Legal Strategies to Reduce Thai Tax

Yellowtail · June 5

4 hours ago, CharlesHolzhauer said:

New overseas income rules
https://www.bangkokpost.com/business/general/2805305/new-overseas-income-rules.

This certainly will throw a spanner in the works.

How so?

ukrules · June 5

31 minutes ago, Yellowtail said:

How so?

People with foreign investments who make any profit would be taxed even if they don't send the money to Thailand.

This is a massive red flag.

CharlesHolzhauer · June 5

34 minutes ago, Yellowtail said:

How so?

Because the threshold may be changed at the will of the government without any notice (next month it could be announced that the threshold will be lowered THB10m). Worrisome times ahead - afaic anyway.

JimGant · June 5

6 minutes ago, ukrules said:

People with foreign investments who make any profit would be taxed even if they don't send the money to Thailand.

Just like 99% of the rest of the world that don't have quirky remittance rules for income taxation.

Thailand is petitioning to join the OECD community. And this community has been working hard to level the playing field with their "global minimum tax" on large corporations:

https://tax.thomsonreuters.com/blog/what-is-global-minimum-tax/

It sounds like -- if Thailand is going to reap billions in new taxes -- that the remittance rule has allowed large corporations, headquartered in Thailand, to avoid taxes due to this remittance rule. So, I guess it was time to go for the quirky remittance rule -- if Thailand wanted a nice new tax source -- and also wanted to be welcomed in to the OECD community with smiles.

It's possible this won't filter down to the individual taxpayer. But, I bet it does.

TroubleandGrumpy · June 5

4 hours ago, CharlesHolzhauer said:

New overseas income rules
https://www.bangkokpost.com/business/general/2805305/new-overseas-income-rules.

This certainly will throw a spanner in the works.

I said a while back that Thailand was looking at introducing a world wide income tax regime (like USA).

Well there it is in black and white - that means will are working on it - and it will be announced just before it starts.

And for those unaware it means a lot - a lot more than the previous change about remitted money not being taxable after one year.

What a global taxation liability for a Thai tax resident means, is that everything earned or received overseas in taxable in Thailand - Pensions, Savings Interest - any earnings - whether it is remitted into Thailand or not. You technically can get a tax relief for due Thai taxes under a DTA for any tax paid back in the other country, but it will not be easy to prove the tax has been paid for many reasons. Just for starters most countries do not align with the Thai tax year of Jan to Dec and they usually only report on their own tax year (in my case July to June). Whilst it is easy for a business, with their in house or contracted accountants to report any month to any month, that is not the case for the majority of personal income tax matters.

This change, if it goes ahead (social media feedback is overwhelmingly bad), means a lot more than the old one year rule change.

It is more bad news IMO for all long term Expats in Thailand who have any income or earnings in overseas countries, including Pensions.

ukrules · June 5

5 minutes ago, JimGant said:

Just like 99% of the rest of the world that don't have quirky remittance rules for income taxation.

That's simply incorrect, almost all countries use a remittance based tax system.

A notable exception is the US

CharlesHolzhauer · June 5

8 minutes ago, TroubleandGrumpy said:

I said a while back that Thailand was looking at introducing a world wide income tax regime (like USA).

Well there it is in black and white - that means will are working on it - and it will be announced just before it starts.

And for those unaware it means a lot - a lot more than the previous change about remitted money not being taxable after one year.

What a global taxation liability for a Thai tax resident means, is that everything earned or received overseas in taxable in Thailand - Pensions, Savings Interest - any earnings - whether it is remitted into Thailand or not. You technically can get a tax relief for due Thai taxes under a DTA for any tax paid back in the other country, but it will not be easy to prove the tax has been paid for many reasons. Just for starters most countries do not align with the Thai tax year of Jan to Dec and they usually only report on their own tax year (in my case July to June). Whilst it is easy for a business, with their in house or contracted accountants to report any month to any month, that is not the case for the majority of personal income tax matters.

This change, if it goes ahead (social media feedback is overwhelmingly bad), means a lot more than the old one year rule change.

It is more bad news IMO for all long term Expats in Thailand who have any income or earnings in overseas countries, including Pensions.

My jitters decreased somewhat after reading the post from Dogmatix <https://aseannow.com/topic/1327622-thai-gov-to-tax-remitted-income-from-abroad-for-tax-residents-starting-2024-part-ii/page/7/>

JimGant · June 5

18 minutes ago, ukrules said:

almost all countries use a remittance based tax system.

As far as I can find, only a handful do -- and this is the "non-dom" option, for legal residents who are not domiciled in country of residency. UK comes to mind. Malta, also.

TroubleandGrumpy · June 5

25 minutes ago, CharlesHolzhauer said:

My jitters decreased somewhat after reading the post from Dogmatix <https://aseannow.com/topic/1327622-thai-gov-to-tax-remitted-income-from-abroad-for-tax-residents-starting-2024-part-ii/page/7/>

I hope Dobmatrix is right, but I do recall a senior tax officer in an interview on Youtube saying that the next step was worldwide taxation, which is what I based my previous statement on some months back. I hope it does not go ahead for personal tax residents - but they are desperate to stop the economy collapsing and to have money to pay their ~~bribe~~ economic kick starter..

nebuer · June 5

I think Dogmatix is wrong, unfortunately. There's a brief reference in Thai media here: https://aec10news.com/contents/news/national/254083/

Quote

เล็งเก็บภาษีคนไทยที่มีรายได้จากตปท. :

นางสาวกุลยา ตันติเตมิท อธิบดีกรมสรรพากร เปิดเผยว่า กรมฯ มีแผนที่จัดเก็บภาษีคนไทยที่มีรายได้จากต่างประเทศ แม้ไม่ได้นำเงินก้อนนั้นเข้ามาในประเทศก็ตาม ทั้งนี้ กฎหมายภาษีของกรมสรรพากรในปัจจุบัน กำหนดว่า หากบุคคลที่อยู่ในประเทศไทยเกิน 180 วัน จะต้องเสียภาษีให้กับประเทศไทย กรณีที่บุคคลนั้น มีเงินได้จากต่างประเทศด้วยตามกฎหมายในปัจจุบัน หากนำเงินได้ก้อนนั้นเข้ามาในประเทศจะต้องเสียภาษีเงินได้บุคคลธรรมดาให้กับกรมสรรพากร ขณะนี้กำลังอยู่ในระหว่างการแก้ไขกฎหมาย โดยอาศัยหลักการของ World Wide Income หรือหลักการการจัดเก็บภาษีตามแหล่งที่อยู่บุคคล (Resident) ในประเทศนั้นๆ ไม่ว่ารายได้นั้น จะมาจากในประเทศหรือนอกประเทศ ถือเป็นรายได้ของบุคคลคนนั้น

Translation:

Quote

Aiming to collect taxes on Thai people who have income from abroad. :

Ms. Kulaya Tantitemit, Director-General of the Revenue Department, revealed that the Department has a plan to collect taxes on Thai people who have income from abroad. Even if that sum of money is not brought into the country. Current tax laws of the Revenue Department stipulate that if a person stays in Thailand for more than 180 days, they must pay tax to Thailand. In the case that that person Have income from abroad as well according to current law If you bring that amount of income into the country, you will have to pay personal income tax to the Revenue Department. Currently, the law is being amended. By relying on the principles of World Wide Income or the principles of tax collection according to the residence of the person (Resident) in that country. Regardless of that income Will it come from within the country or outside the country? It is considered the income of that person.

Edited June 5 by nebuer

digital · June 5

1 hour ago, nebuer said:

Aiming to collect taxes on Thai people who have income from abroad. :

Only Thai People ?

UKresonant · June 5

So if it went global it would make it very complex, what would they make the criteria for tax residence, would it drag like the UK into more than one year. It may be difficult to maintain a non-resident bank account perhaps. Could only then rely on ensuring fiscal domicile under article 4, in the UK, more time there than in Thailand. But with staggered tax years, many scheduling complications. Would be weird paying Thai tax if spending at least half of your income back in the UK, 'no double taxation' but substantially more complex.

I take it the OECD did not think about any State Universal Health care in their criteria 😊

I wonder if this will reflect in the Visa revisions announced, scheduled for September apparently, detail unknown 🫠.

Edited June 5 by UKresonant

KhunHeineken · June 5

9 hours ago, digital said:

Only Thai People ?

Nope. Everyone gets caught up in the net, otherwise, wealthy Thai people would just use a foreigner as a proxy.

TroubleandGrumpy · June 7

On 6/5/2024 at 2:05 PM, nebuer said:

I think Dogmatix is wrong, unfortunately. There's a brief reference in Thai media here: https://aec10news.com/contents/news/national/254083/

Translation:

Ms. Kulya Tantitemit Director-General of the Revenue Department revealed that the Department has a plan to collect taxes on Thai people with foreign income. Even though the lump sum of money was not brought into the country. The current tax law of the Revenue Department stipulates that if a person is in Thailand for more than 180 days, he or she must pay taxes to Thailand. In case the person also has income from abroad according to the current law. If the lump sum of income is brought into the country, personal income tax must be paid to the Revenue Department. Currently, the law is being amended based on the principle of World Wide Income or the principle of taxation based on the source of residence of a person (Resident) in that country, regardless of whether the income comes from within the country or outside the country, it is considered the income of that person.

This is hopefully wrong - lost in translation perhaps?

I see recently several comments on Youtube that Thailand was introducing global taxation rules for businesses as per the OECD directive (min 15% etc.) Maybe the 'numpties' at TRD have seen the likely income this new global business taxation method will bring into their budget, and have figured they will do the same for personal income tax and introduce a rule to tax all income earned worldwide by any Thai tax resident. Only USA and Eritrea currently have worldwide personal taxation liabilities for their Citizens/Residents. As the USA has found out, it requires a lot of very highly efficient well trained tax officers (DTAs etc) to manage such a system. There is not a snowflake in Hell's chance that the TRD will not have a lot of incompetent (nepotism appointments) and corrupt (as is everywhere) officials who will either screw this all up, and/or seek to gain personal advantage. And IMO Expats would be an easy target - we have no legal rights and cannot 'fight back' like Thais can.

Whilst I had the previous rule change 'covered' this new global taxation system, if it is introduced, is not something I can 'cover' and the risks in being caught up in the TRD 'net' are far too high. I just cannot see how anything, including gifting rules, will get around a worldwide income taxation system. I have looked into the USA taxation system and they do this for a very good reason - they get much more tax revenues than they otherwise would and the costs are worth it overall because it is extremely hard for USA Citizens. The USA taxes Citizens who live overseas, but non-citizens in USA are not tax residents unless they have a Green Card or meet their Substantial Presence Tests. Plus a person can use the DTA of their home/resident country to pay taxes there, rather than to USA. I just cannot see the TRD being anything other than 'rabid' when it comes to demanding tax residents pay income taxes on the money they have overseas.

The wife and I have decided that we will not stay in Thailand more than 179 days each year if this change to a global personal taxation system goes ahead in Thailand. That decision will only change if there is clear and reasonable options for Expats to avoid being forced to pay income taxes in Thailand on the earnings they have made/saved overseas over their lifetime.

TroubleandGrumpy · June 7

On 6/5/2024 at 8:06 AM, CharlesHolzhauer said:

New overseas income rules
https://www.bangkokpost.com/business/general/2805305/new-overseas-income-rules.

This certainly will throw a spanner in the works.

That is not a TRD spanner mate - this is a TRD spanner 🙂

Edited June 7 by TroubleandGrumpy

KhunHeineken · June 8

On 6/5/2024 at 9:51 AM, UKresonant said:

So if it went global it would make it very complex, what would they make the criteria for tax residence, would it drag like the UK into more than one year. It may be difficult to maintain a non-resident bank account perhaps. Could only then rely on ensuring fiscal domicile under article 4, in the UK, more time there than in Thailand. But with staggered tax years, many scheduling complications. Would be weird paying Thai tax if spending at least half of your income back in the UK, 'no double taxation' but substantially more complex.

I take it the OECD did not think about any State Universal Health care in their criteria 😊

I wonder if this will reflect in the Visa revisions announced, scheduled for September apparently, detail unknown 🫠.

I have a feeling we will see Thailand, a developing nation, try to emulate the established tax systems of developed western nations, in too quicker time, and there will be chaos.

That said, in my opinion, foreigners will have to pay something. It may not be the correct amount of tax, but foreigners will have to pay some tax. That's Thailand.

Time will tell.

fusion58 · June 8

Just think: All the time and effort the previous regime spent courting wealthy expats and investors negated in one fell swoop. That's gotta sting if you're those guys. LOL.

toums · June 8

On 5/18/2024 at 11:53 PM, Lacessit said:

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

Just ask a friends or someone visiting you sometimes in the year (not TH tax resident) and they just change for you at superrich..

jwest10 · June 9

On 6/6/2024 at 12:52 AM, KhunHeineken said:

Nope. Everyone gets caught up in the net, otherwise, wealthy Thai people would just use a foreigner as a proxy.

ASIF the wealthy always do not get chased up and not just Thailand this happens all around the world.

jwest10 · June 9

15 hours ago, KhunHeineken said:

I have a feeling we will see Thailand, a developing nation, try to emulate the established tax systems of developed western nations, in too quicker time, and there will be chaos.

That said, in my opinion, foreigners will have to pay something. It may not be the correct amount of tax, but foreigners will have to pay some tax. That's Thailand.

Time will tell.

We pay tax every time we go out already!!

Edited June 9 by jwest10

KhunHeineken · June 11

On 6/9/2024 at 6:51 AM, jwest10 said:

We pay tax every time we go out already!!

They want more. :smile:

KhunHeineken · June 11

On 6/9/2024 at 6:38 AM, jwest10 said:

ASIF the wealthy always do not get chased up and not just Thailand this happens all around the world.

"Influential" Thai's will probably be able to negotiate their tax bills. I can't see the same luxury being extended to foreigners.

KhunHeineken · June 11

On 6/8/2024 at 4:04 PM, fusion58 said:

Just think: All the time and effort the previous regime spent courting wealthy expats and investors negated in one fell swoop. That's gotta sting if you're those guys. LOL.

Things can change very quickly here. One day everything is fine, the next day you have a problem.

As you alluded to, "the next day" is usually after you have put money into Thailand. :smile:

KhunHeineken · June 11

I'll post this here. Apologies if it has been asked before.

MODS: feel free to edit, but I don't think it's illegal.

What would happen if you set up a joint bank account with someone who only visits Thailand once or twice a year for holidays, thus a non resident of Thailand for tax purposes, and only that person deposited money (remitted funds) into that bank account, and the tax resident in Thailand withdrew it and spent it?

Basically, the non resident is remitting, but the resident is spending.

Yes, I know an "agent" will probably have to be involved to open the account.

Not difficult to see where I am going with this.

Edited June 11 by KhunHeineken

Lorry · June 11

10 hours ago, KhunHeineken said:

I'll post this here. Apologies if it has been asked before.

MODS: feel free to edit, but I don't think it's illegal.

What would happen if you set up a joint bank account with someone who only visits Thailand once or twice a year for holidays, thus a non resident of Thailand for tax purposes, and only that person deposited money (remitted funds) into that bank account, and the tax resident in Thailand withdrew it and spent it?

Basically, the non resident is remitting, but the resident is spending.

Yes, I know an "agent" will probably have to be involved to open the account.

Not difficult to see where I am going with this.

So the resident gets income from the non-resident.

Is it a gift? > proceed to discussions about gift tax

Is it not a gift? > treat as income and follow RC. No need to apply P. 161/2567 as the money was not remitted by the resident

KhunHeineken · June 11

21 minutes ago, Lorry said:

So the resident gets income from the non-resident.

Is it a gift? > proceed to discussions about gift tax

Is it not a gift? > treat as income and follow RC. No need to apply P. 161/2567 as the money was not remitted by the resident

How do you "gift" to your own account?

I was also going ask what would happen if you are simply given access to a non tax resident's bank account? That was the next logical option.

Once again, I am sure you know where I am going with this. Is it illegal?

A lot of people in the west give their wife / relative their ATM card and PIN number. Happens here also.

What if the owner of a Thai bank account, who is a non resident of Thailand for tax purposes, gives access to their account to a tax resident of Thailand? It may breach the bank's T's & C''s., but that does not make it illegal.

Can you see where I am going with this?

Edited June 11 by KhunHeineken

Lorry · June 11

23 minutes ago, KhunHeineken said:

What if the owner of a Thai bank account, who is a non resident of Thailand for tax purposes, gives access to their account to a tax resident of Thailand?

That doesn't matter at all.

What matters is: does the resident use this account to remit his own foreign income? Then this income is taxable.

Or does the resident withdraw money from this account which had been deposited there by the non-resident? Then see my last post.

If the resident uses the non-resident's account to remit his own income and hide this fact from the RD, that would be illegal tax evasion.

If the resident uses the non-resident's account for other reasons (e.g. this bank won't give him an account but it's the only bank in town) but honestly files taxes, it's not illegal.

Mule accounts are a big topic right now, I would be careful.

NB now you know why they don't let tourists open bank accounts anymore. Banks in the West have long become branches of their tax offices. Thailand is following suit.

Edited June 11 by Lorry

KhunHeineken · June 11

13 minutes ago, Lorry said:

What matters is: does the resident use this account to remit his own foreign income?

You missed it.

The non resident remits the money, not the resident.

14 minutes ago, Lorry said:

Or does the resident withdraw money from this account which had been deposited there by the non-resident? Then see my last post.

Any links to the law for it?

15 minutes ago, Lorry said:

If the resident uses the non-resident's account to remit his own income and hide this fact from the RD, that would be illegal tax evasion.

No, the resident is using the non resident's money, joint account, or otherwise. It would be via ATM withdrawals.

17 minutes ago, Lorry said:

If the resident uses the non-resident's account for other reasons (e.g. this bank won't give him an account but it's the only bank in town) but honestly files taxes, it's not illegal.

Why does the non resident, who owns the bank account, need to file a tax return? They are a non resident. They don't spend more than 180 days inside Thailand.

18 minutes ago, Lorry said:

Mule accounts are a big topic right now, I would be careful.

My question was, is it illegal? Simple question?

18 minutes ago, Lorry said:

NB now you know why they don't let tourists open bank accounts anymore. Banks in the West have long become branches of their tax offices. Thailand is following suit.

This is Thailand. "Agents" can arrange opening bank accounts for people on a 30 day exemption stamp.

Lorry · June 12

8 hours ago, KhunHeineken said:

No, the resident is using the non resident's money

In this case, see gift tax

8 hours ago, KhunHeineken said:

Why does the non resident, who owns the bank account, need to file a tax return?

He doesn't have to, I didn't say that

8 hours ago, KhunHeineken said:

My question was, is it illegal? Simple question?

I answered before, simple answer

You stick to the formal set-up, whose account is it? etc

What you don't want to understand - or maybe pretend not to understand - is that the formalities don't matter in the end.

Not whose bank account is it, but whose money is it? Who controls the account? Who is the beneficial owner?

Reminds me of the set-up of the people buying land through nominees. It worked for a while, but in the end you run the risk that only economic really counts, not the set-up on paper.

I won't answer more because I think you pretend not to understand.

Yellowtail · June 12

It's brilliant, surely the revenue department has not thought of this...

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