Legal Strategies to Reduce Thai Tax

[JimGant]

10 minutes ago, Mike Lister said:

you think that having an intermediary make a payment for you, absolves you of any connection with that payment...

Mike, you've lost your compass. Yes, a bank making a foreign payment of your debit card charge has the appearance of a remitted income, as the account is instantly reduced by the amount of the charge (I say appearance, because your bank account may be full of savings, not income). But a credit charge does not reduce your bank account balance by the amount of the charge (duh), because, of course, it's a loan -- paid back in full 30 days later, or 2 years later, if you make minimum payments and pay interest. There's is no remitted cash flow from your bank account, that can be construed as remitted income.

The payment for your hamburger is the banks money, not yours.

 

Yes, the UK has a remittance income system, somewhat bizarre, where a non resident is considered a resident (kind of a transgender-like tax situation), where they've then transformed credit card charges into debit-like charges, meaning, we'll treat your money as being remitted, not the bank's.

 

That Thailand will follow this system, will remain to be seen (actually, they could have followed it the last 30 years, as this would have been a prima facie case of same year income, being remitted same year, thus taxable. But, good sense -- and history -- says, RD will never look at credit card charges as other than what they are -- loans. Just like a loan for condo remitted to Thailand.

[JimGant]

1 hour ago, Mike Teavee said:

but the discussion was around whether Foreign Credit Cards used in Thailand is remitting money or not

not

[Mike Teavee]

2 minutes ago, JimGant said:

not

We’ll agree to disagree, certainly the UK treats CC payments as remitted income but obviously that doesn’t necessarily mean Thailand will 

[Mike Lister]

6 minutes ago, JimGant said:

Mike, you've lost your compass. Yes, a bank making a foreign payment of your debit card charge has the appearance of a remitted income, as the account is instantly reduced by the amount of the charge (I say appearance, because your bank account may be full of savings, not income). But a credit charge does not reduce your bank account balance by the amount of the charge (duh), because, of course, it's a loan -- paid back in full 30 days later, or 2 years later, if you make minimum payments and pay interest. There's is no remitted cash flow from your bank account, that can be construed as remitted income.

The payment for your hamburger is the banks money, not yours.

 

Yes, the UK has a remittance income system, somewhat bizarre, where a non resident is considered a resident (kind of a transgender-like tax situation), where they've then transformed credit card charges into debit-like charges, meaning, we'll treat your money as being remitted, not the bank's.

 

That Thailand will follow this system, will remain to be seen (actually, they could have followed it the last 30 years, as this would have been a prima facie case of same year income, being remitted same year, thus taxable. But, good sense -- and history -- says, RD will never look at credit card charges as other than what they are -- loans. Just like a loan for condo remitted to Thailand.

 

You say that a debit card transaction is considered assessible income, because it reduces your bank account balance, but not a credit card, because it doesn't do that.....really, is that what you really said!

 

A credit card charge is nothing more than a deferred debit card transaction, I make my credit card behave like a debit card each month, because I always pay down my balance. But I don't have to, I can spread my payments over time, if I chose. According to your logic, I have the ability to determine what is assessable income and what is not, just by deciding whether to pay off my credit card bill, or not. Mike says, do not pass Go, do not collect $200!

 

I take the view that a personal balance sheet comprises assets, liabilities and credit lines that have been granted, especially where that credit line has been drawn down. 

 

We don't agree, it wouldn't be the first time, let's not belabour the point.

[Mike Lister]

19 minutes ago, JimGant said:

not

Jim, why so uncertain, I hate people who sit on the fence. 🙂

[JohnnyBD]

There seems to be different opinions on whether a CC charge (using a foregin bank credit card) is considered remitted income by the TRD. I assume the Thai tax laws do not specifically address this issue, and TRD hasn't addressed this issue. Is that correct? If they haven't addressed this issue, then it's anyone guess at this point, right?

For those saying CC charges are remitted income, are you going to keep every receipt during the year, and then report it on your tax return?

[Mike Lister]

15 minutes ago, JohnnyBD said:

There seems to be different opinions on whether a CC charge (using a foregin bank credit card) is considered remitted income by the TRD. I assume the Thai tax laws do not specifically address this issue, and TRD hasn't addressed this issue. Is that correct? If they haven't addressed this issue, then it's anyone guess at this point, right?

For those saying CC charges are remitted income, are you going to keep every receipt during the year, and then report it on your tax return?

Income is income, no matter that it is remitted in different ways. Cash, TT, debit card, cheque, bankers draft it doesn't matter, they are merely different vehicles for moving funds. A credit card is a debit card with an extended payment option, no more no less. A debit card is the new way to write a cheque and a phone app replaces all of them. But they are all the same basic things, a way to move money from A to B. 

 

Has the TRD addressed CC's? Certainly the TRD is aware of CC's but they are very unlikely to have a policy or documentation on them specifically, why would they, they are just another ways of moving money. The TRD is interested in income, no matter how it is moved.

 

Now, would I personally declare my CC receipts as part of my assessable income? No I wouldn't, not unless it comprised substantial or frequent expenses or extended periods. If it's casual spending, I wouldn't bother.

[JohnnyBD]

Now that I'm thinking about it, my US bank credit card company is remitting the money to Thailand. I pay my US credit card from my US bank account afterwards. So technically, I'm not remitting any money to Thailand. I guess all foreign CC companies will have to start filing tax returns. Just joking. The thing is, I have a credit line on my credit card, so that is what I'm borrowing against for my purchases. That may affect the legality of the issue.

[JimGant]

1 hour ago, Mike Teavee said:

We’ll agree to disagree, certainly the UK treats CC payments as remitted income but obviously that doesn’t necessarily mean Thailand will 

Only in the odd ball situation of a "non domiciled UK resident," who "opts"to be taxed on his remittances. The other 95% of Brits are not taxed on their remittances, and thus credit card charges are loans, not remitted payments. Where Thailand might head is a good question. But wherever that is, no foreigner is going to declare credit card charges, or even debit card charges, as remitted, assessable income. Thailand's cost/benefit analysis will certainly show it ain't worth it to pursue such charges as assessable income. Even Forest Gump would come to this conclusion.

[Yumthai]

6 hours ago, Mike Teavee said:

But my main point is as posted above, you put yourself at higher risk of being audited if you were to only remit money as a gift to your wife and not remit anything to yourself to live on. 

I gift my wife since years and will continue to do so. She uses this money the way she wants including for our common family expenses.
To me, Thai gift law is pretty clear and not correlated to the new remittance rule.

 

I don't see the risk of audit being increased as there have been no announcement regarding audit enforcement. I can't find any individual Thai or foreigner who has been audited either. The very low % of locals declaring and paying tax seems also to demonstrate that they are not audited.

 

Of course things could change and if I see that happening (meaning strict/systematic tax law enforcement + real penalties) I will structure myself accordingly, but not before.

 

[JimGant]

17 minutes ago, Mike Lister said:

A credit card is a debit card with an extended payment option, no more no less.

Yeah, that extended payment option is called a loan. And there's no need to further discuss why remitted loans to Thailand are NOT assessable income.

[Mike Teavee]

10 minutes ago, Yumthai said:

I gift my wife since years and will continue to do so. She uses this money the way she wants including for our common family expenses.
To me, Thai gift law is pretty clear and not correlated to the new remittance rule.

 

I don't see the risk of audit being increased as there have been no announcement regarding audit enforcement. I can't find any individual Thai or foreigner who has been audited either. The very low % of locals declaring and paying tax seems also to demonstrate that they are not audited.

 

Of course things could change and if I see that happening (meaning strict/systematic tax law enforcement + real penalties) I will structure myself accordingly, but not before.

 

Prior to 1/1/24 it seems that TRD assumed all foreign remittances were from prior years’s income or had already had tax paid on it under a DTA so had no interest in auditing people but If they’re going to carry on with the same approach then there was no point in changing the rules.

 

They have no way of automatically/systematically judging whether people should be paying tax or not so the only way I can see them doing this is by relying on people to file accurate tax returns & auditing a percentage of people to a) Check they’ve filed accurately & b) Encourage others to file & file accurately. 
 

They can’t possibly audit everybody so need to come up with some criteria to focus on where they’re most likely to get the largest gains & for me that would be people who remit large amounts of money (how many 20Million THB remittances do we think happen each year)? And those who remit no money (also a possibility to catch somebody working illegally). 

Again, the discussion is not about the chances of being audited/caught it’s about whether the approach is legit or not & gifting you wife money that you use to live on is not a legitimate gift (NB I’m not saying that you do this, I’m just saying that it’s not legit in general). 
 

[UKresonant]

On 5/18/2024 at 10:48 AM, PJ71 said:

This sounds like the most sensible option.

 

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

A snow bird pattern of 179 days within Oct, Nov, Dec _Jan, Feb, March, could be effective. only book your Oct-Dec, once you know how many days you consumed Jan-March. Can't exceed then probably.

(Northern hemisphere idea).

 

One of family does 3 x 59 days but with one segment in December that can take minor adjustments for 179 days in calendar year. (Reminds me, still  to do a tracking speadsheet for that).

 

[Mike Teavee]

35 minutes ago, JimGant said:

Only in the odd ball situation of a "non domiciled UK resident," who "opts"to be taxed on his remittances. The other 95% of Brits are not taxed on their remittances, and thus credit card charges are loans, not remitted payments. Where Thailand might head is a good question. But wherever that is, no foreigner is going to declare credit card charges, or even debit card charges, as remitted, assessable income. Thailand's cost/benefit analysis will certainly show it ain't worth it to pursue such charges as assessable income. Even Forest Gump would come to this conclusion.

Again it’s not about whether you’ll be caught doing it, it’s whether what you’re doing is legit. 
 

If somebody were to never remit any money into Thailand & instead live on Overseas Credit Cards then I would think there is a non zero chance of them being audited & asked to explain how they were funding their stay, if the answer is “I’m using my overseas credit card” then maybe TRD will accept it or maybe they’ll assess it as remitted income & judge they owe tax, in the absence of any formal guidelines we just don’t know.
 

 

[BritManToo]

12 minutes ago, Mike Teavee said:

Again it’s not about whether you’ll be caught doing it, it’s whether what you’re doing is legit. 
 

If somebody were to never remit any money into Thailand & instead live on Overseas Credit Cards then I would think there is a non zero chance of them being audited & asked to explain how they were funding their stay, if the answer is “I’m using my overseas credit card” then maybe TRD will accept it or maybe they’ll assess it as remitted income & judge they owe tax, in the absence of any formal guidelines we just don’t know.
 

 

Just do local flagged bank transfers using WISE, and tell them you live off your Thai wife.

That's if they ever ask.

[Startmeup]

On 5/18/2024 at 5:23 PM, Presnock said:

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.

Anybody who could qualify should already have it, it's the best visa available in Thailand if you qualify but only suits a very small amount of foreigners that come to Thailand. 

[Mike Lister]

1 hour ago, JohnnyBD said:

Now that I'm thinking about it, my US bank credit card company is remitting the money to Thailand. I pay my US credit card from my US bank account afterwards. So technically, I'm not remitting any money to Thailand. I guess all foreign CC companies will have to start filing tax returns. Just joking. The thing is, I have a credit line on my credit card, so that is what I'm borrowing against for my purchases. That may affect the legality of the issue.

Er, no, the bank is remitting the funds to Thailand to pay for your purchase, they are acting as your agent.

[Mike Lister]

57 minutes ago, JimGant said:

Yeah, that extended payment option is called a loan. And there's no need to further discuss why remitted loans to Thailand are NOT assessable income.

is.........:)

[JohnnyBD]

1 hour ago, JimGant said:

credit card charges are loans,

I agree. a true credit card has a credit line assigned to it, so any purchases or cash advances come from that credit line as borrowed money. Then, it's up to you when to pay it back. I don't see any grey area on that, no different than a home equity line of credit or bank line of credit. A credit card is not a debit card which draws directly from your bank funds.  What each person thinks about this issue is up to them, but we do not know what TRD legal thinks about this issue yet. I think this needs to go on the unknown issues list.

[Mike Lister]

Can I just say that a loan is a different beast to a revolving line of credit and a credit card is not the former..

[JohnnyBD]

8 minutes ago, Mike Lister said:

Can I just say that a loan is a different beast to a revolving line of credit and a credit card is not the former..

I agree a revolving credit line and a credit card is not a standard one-time loan. I think this needs to go on the unknown issues list. Specifically, whether a loan or borrowed funds from any source are remitted income or not.

[Mike Lister]

Just now, JohnnyBD said:

I agree a revolving credit line and a credit card is not a standard one-time loan. I think this needs to go on the unknown issues list.

Agreed

[JohnnyBD]

10 minutes ago, Mike Lister said:

Agreed

Please, can you add the following to the unknown issues list:

1. Whether CC purchases are considered assessable income or not

2. Whether foreign loan monies remitted are considered assessable income, such as for the purchase of a vehicles, condos, property, etc.

It would be nice to have a clear picture on those items, if we could ever get one.

Thanks a bunch...

[TroubleandGrumpy]

On 5/19/2024 at 3:08 AM, Lorry said:

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.

Absolutely - we will be doing the same for all our holidays in future (unless this idiocy changes). That way the money never enters Thailand. 

[Mike Lister]

2 minutes ago, JohnnyBD said:

Please, can you add the following to the unknown issues list:

1. Whether CC purchases are considered assessable income or not

2. Whether foreign loan monies remitted are considered assessable income, such as for the purchase of a vehicles, condos, property, etc.

It would be nice to have a clear picture on those items, if we could ever get one.

Thanks a bunch...

'Tis done.

[TroubleandGrumpy]

3 hours ago, JimGant said:

not

I agree. If/when I pay for something like a hotel using an Amex card in Australia, the 'money' is not remitted into any of my Thai bank accounts. And the payment is made to Amex from my bank account/s in Australia. Nothing to do with Thailand banking at all.  I can see a lot of Expats using credit cards from their home countries (paid for in their home countties) as a way around remitting money into Thailand, and that makes sense to me.  Most of the 'hotel booking' websites are 'global' and when you pay using them, it is them that pays the hotel. Same will occur for a lot of other things that can be paid for using a credit card I would assume. 

[Mike Lister]

2 minutes ago, TroubleandGrumpy said:

I agree. If/when I pay for something like a hotel using an Amex card in Australia, the 'money' is not remitted into any of my Thai bank accounts. And the payment is made to Amex from my bank account/s in Australia. Nothing to do with Thailand banking at all.  I can see a lot of Expats using credit cards from their home countries (paid for in their home countties) as a way around remitting money into Thailand, and that makes sense to me.  Most of the 'hotel booking' websites are 'global' and when you pay using them, it is them that pays the hotel. Same will occur for a lot of other things that can be paid for using a credit card I would assume. 

A contract needs three things in order to be formed, an offer, acceptance and consideration. When the hotel in Thailand offers you a rate that you accept, the consideration is provided by the credit card. Services have been provided here, you accepted those services here and you provided consideration, the contract has been formed at that point. The charging and billing components overseas are not relevant, that's just settlement, back office stuff.

[TroubleandGrumpy]

1 hour ago, Mike Teavee said:

Again it’s not about whether you’ll be caught doing it, it’s whether what you’re doing is legit. 
 

If somebody were to never remit any money into Thailand & instead live on Overseas Credit Cards then I would think there is a non zero chance of them being audited & asked to explain how they were funding their stay, if the answer is “I’m using my overseas credit card” then maybe TRD will accept it or maybe they’ll assess it as remitted income & judge they owe tax, in the absence of any formal guidelines we just don’t know.

Therein lies one of the many issues still outstanding with this change and lack of detailed explanations by TRD.

Hard to plan ahead right now for certain - other than doing what is OK to reduce/avoid income taxes (legally), unless specifically advised by TRD (or Court precedence), that it is not legal.  Example - staying overseas for 185 days in a year is a legal method to avoid income taxes in Thailand.  

[Mike Teavee]

19 minutes ago, TroubleandGrumpy said:

I agree. If/when I pay for something like a hotel using an Amex card in Australia, the 'money' is not remitted into any of my Thai bank accounts. And the payment is made to Amex from my bank account/s in Australia. Nothing to do with Thailand banking at all.  I can see a lot of Expats using credit cards from their home countries (paid for in their home countties) as a way around remitting money into Thailand, and that makes sense to me.  Most of the 'hotel booking' websites are 'global' and when you pay using them, it is them that pays the hotel. Same will occur for a lot of other things that can be paid for using a credit card I would assume. 

The discussion is if you used your AUS Amex to pay for a hotel in Thailand did you remit that income (are you using your using money from Australia to pay for something in Thailand) or is it a loan from Amex to you & Amex are remitting money to Thailand.

 

The fact that you booked via Hotels.Com in Singapore doesn’t matter as they’re just acting as an intermediary & sending the money to Thailand on your behalf, no different than Wise sending money to Thailand on your behalf. 

[TroubleandGrumpy]

2 minutes ago, Mike Lister said:

A contract needs three things in order to be formed, an offer, acceptance and consideration. When the hotel in Thailand offers you a rate that you accept, the consideration is provided by the credit card. Services have been provided here, you accepted those services here and you provided consideration, the contract has been formed at that point. The charging and billing components overseas are not relevant, that's just settlement, back office stuff.

Simple explanation that is true, but has nothing to do with incurring an income tax liability for the remittance of assessable income.  If I am living overseas and I book and pay for a holiday to Thailand using my money in that overseas country, that money is not remitted to me in Thailand.  Remember most of the booking sewrvices are global - I paid for a recent triopo and the money went to Denmark (I had a quick look at the Ts&Cs).  That is the same for the airline flights and car rental and anythign else. The booking service I use pays for the hotel and anything else - I pay them.  It does not matter if I am in Thailand or not - the money is not remitted to myself in Thailand.  Sure it is a 'get around' if you want to call it that - but I prefer to call it a 'loophole' - same as the previous one they changed that allowed income earned overseas to be remitted 12+ months later and not incur income taxes.  I see it is on the list of unknowns - lets hope TRD answers them all.