Introduction to Personal Income Tax in Thailand

[tomkenet]

Realising a gain in a year when you are not Thai tax resident and remitting it to Thailand in a year when you are  Thai tax resident would be tax free as far as I understand.

 

What about realising a gain in a year when you are Thai tax resident and remitting it to Thailand in a year when you are not Thai tax resident.

[Yumthai]

11 minutes ago, chiang mai said:

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.

Surprised you're posting a good workaround to avoid admin burden and potential tax. Vacation time is fruitful.

[Eudaimonia]

20 minutes ago, tomkenet said:

Realising a gain in a year when you are not Thai tax resident and remitting it to Thailand in a year when you are  Thai tax resident would be tax free as far as I understand.

 

What about realising a gain in a year when you are Thai tax resident and remitting it to Thailand in a year when you are not Thai tax resident.

It's the year when you realized gains or earned/received income that matters. You cannot keep collecting income abroad for years while living in Thailand and then move out for six months in 2030 to remit it all tax-free.

 

However, with investments, it might be possible to move from dividend-paying stocks and distributing funds to accumulating funds that just keep growing in value and realize all those gains while not a tax resident.

[topt]

1 hour 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?

You determine it. 

According to one of the many vids from ExpatTax you can choose LIFO/FIFO or whatever works best for you - but you would only need to do that if audited or asked for proof of what you were filing.

If you believe it to be non assessable (as pre 2024) then if you don't file they won't be asking unless they check up on you specifically. Which is when you need the paperwork and justifications.

 

That is one take and others may argue differently and nobody really knows how it will play out.

[Agusts]

9 hours ago, topt said:

You determine it. 

According to one of the many vids from ExpatTax you can choose LIFO/FIFO or whatever works best for you - but you would only need to do that if audited or asked for proof of what you were filing.

If you believe it to be non assessable (as pre 2024) then if you don't file they won't be asking unless they check up on you specifically. Which is when you need the paperwork and justifications.

 

That is one take and others may argue differently and nobody really knows how it will play out.

 

As your last sentence says, nobody really knows. We have to see how they audit farangs, and see the result, and not just one, but many, to get a feel for their exact logic...! 

 

This is many years away, I think most farangs, who do not earn in Thailand, won't fill up tax forms, and doubt many or any will be audited anytime soon, Thai taxmen are too busy collecting and auditing millions of locals, let alone farangs.

 

This very law was brought in for billionaires who make a killing abroad in dodgy businesses and countries without paying tax abroad, then bring the money in and use it tax fee..., not a few pensioners living on 1000 pounds a month...! 

 

This will be the same tail as the other laws being enforced here, like buying land and houses using fake company, how many of those have they prosecuted yet...! Not many, despite all the propaganda... 

 

Of course the tax lawyers and consultants looking for clients make this like it's the end of the world...! 😜 

 

[Presnock]

2 minutes ago, Agusts said:

 

As your last sentence says, nobody really knows. We have to see how they audit farangs, and see the result, and not just one, but many, to get a feel for their exact logic...! 

 

This is many years away, I think most farangs, who do not earn in Thailand, won't fill up tax forms, and doubt many or any will be audited anytime soon, Thai taxmen are too busy collecting and auditing millions of locals, let alone farangs.

 

This very law was brought in for billionaires who make a killing abroad in dodgy businesses and countries without paying tax abroad, then bring the money in and use it tax fee..., not a few pensioners living on 1000 pounds a month...! 

 

This will be the same tail as the other laws being enforced here, like buying land and houses using fake company, how many of those have they prosecuted yet...! Not many, despite all the propaganda... 

 

Of course the tax lawyers and consultants looking for clients make this like it's the end of the world...! 😜 

 

The change(s) in tax laws are showing up in other countries too, the reason is the OECD 2023 agreement on exchange of financial data between 130 plus countries, some use CRS, some FACTA and what data is exchangeable is still not totally clear it seems to all.  Yeah, Thailand has had a dismal tax collection from its own citizens who are targets and as a result of the changes within the revenue department, expats are seen as a possible lucrative source of funds too. This is show up possibly in the next year or so but, TIT and who knows if this govt or a more strict govt will be in power so...good luck to all.

[tomkenet]

On 11/3/2024 at 8:24 PM, Eudaimonia said:

It's the year when you realized gains or earned/received income that matters. You cannot keep collecting income abroad for years while living in Thailand and then move out for six months in 2030 to remit it all tax-free.

 

However, with investments, it might be possible to move from dividend-paying stocks and distributing funds to accumulating funds that just keep growing in value and realize all those gains while not a tax resident.

I wonder how that will work. That means you will have to file a tax report for a year you are not a tax resident. How about if you stay non tax resident for several years or for ever.

[Eudaimonia]

1 hour ago, tomkenet said:

I wonder how that will work. That means you will have to file a tax report for a year you are not a tax resident. How about if you stay non tax resident for several years or for ever.

If enough people complain, they will replace this cumbersome system with a better one where we can pay immediately for worldwide income, irrespective of remittance.

[JimGant]

On 11/3/2024 at 9:42 PM, topt said:

According to one of the many vids from ExpatTax you can choose LIFO/FIFO or whatever works best for you

Further substantiated from this 12-year old BP article:

 

Quote

For scriptless securities, the taxpayer is allowed to use any acceptable accounting method such as FIFO, LIFO or weighted average method in calculating cost of securities.

- Once any of the accounting methods is used for calculation of cost basis, such method has to be used consistently.

https://www.bangkokpost.com/business/general/299691/when-the-revenue-department-changes-its-mind-the-taxpayer-gets-the-headache

 Not an exact fit, but good enuf IMO to use for an account with comingled pre 2024 and 2024 onward funds. Thus, FIFO would allow that exemption for pre 2024 income to be what you self assess as to what you remitted.

[Yumthai]

1 hour ago, Eudaimonia said:

If enough people complain, they will replace this cumbersome system with a better one where we can pay immediately for worldwide income, irrespective of remittance.

In my opinion, a better system is one where temporary foreigner residents are not tax liable on their foreign sourced income.

[oldcpu]

2 hours ago, tomkenet said:

I wonder how that will work. That means you will have to file a tax report for a year you are not a tax resident. How about if you stay non tax resident for several years or for ever.

I can't speak for other countries - but for Canada, because I have Canadian investments and pension (and old age security) income, I have to file a tax return to Canada every year.

 

I have not been a resident in Canada since 1999 (and I have a letter from Revenue Canada confirming I am NOT considered a Canadian resident), but once my Canadian income reached a certain point, Revenue Canada still wanted (and still gets) an income tax return from me.

[anrcaccount]

8 hours ago, tomkenet said:

On 11/3/2024 at 8:24 PM, Eudaimonia said:

It's the year when you realized gains or earned/received income that matters. You cannot keep collecting income abroad for years while living in Thailand and then move out for six months in 2030 to remit it all tax-free.

 

However, with investments, it might be possible to move from dividend-paying stocks and distributing funds to accumulating funds that just keep growing in value and realize all those gains while not a tax resident.

I wonder how that will work. That means you will have to file a tax report for a year you are not a tax resident. How about if you stay non tax resident for several years or for ever.

 

This is a good illustration of why the concept of "remittance" taxation is very uncommon, present only in a minuscule number of places in the world .

 

It's basically unenforceable, and add that to a jurisdiction like Thailand, you have unenforceable ++++.

 

Lets assume the  (IMO extremely) unlikely scenario that these laws start to be strictly enforced. 

 

Simply sell stock for gains, repurchase another stock. Sell that repurchased stock immediately at cost > remit the sale proceeds to Thailand. No capital gains are remitted. 

 

It would appear that anyone who pays Thai tax on stock capital gains remitted to Thailand, is doing themselves a disservice.

 

 

 

 

 

 

 

 

 

[anrcaccount]

6 hours ago, JimGant said:

On 11/3/2024 at 9:42 PM, topt said:

According to one of the many vids from ExpatTax you can choose LIFO/FIFO or whatever works best for you

Further substantiated from this 12-year old BP article:

 

Quote

For scriptless securities, the taxpayer is allowed to use any acceptable accounting method such as FIFO, LIFO or weighted average method in calculating cost of securities.

- Once any of the accounting methods is used for calculation of cost basis, such method has to be used consistently.

https://www.bangkokpost.com/business/general/299691/when-the-revenue-department-changes-its-mind-the-taxpayer-gets-the-headache

 Not an exact fit, but good enuf IMO to use for an account with comingled pre 2024 and 2024 onward funds. Thus, FIFO would allow that exemption for pre 2024 income to be what you self assess as to what you remitted.

 

Agreed in general, but this highlights the absurdity of the whole situation.

 

In a complete absence of any clear guidance from the Thai TRD, potential taxpayers are forced to interpret their own rules, from a 12 year old media article.

 

You couldn't make this up! 

 

 

[Agusts]

I understand everywhere they are trying to stop tax dodgers and get some money in the government coffers, but they should be more realistic about farangs living in Thailand on pension. For starters they want pensioners to show monthly income brought in Thailand at rate of around 60k baht a month for visa, then they say the tax free threshold is 60k a "year" ...!!!!? 

 

Doesn't make sense, that threshold is probably for locals, they should say for farang is at least 60k a month or even higher, this way they don't bother low income farangs, but catch the possible millionaire tax dodgers...! 

[tomkenet]

10 hours ago, anrcaccount said:

Simply sell stock for gains, repurchase another stock. Sell that repurchased stock immediately at cost > remit the sale proceeds to Thailand. No capital gains are remitted. 

With statements showing purchase of the last stock without gains dated after 2023, you would probably be asked for documentation of where the money originated, leading back to before 2024.

 

 

[chiang mai]

13 minutes ago, tomkenet said:

With statements showing purchase of the last stock without gains after 2023, you would probably be asked for documentation of where the money originated, leading back to before 2024.

 

 

I'm pretty sure the effect of Por 162 and the impact of the pre 2024 tax exemption will diminish over time, it is after all, only a one time concession. 

[tomkenet]

11 minutes ago, chiang mai said:

I'm pretty sure the effect of Por 162 and the impact of the pre 2024 tax exemption will diminish over time, it is after all, only a one time concession. 

I believe documentation showing the principal leading back to pre-2024 cash will always be exempt. 

What do you mean with one time concession ?  Link?

[chiang mai]

19 minutes ago, tomkenet said:

I believe documentation showing the principal leading back to pre-2024 cash will always be exempt. 

What do you mean with one time concession ?  Link?

Indeed pre 2024 income will always be exempt. But over time, people will need to make less use of that concession because funds will become exhausted and otherwise reinvested.

[anrcaccount]

4 hours ago, tomkenet said:

14 hours ago, anrcaccount said:

Simply sell stock for gains, repurchase another stock. Sell that repurchased stock immediately at cost > remit the sale proceeds to Thailand. No capital gains are remitted. 

With statements showing purchase of the last stock without gains dated after 2023, you would probably be asked for documentation of where the money originated, leading back to before 2024.

 

I don't follow your logic here.

 

The remitted funds originated from a stock sale, you would have documentation to prove it. The remitted funds are not subject to income tax as they do not contain any income. Simple.

 

 

[tomkenet]

38 minutes ago, anrcaccount said:

 

I don't follow your logic here.

 

The remitted funds originated from a stock sale, you would have documentation to prove it. The remitted funds are not subject to income tax as they do not contain any income. Simple.

 

 

I don't think you can simply launder away your previous gains this way. You will have to provide documentation that shows the funds origins backwards until you reach a date before 2024. Then the total gain will be accessable.

 

 

[anrcaccount]

23 minutes ago, tomkenet said:

1 hour ago, anrcaccount said:

 

I don't follow your logic here.

 

The remitted funds originated from a stock sale, you would have documentation to prove it. The remitted funds are not subject to income tax as they do not contain any income. Simple.

 

 

I don't think you can simply launder away your previous gains this way. You will have to provide documentation that shows the funds origins backwards until you reach a date before 2024. Then the total gain will be accessable.

 

You're conflating two unrelated things.
 

1 - Foreign sourced income earned before Jan 1 2024 is exempt regardless of when remitted. Not relevant to the situation I'm describing.

 

2- Capital gains earned after January 1 2024 can be considered assessable income, if remitted to Thailand by a tax resident.

 

The scenario I describe, does not involve any remittance of capital gain. This is within the guidelines. It's quite different to what is known as a 'wash sale'  in other jurisdictions.

 

This would of course change, if Thailand began taxing worldwide income regardless of remittance - a long way off that yet. 

[tomkenet]

19 minutes ago, anrcaccount said:

 

You're conflating two unrelated things.
 

1 - Foreign sourced income earned before Jan 1 2024 is exempt regardless of when remitted. Not relevant to the situation I'm describing.

 

2- Capital gains earned after January 1 2024 can be considered assessable income, if remitted to Thailand by a tax resident.

 

The scenario I describe, does not involve any remittance of capital gain. This is within the guidelines. It's quite different to what is known as a 'wash sale'  in other jurisdictions.

 

This would of course change, if Thailand began taxing worldwide income regardless of remittance - a long way off that yet. 

If your "zero gain" stocks where purchased after 2023 the principal and the gain (which is zero in this case) will be treated as accessable income when remitted if you can not show that the principal comes from savings. That's why you would have to show the origin back to pre24 or another non taxable event.

 

 

[chiang mai]

Savings is income after taxes and expenses. If your wealth was just that, fine. But if it was something else after it became savings then it is no longer savings. 

[Eudaimonia]

PwC has published an updated Thai Tax 2024/25 Booklet. A valuable free resource.

 

https://www.pwc.com/th/en/tax/thai-tax-booklet-2024.html

[anrcaccount]

1 hour ago, tomkenet said:

If your "zero gain" stocks where purchased after 2023 the principal and the gain (which is zero in this case) will be treated as accessable income when remitted if you can not show that the principal comes from savings. That's why you would have to show the origin back to pre24 or another non taxable event.

 

 

Disagree with your view on this. The only concern is "does the remittance contain income". Fact = remittance does not contain any income. There is only capital remitted, no gain. 

 

You don't have to prove the source of the funds for the purchase which occurred outside Thailand, only the source of the remittance into Thailand, and then - only if asked.

 

Even in the ( IMO extremely unlikely) event that your logic held, then you can do the same thing, leave the capital gains overseas, do the purchase>sale only with the principal that existed as of 1 Jan 2024, then remit that. 

[RupertIII]

25 minutes ago, Eudaimonia said:

 

PwC has published an updated Thai Tax 2024/25 Booklet. A valuable free resource.

 

https://www.pwc.com/th/en/tax/thai-tax-booklet-2024.html

Thanks for that.

It was, I think, Mike Lister in one of the forums stated that expenses of up to 50%, subject to a max 100K, could be deducted against income which, at the time, I took to include pension income.

However the above booklet quotes:-

The amount of personal expenses that may be deducted depends on
the category of assessable income, as follows:
• Income under the above categories of assessable income (1) and
(2), including goodwill, copyright and other rights under (3), a
deduction of 50% is allowed subject to a maximum of Baht
100,000.
• Income under (5), the rates of deduction vary from 10% to 30%
depending on the type of rented property.
• Income under (6), (7) and (8), the rates of deduction vary from
30% to 60% depending on the type of income or type of business.

 

Income under categories 1, 2, and 3 are listed as:-

Assessable income is classified into eight categories:
1. Salaries and wages (including income from stock options, house
rent allowance and other fringe benefits)
2. Hire of work, office of employment or service rendered
3. Goodwill, copyright, franchise, patent, other rights, annuity, etc.

 

Could any of these be interpreted as pension, possibly other fringe benefits?

 

I am wondering if anyone has ever been put this to the test by previously successfully submitting a return including this expense deduction  in respect of pension income? 

 

[chiang mai]

8 minutes ago, RupertIII said:

Thanks for that.

It was, I think, Mike Lister in one of the forums stated that expenses of up to 50%, subject to a max 100K, could be deducted against income which, at the time, I took to include pension income.

However the above booklet quotes:-

The amount of personal expenses that may be deducted depends on
the category of assessable income, as follows:
• Income under the above categories of assessable income (1) and
(2), including goodwill, copyright and other rights under (3), a
deduction of 50% is allowed subject to a maximum of Baht
100,000.
• Income under (5), the rates of deduction vary from 10% to 30%
depending on the type of rented property.
• Income under (6), (7) and (8), the rates of deduction vary from
30% to 60% depending on the type of income or type of business.

 

Income under categories 1, 2, and 3 are listed as:-

Assessable income is classified into eight categories:
1. Salaries and wages (including income from stock options, house
rent allowance and other fringe benefits)
2. Hire of work, office of employment or service rendered
3. Goodwill, copyright, franchise, patent, other rights, annuity, etc.

 

Could any of these be interpreted as pension, possibly other fringe benefits?

 

I am wondering if anyone has ever been put this to the test by previously successfully submitting a return including this expense deduction  in respect of pension income? 

 

Pension income is category 1 income. But yes, the amount that can be deducted for expenses does vary, from category to category.

[tomkenet]

28 minutes ago, anrcaccount said:

Disagree with your view on this. The only concern is "does the remittance contain income". Fact = remittance does not contain any income. There is only capital remitted, no gain. 

 

You don't have to prove the source of the funds for the purchase which occurred outside Thailand, only the source of the remittance into Thailand, and then - only if asked.

 

Even in the ( IMO extremely unlikely) event that your logic held, then you can do the same thing, leave the capital gains overseas, do the purchase>sale only with the principal that existed as of 1 Jan 2024, then remit that. 

So you mean if I received 1mill THB in dividend yesterday, used the money to buy stocks today, sell them tomorrow without gain, I can remit the money to Thailand tax exempt the day after?

 

I don't think it will hold up if you get audited.

[chiang mai]

You cannot remit just capital without gain, any remittance of CG is deemed to be a prorated percentage of both, until the total is depleted.

[anrcaccount]

1 hour ago, tomkenet said:

So you mean if I received 1mill THB in dividend yesterday, used the money to buy stocks today, sell them tomorrow without gain, I can remit the money to Thailand tax exempt the day after?

 

I don't think it will hold up if you get audited.

 

That's a different scenario to the one I outlined, but based on the current remittance rules, you would not be remitting income to Thailand.

 

You would be remitting stock principal with no capital gain.