Thailand to tax residents’ foreign income irrespective of remittance

[Dogmatix]

I went to the RD today to present documents following my wife's tax return submission that I filed for her online. She didn't receive the letter saying what docs they wanted but I received the SMS reminding her to send them.  So I went along in person carrying everything under the sun in case it was needed.  As sod's law would have it they only wanted one of the documents and returned all the rest. 

 

I took the opportunity to ask the lady about the case of someone earning 15,000 a month which puts them in the situation of not having to pay any tax but having to file a tax return, according to the RC.  I said that someone had been advised at the RD that they shouldn't file a tax return because it was a waste of officials' time (as someone reported in this thread).  

 

Her reply was that anyone with 120,000 income from employment (including employment pensions) should file a tax return and RD officials should not be advising the public not to file in those circumstances.  I was not surprised as I was dubious about the post that said the RD had advised not to file.  I doubt if the poster talked to the RD himself.

 

Notwithstanding the above I am not sure that I would want to get onto their radar, if I were in that situation.  Anyway bear in mind that there is nowhere on the tax return forms to declare state pension income, so you can argue it is not assessable.

 

 

[Metapod]

On 7/11/2024 at 8:21 AM, Fat Bob said:

So apparently with the new destination thailand visa foreign income is exempt from tax. It‘s starting to make a lot of sense on how it works. I feel totally jypped i haven’t even moved and gotten my elite visa stamp yet. 😂 I had a feeling there‘s always a way with Thailand. Might even get that visa to not worry about tax and just use the elite for the airport rides and travel more to max them out so I feel less taken advantage of. It‘s almost certain that there’s not gonna be any sales of the privilege visas and I really hope they don‘t close down. Still want my option to stay for 20 yrs if I like it there.

 

I'm still hoping Thai Elite gets some tax relief to sell their overpriced visas. Other option for me is just to move to less than 180 days in Thailand and spend more time traveling. i already travel 3-6 months a year, so it won't be a big life adjustment. I just don't like feeling like I have less freedoms and options. Ultimately, it means I'll spend less money in Thailand, not more. I'm sure there are a lot more like us who will choose the same. 

 

 

[redwood1]

20 minutes ago, Metapod said:

 

I'm still hoping Thai Elite gets some tax relief to sell their overpriced visas. Other option for me is just to move to less than 180 days in Thailand and spend more time traveling. i already travel 3-6 months a year, so it won't be a big life adjustment. I just don't like feeling like I have less freedoms and options. Ultimately, it means I'll spend less money in Thailand, not more. I'm sure there are a lot more like us who will choose the same. 

 

 

 

The whole purpose of the Elite visa was so people could LIVE  in Thailand year round with out a visa hassle....A income tax has/will kill the Elite sales deader than a Dodo....

 

Is the Elite company who have spent decades building their brand going to allow a tax to destroy their business?  It seems they would do something......And I mean much more than adding more silly worthless benefits... 

[Metapod]

40 minutes ago, redwood1 said:

 

The whole purpose of the Elite visa was so people could LIVE  in Thailand year round with out a visa hassle....A income tax has/will kill the Elite sales deader than a Dodo....

 

Is the Elite company who have spent decades building their brand going to allow a tax to destroy their business?  It seems they would do something......And I mean much more than adding more silly worthless benefits... 

 

Yep, it makes no sense.

 

"Let's make a program to attract UHNWI and then try to tax the <deleted> out of them!"

[Enzian]

45 minutes ago, Metapod said:

Yep, it makes no sense.

Everyone below them on the social ladder in this society just bends over and takes it from them, so they think we should, and will.

[JimTripper]

Do many locals even do taxes? Many are too busy selling noodles. I can't see them sitting down and doing a bunch of math calculations to figure tax.

[scoutman360]

Imagine being a U.S. citizen having all your retirement savings in a Roth IRA, thinking you are tax free after paying the tax 20 years ago, then watching the gains grow tax free. Think again. Thailand will take up to 35%.

 

Imagine sending 10 million thb to Thailand to buy property. Think again. Thailand can take up to 35%. 

[Incorrigible1]

Spend less than 180 days a year in Thailand sounds good to me. 

[JimTripper]

3 minutes ago, Incorrigible1 said:

Spend less than 180 days a year in Thailand sounds good to me. 

Is it a calendar year starting January 1, or a running year that starts when I enter?

[Incorrigible1]

18 minutes ago, JimTripper said:

Is it a calendar year starting January 1, or a running year that starts when I enter?

Calendar year

[JimGant]

7 hours ago, Dogmatix said:

Her reply was that anyone with 120,000 income from employment (including employment pensions) should file a tax return

And my question to her: How would you know if I have over 120k in assessable income, since I'm an expat, and all my income is foreign source income, most, if not all, is non assessable via DTA. Or, under the old rules, was remitted from a previous year's financial account. Are you going to arbitrarily start calling in some farangs for a discussion on their remitted cash flow -- just to see if they should have filed, even with not taxable income?  I didn't think so.

[Mike Lister]

6 hours ago, JimTripper said:

Is it a calendar year starting January 1, or a running year that starts when I enter?

Calendar year

[Mike Lister]

3 hours ago, JimGant said:

And my question to her: How would you know if I have over 120k in assessable income, since I'm an expat, and all my income is foreign source income, most, if not all, is non assessable via DTA. Or, under the old rules, was remitted from a previous year's financial account. Are you going to arbitrarily start calling in some farangs for a discussion on their remitted cash flow -- just to see if they should have filed, even with not taxable income?  I didn't think so.

Revenue Departments in every country have a similar dilemma, to believe the taxpayers return (or lack of) or not. If they believe or don't think the effort is worthwhile, you get a check and pass, if they don't or they are bored and want some variety in their life, they call you in and ask questions. Perhaps they just get curious one day when they spot a transfer that they bother to take the time to investigate, because it wasn't reported ......why was that they wonder......that's how she knows, because she makes you tell her.

 

You seem to rely on the low odds of being called in for an audit, combined with language barriers and a high work load on their part.....in other words, you're playing the odds. That's not really constructive tax guidance advice, is it, it's a lesson in percentages and gambling.

[motdaeng]

i wonder if there is anything written in thailand's tax regulations or laws about children paying taxes.

for example, if a child has 10 million in a bank account and receives 300,000 in interest every year,

what are the tax implications?

 

also, what about older people who are "incompetent", such as those with dementia, and have no guardians

here in thailand?

[Presnock]

9 hours ago, Incorrigible1 said:

Calendar year

Yes it is the calendar year, but the 180 days  can be spread anywhere within that calendar year.

[jayboy]

3 hours ago, Mike Lister said:

You seem to rely on the low odds of being called in for an audit, combined with language barriers and a high work load on their part.....in other words, you're playing the odds. That's not really constructive tax guidance advice, is it, it's a lesson in percentages and gambling.

 

If I understood the post correctly, his hypothetical case involved non assessable income, and the likely consequences of not filing a return in respect of it.As you suggest, there are quite a few reasons why the RD would not bother following up.What I would want to know is more detail on the penalties in the event of RD focusing on the case and determining a return should have been filed.If those penalties are minimal (and of course based on the assumption no tax was due), then in my opinion the risk - always tiny - was worth taking.I also would hazard a guess that most reputable tax advisers would share my opinion, particularly since there is no suggestion of tax evasion or even tax avoidance.

[Mike Lister]

9 minutes ago, jayboy said:

 

If I understood the post correctly, his hypothetical case involved non assessable income, and the likely consequences of not filing a return in respect of it.As you suggest, there are quite a few reasons why the RD would not bother following up.What I would want to know is more detail on the penalties in the event of RD focusing on the case and determining a return should have been filed.If those penalties are minimal (and of course based on the assumption no tax was due), then in my opinion the risk - always tiny - was worth taking.I also would hazard a guess that most reputable tax advisers would share my opinion, particularly since there is no suggestion of tax evasion or even tax avoidance.

The penalties, as we understand them presently, for not filing a return when the assessable income level was breached yet no tax was due, amount to a fine of 2k baht and potential exposure to back audits spanning 10 years rather than the customary 3 years.

 

I don't think however that was the entire focus of the earlier post, he raises the question, "how would you know if my assessible income exceeds 120k", or whether the funds are assessable or not.

Edited July 13 by Mike Lister

[jayboy]

13 minutes ago, Mike Lister said:

The penalties, as we understand them presently, for not filing a return when the assessable income level was breached yet no tax was due, amount to a fine of 2k baht and potential exposure to back audits spanning 10 years rather than the customary 3 years.

 

I don't think however that was the entire focus of the earlier post, he raises the question, "how would you know if my assessible income exceeds 120k", or whether the funds are assessable or not.

 

Point taken.That wasn't the focus of his question.

 

In my hypothetical example I did not envisage any breach of assessable income level since there was no assessable income remitted.

[freeworld]

14 hours ago, Dogmatix said:

Her reply was that anyone with 120,000 income from employment (including employment pensions) should file a tax return and RD officials should not be advising the public not to file in those circumstances.  I was not surprised as I was dubious about the post that said the RD had advised not to file.  I doubt if the poster talked to the RD himself.

What this RD lady says is correct.

 

It is in the law and revenue code. By someone else saying it is not required does not override the law nor code and is not an excuse even if the info is coveyed by an RD officer, the tax payer will be liable to follow the law and code as it is written.

[heybuz]

You can't blame the people they didn't vote for them, just saying.

[Robin]

Seems to me that much depends on how "savings" are defined.  I have money in a UK bank in a "savings account"  so for the RD is this automatically classified as "Savings"?  Interest on this account is taxed at source in UK.

Also in UK I have property purchased with a bank loan, now paid off from income.  If I sell this property, is the money from the sale "savings" and can it be brought into Thailand free of tax.?

 

If I as going to buy a Condo here in Thailand to live out my retirement.  I would want all the money from sale of UK property to do this, not just 70% that the RD might leave me

[topt]

5 hours ago, Robin said:

Interest on this account is taxed at source in UK.

I thought UK banks stopped doing that many years ago.........? (unless something other than a "normal" savings account.

I have to declare on a tax return.

[Robin]

Something else to consider, (or not as the RD thinks fit,) 

How will be quests be treated by the RD.  For example, my will, made in UK, bequeaths money to my wife, now living in Thailand.  Will this be a taxable income according to the RD?

If an as yet unknown rich uncle leaves me a few Million, will the RD want tax on this if I bring it to Thailand.

Does Thailand have an Inheritance Tax?   One more thing generally ignored and not paid my the majority of the population?

 

[Mike Lister]

2 minutes ago, Robin said:

Something else to consider, (or not as the RD thinks fit,) 

How will be quests be treated by the RD.  For example, my will, made in UK, bequeaths money to my wife, now living in Thailand.  Will this be a taxable income according to the RD?

If an as yet unknown rich uncle leaves me a few Million, will the RD want tax on this if I bring it to Thailand.

Does Thailand have an Inheritance Tax?   One more thing generally ignored and not paid my the majority of the population?

 

Inheritance is tax free in Thailand, up to a high minimum.

 

INHERITANCE TAX 

 

78) "Heirs are subject to the inheritance tax only on the value of a legacy that exceeds THB 100 million obtained from each testator together either once or on several occasions. The inheritance tax rate is 10%, except in the case of heirs who are ascendants or descendants of the testator, where the rate is 5%. Legacies received by the spouse of a testator are exempt from the tax". 

 

 

 

https://taxsummaries.pwc.com/thailand/individual/other-taxes  

 

[Mike Lister]

17 hours ago, topt said:

I thought UK banks stopped doing that many years ago.........? (unless something other than a "normal" savings account.

I have to declare on a tax return.

Agreed

[PFMills]

Mike, thanks for all the hard work.  I remember seeing somewhere that you would be writing about GIFTS, but now I can’t remember where. Have you written anything yet please?

[Mike Lister]

7 minutes ago, PFMills said:

Mike, thanks for all the hard work.  I remember seeing somewhere that you would be writing about GIFTS, but now I can’t remember where. Have you written anything yet please?

I'll post a link to the gift tax section of the tax guide, when I get home later today.

[TroubleandGrumpy]

On 7/13/2024 at 8:20 AM, jayboy said:

 

If I understood the post correctly, his hypothetical case involved non assessable income, and the likely consequences of not filing a return in respect of it.As you suggest, there are quite a few reasons why the RD would not bother following up.What I would want to know is more detail on the penalties in the event of RD focusing on the case and determining a return should have been filed.If those penalties are minimal (and of course based on the assumption no tax was due), then in my opinion the risk - always tiny - was worth taking.I also would hazard a guess that most reputable tax advisers would share my opinion, particularly since there is no suggestion of tax evasion or even tax avoidance.

Nothing has changed as far as the Thai tax system.  Last year it was the same rules - technically we Expats who remitted over 60K PA were supposed to lodge a tax return. But TiT and the rules are a guideline. Advice I have is simple - no taxes to pay - do not lodge a tax return.  

 

Does anyone really believe that TRD are going to audit all Expats living in Thailand? TRD have no idea if anyone is Working, Education, Married,  Retired, etc. If they do, then are they going to go backwards for all Expats who have lived in Thailand and have not lodged a tax return for the past 10 years? Obviously not.

 

Going forward the TRD may take a more proactive approach - maybe.  We have to wait and see what TRD provides by December 2024 - until then we do not know - no matter what the rules state - they have stated that since decades ago.    Wait and see how it goes if/when releases their 'instructions' on how to do a tax return in 2025. 

[Mike Lister]

3 hours ago, PFMills said:

Mike, thanks for all the hard work.  I remember seeing somewhere that you would be writing about GIFTS, but now I can’t remember where. Have you written anything yet please?

GIFT TAX  

 

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

 

What the Rules Say

 

68) 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.

 

69) 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.  

 

70) The third scenario is not agreed by everyone and is contingent upon further input from the TRD. It suggests that if 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.

 

71) "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.

 

72) 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.

 

73) 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.

 

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

 

What Some Members Think:

 

75) 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.

 

76) Additional points on this subject are:

 

a) Funds that are gifted, must be for the use of the person to whom they are gifted.

 

b) 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.

 

c) Gifts to a spouse become Sin Suan Tua or the sole property of the spouse, under marital law the gift is not regarded as conjugal property.

 

d) Gifts made outside Thailand appear to be safe.

 

e) The Gift must be formally documented and recorded, the more documentation the better.

 

f) No more than THB 20 mill should be remitted to Thailand per year, unless 5% Gift Tax is paid on the balance.

 

77) Until the circumstances surrounding Gift Tax and all it entails, becomes more clear,, it is critical that anyone wishing to use Gift Tax, seeks professional advice.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.

[beammeup]

How about if you have a joint account offshore with you Thai missus, and funds are sent to an account solely in her name. Any chance the husband will get dinged for tax?