Legal Strategies to Reduce Thai Tax

[Mike Lister]

Let's make this as simple and crystal clear as we can for everyone:

 

1 - Cyril lives in Thailand year round with his lovely wife Nookie. He decides to give Nookie a present so he transfers 1,000 Pounds from his account with HSBC UK, to his wife's account in Thailand and says its a gift. Cyril's account at HSBC contains only savings that he earned a decade ago. The money that Cyril remitted to Nookie's account in Thailand was not assessable to Thai tax because it was savings earned before 1 January 2024. Nookie also had no tax liability because the amount was under the reporting threshold.

 

2 - The following year, Cyril decides to give Nookie another gift but this time the money, 1,000 Pounds, came from his account at Barclays Bank London which contains untaxed income he derives from his dealings in the UK. Once that income is remitted direct to Nookie's account in Thailand, it becomes assessable income that he must report on his Thai tax return. Nookie however doesn't have to report anything because the amount is under the Gift Tax threshold.

 

3 - In the third year, Cyril is fed up with Nookie so she doesn't get a gift and he transfers 1,000 Pounds from his Barclays account, to his own account in Thailand. That money is assessable to Thai tax and must be reported on a Thai tax return.

 

Agreed?

 

 

[JimGant]

1 hour ago, Mike Teavee said:

Ahh, so  we're debating whether a Thai Tax Resident sending his wife a Gift from his overseas account would be liable for Tax on the Gift even if it doesn't come into his account? 

 

IMHO the answer is NO as you are not remitting any money for yourself & (in the case of a genuine gift) will receive no benefits from that Gift 

Remitted assessable income is subject to Thai taxation -- regardless of where this money eventually ends up.

[Mike Teavee]

Just now, Mike Lister said:

Let's make this as simple and crystal clear as we can for everyone:

 

1 - Cyril lives in Thailand year round with his lovely wife Nookie. He decides to give Nookie a present so he transfers 1,000 Pounds from his account with HSBC UK, to his wife's account in Thailand and says its a gift. Cyril's account at HSBC contains only savings that he earned a decade ago. The money that Cyril remitted to Nookie's account in Thailand was not assessable to Thai tax because it was savings earned before 1 January 2024. Nookie also had no tax liability because the amount was under the reporting threshold.

 

2 - The following year, Cyril decides to give Nookie another gift but this time the money, 1,000 Pounds, came from his account at Barclays Bank London which contains untaxed income he derives from his dealings in the UK. Once that income is remitted direct to Nookie's account in Thailand, it becomes assessable income that he must report on his Thai tax return. Nookie however doesn't have to report anything because the amount is under the Gift Tax threshold.

 

3 - In the third year, Cyril is fed up with Nookie so she doesn't get a gift and he transfers 1,000 Pounds from his Barclays account, to his own account in Thailand. That money is assessable to Thai tax and must be reported on a Thai tax return.

 

Agreed?

 

 

I disagree with #2 & believe that it's not assessable income for him as the money was sent directly to his wife, it was a "Gift".

 

The only case study that I'm aware of is when Thaksin's wife was convicted of Tax Evasion, part of which was a wedding gift, the gift was challenged on the grounds that it was given a couple of years after the Wedding not on the grounds that she should have been taxed on it regardless of when it was given. 

 

She was convicted but the conviction overturned on appeal, if she had to pay tax on the gift regardless of when it was given then she would still have been guilty. 

[Yumthai]

30 minutes ago, Mike Teavee said:

Surely in the case where somebody sends the money directly from an overseas account, the money became a Gift before it was remitted so any tax on it would only be due in the source country unless it's value exceeded the thresholds. 

That is the only point to discuss: what happens first? Gift or Remittance?

I agree with you, imo gift rules prevail over remittance rules i.e. gift event occurs first then remittance event if any.

 

For instance, a Thai tax resident has $1K cash in his home country that he gifts his Thai tax resident wife on 01/05/2024. He can state it in a nice letter/email as proof. From 01/05/2024 gift is acted and this money belongs to his wife wherever it is.

 

There are many ways her $1K cash gift can be repatriated to Thailand (she could fly to pick it up, ask a third-party to bring it back, use online transfer, ...) but in any case the remittance event (tax exempted as it's a gift) will always occur for the giftee (wife) not the gifter.

 

That's my view.

[topt]

2 minutes ago, Mike Lister said:

Agreed?

Isn't example 2 the only one that is really in doubt and being debated?

 

Unless I have misunderstood (very likely) based on @Dogmatix examples previously posted one could possibly disagree - forgetting the details about occasion etc which may have an impact.

 

[Mike Lister]

Just now, Mike Teavee said:

I disagree with #2 & believe that it's not assessable income for him as the money was sent directly to his wife, it was a "Gift".

 

The only case study that I'm aware of is when Thaksin's wife was convicted of Tax Evasion, part of which was a wedding gift, the gift was challenged on the grounds that it was given a couple of years after the Wedding not on the grounds that she should have been taxed on it regardless of when it was given. 

 

She was convicted but the conviction overturned on appeal, if she had to pay tax on the gift regardless of when it was given then she would still have been guilty. 

Okay, are you aware of anything in the Revenue Code that allows Cyril, in Example #3, to escape tax on the remittance or to write off that income or are you relying solely on the case study?

[JimGant]

2 hours ago, KhunHeineken said:

This a quote from Dogmatix:

There is nothing in the thus amended Revenue Code, as some ignorant, English monoglot commentators have suggested, that delineates how spouses may utilize these love gifts or anything, as some have even more ludicrously surmised, saying that gifts may only be made from income already subjected to Thai PIT.

Yes, gifts may only be made from income already subjected to Thai PIT, or per DTA, income subjected to home country taxation.

[Mike Teavee]

2 minutes ago, Mike Lister said:

Okay, are you aware of anything in the Revenue Code that allows Cyril, in Example #3, to escape tax on the remittance or to write off that income or are you relying solely on the case study?

 

It's always harder to prove a negative so can somebody point to anywhere in the Revenue code that says a Gift is assessable Income for the person doing the Gifting, we've established it's not (up to the thresholds) for the person receiving the gift. 

 

 

Edited May 22 by Mike Teavee

[Mike Lister]

3 minutes ago, topt said:

Isn't example 2 the only one that is really in doubt and being debated?

 

Unless I have misunderstood (very likely) based on @Dogmatix examples previously posted one could possibly disagree - forgetting the details about occasion etc which may have an impact.

 

Yes, example #2 is the only one that is not agreed. But the issue is not the occasion of the Gift, the issue is whether Cyril is remitting assessable income that he must declare on his tax return.

[topt]

Just now, JimGant said:

Yes, gifts may only be made from income already subjected to Thai PIT, or per DTA, income subjected to home country taxation.

Sorry if this has been posted already but you have any official link for that? 

[Mike Lister]

1 minute ago, Mike Teavee said:

 

It's always harder to prove a negative so can somebody point to anywhere in the Revenue code that says a Gift is assessable Income to for the person doing the Gifting. 

 

 

Is it not a remittance before it is a Gift?

[Mike Teavee]

1 minute ago, Mike Lister said:

Is it not a remittance before it is a Gift?

Not IMHO, it's a Gift at the point it leaves my account, remittance is just the transport mechanism to get it to her.

 

If I bought the GF a 400K Rolex from Singapore & had it delivered to her in Thailand, would I need to pay income tax on its value ?

Edited May 22 by Mike Teavee

[Mike Lister]

1 minute ago, Mike Teavee said:

Not IMHO, it's a Gift at the point it leaves my account, remittance is just the transport mechanism to get it to her.

 

If I bought the GF a 400K Rolex from Singapore & had it delivered to her in Thailand, would I need to pay income tax on its value ?

Re. Rolex: where did the funds come from, which country, assessable income or not?

 

 

[Mike Teavee]

1 minute ago, Mike Lister said:

Re. Rolex: where did the funds come from, which country, assessable income or not?

Let's say it came from Capital Gains on share sales (SG or UK) where no tax was paid...  

Edited May 22 by Mike Teavee

[topt]

2 minutes ago, Mike Lister said:

Is it not a remittance before it is a Gift?

 

Just now, Mike Teavee said:

Not IMHO, it's a Gift at the point it leaves my account, remittance is just the transport mechanism to get it to her.

 

If I bought the GF a 400K Rolex from Singapore & had it delivered to her in Thailand, would I need to pay income tax on its value ?

The problem is we are back to our individual and collective interpretations.

 

I certainly do not know the answer but I am a little disappointed that it does not appear to have been covered in any of the country specific meetings with the RD that I am aware of. 

[Mike Lister]

6 minutes ago, Mike Teavee said:

Let's say it came from Capital Gains on share sales (SG or UK) where no tax was paid...  

Again, I'm at least 51% in favor of it being assessable income.

 

As others have pointed out we're into an area of pure speculation and guesswork, albeit intelligent guesses based on something or other. I don't think I can offer anything else to help decide this, one way or the other.

 

 

[JimGant]

30 minutes ago, Mike Lister said:

Once that income is remitted direct to Nookie's account in Thailand, it becomes assessable income that he must report on his Thai tax return. Nookie however doesn't have to report anything because the amount is under the Gift Tax threshold.

Of course. Once that money crossed the border, it makes no never mind where it ended up. It is now remitted, assessable income (assuming it's assessable per the DTA). Nookie can call that cash input anything she wants, best just not call it anything. If she called it income for some kind of services provided, then she'd be subject to having to file a Thai tax return. Calling it a gift -- then, yeah, the 20M cutoff for gift tax. Or if the gifter said, "Pay me back in 30 years," then it's now a loan, not a gift. Anyway, Nookie just remain quiet. Cyril, pay the man for that remittance -- again, final destination of remittance completely irrevelant to income tax situation.

[redwood1]

2 minutes ago, topt said:

 

The problem is we are back to our individual and collective interpretations.

 

I certainly do not know the answer but I am a little disappointed that it does not appear to have been covered in any of the country specific meetings with the RD that I am aware of. 

 

Now your coming close to getting it......The Thais love to leave vast tracks of open space around rules and laws so they can be interpreted in a way that is favorable to the interrupter...

 

This whole thread going back to day #1 last year endlessly keeps trying to squeeze fluidity into something solid...And its never going to work....The Very rich here and many others here simply  dont want it....

[Lorry]

1 hour ago, Mike Teavee said:

 

Why would he be over the moon? He's 20 Million out of pocket & got zero benefit from it beyond the warm feeling of giving somebody a Gift, he'd be in a much better position if he simply left the money where it was. 

 

Edit: Again, I'm talking about a direct remittance to the Giftee from overseas & not a remittance to his Thai bank account & then a gift from there to the Giftee. 

 

Most important: Gift tax is a tax the receiver has to pay.

(In Thailand - JimGant says in the US the gifter has to pay it, but we are discussing Thai taxes here).

 

Now the law says "no gift tax is due for gifts under 20m ... etc"

"No gift tax is due" means: the one who normally would have to pay gift tax doesn't have to pay gift tax "for gifts under 20m...etc".

That one is the receiver - the receiver doesn't have to pay gift tax.

 

Example: 

I gift 200MB to my Thai wife in Bangkok.  She is the receiver and has to pay gift tax on the 200MB. But it's only 5%, and the first 20m are completely exempt from gift tax. So, she only has to pay 5% x 180m = 9m.

This is a very good deal for her, because if she would have to pay regular income tax on the 200m, her tax burden would be almost 35% x 200m = 70m.

 

Now, if I am a stingy Euro poor and just gift 20m to my wife,  she (she! You got it? Not me!) doesn't have to pay gift tax at all.

 

But nowhere does the gift tax (that the receiver may have to pay) have anything to do with me, how I got this money, whether I paid or have to pay taxes on this money, whether it's assessable income or not ... all these are questions that have nothing to do with gift tax.

 

The gift tax is a tax exemption for the one who has to pay it, i.e. the receiver. 

It's not a tax exemption for the giver. 

 

The wishful thinking here always runs like this:

"A gift from parents is tax free" - ha! I can send my kids 20m tax-free!

But if you read the whole text it says "income regarded as a gift from parents is tax free". If you send 20m to your kids, its not you who has "income regarded as a gift from parents". Its your kid who has this,  and your kid gets the 20m tax-free, ie your kid doesn't have to pay taxes on those 20m.

You would have a tax-free gift from parents if your parents would gift 20m to you. 

 

I may be wrong, and the gift tax is really a tax exemption for the giver (and also for the receiver??? That's how people here want to have it).

That's not the wording of the law, though. 

Maybe @Dogmatixcan elaborate on the case of Potjaman - who was supposed to pay which tax in this case? Or any other cases?

 

 

[JimGant]

37 minutes ago, Mike Teavee said:

she had to pay tax on the gift regardless of when it was given then she would still have been guilty. 

She had to pay tax on the "bogus" gift amounts given to her cooks, gardeners, drivers, etc, from whom the proceeds were redeposited into her bank account. Pretty sloppy job of disguising gifts.

[Lorry]

39 minutes ago, Mike Teavee said:

I disagree with #2 & believe that it's not assessable income for him as the money was sent directly to his wife, it was a "Gift".

 

The only case study that I'm aware of is when Thaksin's wife was convicted of Tax Evasion, part of which was a wedding gift, the gift was challenged on the grounds that it was given a couple of years after the Wedding not on the grounds that she should have been taxed on it regardless of when it was given. 

 

She was convicted but the conviction overturned on appeal, if she had to pay tax on the gift regardless of when it was given then she would still have been guilty. 

This answers my question above.

Looks like I am wrong

[JBChiangRai]

If I gift pension money, tax deducted in the UK, to someone in Laos, is it assessable income for me in Thailand?

If I gift pension money, tax deducted in the UK, to someone in Thailand, is it assessable income for me in Thailand?

 

I think the issue here is it's only assessable in Thailand under the DTA if I remit it to myself in Thailand, the gift was made in the UK and assessable for UK tax only.

 

I hope!

[Mike Lister]

Just now, Lorry said:

This answers my question above.

Looks like I am wrong

It's not conclusive yet, I don't think.

[Lorry]

5 minutes ago, JimGant said:

Of course. Once that money crossed the border, it makes no never mind where it ended up. It is now remitted, assessable income (assuming it's assessable per the DTA). Nookie can call that cash input anything she wants, best just not call it anything. If she called it income for some kind of services provided, then she'd be subject to having to file a Thai tax return. Calling it a gift -- then, yeah, the 20M cutoff for gift tax. Or if the gifter said, "Pay me back in 30 years," then it's now a loan, not a gift. Anyway, Nookie just remain quiet. Cyril, pay the man for that remittance -- again, final destination of remittance completely irrevelant to income tax situation.

That's how I see it, too

[Mike Lister]

1 minute ago, JBChiangRai said:

If I gift pension money, tax deducted in the UK, to someone in Laos, is it assessable income for me in Thailand?

If I gift pension money, tax deducted in the UK, to someone in Thailand, is it assessable income for me in Thailand?

 

I think the issue here is it's only assessable in Thailand under the DTA if I remit it to myself in Thailand, the gift was made in the UK and assessable for UK tax only.

 

I hope!

1 - Laos....no, not assessable in Thailand

 

2 - I think yes, not everyone agrees. The jury is still out.

[Mike Teavee]

12 minutes ago, JBChiangRai said:

If I gift pension money, tax deducted in the UK, to someone in Laos, is it assessable income for me in Thailand?

If I gift pension money, tax deducted in the UK, to someone in Thailand, is it assessable income for me in Thailand?

 

I think the issue here is it's only assessable in Thailand under the DTA if I remit it to myself in Thailand, the gift was made in the UK and assessable for UK tax only.

 

I hope!

How about if I make a gift from my UK Bank Account (untaxed income) directly to a government recognised charity in Thailand is that tax assessable for me in Thailand (Tax Resident)? 

 

 

 

[JimGant]

12 minutes ago, Lorry said:

I gift 200MB to my Thai wife in Bangkok.  She is the receiver and has to pay gift tax on the 200MB. But it's only 5%, and the first 20m are completely exempt from gift tax. So, she only has to pay 5% x 180m = 9m.

This is a very good deal for her, because if she would have to pay regular income tax on the 200m, her tax burden would be almost 35% x 200m = 70m.

Why define the nature of the 200MB? The gift tax journey is about having Thai fat cats having to pay (or have their recipients pay) a tax for bygone future estate inheritance tax receipts on assets that may have been given away as gifts. Don't define it as a gift, but as a loan, due in 30 years (or some ridiculous term, known only to you, not the tax folks). Bottom line: No gift tax, since no gift.

 

And why would she have to pay income tax on the 200M -- no earnings indicated here.

[Mike Lister]

3 minutes ago, Mike Teavee said:

How about if I make a gift from my UK Bank Account (untaxed income) directly to a government recognised charity in Thailand is that tax assessable for me in Thailand (Tax Resident)? 

 

 

 

If a Gift to a charity, you get to write that off as a deduction

[Mike Teavee]

Just now, Mike Lister said:

If a Gift to a charity, you get to write that off as a deduction

So you're saying that I would have to report it as assessable income & then claim a deduction on my return? 

 

 

What's the point in having Gifts at all then as by the logic being proposed here If I were to Gift my wife 30Million out of untaxed funds from the UK, I'd have to pay the tax on the whole 30Million & then she'd have to pay Gift Tax on 10Million... Isn't that a classic example of double taxation?

[Mike Teavee]

27 minutes ago, JimGant said:

She had to pay tax on the "bogus" gift amounts given to her cooks, gardeners, drivers, etc, from whom the proceeds were redeposited into her bank account. Pretty sloppy job of disguising gifts.

The gifts that I read about were shares in a company given on occasion of a family wedding but if she did give monetary gifts to her staff then why if she was still liable to pay tax on the money?  

 

Edited May 22 by Mike Teavee