Thailand to tax residents’ foreign income irrespective of remittance

[Dogmatix]

I just had a chat with my accountant on the phone about my two staff who earn more than 120k a year but not enough to pay tax and have never filed tax returns.  My question was should I file late tax returns for them.  She said technically they can be fined 2k, if they are caught and they should file tax returns.  I said what about waiting till next year, rather than filing late which can't be done online.  Probably OK was her response.  I think there are many people in this situation and not politically a good idea to go after them but they could be fined, if caught in some kind of random check.

[redwood1]

12 minutes ago, Dogmatix said:

I just had a chat with my accountant on the phone about my two staff who earn more than 120k a year but not enough to pay tax and have never filed tax returns.  My question was should I file late tax returns for them.  She said technically they can be fined 2k, if they are caught and they should file tax returns.  I said what about waiting till next year, rather than filing late which can't be done online.  Probably OK was her response.  I think there are many people in this situation and not politically a good idea to go after them but they could be fined, if caught in some kind of random check.

 

Well this is good 2 Thais paying taxes  55 million more to go.....

[JimHuaHin]

I have been following the various threads on AN about these taxation "issues" since they were "announced" late last year.  In addition, I have sought some "clarity" by reading up on Thai taxation law(s) (only in English), which I have found excessively frustrating, as many sources (both printed and on-line) are dated from decades ago, and at times contradictory.

 

The Australian Taxation Office (the Australian brother/sister of the Thai Revenue Department (RD)), offers clear concise definitions and examples of "assessable", "taxable", "exempt" and "non-assessable, non-exempt" incomes on their web site; similar Thai RD definitions and examples may be found in the Thai literature.  Although there is a generally agreement of the Australian and Thai definitions, what actually constitute/comprise these definitions do not align.  Both countries have tax "allowances" and "deductions", but the nature of these allowances and deductions are very very different, both in type and magnitude (especially in the case of type of employment (professional vs non-professional vs skilled); non-employment income (shares, rental properties, etc.)).  From earlier posts, it is clear that similar situations exist in most of the countries posters lived in prior to coming to Thailand.

 

So when the Thai RD decides to tax your global income, then does Thai tax laws apply, and not your "homeland's" tax laws?  I suspect the former, which means (unless you have only 1-2 sources of income, such as a government old age pension and/or bank interest) one will have to keep detailed monthly records of income and tax-related expenses.

 

Of course, there is also the issue of "foreign tax credits".  How does this work when the tax years do not align, eg Australia 1 July - 30 June, and Thailand 1 January - 31 December?

 

And when does "income" become "savings"?  The month after the income is received (as a poster suggested earlier), or in the following tax year?

 

Does your country's DTA with Thailand offer clarity?  In the case of Australia, I found numerous "ambiguities", on which I sought clarification from the Australian Taxation Office (ATO).  On some issues a degree of clarity was provided, on others an "interpretation" was offered.  Will the Thai RD provide and same clarity and "interpretation"; and what about "Somchai" or "Lek" at your local RD office, do they know anything about your country's DTA agreement?

 

I suppose we must wait until next year, or the next Thai government, or the 12th of never for answers.

 

[NoDisplayName]

2 hours ago, Mike Lister said:

That's not vaid, the default has to be that they are savings or exempt, otherwise everyone is guilty until proven innocent.

 

Is that a "common sense" or "hopeful" interpretation?  In that case nobody would ever file, because it would be up to RTD to track down every individual (non)taxpayer and prove tax was owed.

 

Tax office ladies would never ask the source of remittances if the default was savings.

 

This is not the legal system, it's tax bureaucracy, where everyone is assumed guilty until they prove themselves innocent.

[JimGant]

3 hours ago, NoDisplayName said:

I would suggest the assumption will be any funds remitted will be considered assessable unless shown otherwise.

Come on, folks. Use your heads. Are they going to consider all the zillions of dollars of inbound cash flow as assessable income? Then what -- or so what -- will they then interview the owners of all those zillions as to why no Thai tax return was filed? No way. Self-assessment is the only way this thing will work. Yes, if someone has a substantially large remitted amount of money, and no tax return -- then call him in for a chat. But I suspect, to keep these random large-scale audits manageable, what constitutes a 'substantial amount of remittance' will be a rather high number.

 

But why worry about how they consider all remittances? Makes no difference if you're honest. Just crunch your numbers, and if you have taxable income (i.e., assessable income exceeding allowances, deductions, and the 150k freebie), file a tax return. Period.

[Mike Lister]

2 minutes ago, NoDisplayName said:

 

Is that a "common sense" or "hopeful" interpretation?  In that case nobody would ever file, because it would be up to RTD to track down every individual (non)taxpayer and prove tax was owed.

 

Tax office ladies would never ask the source of remittances if the default was savings.

 

This is not the legal system, it's tax bureaucracy, where everyone is assumed guilty until they prove themselves innocent.

Jim is correct, self assessment is the only viable answer to that quandary.

[NoDisplayName]

Just now, Mike Lister said:

Jim is correct, self assessment is the only viable answer to that quandary.

 

Different subject entirely.

 

One is what the remittance is considered.

 

The other is whether the RTD will bother chasing small fish.

 

Not same-same.

 

Weed is illegal in many places, but police won't bother themselves with amounts under a certain limit.  Not worth their time.

 

 

[Mike Lister]

25 minutes ago, NoDisplayName said:

 

Different subject entirely.

 

One is what the remittance is considered.

 

The other is whether the RTD will bother chasing small fish.

 

Not same-same.

 

Weed is illegal in many places, but police won't bother themselves with amounts under a certain limit.  Not worth their time.

 

 

A remittance is considered to be whatever the taxpayer says it is, there is no default position or automatic assumption that a remittance is one thing or the other.

[andre47]

4 hours ago, redwood1 said:

 

Sir corruption is not a risk in Thailand corruption is a respected institution practiced on all levels...

The ink was not even dry on this tax before everyone and their brother were figuring all ways not to pay jack....

good luck with that

[TheAppletons]

54 minutes ago, JimGant said:

Come on, folks. Use your heads. Are they going to consider all the zillions of dollars of inbound cash flow as assessable income? Then what -- or so what -- will they then interview the owners of all those zillions as to why no Thai tax return was filed? No way. Self-assessment is the only way this thing will work. Yes, if someone has a substantially large remitted amount of money, and no tax return -- then call him in for a chat. But I suspect, to keep these random large-scale audits manageable, what constitutes a 'substantial amount of remittance' will be a rather high number.

 

But why worry about how they consider all remittances? Makes no difference if you're honest. Just crunch your numbers, and if you have taxable income (i.e., assessable income exceeding allowances, deductions, and the 150k freebie), file a tax return. Period.

 

  This is the way.  ^^

 

  All of the old ladies on here - well, what about this, what about that?  

 

  Holy hell.  One can live in fear or one can go with the flow.  In Thailand, it's better to go with the flow.  

[NoDisplayName]

18 minutes ago, Mike Lister said:

A remittance is considered to be whatever the taxpayer says it is, there is no default position or automatic assumption that a remittance is one thing or the other.

 

I'll defer to another expert on default position.

 

3 hours ago, Mike Lister said:

That's not vaid, the default has to be that they are savings or exempt, otherwise everyone is guilty until proven innocent.

[Mike Lister]

5 minutes ago, NoDisplayName said:

 

I'll defer to another expert on default position.

 

More word games!

 

The position cannot automatically be assumed to be that every remitrance is income, that's ludicrous, if anything it;s the obverse position. Fortunately, self assessment solves the problem, what's not clear about that.

[CallumWK]

1 hour ago, JimGant said:

Come on, folks. Use your heads. Are they going to consider all the zillions of dollars of inbound cash flow as assessable income? Then what -- or so what -- will they then interview the owners of all those zillions as to why no Thai tax return was filed? No way.

 

Correct, they not gonna bother with those that send a few hundred thousand in a year, but those that have their pensions transferred, of course can not deny its income.

1 hour ago, JimGant said:

Yes, if someone has a substantially large remitted amount of money, and no tax return -- then call him in for a chat. But I suspect, to keep these random large-scale audits manageable, what constitutes a 'substantial amount of remittance' will be a rather high number.

 

And that is where the snake is hiding in the grass. Someone who buys a property will most like remit several million in one go. So if they call him in, how he gonna proof if it is income or savings?

You will recall that I spoke with the top guy of the legal department of the revenue office, and asked him that question a few times. I'm still waiting for the answer

[Mike Lister]

1 minute ago, CallumWK said:

 

Correct, they not gonna bother with those that send a few hundred thousand in a year, but those that have their pensions transferred, of course can not deny its income.

 

And that is where the snake is hiding in the grass. Someone who buys a property will most like remit several million in one go. So if they call him in, how he gonna proof if it is income or savings?

You will recall that I spoke with the top guy of the legal department of the revenue office, and asked him that question a few times. I'm still waiting for the answer

If somebody is silly enough to remit income, in order to buy property here, they deserve to be taxed. Only they know what it is is, savings, exempt or assessable, it's not difficult to say what it is and to prove it using statements etc. Also, same year remittances starts to be taxable January 2024, anything prior to that is taxed under the old rules or is free of Thai tax.

[Dogmatix]

I saw a friend last night who is retired and needs to make remittances from overseas to survive. He is concerned about how to do his tax return next year, if, indeed he needs to do one, and how the RD will interpret the DTA, how to claim tax credits, what evidence is needed to prove pre-2024 income etc etc.  He visited his local tax office in Bkk and sat down with a nice lady who spoke good English but was totally unable to answer any of his questions, including, “Can I use my overseas credit card and ATM card in Thailand without having to declare on my tax return?”

 

Definitely a high level preparation has been undertaken at the RD for a major tax change.  Just issue an order to say the law means something difference for what it has meant for over 50 years without any legislative process and sit back idly waiting for billions of dollars of foreign cash to pour into the Treasury.

 

I guess the difference with upcountry tax offices is that they are less likely to be able to speak good English or even understand the questions.

[Dogmatix]

18 hours ago, CallumWK said:

 

Correct, they not gonna bother with those that send a few hundred thousand in a year, but those that have their pensions transferred, of course can not deny its income.

 

And that is where the snake is hiding in the grass. Someone who buys a property will most like remit several million in one go. So if they call him in, how he gonna proof if it is income or savings?

You will recall that I spoke with the top guy of the legal department of the revenue office, and asked him that question a few times. I'm still waiting for the answer

 

Simple. Obtain a certified bank statement to show the money was in your overseas bank account as at 31 Dec 2023.   Get that legalised at the Thai embassy or a consulate in that country.  Then get a certified translation done.  Finally get the translation certified at the Thai Ministry of Foreign Affairs.  Present it to the RD and wait to find out what is still wrong with it. 

 

Another solution that will be followed by most sensible people is to avoid buying any property in Thailand or making any major purchases in Thailand like a car.

[Dogmatix]

Sooner or later as sure as God made little green apples and definitely if and when they introduce global taxation, they will ask foreign residents on visas other than transit and tourist visas to show a tax clearance certificate.  They could do this for visa renewals which would be the most logical but, since they are so damn lazy, they could also just enforce the existing regulation requiring a tax clearance certificate to leave the country.

[matta01]

In my opinion, the system of taxing money you bring into Thailand is not "workable", so I think that in the future they will switch to a tax on global income. 

In less than six months one should at least have clear information and guidance. Therefore, if the Thai services are not concerned about it, neither am I

[Presnock]

6 minutes ago, matta01 said:

In my opinion, the system of taxing money you bring into Thailand is not "workable", so I think that in the future they will switch to a tax on global income. 

In less than six months one should at least have clear information and guidance. Therefore, if the Thai services are not concerned about it, neither am I

Yeah, it is so complicated to carry out and that probably is why nothing final has been published.  They probably have as many different suggestions and solutions we have read here and elsewhere.

[Mike Lister]

I have some empathy for those who are panicking about tax and what will happen, it's part of what some people do at times, especially as we get older.

 

I filed my UK return in April, using a tax accountant. As I had calculated, I owed 84 Pounds in tax...great! At end April I logged on to the HMRC Gateway to check my tax account, intending to pay the amount and was met with an ominous message I'd never seen before, something to the effect of, we're checking things and we'll let you know between June and August, how much you owe us! 

 

I asked my accountant if anything was amiss and she said no,they're just slow and lazy! As the weeks dragged on I went over in my mind, all my UK tax affairs for the past few years....had I made a mistake, was I being audited, we're they doing an in depth investigation...whaaaa! 

 

Today I bucked up the courage to look at my account and logged into the Gateway once again. The previous message was gone, replaced by a new one telling me I owed 84 Pounds and sorry for the delay but we're short staffed. My relief was palpable, I paid them ever so quickly and couldn't be happier.

 

The moral of this saga is....it's going to be OK, don't sweat the Thai tax thing, it will work out just fine, don't second guess the things you don't know about.

 

[tomkenet]

Just an idea.

What about discussing today's remittance tax system on this channel: 

 

https://aseannow.com/topic/1327622-thai-gov-to-tax-remitted-income-from-abroad-for-tax-residents-starting-2024-part-ii

 

And talk about the new proposed , world wide,  irrespective of remittance tax on this channel.

[brian2322]

Regarding global taxation, I'm guessing it's as big a deal to the Thai billionaires as it is to us.  More so, maybe...  Do they get to play by the 179 day rule as well?  

[ukrules]

1 hour ago, brian2322 said:

Regarding global taxation, I'm guessing it's as big a deal to the Thai billionaires as it is to us.  More so, maybe...  Do they get to play by the 179 day rule as well?  

 

Yes, they do for their foreign income, not for their Thai income though.

 

The rules we read are not designed for 'the foreigners', they're aimed at Thai people - but they apply to us as well.

 

[ukrules]

4 hours ago, Dogmatix said:

Sooner or later as sure as God made little green apples and definitely if and when they introduce global taxation, they will ask foreign residents on visas other than transit and tourist visas to show a tax clearance certificate.  They could do this for visa renewals which would be the most logical but, since they are so damn lazy, they could also just enforce the existing regulation requiring a tax clearance certificate to leave the country.

I doubt they will go back to that old antiquated system but you never know.

 

If they do then I suspect it might only apply to those who are actually tax resident and stay in Thailand for the full 180 days or more per year.

 

It would be quite a nonsense to have people get tax clearance certificates in the first 180 days of any year unless of course they were resident in the previous year - now that would take a lot of checking and form filling.

 

[Jinxed1]

did we have any official update since this thread was created?

[Klonko]

6 hours ago, matta01 said:

In my opinion, the system of taxing money you bring into Thailand is not "workable", so I think that in the future they will switch to a tax on global income. 

In less than six months one should at least have clear information and guidance. Therefore, if the Thai services are not concerned about it, neither am I

i beg to disagree. Processing tax returns with foreign rental income,  investment income and DTA tax credits all over will add complexity.

[TigerCat]

16 hours ago, Dogmatix said:

Sooner or later as sure as God made little green apples and definitely if and when they introduce global taxation, they will ask foreign residents on visas other than transit and tourist visas to show a tax clearance certificate.  They could do this for visa renewals which would be the most logical but, since they are so damn lazy, they could also just enforce the existing regulation requiring a tax clearance certificate to leave the country.

How many tax years does an individual have to go back to get a tax clearance certificate?   

[topt]

10 hours ago, Jinxed1 said:

did we have any official update since this thread was created?

No.

[Presnock]

On 7/1/2024 at 5:30 PM, JimHuaHin said:

I have been following the various threads on AN about these taxation "issues" since they were "announced" late last year.  In addition, I have sought some "clarity" by reading up on Thai taxation law(s) (only in English), which I have found excessively frustrating, as many sources (both printed and on-line) are dated from decades ago, and at times contradictory.

 

The Australian Taxation Office (the Australian brother/sister of the Thai Revenue Department (RD)), offers clear concise definitions and examples of "assessable", "taxable", "exempt" and "non-assessable, non-exempt" incomes on their web site; similar Thai RD definitions and examples may be found in the Thai literature.  Although there is a generally agreement of the Australian and Thai definitions, what actually constitute/comprise these definitions do not align.  Both countries have tax "allowances" and "deductions", but the nature of these allowances and deductions are very very different, both in type and magnitude (especially in the case of type of employment (professional vs non-professional vs skilled); non-employment income (shares, rental properties, etc.)).  From earlier posts, it is clear that similar situations exist in most of the countries posters lived in prior to coming to Thailand.

 

So when the Thai RD decides to tax your global income, then does Thai tax laws apply, and not your "homeland's" tax laws?  I suspect the former, which means (unless you have only 1-2 sources of income, such as a government old age pension and/or bank interest) one will have to keep detailed monthly records of income and tax-related expenses.

 

Of course, there is also the issue of "foreign tax credits".  How does this work when the tax years do not align, eg Australia 1 July - 30 June, and Thailand 1 January - 31 December?

 

And when does "income" become "savings"?  The month after the income is received (as a poster suggested earlier), or in the following tax year?

 

Does your country's DTA with Thailand offer clarity?  In the case of Australia, I found numerous "ambiguities", on which I sought clarification from the Australian Taxation Office (ATO).  On some issues a degree of clarity was provided, on others an "interpretation" was offered.  Will the Thai RD provide and same clarity and "interpretation"; and what about "Somchai" or "Lek" at your local RD office, do they know anything about your country's DTA agreement?

 

I suppose we must wait until next year, or the next Thai government, or the 12th of never for answers.

 

Well IMHO now, once they decide to notify the nation of the implementation rules for this (first phase of taxation), and then 2025 rolls around and we don't really know more on how the Thai revenue dept will be operating.  They will most likely do that bit about having each person decide if they need a tax number (or they will amend he law to say that each tax resident must obtain a Thai tax id number) and then they will let us the expats either find an agent to assist them in filing the tax forms.  Some will just ignore the RD until queried about the remittances and if one claims "exemption" then one must produce documentation supporting that.  I think that there is no way they could open the gates to every Tom, Dick and Harry to start filing for a Tax ID number nor sending in online all the tax forms especially with so many different interpretations of every type of DTA, or remittances of so many different types of income.  Seeing as how they have rolled out this first phase, so haphazardly, it will probably take years before they settle down as to ''Hm this doesn't work and we are losing money" until they come up with the next phase of worldwide income taxation.  But that is BUT  TIT so...good luck to all you Tax residents.

[matta01]

Quote

i beg to disagree. Processing tax returns with foreign rental income,  investment income and DTA tax credits all over will add complexity.

You are not obliged to bring money into Thailand in 2024.  How you are going to file a tax return? 

Proclaim something is one thing. Converting it into a "workable" system in practice is something else.

Not thinking before they start is a common mistake here