Legal Strategies to Reduce Thai Tax

[proton]

6 minutes ago, KhunHeineken said:

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. 

 

Then bring in cash, up to $20k tax is for mugs

[MangoKorat]

On 5/19/2024 at 12:26 AM, Mike Lister said:

Money changers must be licensed and must report to BOT, although I don't know at what level, aggregated or detail. I strongly suspect BOT is interested more in volumes but they may allow TRD to access or share the data, if required.

I'm not suggesting anyone does anything illegal here but I often let my girlfriend change money for me.  For some reason she's able to do it much faster than I am and rarely has every note photocopied as I do. The transaction is recorded, if at all, under her ID.

[MangoKorat]

39 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 read the new rules, either here or eslewhere and there was a specific clause stating that gifting could not be used in the way suggested.  I can't remember the exact wording but it was clear that a spouse could not gift money in order to avoid tax.  Mike should know the SP on this.

[proton]

8 minutes ago, MangoKorat said:

I read the new rules, either here or eslewhere and there was a specific clause stating that gifting could not be used in the way suggested.  I can't remember the exact wording but it was clear that a spouse could not gift money in order to avoid tax.  Mike should know the SP on this.

 

Already covered and confirmed

[KhunHeineken]

1 hour ago, proton said:

 

Then bring in cash, up to $20k tax is for mugs

No argument from me.

 

I have already said one of a few strategies I will be implementing will be bringing in cash from Singapore after every F1 each year.

 

Was just saying, if a huge percent of foreigners no longer remit funds but "gift" their Thai spouse, we can expect the Thai government to make some changes. 

[KhunHeineken]

53 minutes ago, proton said:

 

Already covered and confirmed

Just read this.  Any link?

[proton]

1 minute ago, KhunHeineken said:

Any link for this? 

I'm not going through hundreds of posts to find it

[Mike Lister]

The section on Gift Tax is shown below:

 

The TRD does not consider what the purpose is of remitted funds, only whether they are assessable or not. If a foreigner remits non-assessable funds and then gifts them in Thailand, that is the end of the matter for the gifter.

 

If however the foreigner remits assessable funds to Thailand and then gifts them inside Thailand, those funds must be reported as assessable income on the foreigners tax return, no matter that they are later gifted.  

 

In the third scenario, the foreigner gifts assessable income direct to a Thai resident, the foreigner must report that income as if they themselves had received it directly.

 

GIFT TAX 

 

66) "PIT is levied on gifts given by persons who are still alive. The tax is collected on the assets or the amount given to parents, ascendants, descendants, spouse, or others based on the value of the gift that exceeds a prescribed threshold, which depends on the type of gift and donor. Assets or amounts given that do not exceed the threshold are exempt from tax. Our confidence levels that we understand all the Gift Tax rules is not high.

 

67) The following gifts are exempt from PIT:

 

a) Income derived by a parent from the transfer of ownership or possessory right in an immovable property without any consideration to a legitimate child, excluding an adopted child, in the amount not exceeding THB 20 million throughout a tax year in respect of each child.

 

b) Maintenance income or gifts from ascendants, descendants, or spouse, in the amount not exceeding THB 20 million throughout a tax year.

 

c) Maintenance income derived under a moral obligation or gifts made in a ceremony or on occasions in accordance with established custom from persons who are not ascendants, descendants, or spouse, in the amount not exceeding THB 10 million throughout a tax year.

 

d) Income from gifts in the case where the person who receives the gifts will use them for religious, educational, or public benefit purposes according to the intention of the donors under the criteria and conditions referred to in the Ministerial Regulations.

 

68) Gifts in excess of the above thresholds will be subject to PIT at the rate of 5% and will not need to be included together with other income when computing the annual PIT liability.

 

69) For ascendants/dependants the threshold is THB 20 mill, nor non-ascendants and dependants, it's THB 10 mill".

 

https://taxsummaries.pwc.com/thailand/individual/income-determination

 

Gift Tax Parameters

 

70) The following summary points compiled by a member may help guide readers in the use of Gift Tax:

 

a) Gifts must be traditional gifts based around a fixed date or occasion.

b) Traditional gifts include supporting the spouse or other persons, mainly family, based on a moral obligation.

c) Gifts to non-family members are more likely not to meet the moral obligation criterion.

d) A ceremonial act may be required, in particular for non-spouses.

e) Gifts must not be returned to the donor and used as a way to avoid income taxes, except under very specific Gift Tax rules which are likely to void the earlier tax advantage.

f) Moral obligation is subject to interpretation, there is no single defintion.

g) TRD may apply additional criteria.

h) TRD assessment may differ from self-assessment which risk must be evaluated in each case individually.

 

71) Note: Because Gift Tax is predominantly a domain of the wealthy and depends to a large extent on local practise, there is a shortage of confirmed information on this subject. One field of thought is that Gift Tax cannot be used to escape Thai tax by Gifting untaxed money from overseas. On the other hand, many Western countries, including the UK, do not tax gifts from overseas. Members wishing to exercise this option should seek qualified advice before using this option to Gift untaxed funds.

 

72) Two additional points on this subject are: 1) Funds that are gifted, must be for the use of the person to whom they are gifted. 2) Gifts can be revoked later and reclaimed, under specific circumstances, such as if the receiver of the gift defames the Gifter or fails to take care of their serious medical needs. Issues arise here when the receiver is the spouse of the Gifter and under marital law, the gift is regarded as conjugal property. Until this becomes more clear, it is critical that anyone wishing to use Gift Tax, seeks professional advice.

[Yumthai]

38 minutes ago, Mike Lister said:

The section on Gift Tax is shown below:

 

The TRD does not consider what the purpose is of remitted funds, only whether they are assessable or not. If a foreigner remits non-assessable funds and then gifts them in Thailand, that is the end of the matter for the gifter.

 

If however the foreigner remits assessable funds to Thailand and then gifts them inside Thailand, those funds must be reported as assessable income on the foreigners tax return, no matter that they are later gifted.  

 

In the third scenario, the foreigner gifts assessable income direct to a Thai resident, the foreigner must report that income as if they themselves had received it directly.

 

GIFT TAX 

 

66) "PIT is levied on gifts given by persons who are still alive. The tax is collected on the assets or the amount given to parents, ascendants, descendants, spouse, or others based on the value of the gift that exceeds a prescribed threshold, which depends on the type of gift and donor. Assets or amounts given that do not exceed the threshold are exempt from tax. Our confidence levels that we understand all the Gift Tax rules is not high.

 

67) The following gifts are exempt from PIT:

 

a) Income derived by a parent from the transfer of ownership or possessory right in an immovable property without any consideration to a legitimate child, excluding an adopted child, in the amount not exceeding THB 20 million throughout a tax year in respect of each child.

 

b) Maintenance income or gifts from ascendants, descendants, or spouse, in the amount not exceeding THB 20 million throughout a tax year.

 

c) Maintenance income derived under a moral obligation or gifts made in a ceremony or on occasions in accordance with established custom from persons who are not ascendants, descendants, or spouse, in the amount not exceeding THB 10 million throughout a tax year.

 

d) Income from gifts in the case where the person who receives the gifts will use them for religious, educational, or public benefit purposes according to the intention of the donors under the criteria and conditions referred to in the Ministerial Regulations.

 

68) Gifts in excess of the above thresholds will be subject to PIT at the rate of 5% and will not need to be included together with other income when computing the annual PIT liability.

 

69) For ascendants/dependants the threshold is THB 20 mill, nor non-ascendants and dependants, it's THB 10 mill".

 

https://taxsummaries.pwc.com/thailand/individual/income-determination

 

Gift Tax Parameters

 

70) The following summary points compiled by a member may help guide readers in the use of Gift Tax:

 

a) Gifts must be traditional gifts based around a fixed date or occasion.

b) Traditional gifts include supporting the spouse or other persons, mainly family, based on a moral obligation.

c) Gifts to non-family members are more likely not to meet the moral obligation criterion.

d) A ceremonial act may be required, in particular for non-spouses.

e) Gifts must not be returned to the donor and used as a way to avoid income taxes, except under very specific Gift Tax rules which are likely to void the earlier tax advantage.

f) Moral obligation is subject to interpretation, there is no single defintion.

g) TRD may apply additional criteria.

h) TRD assessment may differ from self-assessment which risk must be evaluated in each case individually.

 

71) Note: Because Gift Tax is predominantly a domain of the wealthy and depends to a large extent on local practise, there is a shortage of confirmed information on this subject. One field of thought is that Gift Tax cannot be used to escape Thai tax by Gifting untaxed money from overseas. On the other hand, many Western countries, including the UK, do not tax gifts from overseas. Members wishing to exercise this option should seek qualified advice before using this option to Gift untaxed funds.

 

72) Two additional points on this subject are: 1) Funds that are gifted, must be for the use of the person to whom they are gifted. 2) Gifts can be revoked later and reclaimed, under specific circumstances, such as if the receiver of the gift defames the Gifter or fails to take care of their serious medical needs. Issues arise here when the receiver is the spouse of the Gifter and under marital law, the gift is regarded as conjugal property. Until this becomes more clear, it is critical that anyone wishing to use Gift Tax, seeks professional advice.

All this literature on Gift rules is mixing official statements with interpretations/assumptions.

I think it's important to be able to distinguish, for any newbie looking for relevant Gift Tax information, what is coming straight from Thai books and what is assumed, maybe using a code color?

 

[Mike Teavee]

1 hour ago, KhunHeineken said:

No argument from me.

 

I have already said one of a few strategies I will be implementing will be bringing in cash from Singapore after every F1 each year.

 

Was just saying, if a huge percent of foreigners no longer remit funds but "gift" their Thai spouse, we can expect the Thai government to make some changes. 

And the great thing about Singapore is the FX Rate you get at places like “Change Alley” are pretty close to what you would get exchanging it in Thailand. 
 

Not like the UK where you’re lucky if you only get gouged 10% when buying THB (was there 2 weeks back & the rate on XE was showing at approx 46.2, FX places were offering 40.3). 

[topt]

1 hour ago, KhunHeineken said:

Was just saying, if a huge percent of foreigners no longer remit funds but "gift" their Thai spouse, we can expect the Thai government to make some changes. 

Since Johnny Foreigner is not currently paying any taxes on it what difference would it make.....

The money is still remitted.

 

You are still pushing this notion that the Thai government cares 2 hoots about the average expat's remittances. As to making changes.........

 

If influential Thai's make a legal challenge to the ruling then maybe something will change. Otherwise dream on.......

[KhunHeineken]

18 minutes ago, topt said:

Since Johnny Foreigner is not currently paying any taxes on it what difference would it make....

Well, geez, such a difficult question, but I'll try to answer it.

 

Maybe because they can now get some money out of Johnny Foreigner. 

 

20 minutes ago, topt said:

You are still pushing this notion that the Thai government cares 2 hoots about the average expat's remittances.

You are still pushing the notion that they don't care 2 hoots. 

 

Have you ever known the Thai's to pass up an opportunity to turn a baht out of foreigners? 

 

just like cannabis, they have come up with a new earner.  Deal with it. 

 

22 minutes ago, topt said:

If influential Thai's make a legal challenge to the ruling then maybe something will change. Otherwise dream on.......

So you are saying it's all pie in the sky.  Nothing will change.  Foreigners should do nothing.  It will all go away.  Is that your stance? 

[Mike Lister]

6 hours ago, Yumthai said:

All this literature on Gift rules is mixing official statements with interpretations/assumptions.

I think it's important to be able to distinguish, for any newbie looking for relevant Gift Tax information, what is coming straight from Thai books and what is assumed, maybe using a code color?

 

Can you tell me where you think it's mixed and not clear? I've re-read it several times and it appears to me to be mixed but it's clear that it is and is delineated by section. The first three para's are I believe a factual overview of remittances. Para's 66-69 are the rules, 70-71 are interpretations whilst 72 is clearly the rules. It's probable that I am too close to what is written to not see the overlaps that you see so please be specific.

[Mike Lister]

8 hours ago, Yumthai said:

All this literature on Gift rules is mixing official statements with interpretations/assumptions.

I think it's important to be able to distinguish, for any newbie looking for relevant Gift Tax information, what is coming straight from Thai books and what is assumed, maybe using a code color?

 

Thinking about this issue some more.....I recognised some weeks/months ago that the entire document needs to be rewritten/reformatted and structured differently, it has grown because new pieces have been added/inserted piecemeal, to the point where it is now clumsy and confused reading. What I had wanted to do was to provide two parts to each topic, "what the rules say" and "what we think". I haven't had the time to do that recently, mostly because tax thread management has taken up so much of my time......(you know who you are!). If you or anyone else has thoughts about this, I'll be interested to hear them. Similarly, if there's anyone out there who is interested in participating in this rewrite, please contact me.

[jerrymahoney]

2 hours ago, Mike Lister said:

If you or anyone else has thoughts about this, I'll be interested to hear them.

To me it is simple: Just ask KPMG, PWC, or Mazars, etc. since 2016 Gift Tax how many of their big time clients with foreign based earnings are making tax-free Thai gifts up to 20 million baht with their foreign based funds.

[Mike Lister]

5 minutes ago, jerrymahoney said:

To me it is simple: Just ask KPMG, PWC, or Mazars, etc. since 2016 Gift Tax how many of their big time clients with foreign based earnings are making tax-free Thai gifts up to 20 million baht with their foreign based funds.

Simple! Really!

 

If it were simple, which it is far from, what you're left with is anecdotal data that is largely meaningless.

[jerrymahoney]

3 minutes ago, Mike Lister said:

Simple! Really!

 

If it were simple, which it is far from, what you're left with is anecdotal data that is largely meaningless.

If PWC said we use that tactic multiple times for foreign based earnings as we believe that is fully compliant with all Thai regs and rulings, that would not be anecdotal.

[Mike Lister]

3 minutes ago, jerrymahoney said:

If PWC said we use that tactic multiple times for foreign based earnings as we believe that is fully compliant with all Thai regs and rulings, that would not be anecdotal.

Data from a single source remains anecdotal. Anyway, quantify "multiple", it's all subjective.

[jerrymahoney]

6 minutes ago, Mike Lister said:

Data from a single source remains anecdotal. Anyway, quantify "multiple", it's all subjective.

Well this gift option is all academic to me. I just go by the notion that if that 20 million baht tax-free foreign source gift option were as some people like to claim, it would be widely in use already.

[Mike Lister]

8 minutes ago, jerrymahoney said:

Well this gift option is all academic to me. I just go by the notion that if that 20 million baht tax-free foreign source gift option were as some people like to claim, it would be widely in use already.

The wealth distribution in this country is very uneven, if we learned that 10 people or 100 had used that method, would that be meaningful? I suggest it would not.

[jerrymahoney]

40 minutes ago, Mike Lister said:

The wealth distribution in this country is very uneven, if we learned that 10 people or 100 had used that method, would that be meaningful? I suggest it would not.

If one person used that gift tax option with a public statement from PWC that, in their professional opinion, the 20 million baht foreign sourced tax free gift is fully compliant with all current Thai regs and rulings, that would certainly be meaningful

 

... as many of the Thai PWC tax partners have long experience working directly for the Thai RD.

[Yumthai]

5 hours ago, Mike Lister said:

11 hours ago, Yumthai said:

All this literature on Gift rules is mixing official statements with interpretations/assumptions.

I think it's important to be able to distinguish, for any newbie looking for relevant Gift Tax information, what is coming straight from Thai books and what is assumed, maybe using a code color?

 

Can you tell me where you think it's mixed and not clear? I've re-read it several times and it appears to me to be mixed but it's clear that it is and is delineated by section. The first three para's are I believe a factual overview of remittances. Para's 66-69 are the rules, 70-71 are interpretations whilst 72 is clearly the rules. It's probable that I am too close to what is written to not see the overlaps that you see so please be specific.

 

2 hours ago, Mike Lister said:

Thinking about this issue some more.....I recognised some weeks/months ago that the entire document needs to be rewritten/reformatted and structured differently, it has grown because new pieces have been added/inserted piecemeal, to the point where it is now clumsy and confused reading. What I had wanted to do was to provide two parts to each topic, "what the rules say" and "what we think". I haven't had the time to do that recently, mostly because tax thread management has taken up so much of my time......(you know who you are!). If you or anyone else has thoughts about this, I'll be interested to hear them. Similarly, if there's anyone out there who is interested in participating in this rewrite, please contact me.

 

In my opinion,

 

First and foremost, our confidence levels that we understand all the Gift Tax rules is not high.

 

What the rules say:

 

The TRD does not consider what the purpose is of remitted funds, only whether they are assessable or not. If a foreigner remits non-assessable funds and then gifts them in Thailand, that is the end of the matter for the gifter.

 

If however the foreigner remits assessable funds to Thailand and then gifts them inside Thailand, those funds must be reported as assessable income on the foreigners tax return, no matter that they are later gifted.  

 

66) "PIT is levied on gifts given by persons who are still alive. The tax is collected on the assets or the amount given to parents, ascendants, descendants, spouse, or others based on the value of the gift that exceeds a prescribed threshold, which depends on the type of gift and donor. Assets or amounts given that do not exceed the threshold are exempt from tax.

 

67) The following gifts are exempt from PIT:

 

a) Income derived by a parent from the transfer of ownership or possessory right in an immovable property without any consideration to a legitimate child, excluding an adopted child, in the amount not exceeding THB 20 million throughout a tax year in respect of each child.

 

b) Maintenance income or gifts from ascendants, descendants, or spouse, in the amount not exceeding THB 20 million throughout a tax year.

 

c) Maintenance income derived under a moral obligation or gifts made in a ceremony or on occasions in accordance with established custom from persons who are not ascendants, descendants, or spouse, in the amount not exceeding THB 10 million throughout a tax year.

 

d) Income from gifts in the case where the person who receives the gifts will use them for religious, educational, or public benefit purposes according to the intention of the donors under the criteria and conditions referred to in the Ministerial Regulations.

 

68) Gifts in excess of the above thresholds will be subject to PIT at the rate of 5% and will not need to be included together with other income when computing the annual PIT liability.

 

69) For ascendants/descendants the threshold is THB 20 mill, nor non-ascendants and descendants, it's THB 10 mill".

 

What we some posters think:

 

In the third scenario, the foreigner gifts offshore assessable income direct to a Thai resident, the foreigner must report that income as if they themselves had received it directly.

 

 70) The following summary points compiled by a member may help guide readers in the use of Gift Tax:

 

a) Gifts must be traditional gifts based around a fixed date or occasion.

b) Traditional gifts include supporting the spouse or other persons, mainly family, based on a moral obligation.

c) Gifts to non-family members are more likely not to meet the moral obligation criterion.

d) A ceremonial act may be required, in particular for non-spouses.

e) Gifts must not be returned to the donor and used as a way to avoid income taxes, except under very specific Gift Tax rules which are likely to void the earlier tax advantage.

f) Moral obligation is subject to interpretation, there is no single definition.

g) TRD may apply additional criteria.

h) TRD assessment may differ from self-assessment which risk must be evaluated in each case individually.

 

71) Note: Because Gift Tax is predominantly a domain of the wealthy and depends to a large extent on local practice, there is a shortage of confirmed information on this subject. One field of thought is that Gift Tax cannot be used to escape Thai tax by Gifting untaxed money from overseas. On the other hand, many Western countries, including the UK, do not tax gifts from overseas. Members wishing to exercise this option should seek qualified advice before using this option to Gift untaxed funds.

 

72) Two additional points on this subject are: 1) Funds that are gifted, must be for the use of the person to whom they are gifted. 2) Gifts can be revoked later and reclaimed, under specific circumstances, such as if the receiver of the gift defames the Gifter or fails to take care of their serious medical needs. Issues arise here when the receiver is the spouse of the Gifter and under marital law, the gift is regarded as conjugal property. Until this becomes more clear, it is critical that anyone wishing to use Gift Tax, seeks professional advice.

 

 

[Mike Lister]

45 minutes ago, Yumthai said:

 

 

In my opinion,

 

First and foremost, our confidence levels that we understand all the Gift Tax rules is not high.

 

What the rules say:

 

The TRD does not consider what the purpose is of remitted funds, only whether they are assessable or not. If a foreigner remits non-assessable funds and then gifts them in Thailand, that is the end of the matter for the gifter.

 

If however the foreigner remits assessable funds to Thailand and then gifts them inside Thailand, those funds must be reported as assessable income on the foreigners tax return, no matter that they are later gifted.  

 

66) "PIT is levied on gifts given by persons who are still alive. The tax is collected on the assets or the amount given to parents, ascendants, descendants, spouse, or others based on the value of the gift that exceeds a prescribed threshold, which depends on the type of gift and donor. Assets or amounts given that do not exceed the threshold are exempt from tax.

 

67) The following gifts are exempt from PIT:

 

a) Income derived by a parent from the transfer of ownership or possessory right in an immovable property without any consideration to a legitimate child, excluding an adopted child, in the amount not exceeding THB 20 million throughout a tax year in respect of each child.

 

b) Maintenance income or gifts from ascendants, descendants, or spouse, in the amount not exceeding THB 20 million throughout a tax year.

 

c) Maintenance income derived under a moral obligation or gifts made in a ceremony or on occasions in accordance with established custom from persons who are not ascendants, descendants, or spouse, in the amount not exceeding THB 10 million throughout a tax year.

 

d) Income from gifts in the case where the person who receives the gifts will use them for religious, educational, or public benefit purposes according to the intention of the donors under the criteria and conditions referred to in the Ministerial Regulations.

 

68) Gifts in excess of the above thresholds will be subject to PIT at the rate of 5% and will not need to be included together with other income when computing the annual PIT liability.

 

69) For ascendants/descendants the threshold is THB 20 mill, nor non-ascendants and descendants, it's THB 10 mill".

 

What we some posters think:

 

In the third scenario, the foreigner gifts offshore assessable income direct to a Thai resident, the foreigner must report that income as if they themselves had received it directly.

 

 70) The following summary points compiled by a member may help guide readers in the use of Gift Tax:

 

a) Gifts must be traditional gifts based around a fixed date or occasion.

b) Traditional gifts include supporting the spouse or other persons, mainly family, based on a moral obligation.

c) Gifts to non-family members are more likely not to meet the moral obligation criterion.

d) A ceremonial act may be required, in particular for non-spouses.

e) Gifts must not be returned to the donor and used as a way to avoid income taxes, except under very specific Gift Tax rules which are likely to void the earlier tax advantage.

f) Moral obligation is subject to interpretation, there is no single definition.

g) TRD may apply additional criteria.

h) TRD assessment may differ from self-assessment which risk must be evaluated in each case individually.

 

71) Note: Because Gift Tax is predominantly a domain of the wealthy and depends to a large extent on local practice, there is a shortage of confirmed information on this subject. One field of thought is that Gift Tax cannot be used to escape Thai tax by Gifting untaxed money from overseas. On the other hand, many Western countries, including the UK, do not tax gifts from overseas. Members wishing to exercise this option should seek qualified advice before using this option to Gift untaxed funds.

 

72) Two additional points on this subject are: 1) Funds that are gifted, must be for the use of the person to whom they are gifted. 2) Gifts can be revoked later and reclaimed, under specific circumstances, such as if the receiver of the gift defames the Gifter or fails to take care of their serious medical needs. Issues arise here when the receiver is the spouse of the Gifter and under marital law, the gift is regarded as conjugal property. Until this becomes more clear, it is critical that anyone wishing to use Gift Tax, seeks professional advice.

 

 

Yes, agreed, that makes better sense, I'll take steps to make the change.....thanks.

[Mike Lister]

53 minutes ago, jerrymahoney said:

If one person used that gift tax option with a public statement from PWC that, in their professional opinion, the 20 million baht foreign sourced tax free gift is fully compliant with all current Thai regs and rulings, that would certainly be meaningful

 

... as many of the Thai PWC tax partners have long experience working directly for the Thai RD.

I don't believe they would say that publically, partially because of the individual nuances associated with each case.

[JohnnyBD]

12 minutes ago, Mike Lister said:

Yes, agreed, that makes better sense, I'll take steps to make the change.....thanks.

Please be specific and name the third scenario. Is it c) under section 67, or is it 68, 69, etc. I'm missing that distinction. 

[JBChiangRai]

53 minutes ago, Yumthai said:

 

 

In my opinion,

 

First and foremost, our confidence levels that we understand all the Gift Tax rules is not high.

 

What the rules say:

 

The TRD does not consider what the purpose is of remitted funds, only whether they are assessable or not. If a foreigner remits non-assessable funds and then gifts them in Thailand, that is the end of the matter for the gifter.

 

If however the foreigner remits assessable funds to Thailand and then gifts them inside Thailand, those funds must be reported as assessable income on the foreigners tax return, no matter that they are later gifted.  

 

66) "PIT is levied on gifts given by persons who are still alive. The tax is collected on the assets or the amount given to parents, ascendants, descendants, spouse, or others based on the value of the gift that exceeds a prescribed threshold, which depends on the type of gift and donor. Assets or amounts given that do not exceed the threshold are exempt from tax.

 

67) The following gifts are exempt from PIT:

 

a) Income derived by a parent from the transfer of ownership or possessory right in an immovable property without any consideration to a legitimate child, excluding an adopted child, in the amount not exceeding THB 20 million throughout a tax year in respect of each child.

 

b) Maintenance income or gifts from ascendants, descendants, or spouse, in the amount not exceeding THB 20 million throughout a tax year.

 

c) Maintenance income derived under a moral obligation or gifts made in a ceremony or on occasions in accordance with established custom from persons who are not ascendants, descendants, or spouse, in the amount not exceeding THB 10 million throughout a tax year.

 

d) Income from gifts in the case where the person who receives the gifts will use them for religious, educational, or public benefit purposes according to the intention of the donors under the criteria and conditions referred to in the Ministerial Regulations.

 

68) Gifts in excess of the above thresholds will be subject to PIT at the rate of 5% and will not need to be included together with other income when computing the annual PIT liability.

 

69) For ascendants/descendants the threshold is THB 20 mill, nor non-ascendants and descendants, it's THB 10 mill".

 

What we some posters think:

 

In the third scenario, the foreigner gifts offshore assessable income direct to a Thai resident, the foreigner must report that income as if they themselves had received it directly.

 

 70) The following summary points compiled by a member may help guide readers in the use of Gift Tax:

 

a) Gifts must be traditional gifts based around a fixed date or occasion.

b) Traditional gifts include supporting the spouse or other persons, mainly family, based on a moral obligation.

c) Gifts to non-family members are more likely not to meet the moral obligation criterion.

d) A ceremonial act may be required, in particular for non-spouses.

e) Gifts must not be returned to the donor and used as a way to avoid income taxes, except under very specific Gift Tax rules which are likely to void the earlier tax advantage.

f) Moral obligation is subject to interpretation, there is no single definition.

g) TRD may apply additional criteria.

h) TRD assessment may differ from self-assessment which risk must be evaluated in each case individually.

 

71) Note: Because Gift Tax is predominantly a domain of the wealthy and depends to a large extent on local practice, there is a shortage of confirmed information on this subject. One field of thought is that Gift Tax cannot be used to escape Thai tax by Gifting untaxed money from overseas. On the other hand, many Western countries, including the UK, do not tax gifts from overseas. Members wishing to exercise this option should seek qualified advice before using this option to Gift untaxed funds.

 

72) Two additional points on this subject are: 1) Funds that are gifted, must be for the use of the person to whom they are gifted. 2) Gifts can be revoked later and reclaimed, under specific circumstances, such as if the receiver of the gift defames the Gifter or fails to take care of their serious medical needs. Issues arise here when the receiver is the spouse of the Gifter and under marital law, the gift is regarded as conjugal property. Until this becomes more clear, it is critical that anyone wishing to use Gift Tax, seeks professional advice.

 

 

 

What do you mean by "in the third scenario?"

[Yumthai]

2 minutes ago, JBChiangRai said:

What do you mean by "in the third scenario?"

It comes from @Mike Lister original post, I think it should be omitted with the new structure.

[jerrymahoney]

17 minutes ago, Mike Lister said:

I don't believe they would say that publically, partially because of the individual nuances associated with each case.

I don't agree as they routinely cite general case histories but -- as the Texans say -- 'I don't have a dog in this hunt', I am out of here.

[Mike Lister]

13 minutes ago, JBChiangRai said:

 

What do you mean by "in the third scenario?"

The original read as follows:

 

The TRD does not consider what the purpose is of remitted funds, only whether they are assessable or not. If a foreigner remits non-assessable funds and then gifts them in Thailand, that is the end of the matter for the gifter.

 

If however the foreigner remits assessable funds to Thailand and then gifts them inside Thailand, those funds must be reported as assessable income on the foreigners tax return, no matter that they are later gifted.  

 

In the third scenario, the foreigner gifts assessable income direct to a Thai resident, the foreigner must report that income as if they themselves had received it directly.

 

I need to pay around with Yumthai's draft which is much improved but can still use a tweak or two.

[JBChiangRai]

3 minutes ago, Mike Lister said:

The original read as follows:

 

The TRD does not consider what the purpose is of remitted funds, only whether they are assessable or not. If a foreigner remits non-assessable funds and then gifts them in Thailand, that is the end of the matter for the gifter.

 

If however the foreigner remits assessable funds to Thailand and then gifts them inside Thailand, those funds must be reported as assessable income on the foreigners tax return, no matter that they are later gifted.  

 

In the third scenario, the foreigner gifts assessable income direct to a Thai resident, the foreigner must report that income as if they themselves had received it directly.

 

I need to pay around with Yumthai's draft which is much improved but can still use a tweak or two.

 

In the third scenario above, assessable income is not assessable until you bring it to Thailand. If you gift it overseas, tax has already been collected there, and you never bring it to Thailand so I'm not sure that this can be assessable income, unless there is some specific clause for this.

 

I think the whole purpose of the gift provisions is to allow wealthy Thais to avoid tax, this would seem to make it impossible for them to do so.