Introduction to Personal Income Tax in Thailand

[chiang mai]

1 minute ago, Jingthing said:

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My current understanding is this -- the amount withdrawn and then transfered is fully tax accessible in Thailand (following the usual tax residency guidelines).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 It would all about the FULL amount withdrawn and transferred.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

 

 

POR 162 says that the assessability of foreign income earned before 31/12/2023 shall not be enforced.

 

I agree with your assessment of things. Cash in a personal bank account falls easily under the rule, everything that is not cash in your account is an asset of some description. Whilst it may be possible in some cases to accurately value an asset as of the end of the year, the following day that asset becomes comingled funds that include income earned in two periods, one exempt and one assessable. Whether or not it is both possible and permissible to separate those funds, using the year end valuation or FIFO, is very unclear but I strongly suspect it is not.....opinion only.

 

 

POR 162 only relates to funds that are in cash and in a personal bank account. Everything else is an asset of some type and despite being able, in some cases, to value that asset as of the end of 2023, the funds are not fully liquid and fully available.

[Jingthing]

14 minutes ago, chiang mai said:

 

 

POR 162 says that the assessability of foreign income earned before 31/12/2023 shall not be enforced.

 

I agree with your assessment of things. Cash in a personal bank account falls easily under the rule, everything that is not cash in your account is an asset of some description. Whilst it may be possible in some cases to accurately value an asset as of the end of the year, the following day that asset becomes comingled funds that include income earned in two periods, one exempt and one assessable. Whether or not it is both possible and permissible to separate those funds, using the year end valuation or FIFO, is very unclear but I strongly suspect it is not.....opinion only.

 

 

POR 162 only relates to funds that are in cash and in a personal bank account. Everything else is an asset of some type and despite being able, in some cases, to value that asset as of the end of 2023, the funds are not fully liquid and fully available.

Thanks again.

I wish that was wrong, but I think that was right.

I realize there is a lot of questionable info online from "consultants" but I have yet to read one opinion about US IRA "retirement accounts" that would indicate the valuation on December 31, 2023 is at all relevant. 

[Jingthing]

I guess this is a kind of "first in, first out" question but here goes and I think in general principle relevant to a lot of people.

 

For people who are transferring in ALL totally exempt income from a single source account that only contains totally exempt foreign income, then no worries, and ignore this post.

 

For those of us who will have MIXED sources (some exempt and some Thai tax accessible) the common advice is to SEPARATE the source accounts and to not MIX.

 

But realistically speaking, that will not be practical for many people and they will be MIXING foreign income source accounts with different kinds of money as far as Thai tax accessibility into a single MIXED BUCKET ACCOUNT. 

 

So this question is about that.

 

So let's say you have an account with 20K USD completely exempt money and then transfer in 10K of money that will be Thai tax accessible. So first in the 20K exempt, and then later the 10K accessible.

 

Assume consistent Thai tax residency.

 

My understanding (corrections welcome) is that you can go ahead and transfer that 20K (at whatever time you like) but as soon as you start hitting that 10K then and only then is that a tax event for Thailand.

 

But wait. Here's my question.

 

Suppose within a few days of transferring in that 10K (Thai tax accessible) into the foreign source account that you DOMESTICALLY transfer it out in order to make a SEPARATION. 

 

Then at a later date, you might decide to move 5K of that 10K back into the source "MIXED BUCKET" account and then when that is transferred AFTER the exempt part then that 5k would be a Thai tax event.

 

In other words, in terms of FIFO, would that kind of timely manipulation (moving the 10K out of the bucket soon after it was moved in) be acceptable to Thai Revenue assuming that you could document that you did that? 

 

Obviously not ideal compared to complete clean separation, but I'm still asking.

 

Going further, what if you just SPEND part of the potentially accessible income to tax in Thailand if transferred but spend it outside of Thailand. So you put in 10k, then spend 5K without transferring to Thailand, then that means only 5K potentially accessible if transferred to Thailand, correct?

[Jingthing]

To the guy that did the confused emoji, yeah I know!

[JimGant]

1 hour 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

Yeah. I'm getting my threads mixed up, but I recently posted something akin to the above, namely, income after a certain amount of time on the vine, and after being subject to home country taxation, is no longer considered income, but savings. As such, it should no longer be considered as income for Thai taxation purposes. TRD, I guess, could disagree. However, I think with Sherring's input, you should be comfortable not declaring as assessable income monies from past years, now comfortably labelled as savings. And could make a logical argument, in the 1% case you're called in to TRD for an audit.

 

[topt]

45 minutes ago, Jingthing said:

So you put in 10k, then spend 5K without transferring to Thailand, then that means only 5K potentially accessible if transferred to Thailand, correct?

Easiest part - yes as only money remitted (currently) is potentially taxable.

The rest of it - If you did not declare the 20k in the first place (as you decided it was savings and non assessable) then it may help if Thai RD ask for a trail of why you haven't declared more assessable remittances but in theory is the same result - is the way I look at it.

 

Co-mingled funds are always going to be an issue if queried but for most unlikely I suggest unless we are talking much larger numbers or you come to their attention over something else.

[chiang mai]

1 hour ago, Jingthing said:

I guess this is a kind of "first in, first out" question but here goes and I think in general principle relevant to a lot of people.

 

For people who are transferring in ALL totally exempt income from a single source account that only contains totally exempt foreign income, then no worries, and ignore this post.

 

For those of us who will have MIXED sources (some exempt and some Thai tax accessible) the common advice is to SEPARATE the source accounts and to not MIX.

 

But realistically speaking, that will not be practical for many people and they will be MIXING foreign income source accounts with different kinds of money as far as Thai tax accessibility into a single MIXED BUCKET ACCOUNT. 

 

So this question is about that.

 

So let's say you have an account with 20K USD completely exempt money and then transfer in 10K of money that will be Thai tax accessible. So first in the 20K exempt, and then later the 10K accessible.

 

Assume consistent Thai tax residency.

 

My understanding (corrections welcome) is that you can go ahead and transfer that 20K (at whatever time you like) but as soon as you start hitting that 10K then and only then is that a tax event for Thailand.

 

But wait. Here's my question.

 

Suppose within a few days of transferring in that 10K (Thai tax accessible) into the foreign source account that you DOMESTICALLY transfer it out in order to make a SEPARATION. 

 

Then at a later date, you might decide to move 5K of that 10K back into the source "MIXED BUCKET" account and then when that is transferred AFTER the exempt part then that 5k would be a Thai tax event.

 

In other words, in terms of FIFO, would that kind of timely manipulation (moving the 10K out of the bucket soon after it was moved in) be acceptable to Thai Revenue assuming that you could document that you did that? 

 

Obviously not ideal compared to complete clean separation, but I'm still asking.

 

Going further, what if you just SPEND part of the potentially accessible income to tax in Thailand if transferred but spend it outside of Thailand. So you put in 10k, then spend 5K without transferring to Thailand, then that means only 5K potentially accessible if transferred to Thailand, correct?

It doesn't matter where you spent it, the issue is that you remitted it to Thailand.

[JimGant]

2 hours 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

But it asks, "is it taxed when it is brought into Thailand." Certainly sounds like "when remitted" to me.

 

But, Sherrings is even more clearer when it says: "no tax is owed, because accumulated money is savings from earnings in years you were not a resident of Thailand." 

 

Certainly sounds like a case for the argument that prior year's income becomes "savings" after a certain time element, or more specifically, after being subjected to home country taxation.

 

So, based on Sherrings, don't worry about prior year's foreign income, when remitted to Thailand in a subsequent year, being considered income at all, but savings. Ergo, not an assessable income moment.

[Jingthing]

15 minutes ago, chiang mai said:

It doesn't matter where you spent it, the issue is that you remitted it to Thailand.

Thanks, but that was only one of my questions and probably so obvious that I shouldn't have asked it.

It's basically about mixing up the source account which I'm pretty sure is very common thing for people to do. 

The trickiest part was my question that basically asked if I quickly moved Thai accessible income out of the bucket account (domestically abroad), could I delay that amount from being accounted as already in the bucket account (FIFO) until a later date of my choice?

[chiang mai]

4 minutes ago, JimGant said:

But it asks, "is it taxed when it is brought into Thailand." Certainly sounds like "when remitted" to me.

 

But, Sherrings is even more clearer when it says: "no tax is owed, because accumulated money is savings from earnings in years you were not a resident of Thailand." 

 

Certainly sounds like a case for the argument that prior year's income becomes "savings" after a certain time element, or more specifically, after being subjected to home country taxation.

 

So, based on Sherrings, don't worry about prior year's foreign income, when remitted to Thailand in a subsequent year, being considered income at all, but savings. Ergo, not an assessable income moment.

I don't think that's clear at all, it's very ambiguous.

 

The TRD Code doesn't describe or define savings, there is no mention of it anywhere, hence, using the Western definition is probably inappropriate. 

[chiang mai]

2 minutes ago, Jingthing said:

Thanks, but that was only one of my questions and probably so obvious that I shouldn't have asked it.

It's basically about mixing up the source account which I'm pretty sure is very common thing for people to do. 

The trickiest part was my question that basically asked if I quickly moved Thai accessible income out of the bucket account (domestically abroad), could I delay that amount from being accounted as already in the bucket account (FIFO) until a later date of my choice?

You cannot manipulate the account to change the order of FIFO, quickly or slowly, temporarily or permanently. 

[Jingthing]

The previous year's income being exempted when transferred in the current year is exactly what they changed already!

The December 31, 2023 thing for savings exemption is the last time that works as it has been changed.

[Jingthing]

1 minute ago, chiang mai said:

You cannot manipulate the account to change the order of FIFO, quickly or slowly, temporarily or permanently. 

That makes sense but I suppose but I was kind of getting at INTENTIONS based on practical realities. It would be hard to know how any particular office would respond if audited and you explained what you did and why and had a record. But yeah better not to try that. Cheers.

[JimGant]

2 hours ago, chiang mai said:

POR 162 only relates to funds that are in cash and in a personal bank account.

Says who?

[chiang mai]

2 minutes ago, JimGant said:

Says who?

In practical terms it has to be so. We're back to this valuation of assets on 12/31/23 again and the next day effect of commingled funds.  Unless of course the asset matures on 12/31/23 and not reinvested, in which case it's very straight forward.

[JimGant]

8 minutes ago, chiang mai said:

In practical terms it has to be so. We're back to this valuation of assets on 12/31/23 again and the next day effect of commingled funds.

I don't follow... What's so hard to understand about the value of my IRA, brokerage account, whatever on 12/31/2023? This is the baseline for how much I can subsequently remit to Thailand as non assessable income. What happens to these accounts post 2023 -- co-mingled funds, or whatever -- is of no consequence -- the 12/31/2023 baseline number remains intact. What am I missing?

[JimGant]

3 hours 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.

Haven't seen that question -- please resend. Thanx.

[Jingthing]

31 minutes ago, JimGant said:

I don't follow... What's so hard to understand about the value of my IRA, brokerage account, whatever on 12/31/2023? This is the baseline for how much I can subsequently remit to Thailand as non assessable income. What happens to these accounts post 2023 -- co-mingled funds, or whatever -- is of no consequence -- the 12/31/2023 baseline number remains intact. What am I missing?

You're missing that IRAs and 401ks are not bank accounts. 

 

While not exactly pensions by US definition, my current understanding is that TR classes them as PENSIONS and sadly not exempt under the DTA as social security is.

[Ricohoc]

9 hours 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.

 

An end of year statement from my US bank will confirm funds held (millions of baht) in savings. As long as savings prior to Dec 31, 2023 are proven by bank statement, they're savings and not taxable under the current information.

[JimGant]

27 minutes ago, Jingthing said:

You're missing that IRAs and 401ks are not bank accounts. 

So what?  "POR 162 says that the assessability of foreign income earned before 31/12/2023 shall not be enforced." The value of your IRA/401k on 12/31/2023 consists of foreign income earned before 12/31/2023 -- irregardless of what shape or form that income now exists (stocks, bonds, whatever). That this income is not in a bank account is totally irrelevant.

[JimGant]

37 minutes ago, Jingthing said:

While not exactly pensions by US definition, my current understanding is that TR classes them as PENSIONS and sadly not exempt under the DTA as social security is

But Por 162 says pre 2024 income, which is what IRA consists of, is exempt from assessable income. That its payout is categorized as a "pension" is neither here nor there. Now, without Por 162, yes, that IRA payout would be subject to primary taxation authority by Thai taxation. But, Por 162 overrides this.

[JimGant]

31 minutes ago, Ricohoc said:

An end of year statement from my US bank will confirm funds held (millions of baht) in savings. As long as savings prior to Dec 31, 2023 are proven by bank statement, they're savings and not taxable under the current information.

Amen

[Jingthing]

1 hour ago, JimGant said:

But Por 162 says pre 2024 income, which is what IRA consists of, is exempt from assessable income. That its payout is categorized as a "pension" is neither here nor there. Now, without Por 162, yes, that IRA payout would be subject to primary taxation authority by Thai taxation. But, Por 162 overrides this.

I hope you're right.

Except for from you, EVERYTHING that I've read about this issue says you're wrong.

Retirement account balances are NOT INCOME.

They are retirement INVESTMENT VEHICLES.

By your logic the balance in a taxable brokerage account (stocks and bonds) on December 31, 2023 would also be not accessible the same as money in the bank.

But such accounts are definitely NOT treated as you think IRAs and 401Ks are. 

You see that's the thing -- the information on non retirement investments like stocks and bonds is much more clear.

I understand why there is still controversy about IRAs and 401Ks.

Which is why I and all other retired Americans with such accounts would benefit from a definitive ruling.

Your subjective opinion, with all respect, is not that.

How much of the vehemence of your opinion on this is wishful thinking?

 

[Jingthing]

Well, IF you believe this firm, then I think I have now found quite clear information on the IRA/401K exemption question.

 

Must be savings in the bank on December 31, 2023

ONLY SAVINGS in the bank.

IRAs/401Ks are definitely NOT savings in the bank.  

This firm says they are seen as pensions by TR. Accessible income when withdrawn and transferred (unfortunately!).

 

Episode 7: Pre-2024 savings explained

 

Of course it's possible other firms and/or TR has a different opinion, but frankly it ain't looking good for that exemption for U.S. retirement accounts.

 

Another crappy thing about the treatment of U.S. retirement accounts is that unlike non retirement investments, you can't use cost basis to only be liable for the capital gains (if any). Instead you're dealing with the full amount of withdrawals. For example, withdrawal 10K USD from your IRA, transfer that to Thailand, that's 10K USD of Thailand tax accessible income.  That 10K might have been from the sale of one stock in your IRA where the capital gain was 1K within the IRA, but still you're in for the full 10K. 

 

 

[topt]

2 hours ago, JimGant said:

So what?  "POR 162 says that the assessability of foreign income earned before 31/12/2023 shall not be enforced." The value of your IRA/401k on 12/31/2023 consists of foreign income earned before 12/31/2023 -- irregardless of what shape or form that income now exists (stocks, bonds, whatever). That this income is not in a bank account is totally irrelevant.

 

2 hours ago, JimGant said:

But Por 162 says pre 2024 income, which is what IRA consists of, is exempt from assessable income. That its payout is categorized as a "pension" is neither here nor there. Now, without Por 162, yes, that IRA payout would be subject to primary taxation authority by Thai taxation. But, Por 162 overrides this.

I'd love to see the results of this semantical exercise in a TRD vs. JG  poster in a Thai court of law. Otherwise I don't see how it will ever be reconciled - and I have no dog in the fight 

[Jingthing]

3 minutes ago, topt said:

 

I'd love to see the results of this semantical exercise in a TRD vs. JG  poster in a Thai court of law. Otherwise I don't see how it will ever be reconciled - and I have no dog in the fight 

Bring popcorn. 

[topt]

1 minute ago, Jingthing said:

Bring popcorn. 

I missed that in my reply but I meant to say it 

[chiang mai]

6 hours ago, JimGant said:

I don't follow... What's so hard to understand about the value of my IRA, brokerage account, whatever on 12/31/2023? This is the baseline for how much I can subsequently remit to Thailand as non assessable income. What happens to these accounts post 2023 -- co-mingled funds, or whatever -- is of no consequence -- the 12/31/2023 baseline number remains intact. What am I missing?

The closest UK equivalent of an IRA is a SIPP, a self invested pension plan, I use mine to invest in stocks, bonds and cash, tax free. I know the value of my account every day because it's marked to market and of course I have a year end statement. But the account contains stocks and bonds which were they not in a SIPP, would be subject to CG. both in the UK and here. The fact those investments sit within a UK SIPP wrapper doesn't change their taxability in Thailand, remove the wrapper and they are bog standard stock market investments.

[Jingthing]

1 hour ago, chiang mai said:

The closest UK equivalent of an IRA is a SIPP, a self invested pension plan, I use mine to invest in stocks, bonds and cash, tax free. I know the value of my account every day because it's marked to market and of course I have a year end statement. But the account contains stocks and bonds which were they not in a SIPP, would be subject to CG. both in the UK and here. The fact those investments sit within a UK SIPP wrapper doesn't change their taxability in Thailand, remove the wrapper and they are bog standard stock market investments.

You're touching on another aspect of interest to me.

 

Examples.

 

Withdrawal 10k from Traditional IRA.

 

10k taxable in the US.

 

10k taxable if sent to Thailand.

 

 

Withdrawal 10k from Roth IRA.

 

Zero.taxable in the US.

 

10k taxable if sent to Thailand 

 

Double taxation rules may apply but not exempt like social security.

 

Now the source of the 10ks within the retirement accounts could be a single stock or a complex mix of stocks, bonds, mutual funds, etfs, etc. Each source element within would have a profit or loss basis.

 

However it is my understanding that as these are classed as pensions not regular investments that the taxable number of relevance would be the full 10k and not the profit on the source investments if any. Unlike if you held the same investments outside the retirement accounts in which case capital gains would be the thing to look at upon sale.

 

Your post above suggests differently.

 

Still seeking a definituve answer on this.

 

 

 

 

[gamb00ler]

57 minutes ago, Jingthing said:

Examples.

 

Withdrawal 10k from Traditional IRA.

 

10k taxable in the US.

 

10k taxable if sent to Thailand.

 

 

Withdrawal 10k from Roth IRA.

 

Zero.taxable in the US.

 

10k taxable if sent to Thailand 

On this matter I would consider how TRD treated these withdrawals PRIOR to the recent change in treatment of prior year's earnings.

 

I believe that in 2023 and before, the TRD did not consider those withdrawals as assessable income when remitted to Thailand.  I think TRD's treatment of those withdrawals has not changed.