Personal Income Tax Guide (for foreigners) Thailand

[The Cyclist]

3 hours ago, Mike Lister said:

Section 40 Assessable income is income of the following categories including any amount of tax paid by the payer of income or by any other person on behalf of a taxpayer.

(1) Income derived from employment, whether in the form of salary, wage, per diem, bonus, bounty, gratuity, pension, house rent allowance, monetary value of rent-free residence provided by an employer, payment of debt liability of an employee made by an employer, or any money, property or benefit derived from employment.⁴

 

This is for Thai Nationals and Foreigners working legally in Thailand, or others who are gaining other income in Thailand through interest payments etc.

[Mike Lister]

Another Section of the code that people should take note of, in particular landlords who derive income from renting out property in their home country and/or landlords renting out property inside Thailand:

 

SECTION 41: A taxpayer who in the previous tax year derived assessable income under Section 40 from an employment, or from business carried on in Thailand, or from business of an employer residing in Thailand, or from a property situated in Thailand shall pay tax in accordance with the provisions of this Part, whether such income is paid within or outside Thailand.

 

A resident of Thailand who in the previous tax year derived assessable income under Section 40 from an employment or from business carried on abroad or from a property situated abroad shall, upon bringing such assessable income into Thailand, pay tax in accordance with the provisions of this Part.

 

Any person staying in Thailand for a period or periods aggregating 180 days or more in any tax year shall be deemed a resident of Thailand.

[Mike Lister]

I am removing a post that that presumes the Revenue code doesn't cover certain classes of people. If there is proof it does not, posters should post links confirming that fact rather than post their own presumptions.

 

The post went on to say what the Revenue would have said, had it covered those classes of people. Since posters are unlikely to know that, it also is a presumption.

 

This thread will deal only with what is known rather than what posters presume.

 

 

 

 

[JimGant]

1 hour ago, Mike Lister said:

A resident of Thailand who in the previous tax year derived assessable income under Section 40 from an employment or from business carried on abroad or from a property situated abroad shall, upon bringing such assessable income into Thailand, pay tax in accordance with the provisions of this Part.

 

Come on, Mike. This rental question has already been explored vis a vis the US and the UK DTAs. Thailand is secondary tax collector, meaning you pay taxes primarily to your country where rental property exists, and those taxes are used as credits against any Thai tax assessed. Please don't scimp on the full picture of how expat landlords will be treated here in Thailand.

[Mike Lister]

Just now, JimGant said:

 

Come on, Mike. This rental question has already been explored vis a vis the US and the UK DTAs. Thailand is secondary tax collector, meaning you pay taxes primarily to your country where rental property exists, and those taxes are used as credits against any Thai tax assessed. Please don't scimp on the full picture of how expat landlords will be treated here in Thailand.

There are 88 other DTA's apart from the US and UK DTA's, not all posters are from just those two countries.

[JimGant]

5 hours ago, OJAS said:

Yes, we could well, I think, be the low-hanging fruit here in the RD's eyes. And, given the dual pricing tradition in LOS, could we seriously discount the possibility of being clobbered for tax at "special" foreigner rates which were, say, double the corresponding ones paid by locals? 

 

Well, the DTAs have a separate Article dealing with "Non-Discrimination" -- here from the US DTA:

 

Quote

This Article assures that nationals of a Contracting State, in the case of paragraph 1, and residents of a Contracting State, in the case of paragraphs 2 through 4, will not be subject, directly or indirectly, to discriminatory taxation in the other Contracting State. For this purpose, nondiscrimination means providing national treatment.  

Paragraph 1 provides that a national of one Contracting State may not be subject to
taxation or connected requirements in the other Contracting State that are other or more
burdensome than the taxes and connected requirements imposed upon a national of that other
State in the same circumstances.

 

Could be interesting if push came to shove on such matters. The US State Dept takes treaty matters very seriously, so I would hope our Embassy (and others) would take any treaty violation seriously. But, I guess it would all depend on the golfing weather at the time.....

[JimGant]

25 minutes ago, Mike Lister said:

There are 88 other DTA's apart from the US and UK DTA's, not all posters are from just those two countries.

 

Well, granted. But the preponderance of readers here have the King's English as their primary language, with, of course, the exception of we Americans, whose language is anyone's guess.

[Mike Lister]

The existing Revenue Department Code and RD Law is linked in the OP, it is the basis that is used today for all Thai tax residents, native and foreign, to file a tax return and has been so for decades.

 

It is a seriously unhelpful distraction to try and question whether the existing tax rules are fit for purpose, when applied to expat tax residents, and to insist on quotes to prove that they are!

 

The basic premise is that the current RD Law and Code is fit for purpose but that changes are needed and that changes are in the pipeline. That is the baseline for the document in the OP and of any questions and discussions in this thread. 

 

Any further posts that question that baseline, the degree to which the current RD law and code, fits individual needs or indeed attempts to divert from the purpose of the thread, will be deleted without warning. Repeated postings of that nature will result in formal warnings and beyond. That is the end of this discussion.

[UKresonant]

On 1/11/2024 at 4:54 PM, Mike Lister said:

33. UNRESOLVED, CONFLICTING or UNCLEAR  ISSUES

 

 A. The exact nature of the imported income taxation rules between the Thai RD and countries with whom it has DTAs

 

B. The conflicting need to file a tax return where zero tax is due (a nil return).

The need to file a nill return is confirmed in the following link, https://www.rd.go.th/english/37749.html

Chapter 3, Section 40, para 1

Just pondering over

 

https://www.rd.go.th/english/37699.html#section9

"Section 9 Unless stated otherwise, if it is necessary to convert foreign currency into Thai currency in order to comply with this Title, it shall be converted using the exchange rate which the Ministry of Finance announces from time to time. ¹

¹N.MF.Re: Rates of Exchange of Foreign Currencies Against Thai Currency under Section 9 of the Revenue Code".

;-

https://www.rd.go.th/fileadmin/user_upload/kormor/eng/NOOF_Exchange_Rate.pdf

"(2) the exchange rate based on a daily reference rate as announced daily by the Bank of Thailand for the conversion of foreign currency into Thai currency. Once any of the above exchange rate conversion is used, such rate shall continue to be used unless the Director-General of the Revenue Department grants approval to change the exchange rate conversion"

;-

https://www.bot.or.th/en/statistics/exchange-rate.html

 

Would it be the Transfer rate on the date of filing I wonder.  

 

Pending guide item 33 A :-

 

 https://www.rd.go.th/english/37749.html

Chapter 3, Section 40, para 1

So if the "taxed only in UK pension" which is of assessable type, the order in which it is considered may become important.  i.e.  against the highest applicable band. "most beneficial to the payer"

 

 

 

 

 

 

 

 

[Mike Lister]

I have updated the list of unknowns to include the following:

 

F. If, as far as expats are concerned, the existing tax code/law really does pertain only to income derived from inside Thailand, which existing tax code rules, obliges resident expats who receive offshore income to file a tax return, eg is Section 40/41 intended to include such people or not?

 

 

[George FmplesdaCosteedback]

15 hours ago, Mike Lister said:

Another Section of the code that people should take note of, in particular landlords who derive income from renting out property in their home country and/or landlords renting out property inside Thailand:

 

SECTION 41: A taxpayer who in the previous tax year derived assessable income under Section 40 from an employment, or from business carried on in Thailand, or from business of an employer residing in Thailand, or from a property situated in Thailand shall pay tax in accordance with the provisions of this Part, whether such income is paid within or outside Thailand.

 

A resident of Thailand who in the previous tax year derived assessable income under Section 40 from an employment or from business carried on abroad or from a property situated abroad shall, upon bringing such assessable income into Thailand, pay tax in accordance with the provisions of this Part.

 

Any person staying in Thailand for a period or periods aggregating 180 days or more in any tax year shall be deemed a resident of Thailand.

Income earned from businesses in Thailand should be taxable, just like all the 49% "owned" companies in Thailand that pay tax here.

[Will B Good]

On 1/11/2024 at 4:54 PM, Mike Lister said:

As a general rule, most private or company pensions, from most countries, appear to be assessable here but YOU will need to confirm that yours is or is not. If that is true, private and company pension income IS assessable income in Thailand.

Does anyone know how we confirm if our pension is or is not assessable income in Thailand?

 

Do we all have to go to the DR and just ask?

[Mike Lister]

2 minutes ago, Will B Good said:

Does anyone know how we confirm if our pension is or is not assessable income in Thailand?

 

Do we all have to go to the DR and just ask?

I know, the document knows, you don't. No more answers until you read it,

[Chad91]

If someone has a side job (I know many do when they shouldn't) and they are considered a digital normad but don't make enough money to apply for the Digital normal visa type. How will they go about paying Tax on the earnings ? 

 

Also and this in my case, I receive my money to live here as a gift from my Family in the UK. This has been on going for the last 6 years and every month my family put cash In to my UK bank for me and i send it accross with Wise to my Thai account, do I need declare that and will I be taxed on it ? 

[Mike Lister]

11 minutes ago, Chad91 said:

If someone has a side job (I know many do when they shouldn't) and they are considered a digital normad but don't make enough money to apply for the Digital normal visa type. How will they go about paying Tax on the earnings ? 

 

Also and this in my case, I receive my money to live here as a gift from my Family in the UK. This has been on going for the last 6 years and every month my family put cash In to my UK bank for me and i send it accross with Wise to my Thai account, do I need declare that and will I be taxed on it ? 

If you are working here without a work permit you are breaking the law and you seem to understand that, as such you cannot realistically expect this forum to advise how to pay tax on illegal earnings. There is no realistic way to reconcile the two issues of work permit and tax. Please do not pursue this discussion here as any posts that do, will be removed. 

 

The funds that you receive in Thailand from overseas may or may not be taxable, it depends how you account for them and it depends on the amounts involved. If they are a gift from your parents, that may be one tax free solution but only you can decide which way to proceed.

[Robin]

Will there be any difference  between income and savings transferred from home country (UK  in my case.)

Should I sell any property in UK and move he money to Thailand, will this still be classified as 'income'?  

I imagine that a number of potential retirees will be thinking of selling their property in UK.  Is property considered as savings, even if bought from income with a mortgage?

[Mike Lister]

3 minutes ago, Robin said:

Will there be any difference  between income and savings transferred from home country (UK  in my case.)

Should I sell any property in UK and move he money to Thailand, will this still be classified as 'income'?  

I imagine that a number of potential retirees will be thinking of selling their property in UK.  Is property considered as savings, even if bought from income with a mortgage?

Please read the article in the op and come back with any outstanding issues.

[Bluetongue]

Gee these DTAs are a fun read. Australians who are on the age pension or another pension or annuity would be liable here. Unless its a pension from Government service. While those on just the age pension should be zero tax once the various deductions kick in, those on more generous amounts may have something to think about. Particularly as most superannuation benefits in Australia are tax free from the age of 60 on. (Except those unlucky enough to be in the anomaly group which is too much to go into here.)

 

Personally I am not a Thai tax resident for 2023 but it seems I will be in 2024. However I won't be rushing in to get a file number. I have little luck with Thai officialdom out here in the sticks anyway, and quite frankly I couldn't be bothered. Of course some requirement at the Airport or Immigration makes it a different matter. Everybody's circumstances vary so don't take my advice. If I did need to transfer a large amount this year I'll just send it to the wife. She has no tax number, nor any dealings with them and I suspect many Thai's don't. I really don't see how any time soon they could have the wherewithal to force tax returns out of people like me who would be able to arrange things to not have a liability. What is the point, really, of getting a whole heap of mainly old blokes to file complex returns which will result in very little net gain?

[Mike Lister]

2 hours ago, Bluetongue said:

Gee these DTAs are a fun read. Australians who are on the age pension or another pension or annuity would be liable here. Unless its a pension from Government service. While those on just the age pension should be zero tax once the various deductions kick in, those on more generous amounts may have something to think about. Particularly as most superannuation benefits in Australia are tax free from the age of 60 on. (Except those unlucky enough to be in the anomaly group which is too much to go into here.)

 

Personally I am not a Thai tax resident for 2023 but it seems I will be in 2024. However I won't be rushing in to get a file number. I have little luck with Thai officialdom out here in the sticks anyway, and quite frankly I couldn't be bothered. Of course some requirement at the Airport or Immigration makes it a different matter. Everybody's circumstances vary so don't take my advice. If I did need to transfer a large amount this year I'll just send it to the wife. She has no tax number, nor any dealings with them and I suspect many Thai's don't. I really don't see how any time soon they could have the wherewithal to force tax returns out of people like me who would be able to arrange things to not have a liability. What is the point, really, of getting a whole heap of mainly old blokes to file complex returns which will result in very little net gain?

The Thai ID card number is their tax ID number, all Thais have one.

[Mike Lister]

In response to a posters comments in another thread, I have updated Para 3 to include the following:

 

"If after reading it, anyone remains unclear about what has been written in this document, they are welcome to raise questions to see if anyone can provide clarity. Alternatively, the cost of using a qualified Thai Tax preparer to complete your tax return and answer all your questions, somebody who is a CPA, is unlikely to be expensive. I regret that we are unable to recommend specific people or companies".

[BE88]

On 1/23/2024 at 4:47 PM, Mike Lister said:

Le numéro de carte d'identité est leur numéro d'identification fiscale, tous les Thai en ont un.

 

So I suppose that even those who have a pink identification card and already have a tax code?

[Mike Lister]

Another piece of the RD tax jigsaw:

 

When to Apply for  TIN (Tax Identification Number)

 

"Within 60 days from the date he derives assessable income".

 

https://www.rd.go.th/english/21987.html

[retarius]

On 1/11/2024 at 7:24 PM, NoDisplayName said:

 

So, let's say Person X has a baseline statement from Dec 31, 2023 with a balance of $1 million.

 

Does this mean Person X can transfer into Thailand any of this amount free of tax?  And for how long?  Can X bring in $100K each year for the next ten years tax free, by showing the 2023 base balance along with a sum total of all monies transferred in until exhausted?

I have the same question. I am at an age where I have to start drawing down my 410K account in the US. The sum I must withdraw each year is relatively large and it would be great if I could simply declare that none of these withdrawals are income by showing the statement from Dec 31st 2023.  

[Mike Lister]

1 minute ago, retarius said:

I have the same question. I am at an age where I have to start drawing down my 410K account in the US. The sum I must withdraw each year is relatively large and it would be great if I could simply declare that none of these withdrawals are income by showing the statement from Dec 31st 2023.  

I think you're probably outside of the scope of questions this forum can easily answer, simply because everyone has different circumstances, amounts, age, transfer amounts, maturity dates. The two choices I can off offer you are, wait and see what news is announced by the Thai RD eventually, or, seek specialist advice.

[JimGant]

29 minutes ago, retarius said:

I have the same question. I am at an age where I have to start drawing down my 410K account in the US. The sum I must withdraw each year is relatively large and it would be great if I could simply declare that none of these withdrawals are income by showing the statement from Dec 31st 2023.  

 

Sorry. All that money in your 401k or IRA is tax deferred income (unless you padded it with some after tax income, in which case Form 8606 would apply). Thus, when you take your annual Required Minimum Distribution or any other distributions, that now becomes taxable income in the year it is taken. So, nope, can't say it was income prior to Jan 1, 2024.

 

And, the DTA says Thailand has exclusive taxation rights on this income (if remitted). And the saving clause says you also have to declare this income on your US tax return. However, the Thai taxes would be a credit against US taxes owed.

 

The guy who agreed to this on the DTA was an idiot, as here you have years and years of tax deferred income, whereby the US collected no taxes. And now when paid out, and you're a resident of Thailand, Thailand gets  first collection rights on this money, and the US maybe no money, if the Thai credits cover the US tax. Wonderful planning, US.

[Jingthing]

1 minute ago, JimGant said:

 

Sorry. All that money in your 401k or IRA is tax deferred income (unless you padded it with some after tax income, in which case Form 8606 would apply). Thus, when you take your annual Required Minimum Distribution or any other distributions, that now becomes taxable income in the year it is taken. So, nope, can't say it was income prior to Jan 1, 2024.

 

And, the DTA says Thailand has exclusive taxation rights on this income (if remitted). And the saving clause says you also have to declare this income on your US tax return. However, the Thai taxes would be a credit against US taxes owed.

 

The guy who agreed to this on the DTA was an idiot, as here you have years and years of tax deferred income, whereby the US collected no taxes. And now when paid out, and you're a resident of Thailand, Thailand gets  first collection rights on this money, and the US maybe no money, if the Thai credits cover the US tax. Wonderful planning, US.

I thought the Thais had first crack at private pensions, not government pensions.

Taxable in the US withdrawals from US retirement accounts, usually traditional IRAs are arguably part of a U.S. government program. 

Are you absolutely sure such withdrawals would be subject to first crack by the Thais?

Isn't it WAY TOO EARLY to declare such definitive conclusions about such technical details?

Interestingly to me I checked on this issue with another country where taxes for expats can be an issue and was told definitely by a tax expert there that such IRA withdrawals wouldn't even need to be declared there.

Of course every country is different.

 

[JimGant]

29 minutes ago, Jingthing said:

I thought the Thais had first crack at private pensions, not government pensions.

Taxable in the US withdrawals from US retirement accounts, usually traditional IRAs are arguably part of a U.S. government program. 

Are you absolutely sure such withdrawals would be subject to first crack by the Thais?

Isn't it WAY TOO EARLY to declare such definitive conclusions about such technical details?

 

I'm not declaring anything - I'm reading from the Technical Explanation of the Thai-US tax treaty:

 

Quote

Article 20

Paragraph 1 provides that private pensions and other similar remuneration paid in
consideration of past employment are generally taxable only in the residence State of the
recipient.   The phrase “pensions and other similar remuneration” is intended to encompass
payments made by private retirement plans and arrangements in consideration of past
employment. In the United States, the plans encompassed by Paragraph 1 include: qualified
plans under section 401(a), individual retirement plans (including individual retirement plans that
are part of a simplified employee pension plan that satisfies section 408(k), individual retirement
accounts and section 408(p) accounts)

 

I you want to see a test case on how a US expat's IRA is handled, read the following link. It is based on the US-Swiss DTA, which, like the Thai-US DTA, is based on the OECD and UN Model tax treaties. Thus, considerable similarity. Just substitute "Thailand" for "Switzerland" as you read. The main difference, of course, is that Switzerland taxes income, whether remitted or not. Same as most civilized countries.

https://hodgen.com/ira-distribution-to-u-s-citizen-living-in-switzerland-which-country-taxes-it/

[retarius]

51 minutes ago, JimGant said:

 

Sorry. All that money in your 401k or IRA is tax deferred income (unless you padded it with some after tax income, in which case Form 8606 would apply). Thus, when you take your annual Required Minimum Distribution or any other distributions, that now becomes taxable income in the year it is taken. So, nope, can't say it was income prior to Jan 1, 2024.

 

And, the DTA says Thailand has exclusive taxation rights on this income (if remitted). And the saving clause says you also have to declare this income on your US tax return. However, the Thai taxes would be a credit against US taxes owed.

 

The guy who agreed to this on the DTA was an idiot, as here you have years and years of tax deferred income, whereby the US collected no taxes. And now when paid out, and you're a resident of Thailand, Thailand gets  first collection rights on this money, and the US maybe no money, if the Thai credits cover the US tax. Wonderful planning, US.

Thank you for this. Have some patience with me because I am old and the brain is a bit addled. I do understand the concept of deferred income. However I pay income taxes on the US when I draw it out (by choice). So it is no longer income, to my mind, but savings.

As an example say I withdraw $90K from the 401K each year and then give 30K to my ex-wife in the states, 30K to myself remitted in Thailand and 30K to the tax man in the US. 

I was not aware that the DTA gave Thailand first dibs on the money. Personally I would rather give it to Thailand, but it is more inconvenient having to make two tax filings rather than one. I suppose what you are saying is that for 2024 tax filings, on the $30K I bring here in the example, I would owe taxes here of X, but be able to fully deduct those taxes paid off my US taxes (as long as the Thai tax rate doesn't exceed my marginal tax rate at home of 36%).

Am I correct in this thinking?

[JimGant]

26 minutes ago, Jingthing said:

AGAIN  -- NOBODY actually knows how this is going to be enforced here.

 

Yeah, but nice to know what the treaties say is their right to enforce.

[JimGant]

25 minutes ago, retarius said:

I suppose what you are saying is that for 2024 tax filings, on the $30K I bring here in the example, I would owe taxes here of X, but be able to fully deduct those taxes paid off my US taxes (as long as the Thai tax rate doesn't exceed my marginal tax rate at home of 36%).

Am I correct in this thinking?

 

Essentially, yes. The formula for integrating foreign tax credits into your US tax return is interesting, if you like math riddles. Check out the instructions for Form 1116. But, if your Thai taxes on this IRA are less than the US taxes on same amount, your total tax bill between what you pay Thailand and what you pay the US will be the same as if you never filed with Thailand. And, as I think you alluded to, I have no problems paying Thailand and not the US my tax dollars/baht, as I'd rather pay to fix pot holes here than in Iowa. Timing is where it could be tricky, as you need to have your Thai tax return results (for credit purposes) prior to filing your US tax return. But an extension with the IRS is no big deal, as neither are amended returns.