Legal Strategies to Reduce Thai Tax

[Mike Lister]

Several members are itching to discuss ways of avoiding paying tax in Thailand and have been asked not to. This is because discussions about legal ways to mitigate/reduce/avoid tax, nearly always end up discussing illegal ways to evade tax, which must not be discussed here. Part of the problem is that these things are not always black and white and the area of grey that exists in the middle is often open to interpretation, which differs from person to person.

 

If everyone promises to behave and not cross the line or play word games, we can discuss ways to legally mitigate/reduce/avoid tax. If however the discussions start to go in the wrong direction, not even a portable defibrillator will save it. It is therefore in members best interests to ensure no lines are crossed and ensure the debate is self managed. 

 

I’ll start, if you want to avoid paying tax in Thailand:

 

1) Do not become Thai tax resident by remaining in Thailand more than 179 days in any calendar year.

2) Do not remit more assessable income to Thailand than your tax allowances/deductions/zero rated tax band (TEDA) allow.

 

Over to you!

[PJ71]

10 hours ago, Mike Lister said:

Do not become Thai tax resident by remaining in Thailand more than 179 days in any calendar year.

This sounds like the most sensible option.

 

What's the calendar year, 1st Jan - 31st Dec?

[Mike Lister]

11 minutes ago, PJ71 said:

This sounds like the most sensible option.

 

What's the calendar year, 1st Jan - 31st Dec?

Yes

[Presnock]

If one qualifies, get a BOI LTR - check the benefits and qualificatons.  A wealthy pensioner can avoid having to pay taxes on foreign remittances into Thailand.  The BOI will assist with getting a work permit if the applicant wishes to work in Thailand and by getting the LTR can pay lower taxes on the salary from the employment in Thailand.  Just saying.

[patman30]

How much are you allowed to gift the Thai wife each year?
what is the tax threshold for a child's allowance/income?

[treetops]

Pay tax in another country and offset it against any potential Thai tax as per your country's DTA.

[connda]

11 hours ago, Mike Lister said:

1. Do not remit more assessable income to Thailand than your tax allowances/deductions/zero rated tax band (TEDA) allow.

The first option doesn't require too much thinking.  But if you really want to know your exemptions then sit down and calculate your exemptions and determine you exemption threshold.  You may find that your getting excited over nothing.  Then you'll also need to look at your home country's DTA to understand what forms of income are off-limits to the Thai government, for example, the US Social Security payment is only taxable by the US government per the US-Thai Dual Tax Agreement, so then you only have to worry about other earned income like your pension or capital gains. 

Use this form, and crank out a "test scenario" and then you'll know.  In my own case I don't remit anything close to my exemption threshold of 560K THB, so I don't worry about it. 

Thai_Tax_Form.pdf

[connda]

5 minutes ago, connda said:

The first option doesn't require too much thinking.  But if you really want to know your exemptions then sit down and calculate your exemptions and determine you exemption threshold.  You may find that your getting excited over nothing.  Then you'll also need to look at your home country's DTA to understand what forms of income are off-limits to the Thai government, for example, the US Social Security payment is only taxable by the US government per the US-Thai Dual Tax Agreement, so then you only have to worry about other earned income like your pension or capital gains. 

Use this form, and crank out a "test scenario" and then you'll know.  In my own case I don't remit anything close to my exemption threshold of 560K THB, so I don't worry about it. 

Thai_Tax_Form.pdf

Fyi, being an old fart over 65 years old really helps.  In my case the wife turns 65 next year then we can claim two of those generous "over 65 years old" exemptions.  See!  Marrying an older Thai gal has its perks. 

[connda]

1 hour ago, treetops said:

Pay tax in another country and offset it against any potential Thai tax as per your country's DTA.

The problem is - it doesn't work that way.  The DTA outline the conditions under which a country can lay claim to you as an tax resident as well as which country gets the first shot at taxing your income.  You need to read your DTA.  Like, the fine print. 

[motdaeng]

- transfer only savings (from before 2024) to thailand ... 

[treetops]

38 minutes ago, connda said:

The problem is - it doesn't work that way.  The DTA outline the conditions under which a country can lay claim to you as an tax resident as well as which country gets the first shot at taxing your income.  You need to read your DTA.  Like, the fine print. 

 

I have and I believe it does as I fall under this definition from the UK DTA.

 

Quote

(c) if he has an habitual abode in both Contracting States or in neither of them,
he shall be deemed to be a resident of the Contracting State of which he is a
national

 

[Yumthai]

1 hour ago, motdaeng said:

- transfer only savings (from before 2024) to thailand ... 

... said the ant, what about grasshoppers with only yearly income?

[Mike Lister]

1 minute ago, Yumthai said:

... said the ant, what about grasshoppers with only yearly income?

How large is the gap between your TEDA and the amount you need/want each year to live here?

[Yumthai]

1 minute ago, Mike Lister said:

How large is the gap between your TEDA and the amount you need/want each year to live here?

My personal situation is sorted out for the next couple years, I was just thinking about people who don't have enough years savings prior 2024.

[Mike Lister]

2 minutes ago, Yumthai said:

My personal situation is sorted out for the next couple years, I was just thinking about people who don't have enough years savings prior 2024.

In which case, those people need to make that same calculation, because that's their starting point. Are there ways to increase the TEDA? Is the gap manageable? What are the options?

[Lacessit]

The three ways I can think of in terms of reducing tax in Thailand are as follows:

 

1/ Getting married to a Thai, to take maximum advantage of allowances.

 

2/ Only remitting funds from savings which can be proved to have accrued prior to January 1, 2024.

 

3/ Bringing in cash to Thailand when returning from one's country of origin.

[Mike Lister]

3 minutes ago, Lacessit said:

The three ways I can think of in terms of reducing tax in Thailand are as follows:

 

1/ Getting married to a Thai, to take maximum advantage of allowances.

 

2/ Only remitting funds from savings which can be proved to have accrued prior to January 1, 2024.

 

3/ Bringing in cash to Thailand when returning from one's country of origin.

Number 1 sounds a bit drastic, its only 60K you know, the wedding alone will cost you three times that at least. :))

[Ben Zioner]

3 hours ago, patman30 said:

How much are you allowed to gift the Thai wife each year?

Most people don't realise that they are supposed to pay IT on the gift they make, while the wife will be exempt.

[connda]

1 hour ago, treetops said:

I have and I believe it does as I fall under this definition from the UK DTA.

Excellent. 

[Ben Zioner]

21 minutes ago, Lacessit said:

3/ Bringing in cash to Thailand when returning from one's country of origin.

Would need to be THB, changers in Thailand will record ID.

[Lorry]

Buy a condo from savings you had before 2024. Do not rent.

 

Bring things to Thailand . Don't bring money to buy those things here (if price is similar). Remitting money is taxed, bringing stuff is tax-free.

E.g. buy from iHerb (pay with your home-country account), not from a local (who imports from iHerb anyway).

Buy your mobile at home,  it just got 35% more expensive here.

 

Spend your holidays outside Thailand, the family trip to Samet could become a family trip to Malaysia, which isn't more expensive but has a lot more snob-appeal. Pay in Malaysia with money from your home country.

 

Buy air tickets abroad,  don't buy them in Thailand (often cheaper abroad anyway)

 

Do not be the banker for other people (mostly family), all must use their own accounts for their expenses.

 

Do not sponsor too many girls with regular payments.  There are other ways to help them.

 

 

 

 

[Mike Lister]

1 hour ago, Lorry said:

Buy a condo from savings you had before 2024. Do not rent.

 

Bring things to Thailand . Don't bring money to buy those things here (if price is similar). Remitting money is taxed, bringing stuff is tax-free.

E.g. buy from iHerb (pay with your home-country account), not from a local (who imports from iHerb anyway).

Buy your mobile at home,  it just got 35% more expensive here.

 

Spend your holidays outside Thailand, the family trip to Samet could become a family trip to Malaysia, which isn't more expensive but has a lot more snob-appeal. Pay in Malaysia with money from your home country.

 

Buy air tickets abroad,  don't buy them in Thailand (often cheaper abroad anyway)

 

Do not be the banker for other people (mostly family), all must use their own accounts for their expenses.

 

Do not sponsor too many girls with regular payments.  There are other ways to help them.

 

 

 

 

Sensible and practical things many will not even think about

[jerrymahoney]

As a citizen of USofA, make sure that any remitted income not covered by 1. is covered by 3.

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

 

3. Annuities derived and beneficially owned by a resident of a Contracting State shall be taxable only in that State.

 

https://www.irs.gov/pub/irs-trty/thailand.pdf

 

 

[Lacessit]

8 hours ago, Ben Zioner said:

Would need to be THB, changers in Thailand will record ID.

Yes they do. Does that get reported to the tax authorities, though?

[Mike Lister]

31 minutes ago, Lacessit said:

Yes they do. Does that get reported to the tax authorities, though?

Money changers must be licensed and must report to BOT, although I don't know at what level, aggregated or detail. I strongly suspect BOT is interested more in volumes but they may allow TRD to access or share the data, if required.

[Lacessit]

26 minutes ago, Mike Lister said:

Money changers must be licensed and must report to BOT, although I don't know at what level, aggregated or detail. I strongly suspect BOT is interested more in volumes but they may allow TRD to access or share the data, if required.

I am guessing there will be thresholds applied, amounts more than 100K, 500K baht or 1 million baht attract the interest of the taxman. Lower than that, it's not worth the effort.

[Mike Lister]

Just now, Lacessit said:

I am guessing there will be thresholds applied, amounts more than 100K, 500K baht or 1 million baht attract the interest of the taxman. Lower than that, it's not worth the effort.

Yes, I agree.

[jerrymahoney]

Just to note to my comment above, I am on the 65K+ per month FTT transfer retirement extension protocol so bringing in $US cash under the radar is no help to me.

[Mike Lister]

2 minutes ago, jerrymahoney said:

Just to note to my comment above, I am on the 65K+ per month FTT transfer retirement extension protocol so bringing in $US cash under the radar is no help to me.

How much is your TEDA?

[jerrymahoney]

10 minutes ago, Mike Lister said:

How much is your TEDA?

More than I remit.