Introduction to Personal Income Tax in Thailand

[Yumthai]

2 hours ago, Chonnikarn said:

Still, even if you believe you owe no tax, it’s a good idea to file. If you don’t file and you were supposed to, the Thai Revenue Department (TRD) can audit you going back 10 years. But if you do file, they can only go back 2 years. So filing, even with zero tax due, gives you protection.

And yes, there are real penalties. Fines can go up to 200,000 THB and even jail time (up to 7 years) in serious fraud cases. Declaring all income properly is important. For example, claiming that foreign pension income is tax-free when it’s not, or forgetting to report transfers, can get you into trouble.

Scaremongering season open again!

[motdaeng]

12 hours ago, Yumthai said:

Scaremongering season open again!

 

no scaremongering at all, that are facts, written in the tax regulations / tax law ...

if you prefer to follow it or not, that's your own decision because you seems be a grown up already ... 

[Ricohoc]

15 hours ago, Yumthai said:

Scaremongering season open again!

 

Apparently so.

[topt]

5 hours ago, motdaeng said:

 

no scaremongering at all, that are facts, written in the tax regulations / tax law ...

if you prefer to follow it or not, that's your own decision because you seems be a grown up already ... 

So why post the "facts" after the tax filing season has ended - especially as said "facts" have been posted and discussed thousands of times (ok maybe hyperbole but certainly 10's of times) in the past...........

Reads like an AI piece to me especially as a supposedly new poster........

[Yumthai]

1 hour ago, topt said:

Reads like an AI piece to me especially as a supposedly new poster........

I think AI promotes neutral approach rather than biased advice such as "it’s a good idea to file", "So filing, ..., gives you protection", "Declaring ... is important".

[TroubleandGrumpy]

I read an article on Pattaya Mail recently - they interviewed a lot of Expats and asked them what they were doing about 'the income tax issue'.  The responses they got were - Never heard of it - Not on your life - Doesn’t apply to me -  The Tax office said “Go Away”.  Some Expats admitted using a tax consultant because they felt threatened, and some said they already have a work permit and pay taxes now.

 

The vast majority are not getting a TIN and are not lodging anything, because they view that they are getting non-taxable money (Pensions) - and/or the money they bring in has already been taxed and is largely savings made from years of working - and/or with all the allowances and deductions available they do not have to pay any income taxes.  

 

I recently saw a youtube interview that included a senior tax official, and she said that she believes that Thailand will follow the lead of all their neighbours and exempt Govt Pensions from being taxable (which she thinks are exempt anyway).  She also indicated that as with Malaysia. Indonesia and The Philippines, they will probably also exempt any money already subjected to the taxation system of the Expat's home/source country.

 

I very much liked her opinions and views, not only because she was saying 'good' things, but also because she knew what a DTA was and knew the details.  She said to the interviewer in response to a question about taxing Pensions (paraphrase) - 'No that will probably not be taxed - because under all DTAs all foreign tax residents in Thailand are entitled to the same rights and privileges under Thai tax laws as afforded to Thais, and Thai citizens do not pay income taxes on any Govt Pension or payment. Therefore under International Tax Laws and DTAs, Thailand cannot tax Govt Pensions or any Govt payment'. 

 

In summary it was agreed that if any Expat (tax resident) is earning income that is taxable in Thailand, then they should get a TIN and lodge a tax return.  But it was clear to me that if an Expat reasonably believes they are not bringing any taxable income into Thailand, then they do not have to lodge a tax return. That situation will change if they are earning income overseas but do not bring it into Thailand, if/when Thailand goes to a global taxation model (as do most other countries do). 

 

The suggestion by the interviewer that it might be safer to lodge a return just in case, was agreed to by the Expat tax consultant (of course), but it was not actually agreed to by the Official - she said nothing. Instead she gave a commitment that over time TRD will provide a lot more clarity about what is taxable and what is not taxable.  Plus she noted that there was not a place in the 2025 tax return to advise the amount of any Govt Pension received, because Thais dont pay income taxes on Pensions. The Expat tax consultant (IMO to drum up fear/business) said that it could be done in a separate letter attached to the tax return - the Thai official said nothing and just looked away (and we know what that means).

 

As for a long time now - I am waiting and watching before doing anything. I know Government enough to know that if you file a document once, they will wonder why you have not done it again the next time around. If as the Thai Tax Official indicated (both verbally and non-verbally), I am not required to file a tax return in the future, then it would be wise not to file one now. Plus I have written advice from a tax company that I do not have to file a tax return because I do not have to pay income taxes based on the money I remitted and my allowances, deductions and exemptions - their caveat being 'under the current tax filing directives from TRD'.  Given somewhere about 20-30 million Thais dont lodge a tax return on the same basis - I accept that advice.

[Jingthing]

35 minutes ago, TroubleandGrumpy said:

I read an article on Pattaya Mail recently - they interviewed a lot of Expats and asked them what they were doing about 'the income tax issue'.  The responses they got were - Never heard of it - Not on your life - Doesn’t apply to me -  The Tax office said “Go Away”.  Some Expats admitted using a tax consultant because they felt threatened, and some said they already have a work permit and pay taxes now.

 

The vast majority are not getting a TIN and are not lodging anything, because they view that they are getting non-taxable money (Pensions) - and/or the money they bring in has already been taxed and is largely savings made from years of working - and/or with all the allowances and deductions available they do not have to pay any income taxes.  

 

I recently saw a youtube interview that included a senior tax official, and she said that she believes that Thailand will follow the lead of all their neighbours and exempt Govt Pensions from being taxable (which she thinks are exempt anyway).  She also indicated that as with Malaysia. Indonesia and The Philippines, they will probably also exempt any money already subjected to the taxation system of the Expat's home/source country.

 

I very much liked her opinions and views, not only because she was saying 'good' things, but also because she knew what a DTA was and knew the details.  She said to the interviewer in response to a question about taxing Pensions (paraphrase) - 'No that will probably not be taxed - because under all DTAs all foreign tax residents in Thailand are entitled to the same rights and privileges under Thai tax laws as afforded to Thais, and Thai citizens do not pay income taxes on any Govt Pension or payment. Therefore under International Tax Laws and DTAs, Thailand cannot tax Govt Pensions or any Govt payment'. 

 

In summary it was agreed that if any Expat (tax resident) is earning income that is taxable in Thailand, then they should get a TIN and lodge a tax return.  But it was clear to me that if an Expat reasonably believes they are not bringing any taxable income into Thailand, then they do not have to lodge a tax return. That situation will change if they are earning income overseas but do not bring it into Thailand, if/when Thailand goes to a global taxation model (as do most other countries do). 

 

The suggestion by the interviewer that it might be safer to lodge a return just in case, was agreed to by the Expat tax consultant (of course), but it was not actually agreed to by the Official - she said nothing. Instead she gave a commitment that over time TRD will provide a lot more clarity about what is taxable and what is not taxable.  Plus she noted that there was not a place in the 2025 tax return to advise the amount of any Govt Pension received, because Thais dont pay income taxes on Pensions. The Expat tax consultant (IMO to drum up fear/business) said that it could be done in a separate letter attached to the tax return - the Thai official said nothing and just looked away (and we know what that means).

 

As for a long time now - I am waiting and watching before doing anything. I know Government enough to know that if you file a document once, they will wonder why you have not done it again the next time around. If as the Thai Tax Official indicated (both verbally and non-verbally), I am not required to file a tax return in the future, then it would be wise not to file one now. Plus I have written advice from a tax company that I do not have to file a tax return because I do not have to pay income taxes based on the money I remitted and my allowances and exemptions - their caveat being 'under the current tax filing directives from TRD'.  Given somewhere about 20-30 million Thais dont lodge a tax return on the same basis - I accept that advice.

US exception.

IRAs and 401ks are not government pensions.

They are classed  as private pensions and excluded by DTA.

[motdaeng]

18 hours ago, TroubleandGrumpy said:

I.... and Thai citizens do not pay income taxes on any Govt Pension or payment ....

that's an interesting point, thanks for the input.

 

a few years ago, i spoke with a retired bank manager from a government bank (gsb). she told me that she has to pay tax on her pension because she was a government employee, unlike pensions from private companies. whether this is accurate and what the tax regulations actually say would be interesting to find out.

 

many people refer to the DTA and claim that no tax needs to be paid on their pension. the fact that even among tax advisors there's no consensus on how to interpret some of the 61 DTA's, this is one other unresolved issue ...

 

from my point of view, the thai tax department has handled the entire situation very unprofessionally. instead of providing clarity on at least some key questions, there is widespread confusion about how the tax regulations are being (differently) interpreted  ...

 

 

[Ricohoc]

3 hours ago, motdaeng said:

from my point of view, the thai tax department has handled the entire situation very unprofessionally. instead of providing clarity on at least some key questions, there is widespread confusion about how the tax regulations are being (differently) interpreted  ...

 

 

 

Absolutely correct. 

 

Little to no guidance at all; and every local office has a different answer.

[TroubleandGrumpy]

On 5/7/2025 at 4:09 PM, Jingthing said:

US exception.

IRAs and 401ks are not government pensions.

They are classed  as private pensions and excluded by DTA.

Take a look in your DTA and the TRD Tax Laws for the wording associated with 'mutual retirement provident fund'.  My understanding is that mutual funds for retirement are also not taxed in Thailand and IRA/401s are a mutual fund ?

The Revenue Department (rd.go.th)    https://www.rd.go.th/65497.html

I beliueve that there are a lot of PIT exemptions and allowances in the TRD rules that are applicable to Thais and which have never really been looked into in detail for Expats before because we were not proactively taxed in the past.  

[TroubleandGrumpy]

On 5/8/2025 at 9:37 AM, motdaeng said:

that's an interesting point, thanks for the input.

a few years ago, i spoke with a retired bank manager from a government bank (gsb). she told me that she has to pay tax on her pension because she was a government employee, unlike pensions from private companies. whether this is accurate and what the tax regulations actually say would be interesting to find out.

many people refer to the DTA and claim that no tax needs to be paid on their pension. the fact that even among tax advisors there's no consensus on how to interpret some of the 61 DTA's, this is one other unresolved issue ...

from my point of view, the thai tax department has handled the entire situation very unprofessionally. instead of providing clarity on at least some key questions, there is widespread confusion about how the tax regulations are being (differently) interpreted  ...

Yes they have and that is why IMO they are working hard to get as much sorted out as they can, given the extremely 3rd world legal system they operate under, before they ever proactively pursue income taxes on Expats who are not earning income in Thailand. IMO (and of many others) they will not be proactively pursuing retired/married Expats PIT until they have as much sorted as possible, and they have implemented a global taxation system.  Thailand is moving to a global taxation model and IMO it is only when that is implemented that retired/married Expats will know where they stand with regards to PIT in Thailand.  Anything being done or stated now that a TIN must be done and a PIT lodged by a retired/married Expat who does not earn income in Thailand, is IMO scaremongering and/or ridiculous - because TRD has no idea themselves and are too busy sorting things out to provide all the answers to the thousands of questions.  Walk into any Provincial TRD Office and they will not have a clue - how could any Provincial TRD Official possibly know the details of 61 DTAs  and all the associated complications.       

[Jingthing]

2 hours ago, TroubleandGrumpy said:

Take a look in your DTA and the TRD Tax Laws for the wording associated with 'mutual retirement provident fund'.  My understanding is that mutual funds for retirement are also not taxed in Thailand and IRA/401s are a mutual fund ?

The Revenue Department (rd.go.th)    https://www.rd.go.th/65497.html

I beliueve that there are a lot of PIT exemptions and allowances in the TRD rules that are applicable to Thais and which have never really been looked into in detail for Expats before because we were not proactively taxed in the past.  

No.

IRAs and 401k are NOT mutual funds.

They are very specifically regulated RETIREMENT ACCOUNTS that may contain a wide variety of investment vehicles. Mutual funds are one of those.

[mudcat]

From the 1996 Convention and Technical Explanation:

 

TAX CONVENTION - ARTICLE 20

Pensions and Social Security Payments

 

1. Subject to the provisions of paragraph 2 of Article 21 (Government Service), pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

 

 

Article 20 deals with the taxation of private (i.e., non-government) pensions, annuities, social security, and similar benefits.

 

Paragraph 1

 

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. It is understood that the rules of this paragraph apply even if the payee of the pension is not the person who performed the past employment. For example, a pension paid to a surviving spouse who is a resident of Thailand would be exempt from tax by the United States on the same basis as if the right to the pension had been earned directly by the surviving spouse. A pension may be paid periodically or in a lump sum. The rules of this paragraph do not apply to government service pensions, which are dealt with in paragraph 2 of Article 21 (Government Service), nor do they deal with social security benefits, which are dealt with in paragraph 2 of Article 20.

 

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), non-discriminatory section 457 plans, section 403(a) qualified annuity plans, and section 403(b) plans. The Competent Authorities may agree that distributions from other plans that generally meet similar criteria to those applicable to other plans established under their respective laws also qualify for the benefits of Paragraph 1. In the United States, these criteria are as follows:

a)      The plan must be written;

b)      In the case of an employer-maintained plan, the plan must be nondiscriminatory insofar as it (alone or in combination with other comparable plans) must cover a wide range of employees. including rank and file employees, and actually provide significant benefits for the entire range of covered employees;

c)       In the case of an employer-maintained plan the plan must contain provisions that severely limit the employees’ ability to use plan assets for purposes other than retirement, and in all cases be subject to tax provisions that discourage participants from using the assets for purposes other than retirement; and

d)      The plan must provide for payment of a reasonable level of benefits at death, a stated age, or an event related to work status, and otherwise require minimum distributions under rules designed to ensure that any death benefits provided to the participants’ survivors are merely incidental to the retirement benefits provided to the participants.

 

In addition, certain distribution requirements must be met before distributions from these plans would fall under paragraph 1. To qualify as a pension distribution or similar remuneration from a U.S. plan the employee must have been either employed by the same employer for five years or be at least 62 years old at the time of the distribution. In addition, the distribution must be made either (A) on account of death or disability, (B) as part of a series of substantially equal payments over the employee’s life expectancy (or over the joint life expectancy of the employee and a beneficiary), or (c) after the employee attained the age of 55. Finally, the distribution must be made either after separation from service or on or after attainment of age 65. A distribution from a pension plan solely due to termination of the pension plan is not a distribution falling under paragraph 1.

 

 

The U>S. Model Convention has a more exhaustive list (note Article 20 is now Article 17 - note the 'bolded; discussion about Roth IRAs towards the end

 

ARTICLE 17 (PENSIONS, SOCIAL SECURITY, ANNUITIES, ALIMONY, AND CHILD SUPPORT)
This Article deals with the taxation of private (i.e., non-government service) pensions and annuities, social security benefits, alimony and child support payments.
 

Paragraph 1
Paragraph 1 provides that distributions from pensions and other similar remuneration beneficially owned by a resident of a Contracting State in consideration of past employment are taxable only in the State of residence of the beneficiary. The term "pensions and other similar remuneration" includes both periodic and single sum payments.
The phrase pensions and other similar remuneration@ is intended to encompass payments made by qualified private retirement plans. 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), section 403(a) qualified annuity plans, and section 403(b) plans. Distributions from section 457 plans may also fall under Paragraph 1 if they are not paid with respect to government services covered by Article 19.
In the other Contracting State, the term pension applies to: [ ]. The competent authorities may agree that distributions from other plans that generally meet similar criteria to those applicable to the listed plans also qualify for the benefits of Paragraph 1.
Pensions in respect of government services covered by Article 19 are not covered by this paragraph. They are covered either by paragraph 2 of this Article, if they are in the form of social security benefits, or by paragraph 2 of Article 19 (Government Service). Thus, Article 19 generally covers section 457, 401(a), 403(b) plans established for government employees, and the Thrift Savings Plan (section 7701(j)).
However, the State of residence, under subparagraph (b), must exempt from tax any amount of such pensions or other similar remuneration that would be exempt from tax in the Contracting State in which the pension fund is established if the recipient were a resident of that State. Thus, for example, a distribution from a U.S. "Roth IRA" to a resident of the other Contracting State would be exempt from tax in the other Contracting State to the same extent the distribution would be exempt from tax in the United States if it were distributed to a U.S. resident. The same is true with respect to distributions from a traditional IRA to the extent that the distribution represents a return of non-deductible contributions. Similarly, if the distribution were not subject to tax when it was “rolled over” into another U.S. IRA (but not, for example, to a pension fund in the other Contracting State), then the distribution would be exempt from tax in the other Contracting State.

[Ricohoc]

On 5/10/2025 at 7:27 AM, mudcat said:

 

Paragraph 1
Paragraph 1 provides that distributions from pensions and other similar remuneration beneficially owned by a resident of a Contracting State in consideration of past employment are taxable only in the State of residence of the beneficiary. The term "pensions and other similar remuneration" includes both periodic and single sum payments.
The phrase pensions and other similar remuneration@ is intended to encompass payments made by qualified private retirement plans. 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), section 403(a) qualified annuity plans, and section 403(b) plans. Distributions from section 457 plans may also fall under Paragraph 1 if they are not paid with respect to government services covered by Article 19.
In the other Contracting State, the term pension applies to: [ ]. The competent authorities may agree that distributions from other plans that generally meet similar criteria to those applicable to the listed plans also qualify for the benefits of Paragraph 1.
Pensions in respect of government services covered by Article 19 are not covered by this paragraph. They are covered either by paragraph 2 of this Article, if they are in the form of social security benefits, or by paragraph 2 of Article 19 (Government Service). Thus, Article 19 generally covers section 457, 401(a), 403(b) plans established for government employees, and the Thrift Savings Plan (section 7701(j)).
However, the State of residence, under subparagraph (b), must exempt from tax any amount of such pensions or other similar remuneration that would be exempt from tax in the Contracting State in which the pension fund is established if the recipient were a resident of that State. Thus, for example, a distribution from a U.S. "Roth IRA" to a resident of the other Contracting State would be exempt from tax in the other Contracting State to the same extent the distribution would be exempt from tax in the United States if it were distributed to a U.S. resident. The same is true with respect to distributions from a traditional IRA to the extent that the distribution represents a return of non-deductible contributions. Similarly, if the distribution were not subject to tax when it was “rolled over” into another U.S. IRA (but not, for example, to a pension fund in the other Contracting State), then the distribution would be exempt from tax in the other Contracting State.

 

The attorney I contacted in BKK was very clear about this as it applies to Americans here. My meeting with him was worth the minimum cost and consultation.  Unless Thailand decides to throw out the DTA with the US and The Treaty of Amity with the US, I will not owe any income taxes on my pensions before I even calculate any deductions allowed in Thailand.

 

I appreciate you outlining this well.

[Jingthing]

Withdrawls from traditional IRAs ARE taxable events in the US. Roth IRAs are not.

[JimGant]

50 minutes ago, Ricohoc said:

Unless Thailand decides to throw out the DTA with the US and The Treaty of Amity with the US, I will not owe any income taxes on my pensions before I even calculate any deductions allowed in Thailand.

 

Why is that? Unless your pensions are solely for govt/military service, the DTA explicitly states that Thailand has exclusive taxation rights on private pensions -- and the technical explanation further elaborates that this includes traditional IRAs.

 

Quote

ARTICLE 20
Pensions and Social Security Payments
1. Subject to the exceptions of paragraph 2 of Article 21 (pensions for Government Service), pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

 

Now, this "exclusivity" is trumped by the "saving clause" in the DTA, giving the US secondary taxation rights to those incomes designated as "exclusive" in the DTA. This "saving clause" is found in all DTAs, and is just a clever way to make sure you're paying someone somewhere taxes -- and there's not a "no non taxation" situation.

 

Quote

Paragraphs 1, 3 and 4 of Article 20 are subject to the saving clause of paragraph 2 of Article 1 (Personal Scope). Thus, a U.S. citizen who is resident in the other Contracting State, and receives either a pension, annuity or alimony payment from the United States, may [with just a few exceptions, like alimony and child support -- but not IRAs] be subject to U.S. tax on the payment, notwithstanding the rules in those three paragraphs that give the State of residence of the recipient the exclusive taxing right.

Source: Technical Explanation

 

Thailand could write their tax code to exclude taxation on those incomes that the DTA says they have exclusive taxation rights on. Why they would want to throw away potential tax collections -- is beyond me. But they could do this, and it wouldn't violate the DTA, since it doesn't violate the spirit on no double taxation. It just means the US taxation on your IRA (required by the saving clause) is full blast, with no discount from non  existent tax credits from non existent Thai taxation on your IRA.

 

So, when it comes to Traditional IRAs, it really makes no difference whether or not Thailand chooses to tax this remitted IRA -- unless the Thai taxation exceeds that of the US taxation on same IRA. Then, you'd be out of pocket for the higher Thai tax; but then there would be no US tax due, as it would be totally wiped out by the Thai tax credit. But probable situation would be the US has a higher tax bill: thus pay full tax bill to Thailand; and some tax to the US, albeit net of the credit for Thai taxes.

 

Thus, the saving clause makes any exclusion from Thai taxes of your IRA (or private pension) -- not a meaningful part of your financial planning. *

 

* Unless you hire Thomas Carden at AIT in Bangkok. He has an original thought that only the DTA with Thailand has IRAs excluded from the saving clause. Thus, only by being an expat tax resident in Thailand, and no where else, can you avoid US taxes on your IRA. Sound too good to be true? For sure -- but apparently the IRS doesn't have the resources to uncover this scheme, as many have used Carden to avoid taxes on their IRAs -- and have gotten away with it. Feeling lucky?

 

 

[TroubleandGrumpy]

On 5/9/2025 at 5:18 PM, Jingthing said:

No.

IRAs and 401k are NOT mutual funds.

They are very specifically regulated RETIREMENT ACCOUNTS that may contain a wide variety of investment vehicles. Mutual funds are one of those.

I hear you BUT I will say that the USA/West definition of what a mutual fund is, does not automatically mean that in Thailand they are the same.  I am no expert but I would check the Thai definition in the Tax Laws (now and when a global system is introduced).  In the USA/West what a 'mutual fund' definition is probably based upon (taxation and legal issues) does not automatically translate to Thailand. Plus there is the Tax Court's interpretation that may or may not have already taken place.  Unlike in USA/West where the Tax Office decides what exactly one of their rules and laws means (which can be challenged in Court), in Thailand there are a lot of situations where a matter is referred to the Taxation Court for interpretation and decision - including by the TRD itself.   

[mudcat]

The savings clause in Article 1 (Personal Scope) of the 1996 DTA:

 

ARTICLE 1
Personal Scope
1. This Convention shall apply to persons who are residents of one or both of the Contracting States, except as otherwise provided in the Convention.
2. Notwithstanding any provision of the Convention except paragraph 3 of this Article, a Contracting State may tax its residents (as determined under Article 4 (Residence)), and by reason of citizenship may tax its citizens, as if the Convention had not come into effect. For this purpose, the term "citizen" shall include a former citizen whose loss of citizenship had as one of its 
principal purposes the avoidance of tax (as defined under the laws of the Contracting States), but only for a period of 10 years following such loss. In the case of the United States, the term "resident" shall include a former long-term lawful resident (whether or not so treated under Article 4) whose loss of residence status had as one of its principal purposes the avoidance of tax (as defined under the laws of the United States), but only for a period of 10 years following such loss.

 

3. The provisions of paragraph 2 shall not affect:

 

a) the benefits conferred by a Contracting State under paragraph 2 of Article 9 (Associated Enterprises), under paragraphs 2 and 5 of Article 20 (Pensions and Social Security  Payments) and under Articles 25 (Relief from Double Taxation), 26 (Non Discrimination), and 27  (Mutual Agreement Procedure); and

 

b) the benefits conferred by a Contracting State under Articles 21 (Government Service), 22 (Students and Trainees), 23 (Teachers) and 29 (Diplomatic Agents and Consular
Officers), upon individuals who are neither citizens of, nor have immigrant status in, that State.

https://rd.go.th/fileadmin/download/nation/america_e.pd

[TroubleandGrumpy]

1 hour ago, JimGant said:

 

Why is that? Unless your pensions are solely for govt/military service, the DTA explicitly states that Thailand has exclusive taxation rights on private pensions -- and the technical explanation further elaborates that this includes traditional IRAs.

 

 

Now, this "exclusivity" is trumped by the "saving clause" in the DTA, giving the US secondary taxation rights to those incomes designated as "exclusive" in the DTA. This "saving clause" is found in all DTAs, and is just a clever way to make sure you're paying someone somewhere taxes -- and there's not a "no non taxation" situation.

 

 

Thailand could write their tax code to exclude taxation on those incomes that the DTA says they have exclusive taxation rights on. Why they would want to throw away potential tax collections -- is beyond me. But they could do this, and it wouldn't violate the DTA, since it doesn't violate the spirit on no double taxation. It just means the US taxation on your IRA (required by the saving clause) is full blast, with no discount from non  existent tax credits from non existent Thai taxation on your IRA.

 

So, when it comes to Traditional IRAs, it really makes no difference whether or not Thailand chooses to tax this remitted IRA -- unless the Thai taxation exceeds that of the US taxation on same IRA. Then, you'd be out of pocket for the higher Thai tax; but then there would be no US tax due, as it would be totally wiped out by the Thai tax credit. But probable situation would be the US has a higher tax bill: thus pay full tax bill to Thailand; and some tax to the US, albeit net of the credit for Thai taxes.

 

Thus, the saving clause makes any exclusion from Thai taxes of your IRA (or private pension) -- not a meaningful part of your financial planning. *

 

* Unless you hire Thomas Carden at AIT in Bangkok. He has an original thought that only the DTA with Thailand has IRAs excluded from the saving clause. Thus, only by being an expat tax resident in Thailand, and no where else, can you avoid US taxes on your IRA. Sound too good to be true? For sure -- but apparently the IRS doesn't have the resources to uncover this scheme, as many have used Carden to avoid taxes on their IRAs -- and have gotten away with it. Feeling lucky?

 

 

In Malaysia the Govt has recently reiterated that they will not tax the money of Retired Expats brought into their countries in most situations.  One of those is that they will not impose any taxation obligations on money that has been subjected to the taxation system of the country of origin, if that country has a DTA with their country.

https://officialmm2h.com/foreign-sourced-income-tax-exemption/  Other countries in the Region have similar exemptions and allowances on the foreign money of retired/married Expats living in their country - usually implemented as part of their processes in moving to a global taxation system (which Thailand has not yet done). 

 

May I suggest that literal interpretations of the current TRD Tax Laws and related DTAs are at best 'uncertain' at this time. That is because they have not be 'tested' in Thai Tax Court since the rule change in 2024, and the DTAs and TRD Laws/Rules were not written for Expats who are retired/married and who are not working or earning money in Thailand. 

 

The only change to the tax situation on Jan1 2024 was that money earned overseas by a Thai tax resident is no longer tax exempt if it is brought into Thailand after 12 months. The change was not targeted at Expat's pensions and other retirement funds or situations, and TRD clearly did not realise the sh**storm the change would create.

 

I will also point out that since that change was made, and the incomplete unsatisfactory TRD answers provided under the previous TRD Management, that the Thai Govt changed - from the PM down including the Minister responsible for the TRD.  Since then they have not said a word about 'the problem', and I remind you of the normal behaviour of Thais when they might 'lose face'.  What they have said since the change of Govt, is that they are 'very busy' developing a global taxation system and that will involve extremely difficult and convoluted changes to Thai Taxation Laws and Rules, and then is when they will provide full details and clarity to both Thais and Expats.  If you have been in Thailand a long time, then you know even the simple easy things take a long time to change here and they involve a lot of work.

 

I am of the opinion that the reason TRD has not clarified in detail all the issues raised by Expats and Lawyers and Others due the the rule change, is because that would take a lot of work and changes to the Laws/Rules that are not worth the trouble - especially given they are moving towards a global based taxation system.  IMO until the changes are made to the Thai taxation system for the implementation of global taxation, retired/married Expats not earning money in Thailand are not who the TRD wants to go into the local Provincial Offices - and the local Provinces dont want them too.

 

I will also point out that there is a Taxation Law in Thailand that clearly states that any Expat who is a Tax Resident and who is leaving Thailand must present a Tax Certificate before leaving.  That is not enforced - but when the non-enforcement decision was made, it was clearly too much trouble to change the Laws. Unlike in the West where all determinations and decisions are ratified in the applicable Laws and Rules, in Thailand they dont go through the nightmare that such a change requires (including approval by the King).  I state that because there are Laws in Thailand, and then there is whether Thailand Authorities enforce those Laws or not, and how they both interpret and enforce them at the Provincial levels.  PIT is a Provincial issue. 

[mudcat]

From the 1996 Technical Explanation:

 

Paragraph 3

Some provisions of the Convention are intended to provide benefits by a Contracting State to its citizens and 
residents that do not exist under its internal law. Paragraph 3 sets forth certain exceptions to the saving clause that preserve these benefits for citizens and residents of the Contracting States.

 

Subparagraph (a) lists certain provisions of the Convention that are applicable to all citizens and residents of a Contracting State, despite the general saving clause rule of paragraph 2:

 

(1) Paragraph 2 of Article 9 (Associated Enterprises) grants the right to a correlative adjustment with respect to income tax due on profits reallocated under Article 9.

(2) Paragraphs 2 and 5 of Article 20 (Pensions and Social Security Payments) deal with social security benefits and child support payments, respectively. The inclusion of paragraph 2 in the exceptions to the saving clause means that the grant of exclusive taxing right of social 
security benefits to the paying country applies to deny, for example, to the United States the right to tax its citizens and residents on social security benefits paid by Thailand. The inclusion of paragraph 5, which exempts child support 

payments from taxation by the State of residence of the recipient, means that if a resident of Thailand pays child 
support to a citizen or resident of the United States, the United States may not tax the recipient.

(3) Article 25 (Relief from Double Taxation) confirms the benefit of a credit to citizens and residents of one Contracting State for income 
taxes paid to the other.

 

(4) Article 26 (Non-Discrimination) requires one Contracting State to grant national treatment to residents and citizens of the other Contracting State in certain circumstances. Excepting this Article from the saving clause requires, for example, that the United States give such benefits to a resident or citizen of Thailand even if that 
person is a citizen of the United States.

 

(5) Article 27 (Mutual Agreement Procedure) may confer benefits by a
Contracting State on its citizens and residents. For example, the statute of limitations may be waived for refunds and the competent authorities are permitted to use a definition of a term that differs from the internal law definition. These benefits are intended to be granted by a Contracting State to its citizens and residents.

 

Subparagraph (b) of paragraph 3 provides a different set of exceptions to the saving clause. The benefits 
referred to are all intended to be granted to temporary residents of a Contracting State (for example, in the case of the United States, holders of non-immigrant visas), but not to citizens or to persons who have acquired permanent residence in that State. If beneficiaries of these provisions travel from one of the Contracting States to the other, and 
remain in the other long enough to become residents under its internal law, but do not acquire permanent residence status (i.e., in the U.S. context, they do not become "green card" holders) and are not citizens of that State, the host State will continue to grant these benefits even if they conflict with the statutory rules. The benefits preserved by this 
paragraph are the host country exemptions for the following items of income: government service salaries and pensions under Article 21 (Government Service); certain income of visiting students and trainees under Article 22 (Students and Trainees); certain income of visiting teachers or researchers under Article 23 (Teachers); and the income of diplomatic agents and consular officers under Article 29 (Diplomatic Agents and Consular Officers).