Introduction to Personal Income Tax in Thailand

[Mike Lister]

I have updated the document to include various things, including:

 

- greater clarity of some points

- sample completed tax return link

- map of TRD regions/districts

- described the tax return filing process more fully

- clarified that TRD fines for not filing a return when no tax is due are not always levied

- linked the TRD e-filing site where lists of agents can be founds

- described the TIN process more fully.

 

I continue to have ad-hoc problems with some links, all of which work fine in the master copy of the guide on my desktop but sometimes fail when the document is uploaded. Even after checking the links, once the document is uploaded, they work fine for me but not so for others!  This is WIP. 

[treetops]

On 4/29/2024 at 5:01 AM, Mike Lister said:

I'm describing the law, you're describing tax evasion.

 

Avoidance, not evasion, in the eyes of the big Thai accounting companies as reported previously on here.  I think it may even have been you that provided links showing that gift allowances were a weapon in many of their armouries and have been for years.

[Mike Lister]

2 hours ago, treetops said:

 

Avoidance, not evasion, in the eyes of the big Thai accounting companies as reported previously on here.  I think it may even have been you that provided links showing that gift allowances were a weapon in many of their armouries and have been for years.

In the earlier exchange, the poster was describing tax evasion, not tax avoidance. He talked about pretending to use Gift tax to his wife who would then give the gift to him, that was the implication. That is not avoidance, that is very clearly evasion. Avoidance is when a person takes legal steps to avoid paying tax.

[IsaanT]

FYI for UK expats:

 

The Thailand-UK Double Taxation Convention can be viewed at https://www.gov.uk/government/publications/thailand-tax-treaties.  Furthermore, in view of Mike mentioning that a number of double taxation agreements are currently being reviewed, this web page allows you to be notified of any changes in the content by email.  The current information is effective in Thailand from 1st January 1981 and was published on the .gov.uk website on 2nd January 2014.

I already use this .gov.uk email notification service for another UK legislation topic and find it reliable.

Edited April 30 by IsaanT

[Mike Lister]

16 minutes ago, IsaanT said:

FYI for UK expats:

 

The Thailand-UK Double Taxation Convention can be viewed at https://www.gov.uk/government/publications/thailand-tax-treaties.  Furthermore, in view of Mike mentioning that a number of double taxation agreements are currently being reviewed, this web page allows you to be notified of any changes in the content by email.  The current information is effective in Thailand from 1st January 1981 and was published on the .gov.uk website on 2nd January 2014.

I already use this .gov.uk email notification service for another UK legislation topic and find it reliable.

Many thanks for that.

[Mutt Daeng]

On 5/1/2024 at 5:43 AM, IsaanT said:

FYI for UK expats:

 

The Thailand-UK Double Taxation Convention can be viewed at https://www.gov.uk/government/publications/thailand-tax-treaties.  Furthermore, in view of Mike mentioning that a number of double taxation agreements are currently being reviewed, this web page allows you to be notified of any changes in the content by email.  The current information is effective in Thailand from 1st January 1981 and was published on the .gov.uk website on 2nd January 2014.

I already use this .gov.uk email notification service for another UK legislation topic and find it reliable.

Thanks for the info @IsaanT. Very useful service.

[connda]

@Mike Lister
So let me do a "back of a napkin" calculation to determine the top threshold of what I can theoretically remit to Thailand this year just using exemptions:

Here are the exemptions listed from the article:

a) Personal Allowance for self (PA1) - 60,000

b) Personal Allowance for wife (PA2) - 60,000

c) Over age 65 years exemption (OAE) - 190,000

d) 50% of pension income received, up to 100k (PD) - 100,000

e) In addition, the first 150,000 of assessable income is zero rated and free of tax (ZR) 

Am I missing anything here? The way I read it is that I can bring in upwards of 560,000 that is exempted income - in my case US pension income.  Any flaws in my calculations?  I'm I missing anything?  Making assumptions that are incorrect?

[Mike Lister]

15 minutes ago, connda said:

@Mike Lister
So let me do a "back of a napkin" calculation to determine the top threshold of what I can theoretically remit to Thailand this year just using exemptions:

Here are the exemptions listed from the article:

a) Personal Allowance for self (PA1) - 60,000

b) Personal Allowance for wife (PA2) - 60,000

c) Over age 65 years exemption (OAE) - 190,000

d) 50% of pension income received, up to 100k (PD) - 100,000

e) In addition, the first 150,000 of assessable income is zero rated and free of tax (ZR) 

Am I missing anything here? The way I read it is that I can bring in upwards of 560,000 that is exempted income - in my case US pension income.  Any flaws in my calculations?  I'm I missing anything?  Making assumptions that are incorrect?

That's correct, have you never even looked at the tax guide because that information has been oublic and highly visible since December.

 

 

[connda]

On 4/29/2024 at 11:01 AM, Mike Lister said:

I'm describing the law, you're describing tax evasion.

Just being Captain Obvious here, but if Thailand really wanted to collect tax revenue they would start with their own citizens.  Honestly, outside of Thais who work for incorporated businesses and businesses who actually file income taxes (as many small Thai business do not - think massage shops) I personally don't know any Thais who file income taxes other than my son who has a corporate job and I'm sure they withhold taxes.
Filing taxes is not exactly the first thing on the minds of people (poor villagers) who are making 300 to 500 THB per day (cash) doing day labor - like a lot of those in villages and even in cities.  What they are thinking about is surviving day to day and making ends meet.
So in a discussion on tax evasion, which here in Thailand is being so poor that driving to file your taxes is going to cost you a days wage which you can't really afford, the first place to start is with average Thais.  Of course that would expand their tax base but at what social and political costs?  It's much easier to just ramp up the VAT taxes, like the new VAT on foreign goods.

So instead?  Go for the deep pockets - foreigners whom you will never allow to be permanent residents or citizens, but still class as "tax residents" because - "Foreigners are rich!"  Slightly off topic and yet, tax evasion is probably much more widespread than the Thai government is willing to let on.  Just saying...

Edited May 3 by connda

[Mike Lister]

1 minute ago, connda said:

Just being Captain Obvious here, but if Thailand really wanted to collect tax revenue they would start with their own citizens.  Honestly, outside of Thais who work for incorporated businesses and businesses who actually file income taxes (as many small Thai business do not - think massage shops) I personally don't know any Thais who file income taxes other than my son who who has a corporate job and I'm sure they withhold taxes.
Filing taxes is not exactly the first thing on the minds of people who are making 300 to 500 THB per day (cash) doing day labor - like a lot of those in villages.  What they are thinking about is surviving day to day and making ends meet.
So in a discussion on tax evasion, which here in Thailand is being so poor that driving to file your taxes is going to cost you a days wage, the first place to start is with average Thais.  Of course that would expand their tax base but at what social and political costs?  It's much easier to just ramp up the VAT taxes, like the new VAT on foreign goods.

So instead?  Go for the deep pockets - foreigners whom you will never allow to be permanent residents or citizens, but still class as "tax residents."  Slightly off topic and yet, tax evasion is probably much more widespread than the Thai government is willing to let on.  Just saying...

Not so. The target in all of this is well to do middle class and wealthy Thai's who have been exploiting tax loopholes and avoiding taxes. As much as farangs think they are the center of the universe here, they are nothing more than collateral damage, to start with, there are far more middle and upper wealth class Thai's than there are farangs in Thailand. Plus, farangs only need to be non resident for one year, during which they can import as much money as they want, free of Thai tax, that's only 185 days out of the country.

[Presnock]

On 4/20/2024 at 3:40 PM, Mike Lister said:

I have amended para 59 above to reflect latest emerging information between members and TRD personel.

 

NON-RESIDENT INCOME

 

59) Income that was earned and remitted in a year when a person was Thai tax resident is assessable under Thai tax rules. There is now a growing body of opinion from TRD sources to suggest that overseas income earned whilst Thai tax resident but remitted to Thailand whilst not, is free of Thai tax. Some care should be exercised before considering this option, readers may wish to obtain professional tax advice to confirm this point, before using this approach.

Under the wealthy pensioner LTR, funds remitted into Thailand from working outside of Thailand are exempt, but since an LTR holder can work legally in Thailand, those funds are taxable though I am not familiar with the rate.  That is explained if one googles BOI LTR visa and work permit and taxes.

[connda]

5 minutes ago, Mike Lister said:

That's correct, have you never even looked at the tax guide because that information has been oublic and highly visible since December.

Yes sir I have.  But that doesn't mean that I understand what it means and how to apply it correctly.
Which is why I asked the question.  "No such thing as a dumb question," right?  As an ex-instructor (English, computer systems engineering), I always thought that way and urged my otherwise reticent students to speak up when they are confused or didn't understand something I presented.

So thank you for the clarification.  It's truly appreciated as is your efforts to take the lead to provide members of AN with this information.  Kudos! 

[Mike Lister]

I've updated the guide as follows:

 

58) Rental income from overseas property owned by foreigners who are tax resident in Thailand is not liable to Thai tax on that income, as long as that income is not remitted to Thailand. If however that rental income is remitted, an interim tax return PND 94, must be filed if the total remitted within the first six months of the year, exceeds 60,000 baht. “A half-year personal income tax return or PND. 94 is the income tax filing of an individual whose income from January to June exceeds 60,000 baht”.

[Mike Lister]

An update to Capital Gains:

 

49) One way to separate capital and gain may be to have an official valuation or statement that is dated 1 January 2024 (or earlier) since anything earned before that date, is not assessable. That is easier to do with investments but may not be possible with real estate. One usually reliable source has said that any gain begins the date the asset was first acquired and that it is not possible to reset the start date to January 2024. We can add with great certainty however that the date of your move to Thailand has no bearing on the valuation date of a capital asset. Also, if the profit has been the subject of a Capital Gains (CG) return in the home country, that also may be free of Thai tax because the gain would have been converted to savings, at that point.  

 

50) We do not know at this time, exactly  how the Thai Revenue will chose to distinguish between  capital and  gain, what is described above is only one approach. Another approach is apportionment, which is where every transfer from the combined capital and gain, contains a mix of capital and gain and this continues until the total amount is exhausted. Yet a third possibility is that the income is remitted first and that capital always follows. We are told by one of our sources of information that any remittance of a capital gain will contain both parts and that it is not possible to declare the remittance solely as one or the other. We will need to remain vigilant for news on this issue.

 

51) Lastly, It is clear from the Sherings Q&A link below that CG resulting from the sale of foreign assets, whilst not resident in Thailand, are free of Thai tax. As a stop gap measure and for planning purposes, selling the assets before moving to Thailand would appear tax efficient, as would remitting the proceeds whilst not Thai tax resident. 

[Chabie]

Thank you for this valuable resource. If I transferred payments directly from an acount in overseas to a Thai business without going through my Thai bank account, is this taxable income? This may be similar to the credit card issue.

[Mike Lister]

This is very near a final draft so I'll put it up here in case anyone has questions. When it is finalised, I will incorporate it into the document:

 

The Tax Implications of Remittances

 

If you receive funds in Thailand, you must determine whether they represent assessable income or not. If they are assessable, you must report them on a tax return, subject to minimum threshold amounts. You are the only person who can do this because you are the only person who knows.

 

Similarly, if you remit funds to Thailand from overseas, to someone other than yourself, you must also determine if those funds are assessable and if they are, declare them on a tax return, subject to threshold amounts. Just because you remit funds to another person in Thailand and the money does not enter your bank account, does not mean those funds escape tax assessment.

 

For example, a remittance from your overseas account, to a Thai property developer, in order to buy property in Thailand, must still be assessed for Thai tax. If that remittance comprises exempt income, it does not need to be declared on a Thai tax return. But if it comprises taxable income, the money must be declared.

 

In a second example, funds that you remit to another person, from overseas, might be intended as a Gift, but for your own tax declaration this intention does not matter. If the funds you remitted to another person are from your assessable income as listed in RD 161/2566 you have to declare them and you will  have to pay personal income tax on them.

 

The recipient of the Gift, may also need to report the Gift and pay Gift Tax on the amount. Gift tax for customary gifts from close relatives is only due if the gift is more than 10m THB (20m for legally married wife, parents or descendants)

 

Along the same lines as the above, if somebody sends you money in Thailand, it may be deemed to be a Gift, which under Gift Tax rules is not assessable here, subject to the amounts involved. The Thai Revenue may require further details of that Gift to ensure it is genuine and not income disguised as a Gift.

 

As an over arching principle, the Thai Revenue does not care what the purpose is of the remitted funds, or their intended use. The Revenue is only interested in the amounts that you declare and what you say the source of those funds was, which you may need to prove, to the satisfaction of the TRD.

[Mike Lister]

On 5/8/2024 at 2:52 PM, Chabie said:

Thank you for this valuable resource. If I transferred payments directly from an acount in overseas to a Thai business without going through my Thai bank account, is this taxable income? This may be similar to the credit card issue.

The answer to your question is in the previous post which discusses exactly this issue. The answer is yes, that remittance is subject to tax assessment in exactly the same way it would be if it was received directly by you, even though it never enters your bank account. If the remittance contains exempt funds, there is no need to assess them for tax, but if they don't they must be subject to assessment.

[Mike Lister]

I have updated the Introduction to Tax document in the OP, with a new version.

[topt]

2 hours ago, Mike Lister said:

The member who wrote to me, shall remain nameless so please don’t aks me to say who they are:

Sorry Mike but anybody who has been closely following the long thread will know anyway...........

[Aforek]

3 days ago there was a meeting between French and Thai representatives about this tax, and there was one point that I misunderstood, perhaps we will have to declare what we earned abroad (for me, pension) and we will have to pay tax (first question: we pay tax on what? what we transferred to Thailand? so why declare what we earned abroad? in France, we declare our income in April-May, therefore after March 31; The Thai solution is that we make our declaration, we pay a tax, we send them our tax notice and they reimburse us (only if we ask for it!) all this is completely absurd, why not only declare what we transferred to Thailand? maybe I'm mixing things up, please enlighten me THANKS

[Mike Lister]

5 minutes ago, Aforek said:

3 days ago there was a meeting between French and Thai representatives about this tax, and there was one point that I misunderstood, perhaps we will have to declare what we earned abroad (for me, pension) and we will have to pay tax (first question: we pay tax on what? what we transferred to Thailand? so why declare what we earned abroad? in France, we declare our income in April-May, therefore after March 31; The Thai solution is that we make our declaration, we pay a tax, we send them our tax notice and they reimburse us (only if we ask for it!) all this is completely absurd, why not only declare what we transferred to Thailand? maybe I'm mixing things up, please enlighten me THANKS

Only funds that are remitted to Thailand are potentially taxable, Thailand does not tax global income.

[matta01]

Regarding the meeting between French and Thai authorities, the point of discussion was Article 18 of the DTA, where the Thai services cited an English version stating that the tax could be claimed by France and Thailand on the one hand. The French-language treaty states that only the state that pays the pension can claim the tax. ( only one word is the problem " maybe")  The French recognize and are not aware of an English-language treaty. This English copy is therefore not signed There is only a French and Thai treaty that has been signed.

 

Question for Mike If one has paid tax on, for example, a pension, in which section should this be stated on the tax return and can you therefore adjust the document accordingly?

[Mike Lister]

3 minutes ago, matta01 said:

Regarding the meeting between French and Thai authorities, the point of discussion was Article 18 of the DTA, where the Thai services cited an English version stating that the tax could be claimed by France and Thailand on the one hand. The French-language treaty states that only the state that pays the pension can claim the tax. ( only one word is the problem " maybe")  The French recognize and are not aware of an English-language treaty. This English copy is therefore not signed There is only a French and Thai treaty that has been signed.

 

Question for Mike If one has paid tax on, for example, a pension, in which section should this be stated on the tax return and can you therefore adjust the document accordingly?

There is no place on the current form to put that information because it means invoking the DTA. We're waiting to see what the new tax form looks like in the hope it will yield some clues about what is required.

[matta01]

If there is no room whatsoever to place the amount of tax already paid on a Thai tax return, how does one calculate the tax?

A) suppose you bring 1,000,000 THB into Thailand you deduct the deductions as follows: 60,000 THB + 190,000 THB + 100,000 THB remains 650,000 THB
you then calculate according to the tax brackets. First tax bracket no tax , second tax bracket is 5% and so on...

Thus, on the 650,000 THB you need to pay 27,000 baht according to the rules. However, now you can say I have already paid 80,000 baht tax in my home country  result: here you must pay 27.000 THB minus 80.000 THB that you has pay this means you do not pay tax

or

B) you bring 1,000,000 THB into Thailand you deduct the deductions 60,000 THB + 190,000 THB + 100,000 THB + the 80,000 THB that you have already paid in your home country 

remains 570.000 THB
you then calculate the tax brackets, first tax bracket has no tax, second 5% and so on
result you pay 19,500 THB tax

[Mike Lister]

5 hours ago, matta01 said:

If there is no room whatsoever to place the amount of tax already paid on a Thai tax return, how does one calculate the tax?

A) suppose you bring 1,000,000 THB into Thailand you deduct the deductions as follows: 60,000 THB + 190,000 THB + 100,000 THB remains 650,000 THB
you then calculate according to the tax brackets. First tax bracket no tax , second tax bracket is 5% and so on...

Thus, on the 650,000 THB you need to pay 27,000 baht according to the rules. However, now you can say I have already paid 80,000 baht tax in my home country  result: here you must pay 27.000 THB minus 80.000 THB that you has pay this means you do not pay tax

or

B) you bring 1,000,000 THB into Thailand you deduct the deductions 60,000 THB + 190,000 THB + 100,000 THB + the 80,000 THB that you have already paid in your home country 

remains 570.000 THB
you then calculate the tax brackets, first tax bracket has no tax, second 5% and so on
result you pay 19,500 THB tax

 

The standard tax form does not contain a section that allows filers to activate the terms of DTA and note the tax paid overseas. As previously said, we are waiting for the new tax form to be unveiled, which should be shortly.

[Mike Lister]

A poster in another thread passed comment about the tax guide that made me think, The following is my reply which I'm cross posting here in order to get thoughts and opinions:

 

I recognised some weeks/months ago that the entire document needs to be rewritten/reformatted and structured differently, it has grown because new pieces have been added/inserted piecemeal, to the point where it is now clumsy and confused reading. What I had wanted to do was to provide two parts to each topic, "what the rules say" and "what we think". I haven't had the time to do that recently, mostly because tax thread management has taken up so much of my time......(you know who you are!). If you or anyone else has thoughts about this, I'll be interested to hear them. Similarly, if there's anyone out there who is interested in participating in this rewrite, please contact me.

[Mike Lister]

The document in the OP has been updated to reflect our latest views on Gift Tax.

[ThaiPauly]

On 4/30/2024 at 7:42 AM, Mike Lister said:

I have updated the document to include various things, including:

 

- greater clarity of some points

- sample completed tax return link

- map of TRD regions/districts

- described the tax return filing process more fully

- clarified that TRD fines for not filing a return when no tax is due are not always levied

- linked the TRD e-filing site where lists of agents can be founds

- described the TIN process more fully.

 

I continue to have ad-hoc problems with some links, all of which work fine in the master copy of the guide on my desktop but sometimes fail when the document is uploaded. Even after checking the links, once the document is uploaded, they work fine for me but not so for others!  This is WIP. 

Hi Mike, a quick question.

 

If my offshore banking statement shows that there was 40,000 pounds in my account before 1st January this year then that money can be brought to Thailand tax exempt.

 

Is this correct?

[Mike Lister]

8 minutes ago, ThaiPauly said:

Hi Mike, a quick question.

 

If my offshore banking statement shows that there was 40,000 pounds in my account before 1st January this year then that money can be brought to Thailand tax exempt.

 

Is this correct?

Correct

 

 

[Mike Lister]

I have updated the Gift Tax para 77 to reflect Sin Suan Tua:

 

77) Two additional points on this subject are: 1) Funds that are gifted, must be for the use of the person to whom they are gifted. 2) Gifts can be revoked later and reclaimed, under specific circumstances, such as if the receiver of the gift defames the Gifter or fails to take care of their serious medical needs. However, Gifts to a spouse become Sin Suan Tua or the sole property of the spouse, under marital law the gift is not regarded as conjugal property. Until the circumstances surrounding Gift Tax and all it entails, becomes more clear,, it is critical that anyone wishing to use Gift Tax, seeks professional advice.