Introduction to Personal Income Tax in Thailand

[MartinL]

4 hours ago, OJAS said:

 

Did you not receive a letter from the DWP back in 2019 advising you of the rate at which your SP was to be paid (which then, of course, was to be frozen for ever and ever amen while you were in Thailand)?

 

EDIT: I am, of course, assuming that, not only did you become eligible for the SP in 2019, but you also actually claimed it then (in my case I became eligible in 2014 but didn't actually claim until 2015 so as to get at least 1 triple-lock increase under the belt)!

 

Yes, a letter was received, not a statement, relevant to the first year's payment only. A 'statement', to me, implies something different to a letter. The person to whom I was responding subsequently said that he gets annual statements from DWP and that's exactly what I was hoping to clarify.

[Mutt Daeng]

18 hours ago, Liquorice said:

Each year I receive a statement from the DWP notifying me of what my state pension is.

 

On the annual P60 from my private pension, it lists the state pension, the private pension and the company pension totals and the tax paid against each one.

Obviously, nil tax on the state pension.

I don't get an annual statement from DWP and my Govt pension and workplace pension P60s have no references to my State Pension.

Update:

Come to think of it, perhaps I don't get an annual statement from DWP informing me what my state pension is because my state pension is frozen?

[chiang mai]

8 minutes ago, Mutt Daeng said:

I don't get an annual statement from DWP and my Govt pension and workplace pension P60s have no references to my State Pension.

Update:

Come to think of it, perhaps I don't get an annual statement from DWP informing me what my state pension is because my state pension is frozen?

You can check/request this information by establishing an HMRC tax account via the International Gateway, easy and straight forward gives instant access to documents and numbers.

[Mutt Daeng]

2 minutes ago, chiang mai said:

You can check/request this information by establishing an HMRC tax account via the International Gateway, easy and straight forward gives instant access to documents and numbers.

Thanks  @chiang mai . I forgot about that. I already have an account and the HMRC app on my phone. I'll see what I can get from there.

[jwest10]

On 12/18/2024 at 5:38 AM, chiang mai said:

I don't know for certain. Whilst logically speaking that would be correct, I'm not sure if the TRD would accept that, despite pension income being classed as Cat 1 income. I have a feeling that because the income is remitted from overseas, that may push it into the "other" income category and dictate that PND90 is used. It may be worth asking TRD, if you are able to visit. 

Yes, if and when these forms do come out and yes the  current PND 91 and states at at top of the form "Income from Employment in Thailand" or very similar and one would use PND 90 and also do not forget the Income Exemption/allowance form too.
We shall see but again the local  Revenue office with my circumstances that I do not need to file as under the thresholds.
Yes, wait and see and if you have PIN  you can use this.
There again yet again no clarification on anything!!!

[JimGant]

15 hours ago, chiang mai said:

Earned whilst not Thai tax resident but remitted when you are....Thai assessable.

When does income no longer remain income? Joe Blow fully retires in 2025; moves to Thailand; is there for over 180 days, thus a Thai tax resident. All the money he subsequently remits is from income he earned in 2024. And which has already been subject to home income taxes. Wouldn't such income now be considered savings, which to me perfectly describes income after being subjected to home country taxes? And what if Joe Blow didn't become a Thai tax resident until 2030 -- would those 2024 monies still be considered income when remitted? Hmmmm. Maybe not, based on what we've heard supposedly coming from the TRD, namely: "Income taxed in your home country is exempt from Thai taxes."  Sounds like an appreciation that after tax income -- or at least income that had been subjected to taxation -- is now savings.

 

Anyway, without any further guidance coming from the TRD, I know what advice I'd give to Joe Blow.

[chiang mai]

1 minute ago, JimGant said:

When does income no longer remain income? Joe Blow fully retires in 2025; moves to Thailand; is there for over 180 days, thus a Thai tax resident. All the money he subsequently remits is from income he earned in 2024. And which has already been subject to home income taxes. Wouldn't such income now be considered savings, which to me perfectly describes income after being subjected to home country taxes? And what if Joe Blow didn't become a Thai tax resident until 2030 -- would those 2024 monies still be considered income when remitted? Hmmmm. Maybe not, based on what we've heard supposedly coming from the TRD, namely: "Income taxed in your home country is exempt from Thai taxes."  Sounds like an appreciation that after tax income -- or at least income that had been subjected to taxation -- is now savings.

 

Anyway, without any further guidance coming from the TRD, I know what advice I'd give to Joe Blow.

It's been discussed numerous times and hasn't satisfactorily concluded. Post 31/12/23 income that is remitted to Thailand may never be regarded as savings. Income minus taxes and expenditure doesn't appear as a concept anywhere in Thai tax, as far as I can see. Perhaps it does for domestic income, on which Thai tax is paid, but remitted funds from overseas, I'm sceptical.

 

I might elect to not declare post 12/23 savings but if TRD were to ask the source of those funds, would they buy that it wasn't income, especially if the rate of tax on the original income was higher here. Dunno, it's one of those known, unknowns.

[potless]

17 hours ago, chiang mai said:

Earned and remitted whilst not Thai tax resident.....no issues.

 

Earned whilst not Thai tax resident but remitted when you are....Thai assessable.

 

Earned whilst Thai tax resident but remitted when you are.....Thai assessable.

 

Remittance is the key issue, until such time as worldwide income is adopted.

I have a query which I hope yourself or someone else may have some insight. I import money via a Foreign Currency Deposit Account. At what point does the money become assessable ? When I import it or when I actually convert it to Thai baht ? A few years back there were a few threads relating to the bank deposit guarantee being reduced to 1,000,000 baht. It was stated that foreign currency accounts were not covered and one reason cited by a poster was that the foreign currency is technically held offshore. IF that is the case, when would the TRD view it as assessable, hence my query? I will not be tax resident this year but may be next year. Should I convert my foreign currency into baht before this year ends or convert at leisure next year and maybe fall foul of a TRD ruling that the money is assessable only when actually converted to Baht. Thanks in advance for any thoughts.

[topt]

10 minutes ago, potless said:

I have a query which I hope yourself or someone else may have some insight. I import money via a Foreign Currency Deposit Account. At what point does the money become assessable ? When I import it or when I actually convert it to Thai baht ? A few years back there were a few threads relating to the bank deposit guarantee being reduced to 1,000,000 baht. It was stated that foreign currency accounts were not covered and one reason cited by a poster was that the foreign currency is technically held offshore. IF that is the case, when would the TRD view it as assessable, hence my query? I will not be tax resident this year but may be next year. Should I convert my foreign currency into baht before this year ends or convert at leisure next year and maybe fall foul of a TRD ruling that the money is assessable only when actually converted to Baht. Thanks in advance for any thoughts.

@chiang mai I think had the answer to this before which, unless I remember incorrectly, was that it it would be assessed when the original transfer was made. I agree with this. 

[potless]

3 minutes ago, topt said:

 I think had the answer to this before which, unless I remember incorrectly, was that it it would be assessed when the original transfer was made. I agree with this. 

Thanks for your reply. Much appreciated. 

[topt]

18 hours ago, chiang mai said:

Earned whilst not Thai tax resident but remitted when you are....Thai assessable.

Remittance is the key issue, until such time as worldwide income is adopted.

 

1 hour ago, chiang mai said:

It's been discussed numerous times and hasn't satisfactorily concluded. Post 31/12/23 income that is remitted to Thailand may never be regarded as savings.

This is a fairly fundamental issue especially for those selling properties in their home county and then remitting that money here.

I don't disagree with you but did not Carl Turner state the opposite in one of his vids or am I remembering wrongly?

Obviously anybody wanting to do this should endeavour to be non resident at the time of both the sale and remittance but it would be good to have a definitive answer.

[chiang mai]

22 minutes ago, topt said:

 

This is a fairly fundamental issue especially for those selling properties in their home county and then remitting that money here.

I don't disagree with you but did not Carl Turner state the opposite in one of his vids or am I remembering wrongly?

Obviously anybody wanting to do this should endeavour to be non resident at the time of both the sale and remittance but it would be good to have a definitive answer.

I didn't read what Expat Tax said on the issue, I'm happy to be corrected if somebody knows differently and for certain.

 

I think being not resident during sale and remittance is the goal also.

[chiang mai]

48 minutes ago, potless said:

I have a query which I hope yourself or someone else may have some insight. I import money via a Foreign Currency Deposit Account. At what point does the money become assessable ? When I import it or when I actually convert it to Thai baht ? A few years back there were a few threads relating to the bank deposit guarantee being reduced to 1,000,000 baht. It was stated that foreign currency accounts were not covered and one reason cited by a poster was that the foreign currency is technically held offshore. IF that is the case, when would the TRD view it as assessable, hence my query? I will not be tax resident this year but may be next year. Should I convert my foreign currency into baht before this year ends or convert at leisure next year and maybe fall foul of a TRD ruling that the money is assessable only when actually converted to Baht. Thanks in advance for any thoughts.

When you convert it to THB.

 

Foreign Currency Act's in Thailand have similarities to offshore accounts but are in fact very much onshore. What makes them unique here is the tax treatment, by agreement with the TRD

[potless]

1 hour ago, chiang mai said:

When you convert it to THB.

On that basis, I would need to convert the money to Thai baht before the end of this year. I think I will do that anyway to be sure. Thanks for your reply and other input on various threads.

[topt]

1 hour ago, chiang mai said:

When you convert it to THB.

 

Foreign Currency Act's in Thailand have similarities to offshore accounts but are in fact very much onshore. What makes them unique here is the tax treatment, by agreement with the TRD

So I was wrong. Do you have any link for that agreement with the TRD?

[chiang mai]

8 minutes ago, topt said:

So I was wrong. Do you have any link for that agreement with the TRD?

No I don't but I can dig around.

 

First and foremost, an offshore bank is located physically offshore, which means it operates in a different tax regime, case in point UK vs IOM and CI. Thailand doesn't have any offshore locales that enjoy a different tax regime to that onshore.

 

It used to be that in Thailand there was two kinds of bank accounts, resident and non-resident. When I first moved here over 20 years ago, HSBC suggested I open a non-resident account because of the tax implications and the ease of moving funds in and out of the country. That distinction of non-resident account is as close as you can get here to having an offshore account except it's onshore, but with different tax treatment.

 

The following link is dated but explains the concepts and approach here.

 

https://www.juslaws.com/articles/money-transfer-regulations-tax-and-fees

[jwest10]

On 12/19/2024 at 6:56 PM, OJAS said:

 

That would surely mean that only those who were solely in receipt of Thai pensions (or other Thai income from employment) would be able to file on the basis of the PND91 form, would it not?

no it is the 90 form if it ever gets updated.

[topt]

22 minutes ago, chiang mai said:

That distinction of non-resident account is as close as you can get here to having an offshore account except it's onshore, but with different tax treatment.

 

The following link is dated but explains the concepts and approach here.

Unfortunately I am not sure the link really helps (me anyway 555) - certainly not with the tax treatment issue but thanks. 

 

[digital]

2 hours ago, topt said:

 

This is a fairly fundamental issue especially for those selling properties in their home county and then remitting that money here.

I don't disagree with you but did not Carl Turner state the opposite in one of his vids or am I remembering wrongly?

Obviously anybody wanting to do this should endeavour to be non resident at the time of both the sale and remittance but it would be good to have a definitive answer.

 

The Revenue Dept Q&A seems to answer this is See Q5 & Q 14

 

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

[chiang mai]

7 minutes ago, digital said:

 

The Revenue Dept Q&A seems to answer this is See Q5 & Q 14

 

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

I think that Answer 5 in misleading.

 

It states the money is not taxable because the person is not resident in the year it is earned, but it doesn't mention the year the money is remitted and Thailand operates a remittance based tax system. If the money is  both earned and remitted in the same year, it is free of Thai tax. But if it is earned in a year of non residency but remitted in a year when the person is tax resident, the funds are taxable. That is my interpretation and understanding of things.

[Jingthing]

5 minutes ago, chiang mai said:

I think that Answer 5 in misleading.

 

It states the money is not taxable because the person is not resident in the year it is earned, but it doesn't mention the year the money is remitted and Thailand operates a remittance based tax system. If the money is  both earned and remitted in the same year, it is free of Thai tax. But if it is earned in a year of non residency but remitted in a year when the person is tax resident, the funds are taxable. That is my interpretation and understanding of things.

Hi there.

Are you saying that money earned and remitted in the same year (if that year is a year in which you are a Thai resident) that it is exempt from Thai tax?

If so, that doesn't make any sense at all. 

[Jingthing]

chiang mai -- I don't know your nationality. If you happen to be American, I'd like to ask your opinion on a big controversy which has emerged about IRAs (Roth and traditional).

[chiang mai]

3 hours ago, potless said:

Thanks for your reply. Much appreciated. 

 

3 hours ago, topt said:

@chiang mai I think had the answer to this before which, unless I remember incorrectly, was that it it would be assessed when the original transfer was made. I agree with this. 

I have to back track on my recent posts on the subject of foreign currency accounts, I think I may have intermingled two different scenarios' in what is a complex and confusing picture. 

 

Resident Foreign Currency Account

 

Funds arriving in the account are assessable when they are deposited into the account. This is because the account is nothing more than a facility to hold a range of currencies, without any special tax treatment.

 

Non-resident Foreign Currency Account

 

This type of account not only holds a range of currencies but also shares some of the characteristics of an offshore account in that a) the funds are no0t assessable to Thai tax B) the funds can be freely transferred out of Thailand, without regard to BOT normal funds transfer rules. The funds in this account are only considered to be "fully onshore" for tax purposes, once they are converted to THB and withdrawn.

 

Issues arise when a non-resident becomes resident and the bank is unaware.

 

My apologies for my error and incomplete explanation.

 

 

 

 

[digital]

5 minutes ago, chiang mai said:

I think that Answer 5 in misleading.

 

It states the money is not taxable because the person is not resident in the year it is earned, but it doesn't mention the year the money is remitted and Thailand operates a remittance based tax system. If the money is  both earned and remitted in the same year, it is free of Thai tax. But if it is earned in a year of non residency but remitted in a year when the person is tax resident, the funds are taxable. That is my interpretation and understanding of things.

 

Answer to Q14 is perhaps clearer:

 

No tax is payable when you bring accumulated money from working or operating a business abroad into Thailand, because accumulated money is savings from earnings in years you were not a resident of Thailand

 

[chiang mai]

4 minutes ago, Jingthing said:

Hi there.

Are you saying that money earned and remitted in the same year (if that year is a year in which you are a Thai resident) that it is exempt from Thai tax?

If so, that doesn't make any sense at all. 

No I am not saying that.

 

Income earned in a year when the person is not tax resident is not taxable in Thailand in that year, because Thailand operate a remittance based taxation system.

 

That same income becomes Thai taxable, in a subsequent year, assuming the person is That tax resident in the year of remittance..

 

To avoid Thai tax, the income must be both earned and remitted, in a year when the person is not tax resident here.

[digital]

6 minutes ago, Jingthing said:

Hi there.

Are you saying that money earned and remitted in the same year (if that year is a year in which you are a Thai resident) that it is exempt from Thai tax?

If so, that doesn't make any sense at all. 

No, if you earned and remitted that money whilst Thai tax resident it is assessable.

He is suggesting that money earned abroad in a year when non tax resident can still be assessable in the year it is remitted if you are tax resident in that year. (I disagree)

[Jingthing]

8 minutes ago, chiang mai said:

No I am not saying that.

 

Income earned in a year when the person is not tax resident is not taxable in Thailand in that year, because Thailand operate a remittance based taxation system.

 

That same income becomes Thai taxable, in a subsequent year, assuming the person is That tax resident in the year of remittance..

 

To avoid Thai tax, the income must be both earned and remitted, in a year when the person is not tax resident here.

Thank you for the clarification.

[chiang mai]

3 minutes ago, digital said:

 

Answer to Q14 is perhaps clearer:

 

No tax is payable when you bring accumulated money from working or operating a business abroad into Thailand, because accumulated money is savings from earnings in years you were not a resident of Thailand

 

Yet there is no facility within the Thai tax system to state what year any income was earned and TRD is only concerned with current year earnings. TRD is only concerned with remitted assessable funds, remitted funds are either assessable or they are not. If I work in country X and remit my earnings to my Thai bank account, in a year when I am not Thai tax resident, potentially I can evade tax in any country and that is the loop hole the TRD is trying to close.

 

I think statement 14 is aimed at newly arriving expats, people who want to move to Thailand. I don't think it is aimed at existing tax residents.

[chiang mai]

16 minutes ago, Jingthing said:

chiang mai -- I don't know your nationality. If you happen to be American, I'd like to ask your opinion on a big controversy which has emerged about IRAs (Roth and traditional).

I'm a Brit and am aware of Jim Gant's views on Roth and IRA's. I think there are issues there that are unclear/uncertain and I have fielded a question to Jim regarding valuations but have not yet read his reply.

[Jingthing]

2 minutes ago, chiang mai said:

I'm a Brit and am aware of Jim Gant's views on Roth and IRA's. I think there are issues there that are unclear/uncertain and I have fielded a question to Jim regarding valuations but have not yet read his reply.

Yes, my current understanding is that the exemption for money saved as of Dec. 31, 2023 (which can be brought in any time going forward) is ONLY for money in personal bank accounts!

Not investment accounts. Not pensions (which apparently TR classes IRAs and 401Ks as. 

So the theory for example that if someone has a balance of 250K USD in their IRA account (Roth or traditional) on Dec. 31, 2023 which is an amount that will fluctuate up and down daily after that date. that that 250K will be exempt as far as Thailand taxation forever seems radically in error (unless it can proven otherwise). 

My current understanding is this -- the amount withdrawn and then transfered is fully tax accessible in Thailand (following the usual tax residency guidelines). 

Also for example if a withdrawal was based on selling a stock within your IRA in which case you could document a profit or a loss WITHIN the IRA, that would be totally irrelevant. It would all about the FULL amount withdrawn and transferred.

For example, stock sale within the IRA might have a 5K profit. But you withdrew 10K and transferred 10K. The 5K profit within the IRA completely irrelevant.

I am open to be corrected and I really wish it was true about the legacy valuation but it really appears to not be the case.