Legal Strategies to Reduce Thai Tax

[KhunHeineken]

2 minutes ago, TroubleandGrumpy said:

I see now why some people have got somewhat angry about people discussing gifting - they see that as a way of evading taxes. But if the gift is from 'savings' or any other form of non assesable income, then the reason to do it is to evade dealing with the TRD bureacracy - legally.   

I suggest you use the word "avoid" and not "evade."  One is legal, the other is illegal, and can not be discussed. 

 

Currently, gifting is legal, and tax free, and a way to "avoid" paying this tax.  Yes, it's not in the spirit of the legislation, but that's the Thai government's problem, a problem I am sure they will address in 2025 when they see how gifting is being used as a tax avoidance strategy.

 

On that basis, I encourage members to have a Plan B strategy because I have a feeling you will be needing it in the future.  I can see a tweak in the policy whereby gifts will be taxed, or the money to the Thai missus will be deemed an income and she will be taxed on it. 

[TroubleandGrumpy]

1 minute ago, KhunHeineken said:

I suggest you use the word "avoid" and not "evade."  One is legal, the other is illegal, and can not be discussed. 

 

Currently, gifting is legal, and tax free, and a way to "avoid" paying this tax.  Yes, it's not in the spirit of the legislation, but that's the Thai government's problem, a problem I am sure they will address in 2025 when they see how gifting is being used as a tax avoidance strategy.

 

On that basis, I encourage members to have a Plan B strategy because I have a feeling you will be needing it in the future.  I can see a tweak in the policy whereby gifts will be taxed, or the money to the Thai missus will be deemed an income and she will be taxed on it. 

I agree - and in the future the Thai Govt will address the issue. But I think they will not remove the gifting rule, but they will probably reduce it. After all, 20 million baht is a ridiculous amount that onyl the wealthy would utilise - which is of course why it was introduced in the first place. 

[Rimmer]

A post suggesting an illegal activity have been removed

[Yumthai]

9 minutes ago, Neeranam said:

How do the frogs know that the money from yearly income was not savings from before 2024?

The frogs may ask for supporting documents. 

[cdnvic]

9 minutes ago, Neeranam said:

Seems like an easy way to avoid taxes. 
There are many other but I don't know if I am allowed to talk about them. 

 

You aren't. 😉

[KhunHeineken]

4 minutes ago, Neeranam said:

Seems like an easy way to avoid taxes. 
There are many other but I don't know if I am allowed to talk about them. 

 

That's why I suggested it months ago. 

 

Yes, there can be a fine line between tax evasion and tax avoidance. 

 

Wealthy individuals and companies have taken on government's in Courts all around the world for rulings on whether a practice is evasion or avoidance.

 

I just mentioned certain practices may not be in the spirit of the legislation, but that does not make them illegal, therefore, maybe we can discuss them here.    I would be interested in your other strategies.  I have a few of my own as well. 

[cdnvic]

9 minutes ago, Neeranam said:

Seems like an easy way to avoid taxes. 
There are many other but I don't know if I am allowed to talk about them. 

 

You aren't. 😉

[JimGant]

26 minutes ago, Mike Lister said:

it's not about will they monitor this or that it's not about the various workarounds, discussions about those will not be held here!

Why not? A discussion of possible workarounds is certainly germane to this subject. Yes, if the workaround would definitely be illegal -- then, yes, disallow. Possibly illegal? Allow discussion, with caveat of potential illegality. I guess the one workaround you will allow is: Leave the country.

[Neeranam]

Some rich foreigners(and one Thai) I know in Phuket and Koh Pa Ngan only transfer BTC from abroad. 

 

BTC is now accepted in most countries and is even the national currency in El Salvador. 

 

Can the Thai government track BTC transactions? 

[Mike Lister]

1 minute ago, JimGant said:

Why not? A discussion of possible workarounds is certainly germane to this subject. Yes, if the workaround would definitely be illegal -- then, yes, disallow. Possibly illegal? Allow discussion, with caveat of potential illegality. I guess the one workaround you will allow is: Leave the country.

Were only eight pages in and already we've removed posts that described potential ways to evade tax and we've got a couple of members itching to talk around the subject, as close to the line as possible....it's NOT going to happen. 

[Mike Lister]

3 minutes ago, Neeranam said:

Some rich foreigners(and one Thai) I know in Phuket and Koh Pa Ngan only transfer BTC from abroad. 

 

BTC is now accepted in most countries and is even the national currency in El Salvador. 

 

Can the Thai government track BTC transactions? 

The following link describes the tax on digital assets that are imported.

 

https://sherrings.com/cryptocurrency-income-personal-tax-thailand.html

[redwood1]

6 minutes ago, Yumthai said:

The frogs may ask for supporting documents. 

 

Get real......99% of people will not have kept records of where savings money came from over decades....

 

Savings money sources cant be proven by anybody except by maybe the few who were compulsive record keeps....

[Mike Lister]

1 minute ago, redwood1 said:

 

Get real......99% of people will not have kept records of where savings money came from over decades....

 

Savings money sources cant be proven by anybody except by maybe the few who were compulsive record keeps....

They only need to prove the savings as at 1 January 2024 and that they existed prior to that date.

[Mike Lister]

Below is the notice I posted when the thread was first started, please read it again and follow the spirit and letter of what is intended:

 

Several members are itching to discuss ways of avoiding paying tax in Thailand and have been asked not to. This is because discussions about legal ways to mitigate/reduce/avoid tax, nearly always end up discussing illegal ways to evade tax, which must not be discussed here. Part of the problem is that these things are not always black and white and the area of grey that exists in the middle is often open to interpretation, which differs from person to person.

 

If everyone promises to behave and not cross the line or play word games, we can discuss ways to legally mitigate/reduce/avoid tax. If however the discussions start to go in the wrong direction, not even a portable defibrillator will save it. It is therefore in members best interests to ensure no lines are crossed and ensure the debate is self managed. 

[Dogmatix]

On 5/19/2024 at 5:53 AM, Lacessit said:

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

 

I doubt it. It must be a huge amount of data for anyone to sift through. Thousands of foreign passport details, the vast majority of which are not tax residents and no way to distinguish them. I think the details are probably just kept for a while in case of money laundering or passing of forged currency.  Then trashed.  However, the RD must have the right to sift through it, if it feels the urge.

[Neeranam]

7 minutes ago, Mike Lister said:

The following link describes the tax on digital assets that are imported.

 

https://sherrings.com/cryptocurrency-income-personal-tax-thailand.html

Thanks Mike, although I am still confused. 

 

Say I have had 10 BTC since 5 years ago and have been 'Hodling' for 5 years and decide to transfer now, or next year.  

1 - would this be classed under 'savings' pre 2024?

2-  if I 'cash out' via a friend in Phuket who delivers cash to my house, is this an illegal transaction only if I don't volunteer the information to the RD? 

[Mike Lister]

1 minute ago, Neeranam said:

Thanks Mike, although I am still confused. 

 

Say I have had 10 BTC since 5 years ago and have been 'Hodling' for 5 years and decide to transfer now, or next year.  

1 - would this be classed under 'savings' pre 2024?

2-  if I 'cash out' via a friend in Phuket who delivers cash to my house, is this an illegal transaction only if I don't volunteer the information to the RD? 

1 - I think so, I don't know how you might prove that though, if asked.

 

2 - it would only be avasion if you didn't report it.

[JBChiangRai]

2 minutes ago, Neeranam said:

Thanks Mike, although I am still confused. 

 

Say I have had 10 BTC since 5 years ago and have been 'Hodling' for 5 years and decide to transfer now, or next year.  

1 - would this be classed under 'savings' pre 2024?

2-  if I 'cash out' via a friend in Phuket who delivers cash to my house, is this an illegal transaction only if I don't volunteer the information to the RD? 

 

I am in a similar situation.

 

What I should have done is bed & breakfast them at the end of December last year (sold them on an authorised Thai exchange and bought them back) thereby setting a purchase price for the future so that if I sold them later on a Thai exchange my tax liability would only be on the profit from 31/12/023.

 

Thai exchanges do report details to the TRD and I would be extremely surprised if they don't look at large sales and cumulatively large sales. It's easy pickings.

 

You are probably better selling them overseas and making a decision on what to do with the FIAT currency you get for them afterwards.

 

Alternatively, sell them early in the tax year and spend less than 180 days in Thailand during that tax year.

 

[redwood1]

Another thing about all these fabled records everyone keeps talking about for taxes....

Any Expat living in Thailand is not from Thailand and has most likely moved many times in Thailand....

 

They very likely have financial records spread out all over the world if they even remember where they are at all.....Old checking accounts, old credit card,old emails, old banks, old online banking bla bla bla  I think you get the idea....

 

I can see many people seriously lacking the records to pay a tax that was thrust on them out of the blue...

[JBChiangRai]

2 minutes ago, JBChiangRai said:

 

I am in a similar situation.

 

What I should have done is bed & breakfast them at the end of December last year (sold them on an authorised Thai exchange and bought them back) thereby setting a purchase price for the future so that if I sold them later on a Thai exchange my tax liability would only be on the profit from 31/12/023.

 

Thai exchanges do report details to the TRD and I would be extremely surprised if they don't look at large sales and cumulatively large sales. It's easy pickings.

 

You are probably better selling them overseas and making a decision on what to do with the FIAT currency you get for them afterwards.

 

Alternatively, sell them early in the tax year and spend less than 180 days in Thailand during that tax year.

 

 

I should add, I favour a dual strategy.

 

I will sell them overseas and remit FIAT to Thailand in the same year I will be non-resident for Thai purposes.

 

The reason being, transferring millions of baht here by bank transfer is likely to be looked at than selling millions in Crypto.  I would rather not even be looked at, even if I am non-resident that year.

 

Tax people can feel that once they start looking, they need to find things and just don't stop.

[Neeranam]

3 minutes ago, JBChiangRai said:

 

I am in a similar situation.

 

What I should have done is bed & breakfast them at the end of December last year (sold them on an authorised Thai exchange and bought them back) thereby setting a purchase price for the future so that if I sold them later on a Thai exchange my tax liability would only be on the profit from 31/12/023.

 

Thai exchanges do report details to the TRD and I would be extremely surprised if they don't look at large sales and cumulatively large sales. It's easy pickings.

 

You are probably better selling them overseas and making a decision on what to do with the FIAT currency you get for them afterwards.

 

Alternatively, sell them early in the tax year and spend less than 180 days in Thailand during that tax year.

 

I believe Bitkub send information to the TRD. 

I have a Crypto.com debit card which means I can use in BigC or Tesco. I even bought gold with it. The gold shop asked for 3% commission but that equals the cashback I get. I pay  for my family's phone bills, university/school fees, etc. 

It's almost impossible to keep track of the actual BTC I spent and when I bought those exact ones. I bought BTC at 78,000 baht and also 1.5 million baht and in between. 

 

 

[Mike Lister]

11 minutes ago, redwood1 said:

Another thing about all these fabled records everyone keeps talking about for taxes....

Any Expat living in Thailand is not from Thailand and has most likely moved many times in Thailand....

 

They very likely have financial records spread out all over the world if they even remember where they are at all.....Old checking accounts, old credit card,old emails, old banks, old online banking bla bla bla  I think you get the idea....

 

I can see many people seriously lacking the records to pay a tax that was thrust on them out of the blue...

How difficult can it be to obtain a statement as at 1 January 2024?

[BangkokHank]

23 hours ago, Lorry said:

And in America?

They use cheques....

No they don't. They use checks. Ha.

[Dogmatix]

1 hour ago, KhunHeineken said:

I suggest you use the word "avoid" and not "evade."  One is legal, the other is illegal, and can not be discussed. 

 

Currently, gifting is legal, and tax free, and a way to "avoid" paying this tax.  Yes, it's not in the spirit of the legislation, but that's the Thai government's problem, a problem I am sure they will address in 2025 when they see how gifting is being used as a tax avoidance strategy.

 

On that basis, I encourage members to have a Plan B strategy because I have a feeling you will be needing it in the future.  I can see a tweak in the policy whereby gifts will be taxed, or the money to the Thai missus will be deemed an income and she will be taxed on it. 

 

It's hard to say that gifting is not in the spirit of this legislation because what we are talking about is not legislation. It is a reinterpretation of a 1987 ruling that clearly interpreted the RC, the recent reinterpretation of which may well be held to be unlawful, if challenged in the Tax Court. I think it would be more accurate to say that the reinterpretation is not in the spirit of the legislation. 

 

The problem for the RD is that gift tax was introduced via a Royal Decree in 2015 as an amendment to the Revenue Code. There are some vagaries in the wording, as is normal in Thai legislation which likes to keep options open for contradictory interpretation in different cases, but nothing the RD DG can get her hooks into to attempt to amend with another legally dubious departmental order like P. 161/2566.  It can only be amended by another Royal Decree, which can later be nullified by parliament, if deemed inappropriate to the emergency requirement to allow Royal Decrees to circumvent parliament, or by a proper Act of Parliament, involving public consultation and three readings in parliament.  

 

The previous treatment of gifting in the Revenue Code was that there was no tax on gifts but the definition of gifts was somewhat stringent and was the same for everybody. That definition was cut and pasted as the definition of gifts to people who are not spouses or ascendant or descendant blood relations.  However, at the same time a new definition was introduced for gifts to spouses and ascendant and descendant relatives that is very broad, in fact, seems limitless. The actual text of Revenue Code amendment 40 of 2015 promulgated in the Royal Decree of 5 August 2015 signed by Gen Prayut is บุคคลธรรมดาที่ได้รับเงินได้จากการอุปการะหรือจากการให้โดยเสน่หาจากบุพการี ผู้สืบสันดาน หรือคู่สมรส.  This means "Natural persons who receive money being support or gifts of affection to ascendant or descendant relations or spouses."  There is nothing in the thus amended Revenue Code, as some ignorant, English monoglot commentators have suggested, that delineates how spouses may utilize these love gifts or anything, as some have even more ludicrously surmised, saying that gifts may only be made from income already subjected to Thai PIT.  There is also nothing that says these gifts may not come from abroad.  Indeed there is actually a RD case study that implies quite clearly that they can be made from abroad. There is also nothing much that can be found in publicly available information providing any ministerial or departmental regulations apart from the case study referred to above.  However, the Civil & Commercial Code provides a definition of gifts that stipulates that a gift is irrevocable, except in certain circumstances delineated in the C&CC, such as bad faith of the recipient. 

 

There are several court rulings regarding the old definition of gifts, relating to a huge gift made by Thaksin's ex-wife to her brother.  Since the old definition is now the RC definition of gifts to those who are not ascendant or descendant relations or spouses, these rulings can be considered as applicable to gifts to those not directly related. The rulings make clear that the gifts have to be made on a special occasion, such as a wedding. Birthdays are not mentioned and I would be extremely wary of making gifts to unmarried partners for this reason.

 

So will the gifting rules in the RC be amended to close the loophole it appears to provide in the legally dubious P. 161/2566?  Gift tax was introduced in tandem with inheritance tax and made effective on the same day.  It is my belief that it will continue to be considered in tandem with IHT, rather than with the non-legislation of P. 161/2566.  While Gift Tax was introduced via a Royal Decree, IHT was introduced as an Act of Parliament. Srettha actually ordered the RD to review IHT and Gift Tax soon after he became PM and a few weeks later it was reported that the RD had completed its review and made suggestions as to how to tighten up IHT and gift tax to generate more tax revenue but the details were not made public.  Technically the government could do this with a Royal Decree but I feel that broadening the net of IHT which is an extremely unpopular tax in most countries through a Royal Decree would create a backlash and the government would think it safer to amend it through an Act of Parliament with token public consultation.  Of course gift tax could be amended separately with a Royal Decree but I suspect they will continue to be considered together.  The most likely outcome in my view is that thresholds for both IHT and gift tax will be reduced at some point.  The tax rates could also be raised.  If the gift tax threshold for spouses was halved to 10 million a year, that would still be fairly useful for most expats. 

 

A final point to note is that there is nothing to suggest that the spouses who receive tax exempt gifts should be Thai citizens. Foreign spouses are equally eligible.

 

 

Edited May 21 by Dogmatix

[BangkokHank]

Here's what I did/plan to do: At the end of last year, I transferred into Thailand enough money to last me for a few years. Over the next few years, I will transfer into Thailand the maximum amount that I can transfer without incurring any tax obligation.

 

In the meantime, I will just let the rest of my money accumulate offshore for a few years. Then, during the year that I want to transfer into Thailand enough money to live off of for the following few years, I'll make it a point to spend just over six months out of the country, say in a cheap country like Vietnam - where I have many friends and generally enjoy being.

 

So instead of having to spend six months out of the country every year to eliminate my tax obligations in Thailand, I can do it once every three or so years. Sound like a good plan?

 

 

[Mike Lister]

3 minutes ago, BangkokHank said:

Here's what I did/plan to do: At the end of last year, I transferred into Thailand enough money to last me for a few years. Over the next few years, I will transfer into Thailand the maximum amount that I can transfer without incurring any tax obligation.

 

In the meantime, I will just let the rest of my money accumulate offshore for a few years. Then, during the year that I want to transfer into Thailand enough money to live off of for the following few years, I'll make it a point to spend just over six months out of the country, say in a cheap country like Vietnam - where I have many friends and generally enjoy being.

 

So instead of having to spend six months out of the country every year to eliminate my tax obligations in Thailand, I can do it once every three or so years. Sound like a good plan?

 

 

It's a brilliant plan, it will work well, kudos for devising something other than moving countries.

[Dogmatix]

1 hour ago, Neeranam said:

I believe Bitkub send information to the TRD. 

I have a Crypto.com debit card which means I can use in BigC or Tesco. I even bought gold with it. The gold shop asked for 3% commission but that equals the cashback I get. I pay  for my family's phone bills, university/school fees, etc. 

It's almost impossible to keep track of the actual BTC I spent and when I bought those exact ones. I bought BTC at 78,000 baht and also 1.5 million baht and in between. 

 

There is legislation that requires crypto exchanges to withhold tax on crypto gains at the rate of 15% but the last time I looked there was a notice on the Bitkub website saying that the RD has yet to make any moves to require enforcement of that by exchanges and that Bitkub has not yet been ordered to give the RD information about client accounts. No doubt this will all happen at some point but the the tax on gains, like many things here was not thought through and is difficult to implement. A reclaimable withholding tax on gross sales would have been a lot easier.

[Dogmatix]

5 hours ago, BangkokHank said:

Here's what I did/plan to do: At the end of last year, I transferred into Thailand enough money to last me for a few years. Over the next few years, I will transfer into Thailand the maximum amount that I can transfer without incurring any tax obligation.

 

In the meantime, I will just let the rest of my money accumulate offshore for a few years. Then, during the year that I want to transfer into Thailand enough money to live off of for the following few years, I'll make it a point to spend just over six months out of the country, say in a cheap country like Vietnam - where I have many friends and generally enjoy being.

 

So instead of having to spend six months out of the country every year to eliminate my tax obligations in Thailand, I can do it once every three or so years. Sound like a good plan?

 

 

Ok if the RD is not successful in getting the government to amend the RC to introduce global taxation, as they said was the ultimate goal when they introduced the reinterpretation which they said was only a stop gap solution.  In that case becoming a non-tax resident would only exempt you from Thai tax on income earned in that year, regardless of whether it was remitted or not.  However, there is a great deal of uncertainty about when or whether this can be done, as indeed there is about how the reinterpretation will be interpreted.

[proton]

8 hours ago, KhunHeineken said:

It would stand to reason that they tighten this loophole and start taxing the Thai spouses on the gift amount as if it was earnings.  That policy is for 2025. 

There is no loophole, it's in law as 20 million for wife 10 million for another. When has anyone suggested it's a loophole that will be stopped?

[KhunHeineken]

13 minutes ago, proton said:

There is no loophole, it's in law as 20 million for wife 10 million for another. When has anyone suggested it's a loophole that will be stopped?

I'm suggesting that if a high percentage of foreigners start using gifting as a tax avoidance measure, they will not make it illegal, but may then bring in a gift tax.  Why wouldn't they?  

 

That's all I'll say.