Thai gov. to tax (remitted) income from abroad for tax residents starting 2024 - Part II

[anrcaccount]

 

7 minutes ago, NoDisplayName said:

What's not clear?..........What exactly did you remit to Thailand?

 

You remitted whatever you self determined, it's either income or capital.

 

Ergo, simply state it's capital and in the almost negligible chance of being asked,  you'd have the records to prove it. 

[JimGant]

22 minutes ago, Mike Lister said:

That all sounds very like you don't know and are guessing and suggesting you impose your own rules once again, is that the case?

Sigh. I'm just suggesting there's enough wiggle room on how to interpret the nature of your pre 2024 portfolios to give yourself maximum advantage on amount of remittance exempt from tax. To include unrealized capital gains. That you don't agree, to include savings that turn into investments, no longer being exempt from remittance taxation -- well, that's your opinion. And an opinion I'm sure the TRD would welcome, since it's to their advantage.

 

Where you get that I'm imposing my "own rules" is a mystery. I'm just looking at all the data, and choosing all the arguable ones that have credence. Should it come to a chat with TRD, I would feel very confident -- based on what we know now -- in my position. No different than when I went across the Potomac to chat with the IRS; just know there are different interpretations of the same data -- and yours may come out second best.

[NoDisplayName]

26 minutes ago, Mike Lister said:

We still do not know how the TRD will handle commingled accounts such as you've described but I guess it wont be favorably.

 

I think I've lucked out.  My O-visa extension ran out while working in China, only made it back in 2022 for 177 days. 

 

Had cash in Thai accounts, so only remitted 310K in 2023, below the threshold counting the health insurance deduction, and would have been prior savings anyway.  So far this year, have only remitted 275K, and will remit no more, just spend down in-country savings.

 

Considering filing a (late) tax return for 2023 to have a clear record established showing no tax due.  Will need to visit tax office to change address on the TIN anyway.

 

As long as they don't move to taxing worldwide income it's manageable.

[Lacessit]

1 hour ago, Mike Lister said:

Percentage wise I imagine.

 

As I recall a member and his lawyer met with TRD officials, some quite senior, and TRD legal staff, in Hua Hin some m onths ago and provided us with effectively minutes of that meeting. It's all set out in Part 1 of the long tax thread, if you want to trawl though it. As I recall, this issue was confirmed also vis expat tax Q&A's.

On the Q&A links you posted, there is no clear answer to the question.

 

Tax can be levied on any dividends or capital gains. I can't see how it can be levied on a share bought prior to January 2024, which was purchased using cash which also existed prior to 2024.

 

I'm also confused by the term "commingled funds". The online brokerage I deal with has dividend notices and buy / sell notes, it's child's play to separate dividends and capital gains from the capital originally invested.

 

Please explain to me the difference between putting cash into a term deposit to earn interest, and buying shares to obtain dividend income. They are both investments.

Edited June 23 by Lacessit

[Klonko]

1 hour ago, Mike Lister said:

From the tax guide:

 

59) We understand currently that the TRD views any remittance of assessable capital gains to Thailand as comprising both capital and gain. It cannot be claimed that the remittance contains just one or the other, it always contains both and this continues until the total amount is exhausted.

This indirectly affirms my feeling that neither LIFO nor  FIFO will prevail but a pro rata accounting method is likely to be used for many purposes and I am glad that I had set up a segregated non interest bearing account for pre 2024 savings for future remittances.

[Mike Lister]

3 hours ago, Lacessit said:

On the Q&A links you posted, there is no clear answer to the question.

 

Tax can be levied on any dividends or capital gains. I can't see how it can be levied on a share bought prior to January 2024, which was purchased using cash which also existed prior to 2024.

 

I'm also confused by the term "commingled funds". The online brokerage I deal with has dividend notices and buy / sell notes, it's child's play to separate dividends and capital gains from the capital originally invested.

 

Please explain to me the difference between putting cash into a term deposit to earn interest, and buying shares to obtain dividend income. They are both investments.

Commingled is various sources of income feeding into a single account. Feeding the income in is one thing, deciding what you used when you too funds funds out and remitted them from the account is something else. Rules such as FIFO, LIFO etc help clarify this, but none are known.

 

We've already explained this. Savings do not change their form, when you put cash into a fixed deposit they remain as cash until maturity when you get it back again.

 

 When you buy stock you hand over your savings and receive stock in return, you no longer have your savings, you have something else that you purchased.

 

After listening to everyone on this point, I've not heard anything that makes me believe that investments such as stock purchases are savings, they simply cannot be.

 

The idea that we can pick our own accounting method and/or solution on these things and then impose it on the Thai Revenue, just isn't a starter for me. The idea that we can cross the river and discuss these things with the TRD aren't a starter either, we need to know what their rules are and what is acceptable to them. This is not the US, this is Thailand, it's just not the same.

[Mike Lister]

4 hours ago, JimGant said:

Sigh. I'm just suggesting there's enough wiggle room on how to interpret the nature of your pre 2024 portfolios to give yourself maximum advantage on amount of remittance exempt from tax. To include unrealized capital gains. That you don't agree, to include savings that turn into investments, no longer being exempt from remittance taxation -- well, that's your opinion. And an opinion I'm sure the TRD would welcome, since it's to their advantage.

 

Where you get that I'm imposing my "own rules" is a mystery. I'm just looking at all the data, and choosing all the arguable ones that have credence. Should it come to a chat with TRD, I would feel very confident -- based on what we know now -- in my position. No different than when I went across the Potomac to chat with the IRS; just know there are different interpretations of the same data -- and yours may come out second best.

This is where we disagree big time. An unrealised Capital Gain is not savings in any of my books. As others have independently said, it is capital (principle) and gain, not income and not savings. And what's more it's value can't be calculated until it is sold. Would I like to be something other than what I find it is? Of course, but you have to be realistic.

[UKresonant]

6 hours ago, anrcaccount said:

 

Source for this? From where do "we" get the "understanding"?

 

A very unclear statement. There's capital, and then there's capital gains. Gains are income, original capital, is not income. Never has been. 

 

Always contains both?  What a strange statement. How would that possibly work? 

 

Sale price - purchase price= gain.

How could you have recieve the sale proceeds without the gain?

All the gain will belong to Thailand if your tax resident..just a matter of taxing your remittance until all fully remitted ( unless a DTA article helps out)

But wait on the.further clarification from TRD when it comes out, sometime after next weekend, and that will confirm the situation ( for all that are having a tax resident qualification party next weekend )  That will prove your point perhaps .

 

 

[Mike Teavee]

9 hours ago, anrcaccount said:

 

POR 161/162 refer to income. Not remitting original capital / principal.

 

When the investments are sold, only the gains are taxable, if remitted. 

 

Stock investments comprise capital, and gains(if any) ,when sold.  This "savings" terminology is irrelevant. When they are sold is only relevant for the income portion, if remitted, as you reference POR 161/162.  

 

What's not clear?

 

 

Really? So the Sherrings link , question 9, contradicts this completely? 

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

Again, I can only go of what I have read/watched online but you use a percentage basis to determine what part of your remittance is original investment & what part is gain. 

 

E.g. I buy some shares for £10,000 and make a £2,500 profit on it making a 25% gain then anything I remit is considered 75% original investment & 25% gain. 

 

Q9 on the Sherrings link refers to you deciding whether you're remitting assessable income (essentially anything that isn't designated as non-assessable in a DTA) it does not say you can choose which part from the sale of assets your remitting is original income / gain.

 

Edited Sunday at 10:54 PM by Mike Teavee

[Mike Teavee]

8 hours ago, JimGant said:

So what if the value on 31/12/2023 includes the unrealized gain from initial purchase. That unrealized gain, I maintain, can be considered "income" -- as can be shown in many scenarios from different countries. Thus, it can be considered part of the "foreign source income" from before 2024 that is given an exemption from remittance taxation. That certainly could result in a spirited discussion with a TRD official -- who, sadly, probably wouldn't have a clue. But, hey, why would you not give yourself every financial advantage, particularly if you've got several examples from the internet to support your position. Plus, you've got probably a 1% chance of being called in for a chat about the validity of remitted pre 2024 income.

Any unrealised gain is only a paper gain until you sell the asset at which point it becomes the actual Gain and that's what counts for Tax (In the UK anyway excluding the re-baselining of Property Values so they can stiff Expats for CGT when we come to sell our homes there). 

 

 

I do agree there is very little chance of being caught (but we're trying to discuss the rules not enforcement) & even less chance of them being able to understand capital gains position on stock you've held for many years but they always have the "Well I think you owe this" card to play and tax you accordingly. 

 

 

[Mike Teavee]

3 hours ago, Mike Teavee said:

Again, I can only go of what I have read/watched online but you use a percentage basis to determine what part of your remittance is original investment & what part is gain. 

 

E.g. I buy some shares for £10,000 and make a £2,500 profit on it making a 25% gain then anything I remit is considered 75% original investment & 25% gain. 

 

Q9 on the Sherrings link refers to you deciding whether you're remitting assessable income (essentially anything that isn't designated as non-assessable in a DTA) it does not say you can choose which part from the sale of assets your remitting is original income / gain.

 

Apologies, got my maths completely messed up when I calculated the remittance percentages (in my defence is was before 6am, 1st coffee & 1st shower). 

 

The percentage remitted would be 80% (£10,000 of £12,500) Original Investment & 20% (£2,500 of £12,500) Gain so if you were to remit £5,000 £4,000 of it would be Original Investment & £1,000 capital gain.

[Lacessit]

9 hours ago, Mike Lister said:

Commingled is various sources of income feeding into a single account. Feeding the income in is one thing, deciding what you used when you too funds funds out and remitted them from the account is something else. Rules such as FIFO, LIFO etc help clarify this, but none are known.

 

We've already explained this. Savings do not change their form, when you put cash into a fixed deposit they remain as cash until maturity when you get it back again.

 

 When you buy stock you hand over your savings and receive stock in return, you no longer have your savings, you have something else that you purchased.

 

After listening to everyone on this point, I've not heard anything that makes me believe that investments such as stock purchases are savings, they simply cannot be.

 

The idea that we can pick our own accounting method and/or solution on these things and then impose it on the Thai Revenue, just isn't a starter for me. The idea that we can cross the river and discuss these things with the TRD aren't a starter either, we need to know what their rules are and what is acceptable to them. This is not the US, this is Thailand, it's just not the same.

Some people are in the situation where they have a lump sum of cash when they stop working. They then diversify the cash into term deposits, shares, property trusts, even precious metals such as gold and silver as a currency hedge. Cash at call does not produce much income to live on.

 

You're right, the TRD calls the tune as far as what constitutes savings. However, the musical composition still seems to be a work in progress.

[JimGant]

9 hours ago, Mike Lister said:

This is where we disagree big time. An unrealised Capital Gain is not savings in any of my books

Why do you keep referring to savings? The one-time good deal exemption refers only to "foreign source income." Savings, of course, are a form of income, namely, after-tax income. But unrealized gains can also be considered income, and, as such, can be reported on income statements:

Quote

Securities that are held for trading are recorded on the balance sheet at their fair value, and the unrealized gains and losses are recorded on the income statement.

https://www.investopedia.com/terms/u/unrealizedgain.asp

Anyway, TRD's one-time good deal exemption is only interested in a number you can use as your total exemption for post 2023 remittances. This number should be obtained by the balance sheet of the value of all your financial assets on 31 Dec 2023. And this number would include fair market value of your securities, which, of course, would include those unrealized gains. But so what -- there are no taxable events going on here interested in capital gains. The only taxable event of interest is -- how much of your post 2023 remittances can be exempted from Thai tax -- by that number obtained in your 31 Dec 2023 balance sheet.

 

Mike Lister has his interpretation -- and I have mine. Take your pick.

 

 

[Captain Flack]

A reported post and a reply to it has been removed. Can you please discuss the topic without needing to result to personal attacks and if a post is reported, there is no need to also comment on it.

[JohnnyBD]

I have a real life test question:

I have a 5-year CD that I bought in 2023 in the US. It pays interest monthly. The interest is transferred to my US checking account when it posts each month for use. I report and pay taxes on the interest each tax year. When the CD matures in 2028, under the current Thai tax rules, if I remit the CD money to Thailand, can I classify it as pre-2024? If you think the CD money becomes assessable income, do you have any TRD guidance to support your opinion?

Edited Monday at 07:04 AM by JohnnyBD

[Mike Lister]

The thing that scares me with these discussions is that they are uncontrolled and whilst people with some experience of tax will be able to wade through it all unscathed, others may not.

  

We were told previously, for months on end,  there was no penalty for not filing a tax return, when no tax was due. Eventually we found out that there was. Then we were told repeatedly, as a matter of fact, that there is no downside to not filing a tax return, when no tax is due. Eventually we found out there is a significant downside. Now were being told that capital investments can be considered savings income and that they form a part of Por 161/162, which doesn't pass any test of logic or historic precedence in my book. We’re also being told that we can decide our own accounting method and present it as de facto, to the TRD and they will be sympathetic. Perhaps these things are correct, who knows, the problem is, nobody knows.

  

Maybe some of these things can be done in the US but there is no evidence they can be done here. If anything, there is evidence to the contrary, because we are not native Thai's. Maybe they can be argued back home, but suggesting members can do the same here, is too much of stretch for me. The debate needs some rules we can all live with and everyone needs to understand what they are, if we're going to get to the correct answers. I specifically asked for the disclaimers to be put on the threads because of concern about statements that were being made, I regret that may not be enough. I think that if we can’t establish and agree those rules, the best thing to do is to exit the debate and not be associated with it.

 

 

 

 

[JimGant]

28 minutes ago, Mike Lister said:

Then we were told repeatedly, as a matter of fact, that there is no downside to not filing a tax return, when no tax is due. Eventually we found out there is a significant downside.

And what was that again?

[JimGant]

1 hour ago, Mike Lister said:

I keep referring to savings because the issue that was raised is whether stock ownership is considered to be the same as savings accounts,

Raised by whom?

[Mike Teavee]

2 hours ago, JimGant said:

Anyway, TRD's one-time good deal exemption is only interested in a number you can use as your total exemption for post 2023 remittances. This number should be obtained by the balance sheet of the value of all your financial assets on 31 Dec 2023. And this number would include fair market value of your securities, which, of course, would include those unrealized gains.

Can you point to anything (even an unofficial source) that agrees with you when it comes to Capital Gains being re-baselined as at 31/12/2023.

 

I asked this question more or less when this whole thing started & whilst we've not had a definitive statement from TRD, the view of most people on the board (& the Expat Tax consultants) was that the Gain is calculated based on the original cost of purchasing the asset as it is in the majority of countries/cases.

 

I also asked the question what would happen if instead of remitting the Capital Gain, you used it to purchase a new asset & sold it soon after which (given dealing costs/spread) would probably result  in a small Capital loss.  Again no definitive answer from TRD but consensus seemed to be you might be pushing your luck with them on large transfers & if they choose to dig deeper into you finances could decide the money used to purchase the last asset included the Capital Gains.  

 

 

[Mike Teavee]

1 hour ago, JohnnyBD said:

I have a real life test question:

I have a 5-year CD that I bought in 2023 in the US. It pays interest monthly. The interest is transferred to my US checking account when it posts each month for use. I report and pay taxes on the interest each tax year. When the CD matures in 2028, under the current Thai tax rules, if I remit the CD money to Thailand, can I classify it as pre-2024? If you think the CD money becomes assessable income, do you have any TRD guidance to support your opinion?

I take it a "CD" is a "Certificate of Deposit" & not a "Contract for Difference" (Which is what we call CDs, in the finance sense, in the UK), isn't that just a Fixed Term Deposit account & so the original capital invested (and any interest earned) in 2023 is free from Thai Tax whereas any interest earned after 1/1/2024 could be liable to Thai Tax assuming it wasn't covered by a DTA (And in the case of US I'm pretty sure it will be covered, your DTA is much more comprehensive than other countries DTAs).

  

Edited Monday at 08:25 AM by Mike Teavee

[JohnnyBD]

3 minutes ago, Mike Teavee said:

I also asked the question what would happen if instead of remitting the Capital Gain, you used it to purchase a new asset & sold it soon after which (given dealing costs/spread) would probably result  in a small Capital loss.  Again no definitive answer from TRD but consensus seemed to be you might be pushing your luck with them on large transfers & if they choose to dig deeper into you finances could decide the money used to purchase the last asset included the Capital Gains.  

You make a good point. What if you sold a pre-2024 security in your home country in 2024, reported & paid taxes on any gains in your home country, then invested in another security. Then, in 2026, you sold that security, had no gains or a loss, and then remitted those monies to Thailand. Is it assessable income or not?

[JohnnyBD]

36 minutes ago, Mike Teavee said:

I take it a "CD" is a "Certificate of Deposit" & not a "Contract for Difference" (Which is what we call CDs, in the finance sense, in the UK), isn't that just a Fixed Term Deposit account & so the original capital invested (and any interest earned) in 2023 is free from Thai Tax whereas any interest earned after 1/1/2024 could be liable to Thai Tax assuming it wasn't covered by a DTA (And in the case of US I'm pretty sure it will be covered, your DTA is much more comprehensive than other countries DTAs).

  

Yes, it's a 5-year Certificate of Deposit with a US bank. The monthly interest is paid directly to my US brokerage account and then it's transferred to my US checking account the same day it posts each month. I spend the interest in the US and do not remit it to Thailand. So, when the CD matures in 2028, I will get back the original money I invested in 2023. Is that original money I invested in 2023 still considered pre-2024 money if I remit it in 2028?

Edited Monday at 09:02 AM by JohnnyBD

[NoDisplayName]

I predict that TRD won't bother with home country documents, except in certain exceptional cases.  They don't have the staff, the knowledge, the experience, to handle financial forms in foreign languages from 100+ other nations.

 

They'll simply do the simplest thing for simplicity.  Anything and everything remitted will be classed as assessable and taxed, unless you can show that a government pension was directly deposited to a Thai bank.  Up to you to claim benefits under tax treaty and file for a refund.  Elsewhere. 

 

What about government pensions that are deposited in your home country bank, and then remitted to Thailand?  Simple!  They aren't taxing government pensions.  They're taxing remittances.  You can either prove the government pension never comingled with other funds and is completely separate, or claim a tax credit at home. 

[KhunHeineken]

9 minutes ago, NoDisplayName said:

I predict that TRD won't bother with home country documents, except in certain exceptional cases.  They don't have the staff, the knowledge, the experience, to handle financial forms in foreign languages from 100+ other nations.

 

They'll simply do the simplest thing for simplicity.  Anything and everything remitted will be classed as assessable and taxed, unless you can show that a government pension was directly deposited to a Thai bank.  Up to you to claim benefits under tax treaty and file for a refund.  Elsewhere. 

 

What about government pensions that are deposited in your home country bank, and then remitted to Thailand?  Simple!  They aren't taxing government pensions.  They're taxing remittances.  You can either prove the government pension never comingled with other funds and is completely separate, or claim a tax credit at home. 

I agree.

 

What you describe very well may be the way it happens. 

 

Perhaps an end of calendar year total deposit document from your Thai bank/s, and that's the figure they use, and here's your biill.  Easy money collection for them. 

 

if one wants to prove assessable / non assessable, DTA's etc etc, then they must gather all the paperwork and go through Thai bureaucracy to pay less or no tax.  Good Luck doing that. 

[stat]

18 hours ago, Mike Lister said:

From the tax guide:

 

59) We understand currently that the TRD views any remittance of assessable capital gains to Thailand as comprising both capital and gain. It cannot be claimed that the remittance contains just one or the other, it always contains both and this continues until the total amount is exhausted.

Your statement "It cannot be claimed that the remittance contains just one or the other, it always contains both and this continues until the total amount is exhausted." is simply wrong. The method of calculation Lifo, Fifo or percentage are currently unknown. If you can use Lifo, principal comes first when transmitted. Sherrings states as an answer from TRD in question 7 that a generally accepted accounting method is to be used, that would/could be Lifo!

 

Exampe you invest 100.000 USD and get 5000 USD interest. In case of Fifo accounting method you could transmit the first 100.000 USD without incurring any tax as it is principal. If Lifo is used you pay PIT on the first 5000. Only if a mixture of a capital and income is allowed/decreed as the accounting method the above statement from ML would be correct. However this method is rarely used

 

Again the method used will be the key here, I explained this several times. Caveat is that TRD accepts your documentations, a big if.

 

My take is still that TRD will let you self determine if you had any assesable income and in the case of capital gains you would be more or less tax free in most cases as you can transfer every cent of your principal before being taxed.

 

If there has been a change and TRD announced which method is to be used please let me know.

 

 

[Mike Lister]

1 hour ago, JimGant said:

Raised by whom?

 

[Mike Lister]

1 hour ago, JimGant said:

And what was that again?

Jeeze.....!  Exposure to 10 years of back audits versus 3 years if past returns filed.

[Mike Lister]

3 minutes ago, stat said:

Your statement "It cannot be claimed that the remittance contains just one or the other, it always contains both and this continues until the total amount is exhausted." is simply wrong. The method of calculation Lifo, Fifo or percentage are currently unknown. If you can use Lifo, principal comes first when transmitted. Sherrings states as an answer from TRD in question 7 that a generally accepted accounting method is to be used, that would/could be Lifo!

 

Exampe you invest 100.000 USD and get 5000 USD interest. In case of Fifo accounting method you could transmit the first 100.000 USD without incurring any tax as it is principal. If Lifo is used you pay PIT on the first 5000. Only if a mixture of a capital and income is allowed/decreed as the accounting method the above statement from ML would be correct. However this method is rarely used

 

Again the method used will be the key here, I explained this several times. Caveat is that TRD accepts your documentations, a big if.

 

My take is still that TRD will let you self determine if you had any assesable income and in the case of capital gains you would be more or less tax free in most cases as you can transfer every cent of your principal before being taxed.

 

If there has been a change and TRD announced which method is to be used please let me know.

 

 

I'm not about to go digging for the source every of every quote that was ever made, just to prove to somebody that this or that was said, I know full well from history there's no mileage in that. If you don't want to believe the quote, it's your prerogative. 

[stat]

2 hours ago, Mike Lister said:

I keep referring to savings because the issue that was raised is whether stock ownership is considered to be the same as savings accounts, except you wouldn't know that because you don't read and comprehend well at all

 

I still do not understand why it is that Mike Lister can insult anyone on this forum without any repercussions so far.

[Presnock]

1 hour ago, Mike Lister said:

The thing that scares me with these discussions is that they are uncontrolled and whilst people with some experience of tax will be able to wade through it all unscathed, others may not.

  

We were told previously, for months on end,  there was no penalty for not filing a tax return, when no tax was due. Eventually we found out that there was. Then we were told repeatedly, as a matter of fact, that there is no downside to not filing a tax return, when no tax is due. Eventually we found out there is a significant downside. Now were being told that capital investments can be considered savings income and that they form a part of Por 161/162, which doesn't pass any test of logic or historic precedence in my book. We’re also being told that we can decide our own accounting method and present it as de facto, to the TRD and they will be sympathetic. Perhaps these things are correct, who knows, the problem is, nobody knows.

  

Maybe some of these things can be done in the US but there is no evidence they can be done here. If anything, there is evidence to the contrary, because we are not native Thai's. Maybe they can be argued back home, but suggesting members can do the same here, is too much of stretch for me. The debate needs some rules we can all live with and everyone needs to understand what they are, if we're going to get to the correct answers. I specifically asked for the disclaimers to be put on the threads because of concern about statements that were being made, I regret that may not be enough. I think that if we can’t establish and agree those rules, the best thing to do is to exit the debate and not be associated with it.

 

 

 

 

My opinion only as a reader here.  I am fairly fluent in Thai and speak to numerous locals on a variety of issures.  I also watch daily news programs and when they get into the fiance news I drop out as it goes way past my 40+ years of Thai, formal training included and I can only imagine any native American trying to convince a Thai finance officials about the nuances of US tax rules opposed to Thai tax rules  and hoping to convince the Thai that the US was is the only way to look at it.  Best of luck.