Personal Income Tax Guide (for foreigners) Thailand

[Mike Lister]

We are not going to debate legal theory, potential ways to evade tax or second guess what the RD may or may not think or do. This thread is focussed on the things that are known and the assumptions that will be made, pending further clarification by the RD. 

 

It is perfectly acceptable to raise the question about how something might be done or handled by the RD because the answer may already be known. What is not acceptable in this thread is, as per the second post in the thread, that we enter into lengthy discussions about what people think might happen or could happen. As history has shown by the long thread, such discussions are not productive and confuse people more than help them. Our members are looking for clarity and certainly, not "probably", not "maybe", not "a court would have to decide", not "your interpretation", not "legal theory" etc etc. Where that clarity is not achievable, the issue is placed on the list of unknowns, until such time as a clear answer is derived.

[topt]

1 hour ago, Mike Lister said:

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.

This does not seem to be borne out by the actual example posted by @Dogmatix in the other thread? And isn't Jim's interpretation just that - his interpretation?

 

[Mike Lister]

6 minutes ago, topt said:

This does not seem to be borne out by the actual example posted by @Dogmatix in the other thread? And isn't Jim's interpretation just that - his interpretation?

 

I saw that exchange and accept there is still uncertainty regarding the true position in this matter. In the absence of a 100% clarity, I decided to take the low risk route and presume that assessable income could not be gifted as a means of avoiding Thai tax. It is my personal view that the income will need to be taxed in one location or the other.

 

I took that approach in order to manage expectations by the many people who are waiting expectantly in the hope of being able to use Gift Tax as a get out of jail free tax card! When the matter is clarified, it will come as a pleasant surprise to many and no harm will have been done. The alternative was to do nothing and to leave the issue on the list of unknowns which I didn't think was the best approach.

[Mike Lister]

25 minutes ago, hknn said:

Do you understand the difference between realized capital gains and unrealized capital gains? In TH tax law, they don't recognize unrealized capital gains, unlike some other countries. Without selling the asset in 2023, there was no income that was realized before 1/2/2024 and would automatically be excluded from the tax directive. They would have to change the definition to "selling price in 2024 minus asset price on 31/12/2023". That would be nice of RD, but there is no written directive, yet, for the RD employees to acknowledge a new concept like unrealized capital gains. If you change your residence country from, say, the UK to France, and you sell your financial assets in France, the unrealized capital gain you recorded while you were still in the UK will not be excluded from French income tax - even though most of the unrealized gains accumulated before you arrived in France. The full income is realized when you sell the asset. Which TH directive says that they will exclude the unrealized capital gains before 1/1/2024? They would have to write another directive, if they consider this a problem at all.

The asset has to have a valuation dated 1 January 2024 in order to determine what the gain is on that asset when it is subsequently sold and those funds remitted to Thailand. If the asset was sold on 31 January 2024 and the funds remitted to Thailand, the gain on that asset for Thai tax purpose is equal to one month, not the gain since the asset was first acquired.

 

35) The proceeds from the sale of a capital item such as overseas property, where funds are remitted to Thailand, is one popular source of expat funds, the sale of some investment products such as stocks, shares and bonds is another. Those proceeds typically comprise two parts, capital and profit. If the capital and/or profit was acquired before 1 January 2024, it is free of Thai tax. One way to separate capital and profit may be to have an official valuation or statement that is dated 1 January 2024 since anything earned before that date, is not assessable. Also, if the profit has been the subject of a Capital Gains (CG) return in the home country, that also may be free of Thai tax. Lastly, It is clear from the Sherings Q&A link below that CG resulting from the sale of foreign assets, whilst not resident in Thailand, are free of Thai tax. As a stop gap measure and for planning purposes, selling the assets before moving to Thailand would appear tax efficient. 

 

36) Most types of capital gains are taxable as ordinary income. However, the following capital gains are exempt from tax:

 

a) Capital gains on the sale of shares in a company listed on the Stock Exchange of Thailand, provided that the sale is made on the Stock Exchange of Thailand, and on the sale of investment units in a mutual fund.

b) Gains on the sale of non-interest bearing debentures, bills, or debt instruments issued by a corporate entity, except in the case where the bonds or debt instruments were sold for the first time at a price lower than their redemption price to an individual.

c) Gains on the sale of securities listed on stock exchanges in the Association of Southeast Asian Nations (ASEAN) member countries and traded through the ASEAN Link, excluding securities in the form of treasury bills, bonds, bills, or debentures.

d) Capital gains and investment income earned by a resident from sources outside Thailand are not taxable unless remitted to Thailand in the year of receipt. (this clause will have been changed, in line with the rule change) The following is what has been agreed and documented thus far on this point but is subject to RD confirmation.

 

37) Capital losses may not be offset against capital gains.

[Mike Lister]

7 minutes ago, Phulublub said:

Exactly the same as UK and, AFAIAA, every other nation.

 

A Capital Gain is only realsied on sale of the asset.  Any and all valuations after purchase and before sale are utterly irrelevent.

 

PH

A capital gain may well be realised only upon the sale of the asset but assessable income for Thai PIT will not care about that. Thai PIT will care about income that was realised after 1 January 2024, not before. Investment holdings that are priced daily are easily capable of being valued on 1 January 2024 and many automatically are so. When those assets are sold and the proceeds remitted to Thailand, the RD rules require only income earned after 1 January 2024 is assessable. The fact that the asset is subject to capital gains rules in the home country matters nothing as far as the Thai RD is concerned, all they want to know is how much of the proceeds were earned after the start of the year.

[Mike Lister]

1 hour ago, tomkenet said:

So if I bought a share 5 years ago for 1 million, the share price 31.12.23 was 5 mill, and I sell the share now for 5 million there is no tax if the proceeds are remitted to Thailand?

 

Added:

No tax is paid outside Thailand.

 

 

When you sell your shares overseas, you will pay whatever tax is due on that sale at that time, thereafter you will remit those funds to Thailand. The Thai RD will want to understand if those funds are assessable income or not so you must tell them. Your answer will be that only X was earned after 1 January 2024 and that the remainder is not assessable. If, using your example, you purchased those shares for 5 million and you sold them for 5 million, you didn't make a profit so no, no Thai tax is due. If your home country required you to complete a capital gains return on that sale, that is between you and your home country revenue department, it has nothing to to do with Thai RD. All the Thai RD sees is cash which is assessable or not with income that was earned after 1 January 2024 equal to X.

 

One of the problems in this part of the debate is that some posters seem to be confusing Thai Capital Gains rules with the sale of assets in the remitters home country, which of course is of no interest whatsoever to Thailand. When that cash enters Thailand it is cash, it is not a capital gain or an asset that is capable of being charged under capital gains, it is hard cash only.

[JimGant]

On 2/22/2024 at 11:59 AM, Phulublub said:

A Capital Gain is only realsied on sale of the asset.  Any and all valuations after purchase and before sale are utterly irrelevent.

 

 

Capital improvements raise the basis of your investment (thus lowering the capital gains realized upon sale). And, in the US, your basis for capital assets will be upped to the value on your date of death, for purposes of determining estate taxes. So, where Mike seems to be coming from, is the value of all your assets, for the purpose of this new ruling, will be established as of 31 Dec 2023. Thus, all remittances from that pile of money existing pre 2024 is non assessable (exempt) income. Remittances from cap gains of assets sold post Dec 31 2023 -- will use the basis as of Dec 31 2023 to determine cap gains.

 

Hey, this is all new territory we're crossing. But, this does give you a lot of wiggle room to use, should you need to be creative in determining what's, and what's not, assessable income. For my money, using a Dec 31 2023 value as basis is the way to go. And with all the smoke and fog surrounding this whole new adventure into Thai taxation -- I certainly could make a satisfying argument for what is my basis (not that anyone, realistically, is ever going to question you on this). Self-assessment -- which it certainly will be -- should give you the opportunity to pick the grey area that works in your favor.

[Mike Lister]

4 hours ago, JimGant said:

 

Mike, get a grip. All this argument is stimulating. Establish a new thread where financial argument pertaining to the new tax rules can be debated, in a gentlemanly fashion, or maybe a little more heatedly. I'd hate to not be able to see postings that were brilliant.

 

Having said that, I know this project must be a headache -- and I'm sure I speak for all when I say we do appreciate your efforts. That you're subject to some peculiarities on these many postings -- well, welcome to being a moderator. Cheers.

The long tax thread is still there for anyone who wants to debate anything and everything, posters argued for it to be left open and so it has been. That is the place for the debates you describe, not this one. This thread is designed to supply information and answers to average expats, especially pensioners, who are confused and scared by the subject of tax.

 

As stimulating as the arguments may be, this thread is NOT going down the same road the long thread did, as one poster has already tried to take us this morning!  That thread (and others) are still there for anyone who wants to debate theory, posters can stimulate themselves away until there's nothing left, with my blessing.....just not here.

[Mike Lister]

For those wanting more stimulating theoretical debates about possible future answers to tax related issues, such as Gift and Inheritance. along with case studies, political implications, court judgements, legal supposition and a whole host of aspects to theorise upon, below is where you need to be:  

 

 

[Mike Lister]

Updated the document with the following:

 

REVENUE DEPARTMENT OFFICES STRUCTURE

 

The main office of the RD is in Bangkok. The country is divided into tax regions and each region is sub divided into districts. Small RD offices are located in many tessabahns which serve the local community. When dealing with the RD, it is advisable to deal with at least District Level offices.

[Mike Lister]

Updated Para 51,, Crypto. It seems that Mazars is out of date, there is no with holding tax on crypto, it was never implemented.

 

Removed - "There is a 15% with holding tax on proceeds that can be used to offset any tax liability".

[mudcat]

I have a question about the 'inheritance' of tax exemption and onward transfers to my spouse.  

 

I receive two income streams that both taxed in the U.S. but are tax exempt under Thai/U.S. tax conventions Section 20 and 21.

 

U.S. Social Security (remitted to Bangkok Bank in Thailand)

A local government pension in the U.S. direct deposited into my U.S. checking account.

 

From these funds I transfer money to my Thai/U.S. wife for support and savings in both Thailand and the U.S.

 

Needless to say these amounts are <20 million Thai Baht per year, but well in excess of her personal tax exemption.

 

Does my wife have any tax liability for these funds?  

 

 

 

 

 

[Mike Lister]

1 minute ago, mudcat said:

I have a question about the 'inheritance' of tax exemption and onward transfers to my spouse.  

 

I receive two income streams that both taxed in the U.S. but are tax exempt under Thai/U.S. tax conventions Section 20 and 21.

 

U.S. Social Security (remitted to Bangkok Bank in Thailand)

A local government pension in the U.S. direct deposited into my U.S. checking account.

 

From these funds I transfer money to my Thai/U.S. wife for support and savings in both Thailand and the U.S.

 

Needless to say these amounts are <20 million Thai Baht per year, but well in excess of her personal tax exemption.

 

Does my wife have any tax liability for these funds?  

 

 

 

 

 

@JimGant may be able to answer your question.

[JohnnyBD]

On 1/11/2024 at 4:56 AM, Mike Lister said:

Above is the latest version of the Simple Guide to Personal Income Tax (PIT) in Thailand. It was constructed using information gleaned from various threads about  tax but is still incomplete.

 

Readers are asked to contribute to its construction by suggesting new information that should be added or identifying information that is unclear or incorrect….all constructive and relevant comments are welcome. Some of the links in the document can be improved on, some of you will know of ones that are more appropriate and your suggestions will be appreciated. Any discussion issues that represent unknowns will be flagged and recorded at the end of the document and not discussed here, that way the thread can move forward. Separate threads are encouraged for those wishing to discuss topics such as CRS but they should not be discussed here.

 

The purpose of this document is to provide core PIT information to as many people as possible and to relieve the anxiety surrounding the tax issue. Inputs to the document should be generic to all nationalities rather than specific to just one nationality. Posts should be concise and to the point, brevity will be appreciated, as will focus on the particular issue being discussed. If anyone has country specific links to their DTA, please feel free to post it here for the benefit of your fellow countrymen/women.

 

We all start anew, and everyone contributes on an equal basis.

Mike,

Thanks so much for posting and answering everyone's questions. That's a ton of work.

I am a US ciitizen, married to a Thai and living in Bangkok. I am required to file tax returns in USA and required to pay taxes on all of my US sourced income (SS, pension, dividends, interest, capital gains, etc.) If I don't transfer any money into Thailand in 2024, then I shouldn't need to file a Thai tax return, even if I'm here more than 180 days. Is that correct? I have enough here already to live on. In 2025, I won't be in Thailand for 180 days, so I shouldn't be a tax-resident and can then transfer as much money as I want in 2025, right? Also, what if I have money in my US accounts at the end of Dec 31, 2023 and want to transfer those monies to Thailand in the future. Do I need to report that to Thai RD, how?

Thanks again for your time.  

[Mike Lister]

4 minutes ago, JohnnyBD said:

Mike,

Thanks so much for posting and answering everyone's questions. That's a ton of work.

I am a US ciitizen, married to a Thai and living in Bangkok. I am required to file tax returns in USA and required to pay taxes on all of my US sourced income (SS, pension, dividends, interest, capital gains, etc.) If I don't transfer any money into Thailand in 2024, then I shouldn't need to file a Thai tax return, even if I'm here more than 180 days. Is that correct? I have enough here already to live on. In 2025, I won't be in Thailand for 180 days, so I shouldn't be a tax-resident and can then transfer as much money as I want in 2025, right? Also, what if I have money in my US accounts at the end of Dec 31, 2023 and want to transfer those monies to Thailand in the future. Do I need to report that to Thai RD, how?

Thanks again for your time.  

Poster @JimGant is a retired American CPA and he is better placed to answer questions such as yours, I'm sure he'll be along shortly.

[JohnnyBD]

On 2/21/2024 at 1:05 AM, 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.

Hi Jim, (Mike said you may could help answer my questions below) Thanks...

I am a US ciitizen, married to a Thai and living in Bangkok. I am required to file tax returns in USA and pay taxes on my US sourced income (SS, company pension, dividends, interest, capital gains, etc.) My questions. If I don't transfer any money into Thailand in 2024, then I shouldn't need to file a Thai tax return, even if I'm here more than 180 days. Is that correct? I have enough money here to live on. In 2025, I won't be in Thailand for 180 days, so I shouldn't be a tax-resident and can transfer as much money as I want in 2025, right? Also, what if I have some money in my US accounts at the end of Dec 31, 2023 and want to transfer those monies to Thailand in the future. Do I need to report that to Thai RD, and how? I don't think the USA is going to give me a tax credit for paying Thai income taxes on my US income. What do you think? Yes, they will give me a tax credit for paying taxes on my Thai income or interest. Thanks again for your time.  

[Klonko]

At the virtual townhall of the Swiss embassy February 27, 2024, Nathanan Juunprateepchai, Legal Officer, Expert Level, Deputy Director of the Legal Affairs Division from the Thai Revenue Department, answered  questions submitted previously.

 

My key take aways:

• You need to be well documented.
• English documents are generally accepted but other languages require certified translation preferably in Thai.  Documents may need to be signed off by foreign government.
• You could interpret Nathanan's explanations that foreign withholding taxes can be offset under  DTA.
• Foreign taxes need to be paid and fully assessed prior to be claimed under DTA.
• There are no rules on applicable accounting method and commingled funds. Three questions had been specifically directed to this topic but were not raised.
• Gifts from abroad are not taxable in the context of "traditional" support up to THB 10/20m annually.
• You can get a Tax ID now for next year.
• Thai RD hotline 1611 (also in English) answers questions.

 

Video (mainly English)  will be uploaded to "Swiss Embassy Thailand"'s YouTube channel.

Edited February 27 by Klonko

[Mike Lister]

22 minutes ago, Klonko said:

At the virtual townhall of the Swiss embassy February 27, 2024, Nathanan Juunprateepchai, Legal Officer, Expert Level, Deputy Director of the Legal Affairs Division from the Thai Revenue Department, answered  questions submitted previously.

 

My key take aways:

• You need to be well documented.
• English documents are generally accepted but other languages require certified translation preferably in Thai.  Documents may need to be signed off by foreign government.
• You could interpret Nathanan's explanations that foreign withholding taxes can be offset under  DTA.
• Foreign taxes need to be paid and fully assessed prior to be claimed under DTA.
• There are no rules on applicable accounting method and commingled funds. Three questions had been specifically directed to this topic but were not raised.
• Gifts from abroad are not taxable in the context of "traditional" support up to THB 10/20m annually.
• You can get a Tax ID now for next year.
• Thai RD hotline 1611 (also in English) answers questions.

 

Video (mainly English)  will be uploaded to "Swiss Embassy Thailand"'s YouTube channel.

Thanks you for posting that.

 

I think most of the points in your list were already understood although point number one is interesting, it looks like the RD may be preparing to do some digging.

 

Point three, foreign tax can indeed by offset against any Thai tax, that has been confirmed elsewhere.

 

And point six finally has some clarity, the long awaited  gifts from. abroad statement.

[JimGant]

1 hour ago, JohnnyBD said:

I don't think the USA is going to give me a tax credit for paying Thai income taxes on my US income. What do you think?

 

I don't see any of your scenarios that would require you to file a Thai tax return and pay Thai taxes: If income is not remitted, it's not assessable. If monies from pre 2024 are remitted, they're not assessable. If income remitted, otherwise assessable but remitted in a year when you're not a tax resident -- not assessable. Thus, no situations where you're paying Thai taxes, and thus no situations requiring a tax credit of Thai taxes against US taxes.

 

But, your question is a good one for future use, i.e., when you pay Thai taxes on US income because the DTA says that's the way it is. Normally, under US Tax Code, tax credits against your US tax return are for taxes paid only on foreign income. But, there's an exception for taxes paid under treaty (DTA) situations, such as paying taxes to Thailand on US income that they have primary taxation rights on. As such, you DO get a tax credit against your US tax return, requiring you to file a Form 8833. But, all the scenarios you indicate aren't yet in that situation.

 

Bottom line, as a Yank -- all this gobbly gook about the new tax situation doesn't really affect us, as our total tax bill, between the two countries, will, in most scenarios, be the same, with maybe Thailand finally getting more taxes, and the US less, as Thailand finally employs the language of the US-Thai DTA to their benefit.

[JimGant]

5 hours ago, mudcat said:

Does my wife have any tax liability for these funds?  

 

No. You've already met any tax obligations. Money gifted to your wife in the US is exempt from gift taxation. Gift to wife in Thailand is below the 20m threshold.

[Negita43]

1 hour ago, Klonko said:

Gifts from abroad are not taxable in the context of "traditional" support up to THB 10/20m annually.

Gifts to whom? Wife? partner? friend?

[Mike Lister]

21 minutes ago, Negita43 said:

Gifts to whom? Wife? partner? friend?

Traditional is typically defined as spouse, ascendants and descendants.

[UKresonant]

14 hours ago, JohnnyBD said:

In 2025, I won't be in Thailand for 180 days, so I shouldn't be a tax-resident and can then transfer as much money as I want in 2025, right?

As long as it wasn't earned or derived in 2024 when you were a Thai Tax resident, you perhaps would not present proof  of that.....

Your 2025 earnings or pension etc should be no problem bringing it in.

[Mike Lister]

1 hour ago, Yumthai said:

According to the current rules, if JohnnyBD is not TH tax resident in 2025 he can remit any amount of offshore money tax-free in Thailand because he doesn't have to fill any tax declaration in Thailand in 2026 regarding the foreign-sourced money he remitted in 2025. Whether the remitted money has been earned during a year he was Thai resident for tax purposes or not is irrelevant.

 

I do not agree.

 

The key is whether or not you were tax resident in Thailand, when the money was earned. If you were, regardless of when it is remitted, it is assessible here.

[Yumthai]

16 minutes ago, Mike Lister said:

I suppose that if you earn money in a year that you are tax resident here, but don't remit it until the following year when you are not tax resident, you are right, you will never file a tax return so the money may never be assessable. But that also means you can never be tax resident here again because if you are, you will have to declare that previous transfer.

You declare only the year you are/were tax resident. If you ask RD they will tell you can't file a tax return for a year you are not tax resident unless you have local income.

 

16 minutes ago, Mike Lister said:

Taking this one step further: theoretically, a person could work in a third country and remit their income to Thailand but never be tax resident here hence they never need to file a Thai tax return and the money could be free of Thai tax. You have to ask yourself, just how long do you think that scenario would be allowed to continue because it's just the sort of activity the RD is trying to stop.

This is what all Thai people living/working abroad do. As non-residents they remit money into their Thai bank account or gift their relatives tax-free legally. If Thailand wants this to change, they will need to change tax residence rules.

 

https://www.rd.go.th/english/6045.html

 

"A non-resident is, however, subject to tax only on income from sources in Thailand."

Edited February 28 by Yumthai

[Mike Lister]

3 minutes ago, Klonko said:

I respectfully disagree. AFAIK you have only to file income related to the respective tax year. It is a "loophole" but IMHO tax residence rules would need to be changed or taxable income explicitly include transfers of previous non tax resident transfers.

That's fine, we can disagree and I'll put it back on the list of unknowns at the end of the document (I think it was there once already as I recall). That means no more discussion on this point, until further information arises to confirm the situation, one way or the other, those are the rules of the thread as you will recall..

[Mike Lister]

I have updated the list of unknowns in the document with the following.

 

L) - income that is earned in a year when the taxpayer is tax resident but not remitted until a year when they are not tax resident, is it later tax assessible in Thailand?

 

As per the rules of the thread, there will be no further debate on this topic until a clear unambiguous answer arises. Readers should however feel free to discuss it in other threads, if they so wish, leaving this one clear of clutter and ambiguity.

[Mike Lister]

I have once again removed a series of posts, aimed at decluttering the thread and keeping it easy to read for newcomers. I have also moved a developing discussion regarding assessible income, to the thread below:

 

 

[marino28]

First I will like to thanks MR Lister for the tax guide.

 

Second I will like a clarification on this point:

 

23) YOU are responsible for determining if your assessable income in Thailand exceeds the threshold and means you must file a tax return. That assessable income might comprise a combination of pension payments, investment income, rental income or any of the other types of income listed in the link above. If you have assessable income of over 120,000 baht per year, you must file a tax return (60,000 baht if your sole source of assessable income is bank interest paid in Thailand). We further understand that you are still required to file a return, as long as your assessable income exceeds the threshold, even though there is no tax to pay. There is no penalty however, that we can see, for failing to file a nill return, at present. 

 

 

As far as I understand if in the year you receive more than 60k THB you have to present a return, but you also have to present a return if the bank already deduct the tax from the amounts?

 

Actually not only you did not have to pay anything but you suppose to get some money back. 

I hope I make clear my point. English is not my mother toungue.

[Mike Lister]

1 hour ago, marino28 said:

First I will like to thanks MR Lister for the tax guide.

 

Second I will like a clarification on this point:

 

23) YOU are responsible for determining if your assessable income in Thailand exceeds the threshold and means you must file a tax return. That assessable income might comprise a combination of pension payments, investment income, rental income or any of the other types of income listed in the link above. If you have assessable income of over 120,000 baht per year, you must file a tax return (60,000 baht if your sole source of assessable income is bank interest paid in Thailand). We further understand that you are still required to file a return, as long as your assessable income exceeds the threshold, even though there is no tax to pay. There is no penalty however, that we can see, for failing to file a nill return, at present. 

 

 

As far as I understand if in the year you receive more than 60k THB you have to present a return, but you also have to present a return if the bank already deduct the tax from the amounts?

 

Actually not only you did not have to pay anything but you suppose to get some money back. 

I hope I make clear my point. English is not my mother toungue.

You have a choice, you can file a return and potentially get some money back or you can ignore it and let them keep the tax that was deducted, in which case a tax return is not necessary. If you do not owe any tax, there is no penalty for not filing a tax return, it's only when you don't file a return when you do owe tax, that there's a problem.