRS letter audit -- just quote an expat who had negative results with getting a TIN; you're not required to wear out shoe leather looking for the exception.

 

This sounds a "little over the top." It's not, because you're not evading or avoiding taxes -- you're just paying the taxes to the country who has "first dibs" on them, and avoiding double taxation to a country who demands taxation on all worldwide income. Just wish I had had such ethically pure situations doing taxes for flight crews, and arguing with the IRS that shoes with metal inserts are "uniform only" items, and thus deductible.

 

[Mike Lister]

48 minutes ago, JimGant said:

 

Actually, starting three years or so ago, banks started withholding on all interest paid to accounts with a foreigner's name attached. Thus, I started having withholding on my 800k retirement account, plus on the joint account with my wife ('cause the account had a foreigner's name included). But, no such tax wthheld from my wife's bank accounts, which only had her Thai ID attached, as she hadn't been required to mention her dual citizen US ID. This is blatant discrimination according to the DTA between US and Thailand -- but who's to complain?

 

 

FBAR reporting is completely divorced from taxable interest on foreign accounts. If you send $10001 to Thailand, then you had over $10000 in the Thai banking system for at least one day -- and you're required to file a FBAR. But if you took that $10001 out of the bank the next day, to buy a car, then you earned no interest on that -- thus no FBAR related earned interest for the year. That you had to report your foreign interest on Schedule B, which also asks about any FBAR filing requirement -- is incidental, as this is just a way for them to have you acknowledge your FBAR filing requirement. Only if you had $400,000 in Thai banks on Dec 31 would you have to file an income related form on your 1040 filing (filing jointly), under FATCA (not FBAR) filing instructions. A situation most of us aren't in...

 

You indicated in an earlier report that you had between 20k and 60k baht of interest from Thai bank accounts. My recommendation would be to let the Thai 15% withholding at source remain, then when you file your US tax return, take this as a tax credit against your US taxes. If above $600 filing jointly, which it sounds like you are, you'll need to file a Form 1116, which is no big deal -- and allows for a carryover, for any disallowed interest. Yes, the rules say, "If you can get the foreign taxes refunded, then you're required to do that." However, if you can't get a Thai TIN, because you don't have a work permit (or whatever) -- and which you need to get a tax refund -- you can just quote denials for TINs from expat forums like this. That some have gotten TINs is nice -- but in the unlikely situation where you get an IRS letter audit -- just quote an expat who had negative results with getting a TIN; you're not required to wear out shoe leather looking for the exception.

 

This sounds a "little over the top." It's not, because you're not evading or avoiding taxes -- you're just paying the taxes to the country who has "first dibs" on them, and avoiding double taxation to a country who demands taxation on all worldwide income. Just wish I had had such ethically pure situations doing taxes for flight crews, and arguing with the IRS that shoes with metal inserts are "uniform only" items, and thus deductible.

 

I bank with UOB and once I showed them my TIN, they let me have the first 20k free of tax, just like a native, wheee! Exciting no!

[Mike Lister]

24 minutes ago, TigerCat said:

@JimGant

 

My accounting firm in the United States has been taxing me to the IRS on my Thai bank accounts interest. They said they do a lot of FBARs for clients, so I don't know why they've done it this way.

 

"You indicated in an earlier report that you had between 20k and 60k baht of interest from Thai bank accounts."

 

I have less than 60K baht of interest from Thai bank accounts. .  From what I understand, that means I do not to file a tax return on Thai bank accounts interest, "in Thailand". 

Is that correct? 

It seems to me that you earned the interest in Thailand, had 15% tax withheld in Thailand and you declared the income in the US, I wonder if you declared the tax paid also. All things being equal and assuming you have no further Thai assessable income, no, you don't need to file a Thai tax return.

[Mike Lister]

14 minutes ago, TigerCat said:

I did not declare the Thailand withholding tax to the U.S.  (I didn't even know I had withholding tax in Thailand, but I recently noticed "Tax" on my bank books.)

I paid the full amount of Thai bank interest to the U.S.  So I assume I over paid, but that's ok, it's not a huge amount of money.   

Perhaps get yourself a Thai TIN,

Show it to your bank and ask them to stop with holding Thai tax (if they will, mine will)

Continue as is declaring interest AND tax paid to the US

 

Alternatively,

 

Get a Thai TIN

reclaim tax withheld on interest in Thailand

Report gross to the US.

 

 

 

[tomkenet]

Gift tax.

 

There is an essential difference between a gift beeing given within Thailand and a gift given from abroad. 

 

Given from Thailand the income the giver once had to fund the gift was subject to taxation in Thailand . (If assessable )

 

Given from abroad it might be untaxed funds.

If it is not assessable It can be transferred to Thailand tax-free anyway.

[JimGant]

19 minutes ago, tomkenet said:

If it is not assessable It can be transferred to Thailand tax-free anyway.

 

But if it is assessable, then taxes, if due, must be paid before the concept of even being a gift takes place. I've kind of skirted over much of this subject, but it sounds like what I'm hearing is that by remitting money to Thailand, and wired directly to someone's account as a gift -- then income taxation can be avoided. No way. Pay whatever income taxes are due, then gift it -- and pay the 5% gift tax on amounts over 20/10k, depending on relationship. No free lunch here, folks, by categorizing a remittance to Thailand as a "gift." Nice try, 'tho.

[Mike Lister]

1 hour ago, TigerCat said:

"We find that the tax authority stills needs to further address several issues relating to how this new rule will be enforced." Inheritance. 

 

I read that to be taxed on Inheritance, on a few websites, the Inheritance has to be 100 million baht. That's not clear?

 

 

 

You should stop reading a few other websites and get your tax information only from the following, as advised in the document in the OP. If you post any more questions/queries that are in the document, you will be referred back to it:

 

Regarding Inheritance Tax: If you had read the document at the start of the op, the one you were asked to read some time ago, you would already know the answer which is copied below and from PWC!

Inheritance tax

A legacy received by an individual or a corporate entity, regardless of nationality, from a testator who has died is exempt from PIT under the Revenue Code but is subject to inheritance tax. Heirs are subject to the inheritance tax only on the value of a legacy that exceeds THB 100 million obtained from each testator together either once or on several occasions.

The inheritance tax rate is 10%, except in the case of heirs who are ascendants or descendants of the testator, where the rate is 5%. Legacies received by the spouse of a testator are exempt from the tax.

 

Property subject to the inheritance tax comprises immovable property, securities according to the law, bank deposit accounts or other money of a similar nature that the testators have the right to call back or claim from financial institutions or persons who hold such money, registered vehicles, and financial assets to be prescribed in royal decrees.

[Mike Lister]

On 2/20/2024 at 1:19 PM, proton said:

All as clear as mud still

Tell us what parts you don't understand and perhaps we can help?

[Mike Lister]

18 hours ago, JimGant said:

 

But if it is assessable, then taxes, if due, must be paid before the concept of even being a gift takes place. I've kind of skirted over much of this subject, but it sounds like what I'm hearing is that by remitting money to Thailand, and wired directly to someone's account as a gift -- then income taxation can be avoided. No way. Pay whatever income taxes are due, then gift it -- and pay the 5% gift tax on amounts over 20/10k, depending on relationship. No free lunch here, folks, by categorizing a remittance to Thailand as a "gift." Nice try, 'tho.

Jim's point is worth repeating, you can't use Thai Gift Tax as a way of evading Thai tax liabilities, the Gift must be tax exempt income or income that is not liable to tax. 

 

Added to Para 48 in the document as follows:

 

Note: Only funds that are exempt from Thai tax or funds on which Thai tax has already been paid, can be Gifted. It is not possible to Gift funds that are assessable income, in order to avoid Thai tax.