Legal Strategies to Reduce Thai Tax

[TroubleandGrumpy]

4 minutes ago, Mike Teavee said:

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. 

Big Difference.  Wise must and does send it to a Thai bank account. Expedia sends it to the hotel's bank account.  

[proton]

9 hours ago, Mike Teavee said:

Section 535 is referring to gifts that cannot be revoked, remuneration for a gift is not mentioned anywhere else in the "Laws".

 

There is mention of receiving a Service in consideration for a Gift, but I wouldn't classify the Wife paying all the rent, groceries, utilities etc... and giving you "Pocket Money" as a Service. 

 

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. 

 

 

Transfer your tax free limit, then the rest as a gift to the Mrs. It's legal and what she spends it on is legal, let them audit you, no tax to pay.

[Mike Teavee]

32 minutes ago, TroubleandGrumpy said:

Big Difference.  Wise must and does send it to a Thai bank account. Expedia sends it to the hotel's bank account.  

Agreed, Wise was a bad example though I could argue that I could book a room directly with the Hotel & send the money to them via Wise with would be no different that Hotels.Com sending them the money 🙂 

 

NB. I am joking, Wise was a really bad example to use.  

[Lorry]

Paying a hotel or air ticket by CC abroad is obviously not "remitting income to Thailand" in it's literal sense. 

It's  "getting something in Thailand worth money, ultimately paid by you (but maybe  not now and through intermediaries)". 

 

Loans: 

Every Thai can explain to you,  a loan, also a credit card, is the opposite of income.  You need a loan or a credit card because you do NOT have income. 

Ever heard of non-performing loans, btw?

To ask for "income tax" on loans is quite something. 

 

But:

HMRC says this is "remitting money". 

I would not be surprised if the Thai RD follows them. 

 

In the case of air tickets I would say you only get something "in Thailand" as long as the plane is in Thai airspace, which isn't very long.  After crossing the border,  the rest of the ticket should be tax-free.

:p

 

[ukrules]

On 5/18/2024 at 6:35 AM, Mike Lister said:

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

 

Yep, this is the way. I always said only one thing would make me leave this place and that's if they attempt to tax me on my earnings.

 

By voiding the 'memo' made in the 1980s that allowed previous year/years income to be sent in tax free they have opened up a hornets nest.

Anyway, later today, Tuesday 21 May, I fly to Phnom Penh and will be busy looking for somewhere to live for the next few weeks.

 

The Mrs is coming with me and will stay for the duration which I expect to be this year and next year, so we will both be non resident for at least 2024 and 2025.

Then I will reevaluate the situation.

 

I expect to make considerable funds during the next year or two so I can either sit here like an idiot and allow them to take 35% of most of it or make arrangements and save millions of Baht.

So I'm off....I will be beck though - I'll keep the number of days to around 175 and they will get nothing.

 

[mania]

On 5/18/2024 at 4:00 AM, 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.

 

Personally I hope all of this is a storm in a teacup & the tax law is only to close the loophole that Thai's working abroad was using to bring home older than 1 year pay tax free but................

 

As for the benefit that many mention of giving X amount to a Thai wife & it not being taxed I wonder would that not be considered goodwill & therefore subject to taxation under wife's name as income?

 

Or did you mean a married couple have better taxation rates?

 

Quote

Passive or property income (interest, dividends, rental income, goodwill, etc.) based on Article 41 paragraph 2 of the Revenue Code.

Above Quoted from this article 

https://www.aseanbriefing.com/news/taxation-of-foreign-sourced-income-in-thailand-begins-in-2024/

 

I do agree idea #3 should be fine 🤔

 

[Mike Lister]

Back to the idea of Gifting funds to a spouse.

 

Most people seem to agree that this form of Gift is allowable, unless the Gift is discreetly returned to the Gifter, in which case, it can be seen to be tax evasion which is illegal. But also in play in this scenario is conjugal property, which says that assets acquired after marriage are owned 50/50. In a hypothetical example, presumably,4 the Gifter gifted the funds to his wife, from pre-marriage owned assets which means the gift is valid, but what about after it is received? Is that Gift still owned by the wife or did it become conjugal property once it was received? Or more likely, is that gift ring fenced and excluded from conjugal property? Ooo, how exciting, I do love a good mystery.

 

It should be clear to everyone by now that Gift Tax is not as straight forward as first thought and that there are plenty of potential pitfalls along the way.

 

 

[jerrymahoney]

Thailand Gift tax came into effect on 1 February 2016. That the issue of foreign sourced Thai gifts as tax-exempt has not been resolved since then means nobody has thought it is worth the effort to resolve it.

 

None of the  big Thai CPA/tax advisors say on their website:

 

Hey big spender -- want to bring in over a half million dollars into Thai tax free? Here's how you do it.

[Mike Lister]

10 hours ago, TroubleandGrumpy said:

Simple explanation that is true, but has nothing to do with incurring an income tax liability for the remittance of assessable income. 

The point is that any potentially taxable event is formed when the person arrives at the hotel and accepts the offer and hands over their card to the hotel in Thailand and provides consideration. That is when the contract is formed. That means that IF the TRD considers spending on overseas CC to represents assessable income, the liability occurs at that point.

[Mike Teavee]

53 minutes ago, Mike Lister said:

Back to the idea of Gifting funds to a spouse.

 

Most people seem to agree that this form of Gift is allowable, unless the Gift is discreetly returned to the Gifter, in which case, it can be seen to be tax evasion which is illegal. But also in play in this scenario is conjugal property, which says that assets acquired after marriage are owned 50/50. In a hypothetical example, presumably,4 the Gifter gifted the funds to his wife, from pre-marriage owned assets which means the gift is valid, but what about after it is received? Is that Gift still owned by the wife or did it become conjugal property once it was received? Or more likely, is that gift ring fenced and excluded from conjugal property? Ooo, how exciting, I do love a good mystery.

 

It should be clear to everyone by now that Gift Tax is not as straight forward as first thought and that there are plenty of potential pitfalls along the way.

 

 

Surely a gift between spouses cannot become conjugal property as the Gifter would retain an interest in the Gift thus making it not a Gift under the Thai definition of what a Gift is.

 

However, if your parents gave you a large sum of money that they intended to go only to you, would your wife have a claim on 1/2 of it? - My gut feel says no, the gift is the sole property of the intended Giftee. 

 

 

 

[Mike Lister]

1 minute ago, Mike Teavee said:

Surely a gift between spouses cannot become conjugal property as the Gifter would retain an interest in the Gift thus making it not a Gift under the Thai definition of what a Gift is.

 

However, if your parents gave you a large sum of money that they intended to go only to you, would your wife have a claim on 1/2 of it? - My gut feel says no, the gift is the sole property of the intended Giftee. 

 

 

 

So does the gift become ring fenced perhaps and excluded from marital assets, in the event of a subsequent divorce....dunno. I guess that's the risk that needs to be considered, the husband gifts funds to the spouse to avoid tax and ends up losing everything in the divorce court.

[terryq]

32 minutes ago, Mike Lister said:

 

 

 

[Lacessit]

3 hours ago, mania said:

 

Personally I hope all of this is a storm in a teacup & the tax law is only to close the loophole that Thai's working abroad was using to bring home older than 1 year pay tax free but................

 

As for the benefit that many mention of giving X amount to a Thai wife & it not being taxed I wonder would that not be considered goodwill & therefore subject to taxation under wife's name as income?

 

Or did you mean a married couple have better taxation rates?

 

Above Quoted from this article 

https://www.aseanbriefing.com/news/taxation-of-foreign-sourced-income-in-thailand-begins-in-2024/

 

I do agree idea #3 should be fine 🤔

 

I meant the married couple ( foreigner and Thai ) are cut more slack by way of concessions/allowances, the taxation starts at a higher threshold.

 

I am not part of the gifting discussion.

[JBChiangRai]

Gifts between husband and wife are considered conjugal property and therefore you have an interest in the gift and I expect the TRD would say they are taxable.

 

However, I do expect a tax accountant could draw up some kind of specific agreement to get round this, there would also be specific conditions on how the gift is spent so the gifter obtained no advantage from it and relinquished all claim on the gift save those required, defamation etc

[steve187]

21 hours ago, JimGant said:

Indeed. If I buy a BigMac, and charge it to my credit card, this is the bank's money paying for my lunch. Same as if I borrowed money from my bank to buy a condo in Thailand. The money actually being remitted into Thailand is certainly not income -- it's a loan, with how it's to be paid back stipulated in the contract -- whether we're talking hamburgers or condos. For my credit card, once a month my bank debits my checking account to pay off the credit card bill. Money moves from one side of my bank to the other. It's not a cash flow with any income aspects to the IRS -- and certainly no income aspect to Thailand. I don't see any grey area the somehow could make credit card charges some kind of remitted income...

would that be the same as cash taken from an ATM in Thailand using overseas credit card

[Yumthai]

For those who think a gift remitted from overseas between spouses could be assessable income just use the gift rules as being the giftee when possible: A non Thai tax resident parent or child can send to the Thai tax resident child/parent giftee up to THB20M/year tax-free.

 

 

[Ben Zioner]

5 hours ago, ukrules said:

 

Yep, this is the way. I always said only one thing would make me leave this place and that's if they attempt to tax me on my earnings.

 

By voiding the 'memo' made in the 1980s that allowed previous year/years income to be sent in tax free they have opened up a hornets nest.

Anyway, later today, Tuesday 21 May, I fly to Phnom Penh and will be busy looking for somewhere to live for the next few weeks.

 

The Mrs is coming with me and will stay for the duration which I expect to be this year and next year, so we will both be non resident for at least 2024 and 2025.

Then I will reevaluate the situation.

 

I expect to make considerable funds during the next year or two so I can either sit here like an idiot and allow them to take 35% of most of it or make arrangements and save millions of Baht.

So I'm off....I will be beck though - I'll keep the number of days to around 175 and they will get nothing.

 

Just hope there will be many more like you.

[Presnock]

12 hours ago, Startmeup said:

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. 

Well, I am not so sure, I still see some asking particular questions about documentation for qualifications, plus clarity in this new interpretation of the tax laws and how they might or might now affect one's quality of living due to taxation or problems associated with the interpretations of the TRD, some might just decide then so that they don't have to think about it for an extended period of time, they might

go ahead and apply for the LTR.  I only go mine a couple of months ago (MARCH) as I have not had any realproblems with my retirement O for 20 years and even with the new tax bit, I only have a US govt pension so felt pretty confident that the DTA would mean no effects from the new interpretation but then looked closely at the BOI LTR and realized it fit me better than any other visa.  Glad I changed.  Happy to stay another 10 years and hopefully worry free as TIT and one never knows...just like this Thursday we might see some unhappy people.

[Presnock]

15 hours ago, Mike Lister said:

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

hey all must remember whrere we are living TIT and I have been living here off and on since 1972 and nothing is permanent here except the changes.  Hopefully, someday SOON the TRD/govt will put out the final documentation on the tax interpretations and most of us can jus totally relax as we are not affected one way or the other.  Take care,  all be happy in the LOS.

[jerrymahoney]

17 hours ago, Mike Teavee said:

If you do plan to use the gifting rules in your tax planning, we strongly advise seeking professional advice and having a formal gift document drawn up and notarised by a lawyer.

Unless you know more than them.

[TroubleandGrumpy]

2 hours ago, Mike Lister said:

The point is that any potentially taxable event is formed when the person arrives at the hotel and accepts the offer and hands over their card to the hotel in Thailand and provides consideration. That is when the contract is formed. That means that IF the TRD considers spending on overseas CC to represents assessable income, the liability occurs at that point.

So you are saying that every tourists that enters Thailand, after paying for their holiday at home, has a potential taxation liability as they have remitted assessable income into Thailand.  Lets hope none of them stays for two trips of 90 days - they might be hit at the airport when leaving for not havinbg a tax clearance certificate 😉   The point is that at this time there is no reason to think that TRD considers a credit card transaction as a taxation event and that tax is payable, so therefore it is a legal way to avoid paying income tax in Thailand. However, if anyone was to use a CC for everything they pay for, then they MIGHT be asked one day to come and talk to the local TRD Office where they wiull be asked to explain how they pay to stay in Thailand.  I am not a lawyer and I cannot give legal advice, but if I was single with no ties to Thailand and doing that, and was asked to 'appear' in the local TRD within 7 days (say), then my time would be up in Thailand. Not an ideal strategy for someone intending to live here long term and/or with a Thai partner - not ideal, but a legal loophole. 

[TroubleandGrumpy]

12 hours ago, Mike Teavee said:

Agreed, Wise was a bad example though I could argue that I could book a room directly with the Hotel & send the money to them via Wise with would be no different that Hotels.Com sending them the money 🙂 

 

NB. I am joking, Wise was a really bad example to use.  

Did I also popint out that big companies like Expedia dont actually pay the Hotel for every visit?  They have an Agreement and under that they make a single total payment (after fees etc) once a month to the hotel.  Friends of a mate have 3 small units in Isaan (we stayed there a few times) and they stopped using them because of the fees and late payment. 

[TroubleandGrumpy]

6 hours ago, ukrules said:

 

Yep, this is the way. I always said only one thing would make me leave this place and that's if they attempt to tax me on my earnings.

By voiding the 'memo' made in the 1980s that allowed previous year/years income to be sent in tax free they have opened up a hornets nest.
Anyway, later today, Tuesday 21 May, I fly to Phnom Penh and will be busy looking for somewhere to live for the next few weeks.

The Mrs is coming with me and will stay for the duration which I expect to be this year and next year, so we will both be non resident for at least 2024 and 2025.
Then I will reevaluate the situation.

I expect to make considerable funds during the next year or two so I can either sit here like an idiot and allow them to take 35% of most of it or make arrangements and save millions of Baht.
So I'm off....I will be beck though - I'll keep the number of days to around 175 and they will get nothing.

I would do the same if I was making any income/earnings this year and beyond.  You are not the only one leaving for a short or extended period. Most others I know of have decided to spend 179 days in Thailand, and the rest in another place - Cambodia and Laos are easy in and out - Vietnam is also very close. Others have gone to Philippines or Malaysia and most dont intend returning - lots of Yanks now live in Philippines.

[TroubleandGrumpy]

12 hours ago, proton said:

 

Transfer your tax free limit, then the rest as a gift to the Mrs. It's legal and what she spends it on is legal, let them audit you, no tax to pay.

Good advice IMO.  But everyone needs to make sure they keep an auditable paper trail of every transaction and transfer - and keep them in separate banks - both here and overseas.  Plus of course the tax free limit is twice the amount when you have a partner, because joint tax returns are very easy to do in Thailand. 

[TroubleandGrumpy]

37 minutes ago, Presnock said:

hey all must remember whrere we are living TIT and I have been living here off and on since 1972 and nothing is permanent here except the changes.  Hopefully, someday SOON the TRD/govt will put out the final documentation on the tax interpretations and most of us can jus totally relax as we are not affected one way or the other.  Take care,  all be happy in the LOS.

Hope you are correct - but I am worried it will take a year of 'financial disasters' and Court appeals by Thais, before they realise they need to back down and do something reasonable like follow Malaysia's path - the big one being to exempt all FSI that has been subjected to the overseas country's tax rules. 

[jayboy]

13 hours ago, TroubleandGrumpy said:

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 think this is correct.While I understand the arguments that have been made on this point, I would go out on a limb with this prediction.In a couple of years time it will seem absurd that anyone seriously maintained that expenses incurred on a foreign credit card and settled in the same foreign country should be regarded as assessable Thai income and entered on an expatriate's Thai tax return.This slightly absurd aspect should remind us that sometimes common sense needs to be applied though I don't suppose it will be.Once matters settle down - and I am speaking of the whole subject now - and we have the hard evidence available on RD's position (both de jure and de facto) in 2025, my hunch is much of what is being assumed now may have to be revised.This is not to deprecate the valuable work being done now and its prudent to prepare for all scenarios.

[KhunHeineken]

7 hours ago, ukrules said:

 

Yep, this is the way. I always said only one thing would make me leave this place and that's if they attempt to tax me on my earnings.

 

By voiding the 'memo' made in the 1980s that allowed previous year/years income to be sent in tax free they have opened up a hornets nest.

Anyway, later today, Tuesday 21 May, I fly to Phnom Penh and will be busy looking for somewhere to live for the next few weeks.

 

The Mrs is coming with me and will stay for the duration which I expect to be this year and next year, so we will both be non resident for at least 2024 and 2025.

Then I will reevaluate the situation.

 

I expect to make considerable funds during the next year or two so I can either sit here like an idiot and allow them to take 35% of most of it or make arrangements and save millions of Baht.

So I'm off....I will be beck though - I'll keep the number of days to around 175 and they will get nothing.

 

Instead of leaving for Cambodia for a long trip, have you considered getting the 6 or 12 month Cambodia visa, which is needed to open a bank account in Cambodia, then have your "considerable funds" deposited into the Cambodian bank account, and then do some "cash runs" in the same way many people do "visa runs?" 

 

You and the Thai missus can bring back to Thailand just under the maximum allowed, and it can be a short break away for a few days every now and then, unless you need the lump sum here for other reasons.  You'll still be a Thai resident for tax purposes, but just have no remitted funds.  

 

If you live near a boarder, one of the many casinos set up for Thai gamblers can be used as a couple of days away and a cash run.  There's no requirement to gamble. 

 

I go to the Singapore F1 every year.  I have a bank account in Singapore.  I will be ordering a reasonable amount of Thai baht to bring back each year.  Not enough to live on for the year, but just one strategy of a few I will be using that should see me pay little to none of this tax. 

 

With guys using legal strategies to minimize / avoid paying this tax, if some type of certificate from the RD is needed at extension time, it's going to be funny when the immigration officers all around the country ask, "What money you live on in Thailand?"  The reply from guys all over the country,  "Thai lady take care me." 

 

As I mentioned in the other thread, I suspect the Thai banks will not be too happy with this policy.  

[JimGant]

2 hours ago, steve187 said:

would that be the same as cash taken from an ATM in Thailand using overseas credit card

Sure. That would be a "cash advance," which is a fancy term for a loan. And since a loan is not income, such monies when remitted to Thailand, either by a SWIFT wire or by an ATM machine -- are not subject to Thai taxation.

[KhunHeineken]

3 minutes ago, JimGant said:

Sure. That would be a "cash advance," which is a fancy term for a loan. And since a loan is not income, such monies when remitted to Thailand, either by a SWIFT wire or by an ATM machine -- are not subject to Thai taxation.

If it's a debit card, it's not a loan. 

 

The Thai government and Thai banks would need some serious disclosure and paperwork from expats, as well as cross referencing, if they are even going to try to tax ATM withdrawals. 

 

They would need to be able to differentiate between tourists and expats at the time of the withdrawal, at the ATM.  Not going to happen.

[TroubleandGrumpy]

5 minutes ago, jayboy said:

 

I think this is correct.While I understand the arguments that have been made on this point, I would go out on a limb with this prediction.In a couple of years time it will seem absurd that anyone seriously maintained that expenses incurred on a foreign credit card and settled in the same foreign country should be regarded as assessable Thai income and entered on an expatriate's Thai tax return.This slightly absurd aspect should remind us that sometimes common sense needs to be applied though I don't suppose it will be.Once matters settle down - and I am speaking of the whole subject now - and we have the hard evidence available on RD's position (both de jure and de facto) in 2025, my hunch is much of what is being assumed now may have to be revised.This is not to deprecate the valuable work being done now and its prudent to prepare for all scenarios.

Yes that is what I also think will happen - one year of 'issues' and then a lot more rational approach. In the meantime, IMO all Expats that are not earning money in Thailand (working etc) and are 'lineball' about whether they should get a TIN and lodge a tax return, should take the prudent approqach and keep their heads down.  It is always the foolish ones who rush to be up front who get 'hit' when things are wrong - the wise ones hang back and wait and watch. This is the same sort of thing IMO.