Introduction to Personal Income Tax in Thailand

[chiang mai]

6 minutes ago, Agusts said:

 

This sounds good, so on their Thai tax form I can enter somewhere I transfered £10k and also somewhere that I say it was earned before 1/1/2024, so have zero tax to pay, and that would be the end of it...?

And I would have statement to prove if they enquired further.... (well, no statement these days, but can get online printout....). 

If all your remittances are from savings and there is no tax to pay, there is no requirement to even file a tax return because you don't have any assessable income. Assessable income is that which must be assessed for tax whilst savings pre 12/31/23 are exempt hence they are  not assessable.

[Agusts]

13 hours ago, topt said:

Supposedly it is whether you are tax resident when the income is earned that is more relevant than whether you are resident when it is transferred.

If you have good records of when you earned and can produce that if required.

However whether you would be picked up on it probably depends on amounts transferred/frequency so you can roll the dice if that's your style......

 

I thought it was the amount transfered in each calender year from 1 Jan to 31 Dec that is taxed and analysed, and if not tax resident that year, then no form to fill up that year...!

 

Unless once someone becomes tax resident, then he/she needs to carry on filing up tax form even if not there 180 days...!? 

[Agusts]

3 minutes ago, chiang mai said:

If all your remittances are from savings and there is no tax to pay, there is no requirement to even file a tax return because you don't have any assessable income.

 

I have seen many posts saying anyone stay over 180 days and becomes tax resident must fill up form even with no tax to pay, see the very first post on this thread as a starter..., lots more on other threads and websites... 

[chiang mai]

6 minutes ago, Agusts said:

 

I have seen many posts saying anyone stay over 180 days and becomes tax resident must fill up form even with no tax to pay, see the very first post on this thread as a starter..., lots more on other threads and websites... 

If you have no assessable income, there is no need to file a return.

 

If you have assessable income that exceeds the threshold of 60k/120k baht per year, but there is no tax to pay, you must decide whether to file of not. There are penalties for not filing under those circumstances but they appear not to be levied.

 

If you have assessable income above the threshold and there is tax to pay, you must file a return.

[garygooner]

5 minutes ago, chiang mai said:

If you have assessable income that exceeds the threshold of 60k/120k baht per year, but there is no tax to pay, you must decide whether to file of not.

Some people seem to think that you can also add 150k to those amounts. 

[chiang mai]

10 minutes ago, garygooner said:

Some people seem to think that you can also add 150k to those amounts. 

There are people who think that but there is nothing I have seen the Revenue Code, or from professional sources, that says you can.

 

The issue of whether or not you can do a pen and paper calculation and deduct TEDA/zero rated band to determine if tax is payable, has been often debated. You must decide what you want to do. TEDA is variable from person to person, one person may have only 60k as a personal allowance,-plus the 150k zero rated tax band. Others will have significant other deductions/allowances hence it's not only the 150k that must be considered.

[Presnock]

BTW: there is a 2 November BP article saying that the government is drawing up a draft law on the worldwide income tax scheme which they plan to implement next year.  Not much in the article other than this info that the BOI needs to come up with something to dull the pain on Tax resident foreigners having to pay taxes on income earned whether the income is remitted or not. Good luck.

[vinny41]

25 minutes ago, Presnock said:

BTW: there is a 2 November BP article saying that the government is drawing up a draft law on the worldwide income tax scheme which they plan to implement next year.  Not much in the article other than this info that the BOI needs to come up with something to dull the pain on Tax resident foreigners having to pay taxes on income earned whether the income is remitted or not. Good luck.

BOI is looking at ways to ease the pain of foreign investors only

"We expect the tax to affect foreign investors who expand their businesses into Thailand, so we need measures to deal with the impact," said Narit Therdsteerasukdi, secretary-general of the BoI.

https://www.bangkokpost.com/business/general/2894662/board-of-investment-eager-to-dull-minimum-tax-pain

.

[Eudaimonia]

8 hours ago, chiang mai said:

What you have described is incorrect and appears to be a proportional formula for capital gains remittance rather than the remittance of savings.

 

If the poster has 10,000 pounds in a savings account, as of 31/12/2023, he/she can draw down and remit that amount any time therefacter, reducing the  end of year statemented amount accordingly and the entire 10k is free of Thai tax. @Agusts

 

Thank you for your comment. I used the capital gains formula because the interest should be taxed similarly.

 

"Savings" comprise 98.75% of the remitted amount in the example. The rest is income from 2024.

 

According to the Revenue Department's guidelines, "If foreign-sourced income is remitted partially, the taxable amount shall be apportioned accordingly."

 

As you told me that my reply is "incorrect," I suppose the accounting method for interest-bearing bank accounts fundamentally differs from other income-generating assets. Do you have a source you could share?

 

Compare my answer with that of Expat Tax Thailand's FAQ:

 

[chiang mai]

1 hour ago, Eudaimonia said:

 

Thank you for your comment. I used the capital gains formula because the interest should be taxed similarly.

 

"Savings" comprise 98.75% of the remitted amount in the example. The rest is income from 2024.

 

According to the Revenue Department's guidelines, "If foreign-sourced income is remitted partially, the taxable amount shall be apportioned accordingly."

 

As you told me that my reply is "incorrect," I suppose the accounting method for interest-bearing bank accounts fundamentally differs from other income-generating assets. Do you have a source you could share?

 

Compare my answer with that of Expat Tax Thailand's FAQ:

 

There is an exemption for all income earned prior to 13/12/23, there is no formula involved and there is nothing to calculate,

 

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

 

Interest bearing income such as savings deposits can be taxed at a flat rate of 15%, Capital Gains are taxed as income on the PIT tables. 

 

 

[Celsius]

so I just want to understand this.

 

If I stay in Thailand 179 days per year, sell 25 million baht on shopee and lazada, plus teach English at the language center, I don't have to file taxes?

[Eudaimonia]

7 minutes ago, chiang mai said:

There is an exemption for all income earned prior to 13/12/23, there is no formula involved and there is nothing to calculate

 

No doubt about that. However, income from 2024 was not earned before 31/12/23. And that's what the entire question is about.

[oldcpu]

16 minutes ago, Celsius said:

so I just want to understand this.

 

If I stay in Thailand 179 days per year, sell 25 million baht on shopee and lazada, plus teach English at the language center, I don't have to file taxes?

My understanding is if you teach English in Thailand and earn a salary in Thailand from such teaching then you will have to pay tax on Thai derived income even if you stay less than 180 days in Thailand in a taxation year ( which I believe means file a Thai tax return).

[chiang mai]

2 minutes ago, oldcpu said:

My understanding is if you teach English in Thailand and earn a salary in Thailand from such teaching then you will have to pay tax on Thai derived income even if you stay less than 180 days in Thailand in a taxation year.

Agreed

[chiang mai]

36 minutes ago, Eudaimonia said:

 

No doubt about that. However, income from 2024 was not earned before 31/12/23. And that's what the entire question is about.

Sorry, I now realise you are no longer focussing on just the question and scenario raised by the earlier poster but on defining the circumstances surrounding your answer to it, gottit. I understood the earlier poster was solely interested in 2023 savings but you are interested in 2023 and 2024 amounts which are commingled. 

 

I am not aware that TRD has made their position clear with regard to commingled accounts (FIFO/LIFO) but I don't think that detracts from the fact that exempt and taxable income can be separated using statements at the end of last year. There is therefore no need for apportionment since the pre 2024 income is exempt and excluded from the return. What remains is interest income earned in 2024, the Thai tax on which will depend on how that interest was earned. Apparently, TRD regards fixed deposit interest as capital gains but regular savings account interest is not. Regardless, all income is taxed using PIT tables rather than a special CG rate. 

 

Lastly, I think you are correct that TRD regards partial remittances of CG income to be apportioned although I'm not sure that any of the examples mentioned thus far involve CG.

 

 

 

 

 

"If the bank balance was £10,000 at the end of 2023 and you have received monthly interest payments in 2024 (and nothing else), the balance might now be £10,220.

 

10000/10220 = 97.85% is from pre-2024
220/10220 = 2.15% is from 2024.

 

You transfer £1000. Of that amount, 2.15%, or £21.53, was earned in 2024".

 

 

[BE88]

In my opinion I consider that the payment of a pension is not an income but a form of savings. My pension was calculated like this by my government without any increase for inflation or anything else, so the monthly payments are only savings that I have deposited in my working life in a pension fund. Many have not had this "privilege" and so their pension becomes an income.

And here now the big question...

[Presnock]

1 minute ago, BE88 said:

In my opinion I consider that the payment of a pension is not an income but a form of savings. My pension was calculated like this by my government without any increase for inflation or anything else, so the monthly payments are only savings that I have deposited in my working life in a pension fund. Many have not had this "privilege" and so their pension becomes an income.

And here now the big question...

according to the expattaxesthailand.com agency, unless your pension is specifically mentioned in the DTA with your country, then Thailand will be able to tax it even if your government does or does not tax it.  Maybe something about tax credits.  You can check free with that agency.

[chiang mai]

1 minute ago, BE88 said:

In my opinion I consider that the payment of a pension is not an income but a form of savings. My pension was calculated like this by my government without any increase for inflation or anything else, so the monthly payments are only savings that I have deposited in my working life in a pension fund. Many have not had this "privilege" and so their pension becomes an income.

And here now the big question...

Regrettably, various Revenue functions and governments don't agree that pensions are savings, in many cases they were accrued using pre tax income or preferentially treated income.

[Presnock]

1 minute ago, chiang mai said:

Regrettably, various Revenue functions and governments don't agree that pensions are savings, in many cases they were accrued using pre tax income or preferentially treated income.

not a tax-free pension unless specified in the DTA which overrides the ThaI TAX LAW.

[Presnock]

5 hours ago, chiang mai said:

If all your remittances are from savings and there is no tax to pay, there is no requirement to even file a tax return because you don't have any assessable income. Assessable income is that which must be assessed for tax whilst savings pre 12/31/23 are exempt hence they are  not assessable.

that is what one tax agency is saying also, even says that if you go to the local revenue department office and explain that to them, they won't even give you a tax id number and will tell you that you don' have to file.  Unless some different RULES  from the revenue dept come out, I don't plan on doing anything at all!

 

[chiang mai]

1 minute ago, Presnock said:

that is what one tax agency is saying also, even says that if you go to the local revenue department office and explain that to them, they won't even give you a tax id number and will tell you that you don' have to file.  Unless some different RULES  from the revenue dept come out, I don't plan on doing anything at all!

 

Indeed that's what the TRD Code says. TIN's can only be issued to tax residents once they have breached the assessable income threshold. If they don't do that, they are not required to obtain a TIN and will not be able to file.

 

The middle part of the argument, where thresholds are breached but there is no tax to pay, once TEDA and the zero rated band are taken into consideration, is much less clear.

[Eudaimonia]

15 minutes ago, chiang mai said:

Sorry, I now realise you are no longer focussing on just the question and scenario raised by the earlier poster but on defining the circumstances surrounding your answer to it, gottit. I understood the earlier poster was solely interested in 2023 savings but you are interested in 2023 and 2024 amounts which are commingled.

 

 

The earlier poster's question and scenario was about 2023 and 2024 commingled funds: ☺️

 

On 10/31/2024 at 6:14 PM, Agusts said:

How do they establish money was earned before 1/1/2024...?

 

I have a saving bank account of say £10k, this has accumulated interest added over 20 years, now say in 2025 I transfer 1k from this account to Thailand. How would we establish what part of this money was earned after 1/1/2024 and what part was before.... (I know it's a small part due to low interest rate etc. but as an example). I don't understand this because many people earn and save over the years, then transfer from their accumulated saving....!? 

 

This is a very common scenario. Few people have pure 2023 savings in ring-fenced accounts that do not generate any further interest. We should be able to figure out how such funds are treated. I think any interest earned after 1/1/2024 will be assessable, as already detailed above. I might be wrong.

[Presnock]

7 minutes ago, chiang mai said:

Indeed that's what the TRD Code says. TIN's can only be issued to tax residents once they have breached the assessable income threshold. If they don't do that, they are not required to obtain a TIN and will not be able to file.

 

The middle part of the argument, where thresholds are breached but there is no tax to pay, once TEDA and the zero rated band are taken into consideration, is much less clear.

yes that is what the webinar stated but they also said CSR could allow Thailand to access ATM and CC and we have read that isn' so.  Anyway they have that webinar on the website and about many DTA's also.  Access is free.  BUt most is exactly what we have come to accept.  Have a good one..."winter" appears to have arrived further north.

[chiang mai]

19 minutes ago, Eudaimonia said:

 

 

The earlier poster's question and scenario was about 2023 and 2024 commingled funds: ☺️

 

 

 

Sorry, yes, you are correct, I'm juggling too many things whilst I ought to be just enjoying the beach. 😞

[chiang mai]

34 minutes ago, Presnock said:

yes that is what the webinar stated but they also said CSR could allow Thailand to access ATM and CC and we have read that isn' so.  Anyway they have that webinar on the website and about many DTA's also.  Access is free.  BUt most is exactly what we have come to accept.  Have a good one..."winter" appears to have arrived further north.

I've read some posts arguing that access isn't allowed but I think it's important to read the precise wording. As I recall, it says access to transaction detail isn't part of the annual data transfers under CRS but it CAN/COULD be accessed/provided under required circumstances. Those expressions may not necessarily be contained in any single document since tax and legal requirements both come into play here.

[Presnock]

34 minutes ago, chiang mai said:

I've read some posts arguing that access isn't allowed but I think it's important to read the precise wording. As I recall, it says access to transaction detail isn't part of the annual data transfers under CRS but it CAN/COULD be accessed/provided under required circumstances. Those expressions may not necessarily be contained in any single document since tax and legal requirements both come into play here.

HMM interesting!  I will continue checking around to see what I can find.

[Cardano]

21 hours ago, topt said:

Assesable depending on how much relative to TEDA......unless savings held prior to 01/01/2024 so already paid at that date or earned as a non tax resident since......

ISA was started in 2004 with 20k invested each year and all dividends reinvested, I cannot for the life in me comprehend how the Thai revenue department will assess any income I bring in to Thailand from this ISA.

[chiang mai]

1 minute ago, Cardano said:

ISA was started in 2004 with 20k invested each year and all dividends reinvested, I cannot for the life in me comprehend how the Thai revenue department will assess any income I bring in to Thailand from this ISA.

I think the TRD will look at that as Capital Gains, even though they are tax free in the UK, that is after all what it would be if it weren't inside the ISA.

[Cardano]

3 minutes ago, chiang mai said:

I think the TRD will look at that as Capital Gains, even though they are tax free in the UK, that is after all what it would be if it weren't inside the ISA.

Yes but 90% of the value of my ISA was generated from 2004 to end of 2023, if I bring in £25K how do they determine what time frame that £25K is from?

[chiang mai]

6 minutes ago, Cardano said:

Yes but 90% of the value of my ISA was generated from 2004 to end of 2023, if I bring in £25K how do they determine what time frame that £25K is from?

I'm unsure. But the work around is to realise the gain and remit it to Thailand, in a year when you are not Thai tax resident.