Remit vs. Credit card payment (under new tax rules)

[Somros]

Option 1:

Remit money into Thailand, then use it to make payments.

 

Option 2:

Use your foreign credit card to make these payments directly (whenever applicable).

 

Considering the planned taxation on remitted amounts, does it make sense to use option 2 as much as possible (e.g. larger payments done to bodies that accept CC)?

[freeworld]

If you are paying for things in Thailand using a foreign credit card it is still remitting money is it not.

[Etaoin Shrdlu]

Option 2 is likely to be considered the same as Option 1 by the RD.

[Cardano]

3 minutes ago, freeworld said:

If you are paying for things in Thailand using a foreign credit card it is still remitting money is it not.

Not in the sense that it would be in any way visible to the RD.

[Cardano]

4 minutes ago, Etaoin Shrdlu said:

Option 2 is likely to be considered the same as Option 1 by the RD.

How the hell will the RD have any idea of or even be interested in any purchase by a foreign CC.

[Mike Lister]

1 minute ago, Cardano said:

Not in the sense that it would be in any way visible to the RD.

Which is tax evasion and since its illegal, can't be discussed here.

 

Regardless, using a foreign credit card in Thailand to make payments kere, is still considered to be remitted funds.

[ukrules]

12 minutes ago, freeworld said:

If you are paying for things in Thailand using a foreign credit card it is still remitting money is it not.

 

It's about whether that money is 'assessable income' - not just remitted.

 

Credit cards are borrowed money, so is an overdraft. Much remains unclear.

 

For example if the credit card was paid off with money from before Jan 1, 2024 is it still considered income or earnings / assessable. This whole thing is a minefield, at least for the first few years.

Does using a foreign credit card which is paid off using fully taxed 'old savings' and non assessable income convert it to earnings?

 

[freeworld]

1 minute ago, Cardano said:

Not in the sense that it would be in any way visible to the RD.

Agreed but then the question of avoidance and evasion arises.

[Mike Lister]

3 minutes ago, freeworld said:

Agreed but then the question of avoidance and evasion arises.

Just evasion actually.

 

On the positive side, no more visa issues, no 90 day reports and no cost of living worries, plus free room and board and one square meal a day, all gratis.

[TheAppletons]

Criminal geniuses who crowdsource their plans on public internet forums.....priceless.  

[JackGats]

The valid question is: how to document credit card payments when filing taxes in Thailand? Lots of paperwork especially if the same credit card is used for payments both in and outside Thailand.

[Etaoin Shrdlu]

36 minutes ago, Cardano said:

How the hell will the RD have any idea of or even be interested in any purchase by a foreign CC.

 

The most likely scenario would be in the event of an audit and request for this info by the RD.

 

Don't think the RD can't get this info if they want it.

[Mike Lister]

48 minutes ago, ukrules said:

 

It's about whether that money is 'assessable income' - not just remitted.

 

Credit cards are borrowed money, so is an overdraft. Much remains unclear.

 

For example if the credit card was paid off with money from before Jan 1, 2024 is it still considered income or earnings / assessable. This whole thing is a minefield, at least for the first few years.

Does using a foreign credit card which is paid off using fully taxed 'old savings' and non assessable income convert it to earnings?

 

Umm, not really. The issue is the date of the transaction, that's the date when the seller was paid by the card holder, that is the date the transfer of funds into Thailand was deemed to have been made. The fact the card holder used old funds to pay the bill, in another country, is not really relevant.

[Dan O]

1 hour ago, Somros said:

Option 1:

Remit money into Thailand, then use it to make payments.

 

Option 2:

Use your foreign credit card to make these payments directly (whenever applicable).

 

Considering the planned taxation on remitted amounts, does it make sense to use option 2 as much as possible (e.g. larger payments done to bodies that accept CC)?

Remittance or payment of bills is not an indication that the money used regardless of category is an indication the funds are  income. Too much unknowledgeable speculation 

[eisfeld]

2 hours ago, Mike Lister said:

Umm, not really. The issue is the date of the transaction, that's the date when the seller was paid by the card holder, that is the date the transfer of funds into Thailand was deemed to have been made. The fact the card holder used old funds to pay the bill, in another country, is not really relevant.

 

I think there can be a reasonable argument made that the funds used for the purchase were a loan if it's a credit card. The loan then is repaid outside Thailand. So if really going by the letter of the law then the credit card transaction is not counted towards assessable income. And there is no income transferred to Thailand.

 

What should be counted as assessable income is the value of the item. The user from Thailands point of view got the item from the credit card company. The amount of tax due will be the same.

 

Quote

Income chargeable to the PIT is called “assessable income”. The term covers income both in cash and in kind. Therefore, any benefits provided by an employer or other persons, such as a rent-free house or the amount of tax paid by the employer on behalf of the employee, is also treated as assessable income of the employee for the purpose of PIT.

 

In the end it might be just semantics but maybe there's some edgecases where this plays a role.

 

In fact, if interpreted this way then it doesn't even matter if the recent changes were made or not. It would apply the same already before.

[Etaoin Shrdlu]

46 minutes ago, eisfeld said:

 

I think there can be a reasonable argument made that the funds used for the purchase were a loan if it's a credit card. The loan then is repaid outside Thailand. So if really going by the letter of the law then the credit card transaction is not counted towards assessable income. And there is no income transferred to Thailand.

 

What should be counted as assessable income is the value of the item. The user from Thailands point of view got the item from the credit card company. The amount of tax due will be the same.

 

 

In the end it might be just semantics but maybe there's some edgecases where this plays a role.

 

In fact, if interpreted this way then it doesn't even matter if the recent changes were made or not. It would apply the same already before.

 

Remitting money that is borrowed abroad may not count as income when remitted, but payments to repay the loan could be considered income even if the payments don't cross a border since they accrue to the benefit the debtor located in Thailand. 

[eisfeld]

2 hours ago, Etaoin Shrdlu said:

 

Remitting money that is borrowed abroad may not count as income when remitted, but payments to repay the loan could be considered income even if the payments don't cross a border since they accrue to the benefit the debtor located in Thailand. 

 

But then that could be avoided by traveling outside of Thailand at the time the debt is settled. It makes more sense to count the items value as assessable income because it was at that time for sure for the benefit of someone in Thailand.

[Mike Lister]

In Thai tax law, income is defined as something that is received, not necessarily earned, it can even be like or in kind. Knowing that, I personally wouldn't want to mess around trying to second guess whether something is or isn't.

[xeniv23]

11 hours ago, Cardano said:

Not in the sense that it would be in any way visible to the RD.

The merchant's bank will have to handle the payment on the Thai end thus creating a record of a remittance by credit card.  My guess is that those records are visible to the RD.

[Mike Lister]

5 minutes ago, xeniv23 said:

The merchant's bank will have to handle the payment on the Thai end thus creating a record of a remittance by credit card.  My guess is that those records are visible to the RD.

Certainly visible to the Central Bank since it involves currency exchange, whether or not the RD has saight also, is unclear.

[Etaoin Shrdlu]

5 hours ago, eisfeld said:

 

But then that could be avoided by traveling outside of Thailand at the time the debt is settled. It makes more sense to count the items value as assessable income because it was at that time for sure for the benefit of someone in Thailand.

 

The funds were remitted into Thailand so perhaps the only way to reverse the debt obligation without creating a potentially taxable event would be to send after-tax funds from Thailand to the person or institution that lent the money.

[Mike Lister]

12 minutes ago, Etaoin Shrdlu said:

 

The funds were remitted into Thailand so perhaps the only way to reverse the debt obligation without creating a potentially taxable event would be to send after-tax funds from Thailand to the person or institution that lent the money.

I think the taxable event occurs when the cardholder transacts against the card in Thailand and that nothing else matters.

[Dan O]

8 hours ago, Etaoin Shrdlu said:

 

Remitting money that is borrowed abroad may not count as income when remitted, but payments to repay the loan could be considered income even if the payments don't cross a border since they accrue to the benefit the debtor located in Thailand. 

The tax reg only speaks to income earned not payments made for purchase as purchases are already taxed. If that were the case you would pay tax on every deposit to a bank, every purchase or withdrawal and then have to pay tax on any affected foreign income as well.  People need to calm down and wait for clear guidance to be issued. The speculation on this issue is way out of hand ang the end result with all the DTA's in place will limit the impact to most everyone.

[Presnock]

I do believe that the Thai RD should be following conversations on the local media and in response to the same kind of question on a daily basis, should be putting out some kind of guidance.  Otherwise, next March should be a total fiasco within the RD trying to figure it all out.  Luckily some folks will study available documentation about taxes in Thailand, and will be able to understand that not all folks will be affected by these new regulations.  "google" search is readily available and carries numerous documents regarding all the issues.  I myself have now satisfied myself about any issue that might affect me or

not so can relax knowing that life can still be great here.  Next week I will receive my LTR visa.  The BOI folks are truly helpful and patient with those applying for that visa.  Although the pollution problem in BKK is almost as bad as CM, I still notice very few people wearing masks even when exercising outside.   Another reason to use google search - masks do help!  Take care and good searching for all.

 

[Etaoin Shrdlu]

29 minutes ago, Mike Lister said:

I think the taxable event occurs when the cardholder transacts against the card in Thailand and that nothing else matters.

 

That may very well be the case. 

[Chongalulu]

12 hours ago, Etaoin Shrdlu said:

 

The most likely scenario would be in the event of an audit and request for this info by the RD.

 

Don't think the RD can't get this info if they want it.

Data protection in the country of the card would deny access to them. Unless you volunteered it how would they obtain the information or even know you had such card?

[Etaoin Shrdlu]

17 minutes ago, Chongalulu said:

Data protection in the country of the card would deny access to them. Unless you volunteered it how would they obtain the information or even know you had such card?

 

The RD would request this information from the person they were auditing as a first step. As a second step, the RD could request assistance from the auditee's home country tax authorities who could obtain this from the bank or other financial institution and send it to the RD.

 

I don't think data protection laws would prevent tax authorities from obtaining information from financial institutions under existing international tax cooperation agreements. Privacy in financial matters, at least when it comes to tax, has been pretty much dead since the IRS busted open the Swiss banks about fifteen years ago.

 

 

[Dan O]

14 hours ago, Mike Lister said:

Umm, not really. The issue is the date of the transaction, that's the date when the seller was paid by the card holder, that is the date the transfer of funds into Thailand was deemed to have been made. The fact the card holder used old funds to pay the bill, in another country, is not really relevant.

Im not sure that payment of debt is considered income in any country. I may be wrong but that is a gross overstretch to make a claim like that. 

[Yumthai]

1 hour ago, Etaoin Shrdlu said:

The RD would request this information from the person they were auditing as a first step. As a second step, the RD could request assistance from the auditee's home country tax authorities who could obtain this from the bank or other financial institution and send it to the RD.

 

I don't think data protection laws would prevent tax authorities from obtaining information from financial institutions under existing international tax cooperation agreements. Privacy in financial matters, at least when it comes to tax, has been pretty much dead since the IRS busted open the Swiss banks about fifteen years ago.

I think that Thai RD, unlike IRS, has no means nor power to enforce anything out of Thailand borders. Could you bring any case of Thai law being enforced abroad?

 

[Mike Lister]

7 minutes ago, Dan O said:

Im not sure that payment of debt is considered income in any country. I may be wrong but that is a gross overstretch to make a claim like that. 

I think this is about borders. The Thai RD doesn't care what financial arrangement's you have overseas, all it cares about is that your purchased goods or services here in Thailand and that ultimately you paid for them using overseas funds.

 

The definition of an international tourist, in economics terms, is somebody from outside Thailand's borders who holidays in Thailand using overseas funds that are brought into the country and the holiday experience is then taken home again. It doesn't matter that those funds are borrowed funds or on credit, as many will be. Once the purchase is made, it gets logged against Thai GDP.

 

So the tax resident who uses an overseas credit card in Thailand to finance his/her 181 day stay, may pay  off their credit card bill using savings, or income, one being taxable, the other not, potentially. The fact the cardholder choses to draw out reimbursement of the credit card bill using extended payments, is not a matter for the TRD.,