Thailand to tax residents’ foreign income irrespective of remittance

[Lorry]

1 hour ago, SHA 2 BKK said:

And where did you read this?  Please provide the link as other posters do.  Many thanks in advance.

This has been discussed in extenso in the main tax thread, part one,  now pinned.

You can find links there,  posted by Mike Lister and others. 

 

The result was what expatsoon wrote. It's not a "tiny percentage" of Thais who pay tax.

[Ben Zioner]

3 hours ago, redwood1 said:

What ever taxes Australia has, you can be sure everyone pays...

In Thailand only a tiny percentage pay any taxes.... 

Yes, but most people have PAYE tax, so don't worry about tax, just don't look at the gross figure. Actually the only time the gross comes into play is when you negotiate a new job. PAYE is a lot less painful then having to pay a bill for several hundred thousand, possibly a million, of your hard earned pension.

[TroubleandGrumpy]

8 hours ago, sidneybear said:

Taxing worldwide income is nothing new. Australia does it. 

No it does not - it only taxes 'income' brought into Australia - like Thailand is currently implementing.

 

Only 2 countries tax worldwide income - USA and Aritrea.

 

Taxing worldwide income means that if you make money/income in another country, then you pay income tax on that money, whether you bring it into the country you are a tax resident in, or not.  Example 1 - Tax resident Thailand and earns interest on investments in Singapore - if Thailand implements worldwide taxation, they are liable to pay income taxes on that amount of interest to Thailand.  Example 2 - Tax resident Thailand and receives Pension payments to bank account in UK - if Thailand implements worldwide taxation, they are liable to pay income taxes on that amount of Pension to Thailand.  That is when DTAs come into affect - offsetting income taxes already paid overseas against the income taxes liable in Thailand. 

[Sheryl]

1 hour ago, Misty said:

Here’s a table comparing the tax systems of different countries on how they tax local income, foreign income of residents, and foreign income of nonresident citizens. The Philippines is noted to tax residents on foreign income, but there’s a note which seems to exempt foreign citizens. If this is correct, it would be nice if Thailand could consider doing something similar.

 

 

The table is not clear on what is meant by "resident". It can be based on length of time in country or on immigration status i.e. temporary resident (analogous to anyone in Thailand on a visa) or permanent resident (analogous to holding permanent resident status).

 

I know that in the US, only citizens and permanent residents are taxed on worldwide income. Non-resident aliens (i.e. anyone there on a visa rather than a "green card" -- no matter how long in country) are taxed only on US income.

 

The various reports in newspapers -- which likely came from people not versed in different types of immigration status, and are in any case unclear -- seem to imply that any foreigner in country 180 days or more, regardless of immigration status, would be taxed on foreign income, and it is this which has set off all the fuss and worry in the expat community. 

 

Taxing foreign aliens who do not hold permanent residency or equivalent on their overseas income would be pretty unprecedented and certainly unlike the US system which has been referenced as the model that might be followed.

 

It would also be full of problems and complexities since so much of the income would be exempt under a DTA (and there are  60+ different DTAs), or has already been taxed in the home country, and most of what doesn't fall under these categories will be below or not much above the tax threshold.

 

IF this proposal goes forward at all, one hopes the above points will be taken into account. The simplest solution, and one consistent with what other countries who tax worldwide income do, would be to limit taxation on foreign income to Thai citizens and permanent residents, with other aliens (the majority) taxed only on Thai-sourced income.

[TroubleandGrumpy]

20 hours ago, lordgrinz said:

Speaking of which, does anyyone know what MFP's stance is on these new tax changes? For that matter, are these changes even acceptable to Pheu Thai's reluctant partners (the army, Royalist Elites)?

I would say that MFP will be even worse towards increasing taxation, and also with little regard to Expats.  They are (if they ever get into Govt) going to introduce social welfare and increase social support - it all sounds great to their supporters, but is with all forms of socialism - they are great until they run out of other people's money.  

[sidneybear]

3 hours ago, lordgrinz said:

 

So, if someone jumps off a cliff, everyone should?

Tax as unpleasant for me as it is for anyone else. The fact is many countries tax worldwide income for residents. People complain at any new tax, but it isn't a cliff and life goes on. Foreign sourced income is likely a drop in the ocean anyway: most personal income tax is paid on domestic income, from the droves of people working here. Not a cliff, I'm afraid, which is probably why they're doing it.

[sidneybear]

32 minutes ago, TroubleandGrumpy said:

No it does not - it only taxes 'income' brought into Australia - like Thailand is currently implementing

Not true:

 

https://www.ato.gov.au/tax-and-super-professionals/for-tax-professionals/prepare-and-lodge/tax-time/before-you-lodge/foreign-income

 

[TroubleandGrumpy]

8 minutes ago, sidneybear said:

Not true:

 

https://www.ato.gov.au/tax-and-super-professionals/for-tax-professionals/prepare-and-lodge/tax-time/before-you-lodge/foreign-income

 

Mate - I know a lot about this - worked in IT with the ATO for 2 decades (on and off).

 

Read the first statement of your link - "Your clients must declare all income they receive from foreign sources during the financial year in their tax returns.

They receive - means they receive in Australia.  UK Pensions are taxed in Australia - if that money that is brought into Australia, plus any other income, putsyou over the tax free threshold.  

 

[Misty]

1 hour ago, Sheryl said:

 

The table is not clear on what is meant by "resident". It can be based on length of time in country or on immigration status i.e. temporary resident (analogous to anyone in Thailand on a visa) or permanent resident (analogous to holding permanent resident status).

 

I know that in the US, only citizens and permanent residents are taxed on worldwide income. Non-resident aliens (i.e. anyone there on a visa rather than a "green card" -- no matter how long in country) are taxed only on US income.

 

The various reports in newspapers -- which likely came from people not versed in different types of immigration status, and are in any case unclear -- seem to imply that any foreigner in country 180 days or more, regardless of immigration status, would be taxed on foreign income, and it is this which has set off all the fuss and worry in the expat community. 

 

Taxing foreign aliens who do not hold permanent residency or equivalent on their overseas income would be pretty unprecedented and certainly unlike the US system which has been referenced as the model that might be followed.

 

It would also be full of problems and complexities since so much of the income would be exempt under a DTA (and there are  60+ different DTAs), or has already been taxed in the home country, and most of what doesn't fall under these categories will be below or not much above the tax threshold.

 

IF this proposal goes forward at all, one hopes the above points will be taken into account. The simplest solution, and one consistent with what other countries who tax worldwide income do, would be to limit taxation on foreign income to Thai citizens and permanent residents, with other aliens (the majority) taxed only on Thai-sourced income.

 

Generally it looks like the table is referring to "tax resident" as opposed to "legal resident." Most countries have clear definitions of what they mean for each of these, and they are not necessarily the same thing.

 

The US definitions and rules are especially complicated. According to the IRS, the  US  defines "tax residents" as meeting either the green card OR the substantial presence test (no green card needed). The latter is complicated: https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test   

 

And for US taxes, even if you are nonresident alien, if your spouse choses to file MFJ, you are also taxed as if you are a tax resident.  So a Thai citizen married to a US citizen but with no green card and living in Thailand, could still be taxed on worldwide income.

 

 

 

 

[John Drake]

1 hour ago, TroubleandGrumpy said:

I would say that MFP will be even worse towards increasing taxation, and also with little regard to Expats.  They are (if they ever get into Govt) going to introduce social welfare and increase social support - it all sounds great to their supporters, but is with all forms of socialism - they are great until they run out of other people's money.  

 

I think you're right. PTP and MFP are a catastrophe for expatriates. Yes, Prayuth was better.

[Dogmatix]

44 minutes ago, John Drake said:

 

I think you're right. PTP and MFP are a catastrophe for expatriates. Yes, Prayuth was better.

 

Pita planned a wealth tax.  Prayut good in this context because very conservative and avoided any radical reform. 

[Dogmatix]

2 hours ago, TroubleandGrumpy said:

No it does not - it only taxes 'income' brought into Australia - like Thailand is currently implementing.

 

Only 2 countries tax worldwide income - USA and Aritrea.

 

Taxing worldwide income means that if you make money/income in another country, then you pay income tax on that money, whether you bring it into the country you are a tax resident in, or not.  Example 1 - Tax resident Thailand and earns interest on investments in Singapore - if Thailand implements worldwide taxation, they are liable to pay income taxes on that amount of interest to Thailand.  Example 2 - Tax resident Thailand and receives Pension payments to bank account in UK - if Thailand implements worldwide taxation, they are liable to pay income taxes on that amount of Pension to Thailand.  That is when DTAs come into affect - offsetting income taxes already paid overseas against the income taxes liable in Thailand. 

 

I don't know about Eritrea but what is unusual about the US is that it taxes US citizens and green card holders on global income wherever they live in the world. The UK and most of Western Europe already do what Thailand is planning to do, i.e. tax worldwide income of tax residents.  You can get out of the UK tax net but it is quite difficult.  Once out you pay UK tax only on UK source income.

[fortz]

2 hours ago, TroubleandGrumpy said:

Mate - I know a lot about this - worked in IT with the ATO for 2 decades (on and off).

 

Read the first statement of your link - "Your clients must declare all income they receive from foreign sources during the financial year in their tax returns.

They receive - means they receive in Australia.  UK Pensions are taxed in Australia - if that money that is brought into Australia, plus any other income, putsyou over the tax free threshold.  

3 hours ago, TroubleandGrumpy said:

No it does not - it only taxes 'income' brought into Australia - like Thailand is currently implementing.

 

Only 2 countries tax worldwide income - USA and Aritrea.

 

Taxing worldwide income means that if you make money/income in another country, then you pay income tax on that money, whether you bring it into the country you are a tax resident in, or not.  Example 1 - Tax resident Thailand and earns interest on investments in Singapore - if Thailand implements worldwide taxation, they are liable to pay income taxes on that amount of interest to Thailand.  Example 2 - Tax resident Thailand and receives Pension payments to bank account in UK - if Thailand implements worldwide taxation, they are liable to pay income taxes on that amount of Pension to Thailand.  That is when DTAs come into affect - offsetting income taxes already paid overseas against the income taxes liable in Thailand. 

 

Completely incorrect. You are conflating tax by nationality with tax by residency. Tax residents of Australia are are subject to Australian tax on worldwide income. Non-residents are subject to Australian tax on Australian-source income only. An exemption from Australian tax on certain income is available for individuals who qualify as a temporary resident.

 

https://taxsummaries.pwc.com/australia/individual/taxes-on-personal-income

 

 

Quote

Edited June 10 by fortz

[Dogmatix]

2 hours ago, Sheryl said:

 

The table is not clear on what is meant by "resident". It can be based on length of time in country or on immigration status i.e. temporary resident (analogous to anyone in Thailand on a visa) or permanent resident (analogous to holding permanent resident status).

 

I know that in the US, only citizens and permanent residents are taxed on worldwide income. Non-resident aliens (i.e. anyone there on a visa rather than a "green card" -- no matter how long in country) are taxed only on US income.

 

The various reports in newspapers -- which likely came from people not versed in different types of immigration status, and are in any case unclear -- seem to imply that any foreigner in country 180 days or more, regardless of immigration status, would be taxed on foreign income, and it is this which has set off all the fuss and worry in the expat community. 

 

Taxing foreign aliens who do not hold permanent residency or equivalent on their overseas income would be pretty unprecedented and certainly unlike the US system which has been referenced as the model that might be followed.

 

It would also be full of problems and complexities since so much of the income would be exempt under a DTA (and there are  60+ different DTAs), or has already been taxed in the home country, and most of what doesn't fall under these categories will be below or not much above the tax threshold.

 

IF this proposal goes forward at all, one hopes the above points will be taken into account. The simplest solution, and one consistent with what other countries who tax worldwide income do, would be to limit taxation on foreign income to Thai citizens and permanent residents, with other aliens (the majority) taxed only on Thai-sourced income.

 

AFAIK US green card holders are also taxed on world wide income, even if they reside abroad, as long as they maintain their green cards. 

[Dogmatix]

On 6/9/2024 at 2:15 PM, lordgrinz said:

Speaking of which, does anyyone know what MFP's stance is on these new tax changes? For that matter, are these changes even acceptable to Pheu Thai's reluctant partners (the army, Royalist Elites)?

 

MFP's policies involved a big step up in welfare payments and they were planning a wealth tax to help pay for that.  They had also proposed axing the exemption on capital gains on listed Thai stocks.  I don't think they had proposed global tax or remittance tax but it would appear to be a fit with their policies.

[Sheryl]

2 hours ago, Dogmatix said:

 

AFAIK US green card holders are also taxed on world wide income, even if they reside abroad, as long as they maintain their green cards. 

Correct. The worldwide taxation of the US applies to US citizens and permanent residents (green card holders). It does not  apply to foreigners staying in the US on any type of visa (i.e., non-permanent residents) regardless  of how long they stay. They are taxed only on US sourced income,

[Felt 35]

This has probably been answered earlier but its hundreds of posts to search through so I allow myself to ask if there is anyone who already pays taxes here and knows the tax rate on bank savings and interest on this when the savings are in home country. Btw, I'm already a Thai tax resident but so far as we know until now only pay tax on what is remitted from home country.

 

Thanks

Felt

[SHA 2 BKK]

7 hours ago, Lorry said:

This has been discussed in extenso in the main tax thread, part one,  now pinned.

You can find links there,  posted by Mike Lister and others. 

 

The result was what expatsoon wrote. It's not a "tiny percentage" of Thais who pay tax.

Sorry you seem confused mate.  
 

i was asking for the evidence from the poster in which he/she intimated that the provisions of the LTR Visa relating to taxation were being changed.  
 

Nothing about the percentage Thais who pay tax.  

 

I occasionally read the pinned tax thread and think Mike Lister did an excellent job - but even as Mike Lister noted those notes relate very little if at all to LTR Visa holders.  
 

Again if you or the original poster has information about changes to the LTR Visa scheme I’d be obliged if you could post a link.  Many thanks in advance. 
 

 

[TroubleandGrumpy]

2 hours ago, fortz said:

Completely incorrect. You are conflating tax by nationality with tax by residency. Tax residents of Australia are are subject to Australian tax on worldwide income. Non-residents are subject to Australian tax on Australian-source income only. An exemption from Australian tax on certain income is available for individuals who qualify as a temporary resident.

https://taxsummaries.pwc.com/australia/individual/taxes-on-personal-income

Quote

 

Yes you are right - my bad.  I am confusing Tax by Nationality and Tax by Residency.  Yes Australia does tax worldwide income for tax residents, but not for non-residents.  This list on Wikipedia provides the latest updated worldwide taxations systems country by country and that helped me see the mistake I had made.   Now it is USA, Eritrea, Hungary and Tajikistan are the only ones that tax worldwide - whether the person is a tax residents of another country or not (the point I missed).  

International taxation - Wikipedia

 

[TroubleandGrumpy]

6 hours ago, Sheryl said:

 

The table is not clear on what is meant by "resident". It can be based on length of time in country or on immigration status i.e. temporary resident (analogous to anyone in Thailand on a visa) or permanent resident (analogous to holding permanent resident status).

 

I know that in the US, only citizens and permanent residents are taxed on worldwide income. Non-resident aliens (i.e. anyone there on a visa rather than a "green card" -- no matter how long in country) are taxed only on US income.

 

The various reports in newspapers -- which likely came from people not versed in different types of immigration status, and are in any case unclear -- seem to imply that any foreigner in country 180 days or more, regardless of immigration status, would be taxed on foreign income, and it is this which has set off all the fuss and worry in the expat community. 

 

Taxing foreign aliens who do not hold permanent residency or equivalent on their overseas income would be pretty unprecedented and certainly unlike the US system which has been referenced as the model that might be followed.

 

It would also be full of problems and complexities since so much of the income would be exempt under a DTA (and there are  60+ different DTAs), or has already been taxed in the home country, and most of what doesn't fall under these categories will be below or not much above the tax threshold.

 

IF this proposal goes forward at all, one hopes the above points will be taken into account. The simplest solution, and one consistent with what other countries who tax worldwide income do, would be to limit taxation on foreign income to Thai citizens and permanent residents, with other aliens (the majority) taxed only on Thai-sourced income.

Excellent point - what does Thailand deem to be a 'Resident' as opposed to a 'Tax Resident'.  All the other countries in the world (that I am aware of) only tax the worldwide income of 'real' Residents - not 'temporary residents' on a 'temporary Visa' which is what all non-working Expats in Thailand are in any legal sense.  This is from the Australian Tax Office -

If you're an Australian resident for tax purposes and you:

• have a temporary resident visa
  • you don’t pay tax on most of your foreign income in Australia
  • we tax your income from some actual work you do overseas while you are a temporary Australian resident

A temporary resident Visa allows someone to live and work in Australia for a defined period (example 12 months). To stay any longer than that means applying for a 'renewal' of your temporary resident visa (sounds familiar). But without the 90 day reporting and other impositions that Thailand applies for 'temporary residents'.  

[doosyhindleg]

Married to a Thai, lived here a couple of years & have zero personal income, zero savings & zero remittance from here or anywhere in my name other than keeping 400,000 in my Thai bank for yearly renewals. Wife supports me financially for everything and have a semi-decent quality of life together! Married for a long time & it's just the way it is, can't see how you can get blood from a stone.

[fortz]

1 hour ago, TroubleandGrumpy said:

Excellent point - what does Thailand deem to be a 'Resident' as opposed to a 'Tax Resident'.  All the other countries in the world (that I am aware of) only tax the worldwide income of 'real' Residents - not 'temporary residents' on a 'temporary Visa' which is what all non-working Expats in Thailand are in any legal sense.  This is from the Australian Tax Office -

If you're an Australian resident for tax purposes and you:

• have a temporary resident visa
  • you don’t pay tax on most of your foreign income in Australia
  • we tax your income from some actual work you do overseas while you are a temporary Australian resident

A temporary resident Visa allows someone to live and work in Australia for a defined period (example 12 months). To stay any longer than that means applying for a 'renewal' of your temporary resident visa (sounds familiar). But without the 90 day reporting and other impositions that Thailand applies for 'temporary residents'.  

 

Edited June 10 by fortz

[Lorry]

8 hours ago, Sheryl said:

 

The table is not clear on what is meant by "resident". It can be based on length of time in country or on immigration status i.e. temporary resident (analogous to anyone in Thailand on a visa) or permanent resident (analogous to holding permanent resident status).

 

I know that in the US, only citizens and permanent residents are taxed on worldwide income. Non-resident aliens (i.e. anyone there on a visa rather than a "green card" -- no matter how long in country) are taxed only on US income.

 

The various reports in newspapers -- which likely came from people not versed in different types of immigration status, and are in any case unclear -- seem to imply that any foreigner in country 180 days or more, regardless of immigration status, would be taxed on foreign income, and it is this which has set off all the fuss and worry in the expat community. 

 

Taxing foreign aliens who do not hold permanent residency or equivalent on their overseas income would be pretty unprecedented and certainly unlike the US system which has been referenced as the model that might be followed.

 

It would also be full of problems and complexities since so much of the income would be exempt under a DTA (and there are  60+ different DTAs), or has already been taxed in the home country, and most of what doesn't fall under these categories will be below or not much above the tax threshold.

 

IF this proposal goes forward at all, one hopes the above points will be taken into account. The simplest solution, and one consistent with what other countries who tax worldwide income do, would be to limit taxation on foreign income to Thai citizens and permanent residents, with other aliens (the majority) taxed only on Thai-sourced income.

To take the US as an example for how most countries do it usually doesn't work. 

If the US really tie tax residency to immigration status,  they are certainly the odd man out.

In Europe as in SEA, tax residency is usually well defined and has  nothing to do with visa status.

 

Of course,  Thailand can introduce whatever tax laws they want.

Let's hope they follow the American way of tax.

[TheAppletons]

1 hour ago, doosyhindleg said:

Married to a Thai, lived here a couple of years & have zero personal income, zero savings & zero remittance from here or anywhere in my name other than keeping 400,000 in my Thai bank for yearly renewals. Wife supports me financially for everything and have a semi-decent quality of life together! Married for a long time & it's just the way it is, can't see how you can get blood from a stone.

 

  Feel good stories like this warm the cockles of my cockles.  

[Sheryl]

11 minutes ago, Lorry said:

To take the US as an example for how most countries do it usually doesn't work. 

If the US really tie tax residency to immigration status,  they are certainly the odd man out.

In Europe as in SEA, tax residency is usually well defined and has  nothing to do with visa status.

 

Of course,  Thailand can introduce whatever tax laws they want.

Let's hope they follow the American way of tax.

In Europe and (so far) SEA, income earned abroad and not remitted to country of residence is usually not taxed in the latter.

 

In the US, all citizens and all permanent residents (green card holders) are resident for tax purposes, irrelevant how long they do or don't stay, and they are taxed on their worldwide income regardless of whether remitted into the US.  They are indeed unusual in doing this.

 

The RD in its references to the proposed global tax, has specifically referenced US as an example in terms of taxing worldwide income, something most countries do not do but the US does. Fine. But in that case, follow the example, and make the global taxation applicable only to citizens and permanent residents.

[Jinxed1]

On 6/7/2024 at 5:35 PM, Jinxed1 said:

Wait... multiple sources say "from 2024"

 

So, If this year I already remitted money that I earned before 2024 (not taxable before the change), before knowing about this new rule, I still have to pay tax on it in 2025 because it's retroactive?

 

Please tell me I'm wrong or that's completely fked up

any insight on this situation?

[TheAppletons]

2 minutes ago, Jinxed1 said:

any insight on this situation?

 

  Yes.  Here's your insight:  nothing's changed.

 

  This entire thread is about a proposal.  Nothing more, nothing less.

[proton]

I'm still confused about all this 

[Sheryl]

2 hours ago, Felt 35 said:

This has probably been answered earlier but its hundreds of posts to search through so I allow myself to ask if there is anyone who already pays taxes here and knows the tax rate on bank savings and interest on this when the savings are in home country. Btw, I'm already a Thai tax resident but so far as we know until now only pay tax on what is remitted from home country.

 

Thanks

Felt

There isn't a special tax rate on interest. Assuming it is assessable in Thailand under the terms of the relevant DTA, it is same as any other income. Tax rate depends on total assessable income (from all sources) minus deductions/exemptions. this has been covered in detail in other threads. See https://aseannow.com/topic/1324294-introduction-to-personal-income-tax-in-thailand/

 

Savings in the bank from prior earnings are not income so not taxable anywhere.

 

Correct that at this time, only funds remitted to Thailand (and Thai-sourced income, if any) are taxable. Again, subject to the terms of applicable DTA.

[Jinxed1]

24 minutes ago, TheAppletons said:

 

  Yes.  Here's your insight:  nothing's changed.

 

  This entire thread is about a proposal.  Nothing more, nothing less.

very helpful

 

To be more specific in case some did not understand, my question is what would happen IF this proposal were to pass 🙂

 

Also, as I said, it sounds like the Thaiger does have an information on the specific date the rule is gonna apply, so it sounds a bit more than "just a proposal"