Personal Income Tax Guide (for foreigners) Thailand

[Mike Lister]

4 minutes ago, JimGant said:

 Only if the DTA is modified with a protocol (unlikely). Right now, the 401k/IRA example with the US-Thai DTA is hard and fast -- here's the exact quote from the treaty:

 

"Taxable only in that State" means exclusive taxation rights. If the US didn't have the saving clause, this would mean only Thailand could tax my IRA, and the US couldn't. But, with the saving clause (allowing the US to tax anything regardless of what the DTA says), the US can and will tax my IRA. But, because, even with the saving clause, they are secondary, not primary, taxing authority -- they have to absorb the tax credit, meaning Thailand gets to keep all taxes collected, and the US keeps only those taxes net of the credit. Pretty simple math and concept, me thinks.

 

But, if somehow it's interpreted that Thailand doesn't want to adhere to a DTA, and just says, "Take a credit for all your home country taxes against Thai taxes," well, that's their loss. Why they would go this route, even if it facilitates double taxation matters, is a little perplexing -- as it is costing them lost revenue -- and not something particularly difficult to remedy with a better explanation of "self-assessment" as it regards the DTA.

Jim, thanks for the explanations but we're doing the very thing we said we wont do in this thread which is to post long explanations about what if's etc. I hope you wont be offended if I follow the practise I adopted from the outset and remove unnecessary posts, hopefully leaving the poster with his answer

[Mike Lister]

A reminder of the second post in the thread and the purpose of the tax guide and this thread:

 

"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. Anyone needing information regarding Thai tax related issues should raise them here. Any 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. Any post that does not contain factual answers to questions raised, will be removed, that way the thread will remain easily readable to newcomers".

[hcvc]

A number of online sources advocated bringing funds into Thailand before December 31, 2023 to lessen the impact from Thai tax revisions taking effect on January 1, 2024. Which I did.

 

I now worry that remitting money in 2023 may have subjected me to a tax liability under previously existing Thai tax rules. Rules that state income is assessable (taxable) if brought into Thailand in the same calendar year that the income is received. Guessing I may have an obligation to file a Thai 2023 tax return by March 31, 2024.

 

Online sources are now claiming there is no Thai tax obligation on foreign sourced funds held prior to January 1^st 2024.

 

This is all very taxing.

 

Losnsol?

[UKresonant]

5 hours ago, hcvc said:

A number of online sources advocated bringing funds into Thailand before December 31, 2023 to lessen the impact from Thai tax revisions taking effect on January 1, 2024. Which I did.

 

I now worry that remitting money in 2023 may have subjected me to a tax liability under previously existing Thai tax rules. Rules that state income is assessable (taxable) if brought into Thailand in the same calendar year that the income is received. Guessing I may have an obligation to file a Thai 2023 tax return by March 31, 2024.

 

Online sources are now claiming there is no Thai tax obligation on foreign sourced funds held prior to January 1^st 2024.

 

This is all very taxing.

 

Losnsol?

In year assessable income from overseas has always been potentially taxable if brought in within the same year as earned. Whilst you are Thai tax resident.

 

If you have brought in funds, during 2023from before, no worries.

 

If you become Thai Tax resident this year, and have assessable earnings this year, they effectively tagged and go on the Tax assessment for the year you bring them, when ever that may be, this year or in the future.

 

Savings before 1st Jan 2024, not a problem.

 

Savings put aside when your not Thai tax resident, not relavant when you later bring them in, new arrivals perhaps better planning an only after 7th July as optimal for their initial funding.

 

Probably better  just preping for your 2024 return in 2025 Q1

[TroubleandGrumpy]

Question - Expat who remits 2 million baht in one calendar year. 

Does an Expat have to declare the whole 2 million baht they remitted into Thailand in that year, and then details what is savings and what is income.  

Or does an Expat only have to declare in a tax return the part of the 2 million baht they remitted that was 'income'.

 

 

[Mike Lister]

1 minute ago, TroubleandGrumpy said:

Question - Expat who remits 2 million baht in one calendar year. 

Does an Expat have to declare the whole 2 million baht they remitted into Thailand in that year, and then details what is savings and what is income.  

Or does an Expat only have to declare in a tax return the part of the 2 million baht they remitted that was 'income'.

 

 

The taxpayer needs to understand and be able to prove (if asked) the breakdown of the 2 million and what it comprises. If it comprises a mixture of assessable income and exempt funds, only the assessable funds should be declared on a tax return, (as the rules stand at present).

[TroubleandGrumpy]

5 minutes ago, Mike Lister said:

The taxpayer needs to understand and be able to prove (if asked) the breakdown of the 2 million and what it comprises. If it comprises a mixture of assessable income and exempt funds, only the assessable funds should be declared on a tax return, (as the rules stand at present).

Thanks - So that is a No and a Yes.  Plus keep records to prove it, just in case ever audited in the future.  

 

[Mike Lister]

I'm going to take that Mazars post example down and rewrite it more logically and completely, the fault is mine and the way I've tried to express it. Sorry for the confusion.

[hcvc]

This forum (topic/1306896) is forging its way into the annals (had to check and make certain it’s spelled with two nn’s) of forum record books by mere volume. A hot topic that touches the lives of all individuals with a connection to Thailand.

I am quite thankful this forum exists – though I wish there was not a need for its existence.

When threatened herd animals (people) congregate. Apparently this forum acts as a haven for expats to gather for sharing their thoughts and concerns - I would have included sharing of information – but sadly it seems little of that has been forthcoming from the Revenue Department of Thailand. Kudos to those contributors that offer their tax related experience in trying to second guess the best they can. Yes, we are all alone in the dark – though linked together - in a never ending forum.

 

On a personal level – I have an issue related to bringing money into Thailand to pay for medical expenses. Like an old beach ball with a slow leak – I am gradually losing my bounce. Feeling flatter lately - likely stress related. Stressing over potential medical bills post January 1, 2024 – how ironic.

 

losnsol?

[Mike Lister]

16 minutes ago, hcvc said:

This forum (topic/1306896) is forging its way into the annals (had to check and make certain it’s spelled with two nn’s) of forum record books by mere volume. A hot topic that touches the lives of all individuals with a connection to Thailand.

I am quite thankful this forum exists – though I wish there was not a need for its existence.

When threatened herd animals (people) congregate. Apparently this forum acts as a haven for expats to gather for sharing their thoughts and concerns - I would have included sharing of information – but sadly it seems little of that has been forthcoming from the Revenue Department of Thailand. Kudos to those contributors that offer their tax related experience in trying to second guess the best they can. Yes, we are all alone in the dark – though linked together - in a never ending forum.

 

On a personal level – I have an issue related to bringing money into Thailand to pay for medical expenses. Like an old beach ball with a slow leak – I am gradually losing my bounce. Feeling flatter lately - likely stress related. Stressing over potential medical bills post January 1, 2024 – how ironic.

 

losnsol?

The Thai Revenue does not consider the purpose of imported funds, only their source and whether they are assessable or not.

 

Whilst trying to keep this thread focussed with the dialogue and chat at an absolute minimum, it's worth reminding that the Revenue has only made one small change to the Thai tax code. There is therefore no reason to expect a big announcement from them.

 

[Negita43]

So here goes with another what if:

If I am out of the country for more than 180 days in 2024 and transfer:

 

a) funds from my UK assets/income held befor 31/12/23 to my Thai Bank account in 2024.

 

b) funds from a capital gain (or income) made in 2024 to my Thai Bank account in 2024 :

i) whilst not in the country

ii) when I return

 

Am I not liable for tax (or even a tax declaration) as I am not technically resident for that year.

[Mike Lister]

2 minutes ago, Negita43 said:

So here goes with another what if:

If I am out of the country for more than 180 days in 2024 and transfer:

 

a) funds from my UK assets/income held befor 31/12/23 to my Thai Bank account in 2024.

 

b) funds from a capital gain (or income) made in 2024 to my Thai Bank account in 2024 :

i) whilst not in the country

ii) when I return

 

Am I not liable for tax (or even a tax declaration) as I am not technically resident for that year.

Your timing is perfect, we're just finalising a related piece and one of the main points of concern that jumped out (again) was the issue you raise.

 

A taxable event occurs typically at a single point in time but in the case of expats in Thailand, there are two separate points, both of which must be met before the event becomes real.

 

The first one is when the capital gain is realised, and your tax residency at that time. If you happen to be in Thailand when the you sell the capital item and realise the gain, that's Stage I of the Thai taxable event. Stage II depends on whether or not you remit the gain to Thailand, if you do not, it never occurs, that's not to say it wont occur somewhere else!

 

But trying to escape the Capital Gain by remitting the funds to Thailand, in a year when you are not Thai tax resident, does not nullify the Capital Gain. Exactly what the RD mechanism will be for this is unclear but previous discussions on this point, accompanied by reviews of tax consultancy reports, pretty much confirm the gain still exists. Our working assumption on this aspect has been that the gain must be reported in a subsequent year, as soon as you become tax resident once again..

 

 

 

 

[Negita43]

17 minutes ago, Mike Lister said:

Your timing is perfect, we're just finalising a related piece and one of the main points of concern that jumped out (again) was the issue you raise.

Thanks Mike

So how about if the capital gain is realised and remitted whilst not in the country (for more than 180 days). I assume that does not meet at least point 1

[Mike Lister]

1 minute ago, Negita43 said:

Thanks Mike

So how about if the capital gain is realised and remitted whilst not in the country (for more than 180 days). I assume that does not meet at least point 1

If realised AND remitted whilst not Thai tax resident....hmmmm!

 

I'm fairly sure that would be safe but I cannot say with 100% certainty, although technically it appears sound.

 

 

[Mike Lister]

I have rewritten an earlier post citing an article in Mazars, regarding Capital Gains, because it was incomplete and misleading.

 

 

An example that paraphrases extracts from Mazars regarding the sale of stocks and shares vs Capital Gains and savings:

 

 "Mr. A, a Thai tax resident, had income from selling shares in a Singapore company in 2020 and kept the share consideration, including the capital gain in a bank account in Singapore”

 

Under the old rule, those funds would be regarded as savings that were earned in a previous year, hence, they would not be taxable here, if imported into Thailand, in say 2023. The reason they are exempt is because the gain was earned in a different year from the one in which the funds were imported.

 

In the second scenario, the funds mentioned above, are imported after 1 January 2024, in which case they are once again not assessable to Thai tax, by virtue of the 1 January, 2024 rule whereby only remitted foreign income earned after that date is potentially taxable.

 

In the third and final scenario, entirely post 1 January, 2024: if those shares had been sold and banked as cash and then imported at some later date, regardless of the years that took place, the key issue is whether the tax payer was tax resident in Thailand, when the shares were sold. (see Q:7 in link below). The date of the sale establishes a taxable event but not necessarily a Thai taxable event, which for foreigners, requires the funds to be imported into Thailand, before that occurs. Up until the point of importation, the Thai taxable event can be avoided.

 

https://sherrings.com/foreign-source-income-personal-tax-thailand.html

 

Selling the shares any time after 1 January 2024 and banking the proceeds overseas, in a year when the tax payer was tax resident in Thailand, means the funds become assessable to Thai tax, if and when they are imported to Thailand. If the tax payer was not tax resident in Thailand when the shares were sold, there is no liability to Thai tax, if and when they are imported here.

 

Importing the funds described above, in a year in which the tax payer is tax resident, is straight forward, those funds are assessable to Thai tax. Delaying the transfer, however, until a tax year when the taxpayer is not tax resident, does not negate the Capital Gain which remains assessable. (the operational aspect of filing and tax collection in this scenario are unclear at present).

 

There are two points to consider here:

 

The first is that the Capital Gain can remain outside Thailand and only the principle transferred to Thailand. If that principle was derived from savings or taxed earned income, no further tax will be due in Thailand, as long as the levels of tax in the two countries are the same. (Important to remember that Thai CG is assessable to PIT which is scaled) Note: there is a risk that the Revenue may not allow separation of the principle and the gain and may instead view imported funds as a proportion of the total gain, we shall have to wait and see what practise is adopted.

 

The second is, the source of funds used to acquire an asset such as savings, versus the dates of Thai tax residency, are important, not merely the fact that money  exists in a bank account in cash form. Again, using the example above, if Mr A had sold his shares in a year when he was not Thai tax resident, he would be deemed to be holding cash savings in his bank and share ownership and Capital Gains issues would not be relevant. But converting a Capital Asset to cash, storing it as cash and then importing it, all whilst Thai tax resident, may not negate the Capital Gain.

 

Key Take Aways:

 

1) Keep Capital Gains and principle amounts separate for accounting purposes, where ever possible and practicable.

 

2) Sell any overseas Capital Gains in a year when you are not Thai tax resident.

 

3) Importing a Capital Gain, in a year in which the taxpayer is not Thai tax resident, might not negate the Thai Capital Gain.

 

 

 

 

[JimGant]

On 3/11/2024 at 5:24 PM, Mike Lister said:

On 3/11/2024 at 2:26 PM, hcvc said:

A number of online sources advocated bringing funds into Thailand before December 31, 2023 to lessen the impact from Thai tax revisions taking effect on January 1, 2024. Which I did.

 

I now worry that remitting money in 2023 may have subjected me to a tax liability under previously existing Thai tax rules. Rules that state income is assessable (taxable) if brought into Thailand in the same calendar year that the income is received. Guessing I may have an obligation to file a Thai 2023 tax return by March 31, 2024.

 

Online sources are now claiming there is no Thai tax obligation on foreign sourced funds held prior to January 1^st 2024.

 

This is all very taxing.

 

Losnsol?

 

 

No, they're wrong. Foreign sourced income earned in 2023, and remitted to Thailand in 2023, are assessable. Had you waited until this year, or later, to remit, then, yes, it would then not be assessable.

[Mike Lister]

Link below to Mazars 2023 tax guide, including latest foreign income rules. A more comprehensive brochure and easier to read than the others:

 

https://www.mazars.co.th/content/download/1176493/59841085/version//file/Personal-income-tax-return-PND-91-A-closer-look-November-2023.pdf

[Yumthai]

1 hour ago, Mike Lister said:

As said previously, the operational process for taxing that gain, remains unclear at present. It might be that the new redesigned forms will yield a clue. It would be niave to think that just because there are no relevant boxes on the form currently that the gain couldn't be taxed!

It's not much about the tax return form. Rather, the way foreign-sourced income and tax residence rules are currently formulated prevents foreign-sourced income remitted in a year one is not tax resident to be taxed. It would be nonsensical to think they could enforce tax without first amending their own law.

[Mike Lister]

20 minutes ago, Yumthai said:

It's not much about the tax return form. Rather, the way foreign-sourced income and tax residence rules are currently formulated prevents foreign-sourced income remitted in a year one is not tax resident to be taxed. It would be nonsensical to think they could enforce tax without first amending their own law.

We will see, in the meantime the issue can remain on the list of unknowns and not be debated here, per thread rules.

[Mike Lister]

The previous point about if/how/when Capital Gains, earned when a tax payer is tax resident, but remitted when they are not, already exists at the end of the document in the op so please, no further hypothesis or debate here, per the rules.

 

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?

[UWEB]

Most of the Countries using 183 days to become Tax Resident, but in Thailand it's 180 days only. What is the situation when I stay 184 days in my Home country and 181 days in Thailand, I'm  dual Tax Resident?

 

[Mike Lister]

17 minutes ago, UWEB said:

Most of the Countries using 183 days to become Tax Resident, but in Thailand it's 180 days only. What is the situation when I stay 184 days in my Home country and 181 days in Thailand, I'm  dual Tax Resident?

 

Yes, but only one of them can be the primary taxing authority:

 

https://www.gfp.institute/post/what-to-do-if-you-satisfy-more-than-one-countrys-tax-residency-test

[Mike Lister]

Reminder

 

For those wanting to debate possible scenarios and outcomes regarding tax, the long thread remains open and is linked below:

 

 

[ukrules]

On 3/12/2024 at 12:38 PM, Mike Lister said:

Our working assumption on this aspect has been that the gain must be reported in a subsequent year, as soon as you become tax resident once again..

 

Well that seems a little odd, it would make sense that if you're not resident in Thailand and you make some capital gains during the time you're non resident and then remit them at any time, same year or a later year then it should not really be anything to do with Thailand.

 

They don't have a  specific capital gains tax in Thailand do they?

It's all personal income tax based on what I've read and if you're non resident then it simply doesn't apply to 'profit' made during that year.

 

I've seen capital gains mentioned but only in the context of exemptions from tax, like the SEC and mutual funds.

 

Will be interested in your findings on this as it's important.

[UKresonant]

Just now, UWEB said:

Most of the Countries using 183 days to become Tax Resident, but in Thailand it's 180 days only. What is the situation when I stay 184 days in my Home country and 181 days in Thailand, I'm  dual Tax Resident?

 

The 183 day thing can be more complicated, where the Thai Definition is the simple 180 Days or more (as far as i know)

The Tax residency for the UK is not as simple as the Thai definition, I probably will always have at least two Ties in the UK, maybe three, maybe even 4 for short periods.

The number of days an individual spends in the UK in a tax year dictates the number of ties that are needed to make them UK resident.

The following tables set out the correlation between the 2.

Table A: Ties required if individual was UK resident in 1 or more of the 3 tax years before the year under consideration

Days spent in the UK in the tax year under consideration	UK ties needed
16 - 45	At least 4
46 - 90	at least 3
91 - 120	At least 2

 

https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm11520

Tie 1

The individual will have an accommodation tie for a tax year if they have a place to live in the UK and:

• It is available to them for a continuous period of 91 days or more during that tax year, and
  • they spend 1 or more nights there during that year, or
  • if it is the home of a close relative, they spend 16 or more nights there during the year
  • Tie 2
  • The individual will have a 90 day tie for the tax year if they have spent more than 90 days in the UK in either or both of the previous 2 tax years immediately before the year under consideration.
  • I'm a national of the UK, and it would be difficult to say in is not my centre of vital interest. 99.98% of income derived and always taxed at source there, without option to get a no tax code (where taxation is applicable at the UK end).

Where as If I stay in Thailand more then 180days, and I might be able to stay in a house that I signed at the Thai Land office, that I had no connection with, on my essentially temporary permission to stay in Thailand.

 

Yes Dual tax Resident, but Thailand may always wish primary taxing rights if over the 179 days, under DTA article 4. 

 

(Additionally the Tax years don't align)

 

Edited March 13 by UKresonant

[Mike Lister]

27 minutes ago, ukrules said:

 

Well that seems a little odd, it would make sense that if you're not resident in Thailand and you make some capital gains during the time you're non resident and then remit them at any time, same year or a later year then it should not really be anything to do with Thailand.

 

They don't have a  specific capital gains tax in Thailand do they?

It's all personal income tax based on what I've read and if you're non resident then it simply doesn't apply to 'profit' made during that year.

 

I've seen capital gains mentioned but only in the context of exemptions from tax, like the SEC and mutual funds.

 

Will be interested in your findings on this as it's important.

The issue that we're trying desperately not to debate here, is realising the gain in a year when you are resident but remitting the gain in a year when you are not. The first part is quite clear, to me at least. If you are Thai tax resident when the gain is made, any subsequent transfer of that gain to Thailand is assessible. The issue is tax residency in the year when the gain is remitted and whether or not tax can be avoided by not being resident. An earlier discussion on this point concluded that becoming not tax resident in the year of remittance, didn't pass the sniff test and was counter to what the RD was trying to achieve with the new rule. The argument about not having space on the form for previous year income is silly and is no basis to expect tax can be avoided. 

[Mike Lister]

12 minutes ago, Negita43 said:

Sorry to be thick but I don't understand that - "before that occurs" - before what occurs?

 

If the tax payer was resident in his home country, the CG would be realised as soon as the item was sold. But because the taxpayer is tax resident in a different country from the sale, the actual sale of the item itself does not trigger the taxable event, a second step, remittance of the funds does. The taxpayer therefore has an option to avoid Thai tax on the gain, until the second step occurs.

 

This topic has been moved across to a debating thread, in an attempt to keep this thread clear for fact (I clean it up every couple of days and delete the commentary and hypothesis). The debating thread is linked below:

 

 

[Deerculler]

I am 80 years old. It looks to me that Thai Inland Revenue want to tax me maybe 25 percent of my pensions and most likely have to an accountant to do this for me.

He will most likely charge the old farang like a wounded bull.

Which all sounds like a good wack out of my pensions.

 

Thank you Mike for the effort that you gone done to explain to us.

To me personally.

It just seems to give me problems at my age that I can do without.

The golden years of old doesn't really exist.

[VocalNeal]

7 minutes ago, Deerculler said:

Thank you Mike for the effort that you gone done to explain to us.

 

Why are you thanking him for explaining  something that hasn't happened yet and may never happen? And then if we all pay tax for 3 years we may all apply for citizenship? Then the system will overflow with citizenship applications. 

I looked up the opposite of self-effacing but non of them seem to do justice.

[G_Money]

Don’t burn your bridges by “moving “ to Thailand.

 

I’ll never pay the Thai  tax man one baht of my personal pensions and IRA distributions after paying USA taxes on them already.

 

Even while on a retirement visa/ extensions.

 

If push comes to shove I’ll go back every 3 months for a new tourist visa.   Or just stay home for awhile and then come back.

 

Absolutely no way I would pay 2 countries income tax.