Legal Strategies to Reduce Thai Tax

[Ben Zioner]

On 5/18/2024 at 6:40 PM, connda said:

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. 

Hmmmhhh, it would cost me a lot more the 190000 in extra trips to Bangkok, if my wife was over 65.

[KhunHeineken]

19 hours ago, BangkokHank said:

I put the first tranche of the money that I sent over last December into physical gold. It's already up over 30% since I bought it six months ago. That makes up for several years worth of paltry interest at a Thai bank.

Such investment strategies may not always go in your favor.  It's a risk. 

 

I mentioned in another post the Thai banks may not be so happy with this policy because they will miss out on remitted funds from foreigners.  You remitted funds and the Thai bank still missed out. 

[KhunHeineken]

29 minutes ago, Ben Zioner said:

Hmmmhhh, it would cost me a lot more the 190000 in extra trips to Bangkok, if my wife was over 65.

Interesting comment. 

 

Got me thinking, say an expat needed emergency medical treatment, possibly a life saving operation.  That would require the immediate remittance of a large sum of money, and possibly further transfers for ongoing recovery or treatment.  

 

Of course, at such a time, money is the least of your worries, but that medical treatment or operation has now costed a lot more due to the remittance tax the transfer/s has attracted. 

Edited May 23 by KhunHeineken

[Mike Lister]

45 minutes ago, KhunHeineken said:

I'll ask the obvious, but probably most relevant question to many expats here, what happens if Cyril transfers his pension to Nookie every month? 

 

Not savings.  Not earnings.  Not the proceeds from a sale of a property.  Etc etc. 

 

Nothing else but his pension, on an ongoing basis. 

Nookie would have to declare that pension as assessable income and pay tax on it. Cyril could declare the payments were a gift but the frequency of them would likely come under suspicion and the TRD will probably ask for more information. Even though the tax burden had been transferred from Cyril to Nookie, the TRD would almost certainly view it as evasion, if for no other reason than that's what it is. The TRD would question how Cyril managed to maintain his life style in the absence of any income of his own. This would result in Cyril and Nookie both being fined and sent to the big house for a period of attitude readjustment, after which Cyril would be deported, blacklisted and destined to live in Morecambe forever. 

[Mike Lister]

17 minutes ago, KhunHeineken said:

Exactly.  People seem to forget TIT, and foreigners are an easy target.  With no rights here, we are at the mercy of the Thai government. 

An exaggeration, all Thai laws and the Revenue Code, apply equally to people of all nationalities, the same way they do to Thai nationals.

[Mike Lister]

48 minutes ago, tandor said:

Mike (or others)..do you know if the Australian Aged Pension (Services Australia or Social Security Dept) is Tax exempt here. It seems to me reading that an Australian Superannuation Pension (where one was a State Government employee) is Tax exempt), yet no real clarification from anyone..thanks in advance.

I do not, you would have to look at your DTA, perhaps the thread on Australian tax on pensions etc will be useful.

[Ben Zioner]

21 minutes ago, KhunHeineken said:

Interesting comment. 

 

Got me thinking, say an expat needed emergency medical treatment, possibly a life saving operation.  That would require the immediate remittance of a large sum of money, and possibly further transfers for ongoing recovery or treatment.  

 

Of course, at such a time, money is the least of your worries, but that medical treatment or operation has now costed a lot more due to the remittance tax the transfer/s has attracted. 

Had a Cholecystectomy a few weeks ago, my insurance covered through direct payment of 250K, was wondering if I'd have to include those 250k in my tax return if I had to make one. Fortunately not..

 

But if I lost my LTR privileges the only option would be to seek treatment in Malaysia, possibly Singapore. So another small loss for a Thai industry. And all these small losses added up could become significant. 

Edited May 23 by Ben Zioner

[KhunHeineken]

7 minutes ago, Mike Lister said:

An exaggeration, all Thai laws and the Revenue Code, apply equally to people of all nationalities, the same way they do to Thai nationals.

Not entirely true.  The criminal laws apply equally, but I can't own land here in my name, can you? 

 

I'm simply saying the permission to live here, as opposed to the right to live here, is always held over foreigners.  Thailand does not offer a reasonable pathway to permanent residency and citizenship.  

 

The Thai government says jump to foreigners, and we ask how high, or leave. 

 

In my opinion this policy is an absolute mess, but you watch them turn a baht out of foreigners regardless. 

[Mike Lister]

1 hour ago, JBChiangRai said:

Fred is British and a Thai tax resident, he has a pension in the UK which is taxed at source.  All transfers are from his UK bank.

 

Fred has 3 daughters.

 

a) Daughter 1 is a Thai citizen, living in Thailand and Fred sends her 10M baht to her Thai bank account

b) Daughter 1 is a Thai citizen, living in Thailand and Fred sends her 10M baht to her UK bank account, subsequently maybe years later, she may or may not bring it to Thailand claiming gift allowance.

c) Daughter 2 is a UK citizen spending 4 months only in Thailand, Fred sends her 10M baht to her Thai bank account

d) Daughter 2 is a UK citizen spending 4 months only in Thailand, Fred sends her 10M baht to her UK bank account which she sends to her Thai bank to fund her holiday.

e) Daughter 3 is a Thai Citizen spending 4 month in Laos, Fred sends her 10M baht to her Laos bank account.

 

Which of those do you think count as assessable income for Fred? 

 

Case (b) is particularly interesting

 

The caveat on the following answers is below:

 

It is clear that (a) does not. This is the conventional and traditional application of the Gift Tax rule.

 

It is also clear that (b) does not since the funds do not enter Thailand.

 

Option (c) is also the conventional application of the gift tax rule which is unchanged just because Cyril's daughter ia  US citizen. The key issues here are, the relationship with the receiver of the gift, and the fact the funds enter Thailand.

 

It is clear that point (d) does not because the funds don't enter Thailand

 

Ditto the above in point (e).

 

Caveat - there was a discussion yesterday whether assessable income remitted directly to the receiver of the gift in Thailand remains assessable or not and that remains unproven currently. 

 

 

 

[KhunHeineken]

33 minutes ago, Ben Zioner said:

Had a Cholecystectomy a few weeks ago, my insurance covered through direct payment of 250K, was wondering if I'd have to include those 250k in my tax return if I had to make one. Fortunately not..

 

But if I lost my LTR privileges the only option would be to seek treatment in Malaysia, possibly Singapore. So another small loss for a Thai industry. And all these small losses added up could become significant. 

As expats age, health insurance becomes more and more expensive.  Difficult to pay the premiums without remitting the funds. 

 

For those who self insure, as mentioned, any major treatment will now be indirectly taxed, thus, cost more. 

Edited May 23 by KhunHeineken

[Mike Lister]

2 minutes ago, KhunHeineken said:

As expats age, health insurance becomes more and more expensive.  Difficult to pay the premiums without remitting the funds. 

 

For those who self insure, as mentioned, and major treatment will now be indirectly taxed, thus, cost more. 

Not necessarily, nobody forces the expat to remit funds that are tax assessable in Thailand, most people maintain non-assessable assets such as savings overseas.

[Ben Zioner]

1 minute ago, KhunHeineken said:

As expats age, health insurance becomes more and more expensive.  Difficult to pay the premiums without remitting the funds. 

 

For those who self insure, as mentioned, and major treatment will now be indirectly taxed, thus, cost more. 

Sorry I was babbling, but my point/question was wether the 250K paid directly by Cigna to Bumrungrad, for my medical treatment should be included in my assessable income.

[Mike Lister]

1 minute ago, Ben Zioner said:

Sorry I was babbling, but my point/question was wether the 250K paid directly by Cigna to Bumrungrad, for my medical treatment should be included in my assessable income.

No, you did not remit funds, Cigna did.

[Ben Zioner]

1 minute ago, Mike Lister said:

Not necessarily, nobody forces the expat to remit funds that are tax assessable in Thailand, most people maintain non-assessable assets such as savings overseas.

Savings made prior to Jan 1, 2024.

[JBChiangRai]

15 minutes ago, Mike Lister said:

 

The caveat on the following answers is below:

 

It is clear that (a) does not. This is the conventional and traditional application of the Gift Tax rule.

 

It is also clear that (b) does not since the funds do not enter Thailand.

 

Option (c) is also the conventional application of the gift tax rule which is unchanged just because Cyril's daughter ia  US citizen. The key issues here are, the relationship with the receiver of the gift, and the fact the funds enter Thailand.

 

It is clear that point (d) does not because the funds don't enter Thailand

 

Ditto the above in point (e).

 

Caveat - there was a discussion yesterday whether assessable income remitted directly to the receiver of the gift in Thailand remains assessable or not and that remains unproven currently. 

 

 

 

 

I think between a) and b) it is safer to b)

 

In other words, it is better if the Thai receiver of the gift receives it overseas and they then transfer it to their Thai bank.  There can then be no question about whether it is assessable income for the giver.

[KhunHeineken]

30 minutes ago, Mike Lister said:

Nookie would have to declare that pension as assessable income and pay tax on it. Cyril could declare the payments were a gift but the frequency of them would likely come under suspicion and the TRD will probably ask for more information. Even though the tax burden had been transferred from Cyril to Nookie, the TRD would almost certainly view it as evasion, if for no other reason than that's what it is. The TRD would question how Cyril managed to maintain his life style in the absence of any income of his own.

Wouldn't you agree that my example, and your reply, is the situation of thousands of expats across Thailand? 

 

This would mean, "gifting" is not an option for them. 

 

32 minutes ago, Mike Lister said:

This would result in Cyril and Nookie both being fined and sent to the big house for a period of attitude readjustment, after which Cyril would be deported, blacklisted and destined to live in Morecambe forever. 

Section 37 of the Thai Revenue Code. 

 

https://www.rd.go.th/english/37746.html#:~:text=Section 37 Bis Any person,exceeding 1 year or both.

 

"Section 37 Bis Any person intentionally fails to file tax returns prescribed under this Title in order to evade or in an attempt to evade tax, shall be subject to a fine not exceeding 200,000 Baht or an imprisonment for a term not exceeding 1 year or both."

 

Pretty scary, Mike, but as you say, the law applies equally.  I'm surprised you allowed yourself to post it. 

[Mike Lister]

3 minutes ago, KhunHeineken said:

Wouldn't you agree that my example, and your reply, is the situation of thousands of expats across Thailand? 

 

This would mean, "gifting" is not an option for them. 

 

Section 37 of the Thai Revenue Code. 

 

https://www.rd.go.th/english/37746.html#:~:text=Section 37 Bis Any person,exceeding 1 year or both.

 

"Section 37 Bis Any person intentionally fails to file tax returns prescribed under this Title in order to evade or in an attempt to evade tax, shall be subject to a fine not exceeding 200,000 Baht or an imprisonment for a term not exceeding 1 year or both."

 

Pretty scary, Mike, but as you say, the law applies equally.  I'm surprised you allowed yourself to post it. 

I'm only surprised that I didn't delete your original post which proposed a method of evading Thai tax and is very clearly against forum rules, but I elected instead to explain how and why it was so. Best you make that the last in the series of examples.

[Ben Zioner]

10 minutes ago, JBChiangRai said:

 

I think between a) and b) it is safer to b)

 

In other words, it is better if the Thai receiver of the gift receives it overseas and they then transfer it to their Thai bank.  There can then be no question about whether it is assessable income for the giver.

But I wouldn't be at all surprised if the gift was then included into the daughters income hence subject to income tax.

[Fat is a type of crazy]

1 hour ago, tandor said:

Mike (or others)..do you know if the Australian Aged Pension (Services Australia or Social Security Dept) is Tax exempt here. It seems to me reading that an Australian Superannuation Pension (where one was a State Government employee) is Tax exempt), yet no real clarification from anyone..thanks in advance.

This post from Dinga is helpful -  a bit less than half down the page. Link doesn't work but put in browser it will . 

 

https://aseannow.com/topic/1306896-thai-government-to-tax-remitted.-income-from-abroad-for-tax-residents-starting-2024/page/282/

[JBChiangRai]

19 minutes ago, JBChiangRai said:

 

I think between a) and b) it is safer to b)

 

In other words, it is better if the Thai receiver of the gift receives it overseas and they then transfer it to their Thai bank.  There can then be no question about whether it is assessable income for the giver.

 

6 minutes ago, Ben Zioner said:

But I wouldn't be at all surprised if the gift was then included into the daughters income hence subject to income tax.

 

I don't think that can happen, there is nothing that says a gift must be received in Thailand, this is also in line with advice from www.expattaxthailand.com 

[Mike Lister]

Judging from now deleted posts, several members need to read the tax guide which is linked below:

 

 

[KhunHeineken]

25 minutes ago, Ben Zioner said:

Sorry I was babbling, but my point/question was wether the 250K paid directly by Cigna to Bumrungrad, for my medical treatment should be included in my assessable income.

The insurance company pays the hospital / doctor bills directly.  So I would say no, but this is just my opinion. 

 

I have just posted an example where serious medical intervention could be more expensive under this policy because it usually requires the transfer of large sums of money immediately. 

[Ben Zioner]

1 minute ago, KhunHeineken said:

I have just posted an example where serious medical intervention could be more expensive under this policy because it usually requires the transfer of large sums of money immediately. 

This is where a trip to Malaysia can save hundreds of thousand.

[Mike Lister]

Just now, KhunHeineken said:

The insurance company pays the hospital / doctor bills directly.  So I would say no, but this is just my opinion. 

 

I have just posted an example where serious medical intervention could be more expensive under this policy because it usually requires the transfer of large sums of money immediately. 

I have removed that post. If you want to cite examples or cases, please do so concely without the theatrics.

 

I have also posted a link to the tax guide which I strongly recommend you study because it will answer many if not most of your questions, especially the one regarding the medical emergency scenario.

 

For everyone else: a sudden need to access funds for emergency medical care may alter the year end tax position of tax residents which is why medical insurance is essential, as is access to emergency funds in country.

[KhunHeineken]

33 minutes ago, Mike Lister said:

No, you did not remit funds, Cigna did.

The point I was making was, if the premiums are paid from a Thai bank account, then those funds are remitted.

 

Health insurance is quite expensive, so perhaps a way of remitting less, therefore paying less tax, may be to pay Cigna, or any other insurance company, from your home country bank account.

 

A small tax reduction strategy. 

[Mike Lister]

2 minutes ago, KhunHeineken said:

The point I was making was, if the premiums are paid from a Thai bank account, then those funds are remitted.

 

Health insurance is quite expensive, so perhaps a way of remitting less, therefore paying less tax, may be to pay Cigna, or any other insurance company, from your home country bank account.

 

A small tax reduction strategy. 

If your policy is with a Thai insurer based in Thailand, such as Cigna Thailand, and you paid those premiums from overseas using assessable income, and you didn't declare them on your tax return, that is tax evasion. 

[KhunHeineken]

5 minutes ago, Mike Lister said:

have removed that post. If you want to cite examples or cases, please do so concely without the theatrics.

An expat collapses with a stroke.  He is rushed to hospital.  They run some tests and tell the expat he needs a major operation urgently, or he could die. 

 

The cost of the operation is upwards of 500k Thai baht. 

 

The expat gets on his phone and immediately transfers 500k from a bank account in his home country to his  bank account in Thailand.  He then pulls out his Thai bank visa card and pays for the operation. 

 

He has the operation and recovers. 

 

At the end of the tax year, has the 500k transfer for urgent medical treatment attracted tax as remitted funds?  If it has, the operation has costed more, has it not? 

[Mike Lister]

6 minutes ago, KhunHeineken said:

An expat collapses with a stroke.  He is rushed to hospital.  They run some tests and tell the expat he needs a major operation urgently, or he could die. 

 

The cost of the operation is upwards of 500k Thai baht. 

 

The expat gets on his phone and immediately transfers 500k from a bank account in his home country to his  bank account in Thailand.  He then pulls out his Thai bank visa card and pays for the operation. 

 

He has the operation and recovers. 

 

At the end of the tax year, has the 500k transfer for urgent medical treatment attracted tax as remitted funds?  If it has, the operation has costed more, has it not? 

It depends what his tax position is at the end of the year, only that will determine what his tax position is, along with his TEDA. It also depends on whether he remitted assessible income or tax free income to pay for the medical emergency.  There is no yes/no answer to your question, it depends on a series of factors, including the point in the year when the emergency occurred and whether he is able to leave the country and not remain Thai tax resident.

 

I strongly suggest you read the tax guide I linked earlier and stop raising questions. You've posted over twenty times in the past two hours at a rate of over one post every eight minutes hence you have dominated my time and thread. Desist, now! This is not the Mike Lister/Kuhn Heineken chat show!

 

 

[Ben Zioner]

58 minutes ago, JBChiangRai said:

I don't think that can happen, there is nothing that says a gift must be received in Thailand, this is also in line with advice from www.expattaxthailand.com

Your answer is quite useful, I insert below a Q&A that seems says a lot about gift topic.

 

[Random8]

I apologize if I'm repeating information that has already been discussed, but I don't have the time or tenacity to go through 400 prior posts on this thread or other similar threads.

 

I am very appreciative of Mike's document explaining the tax situation.  My goal is to create documentation that readily supports that the funds I remit to Thailand are not "Assessable" (as defined in section 10 of Mike's document).

 

I hope to avoid the entire issue, by never remitting any funds other than savings.  If anyone sees any flaws in my methods, please let me know.

 

I suspect the biggest challenge will be to create a proper paper trail to demonstrate I am not remitting income earned in the same year.  My plan is to open two new bank accounts in the US in 2024.  I will stay out of Thailand for 190 days in 2024 even though I have a 1 year visa retirement extension.  One bank account will be for current year income deposits only.  The other will be only for cash disbursements to Thailand.  I will switch the functions of each account on January 1st of each year.

 

In 2025, all my income will be deposited into bank account "A".  Some time in late December 2024, I will deposit a large lump sum into bank account "B".  During the course of the year (2025) I will remit money to Thailand from bank account "B" while income accumulates in bank account "A".

 

In 2025, if the Thai government wants to have proof that the remitted funds came from savings, I will be able to supply them with an annual bank statement from account B which will show a large beginning balance on January 1st, no other deposits in the course of the year, only remittances to Thailand.  In 2026, if the Thai government wants to have proof that the remitted funds came from savings, I will be able to supply them with an annual bank statement from account A which will show a large beginning balance on January 1st, no other deposits in the course of the year, only remittances to Thailand.  I will alternate bank accounts functions annually.  The Thai government will never receive documentation demonstrating how much I actually earn (and pay taxes on) in the US.  I will only supply them with bank statements showing large beginning balances and remittances to Thailand for the year in question.

 

I hope to avoid the entire issue, by never remitting any funds other than savings.  I will structure my bank accounts and remittances to easily demonstrate the funds are from savings.  If anyone sees any flaws in my methods, please let me know.

 

Thanks in advance!