Thailand to tax residents’ foreign income irrespective of remittance

[AreYouGerman]

10 hours ago, Surasak said:

Who's side are you on?

 

White > Men > The rest.

 

 

 

[AreYouGerman]

1 minute ago, Marco100 said:

My understanding is that Thailand joins the OECD - CRS and AEOI ( automatic exchange of information ) .

 

 

Joined already.

[MeePeeMai]

I don't usually listen to this guy but here he is doing a great rant on the subject and it seems that he's a bit pissed off about it too.

 

 

[CharlesHolzhauer]

10 minutes ago, Ben Zioner said:

LTR giving you a bad itch?

Why would you say something like that, are you trying to have an argument about my inquiry? Since there are so many proposed changes on the horizon I felt it reasonable to ask the author of the post as he seems to very knowledgeable about tax issues.  And, like many others, I'll spend my remaining years here in Thailand come rain or shine, with tax breaks or without. Steer away from me - Ben Zioner, won't you!

[JimGant]

3 hours ago, MeePeeMai said:

Exactly which and what amount of relevant documents am I going to have to show to the Thai R.D. and just how are they possibly going to figure out this mess in a fair and equitable manner with regards to the tax amount due under the USA/Thai double taxation treaty?

 

Of course, your govt pensions and social security are strictly US business -- and need not be reported to TRD, as they're exclusively taxable by the US. IRAs, private pensions, annuities-- to name three -- are primarily taxable by Thailand. So, you just self-declare this income on your Thai tax return -- no official paperwork needed. And since Thailand is primary taxation authority, there's no credit due from the US: Thailand, as primary taxation authority, gets to keep all the taxes -- and issues a credit to the US to absorb. So there's NO US tax credit against Thai taxes.

 

On the US side, you don't need any official paperwork from TRD to take a credit against your US taxes -- you just do it, based on the numbers you derived from you Thai tax return. Since you don't have to file your US return until June, plenty of time to file a Thai tax return, and get the amount to credit. 

 

One other example -- rental income from a US property -- is a mix, with the US as primary taxation authority (but not exclusive taxation authority), and Thailand as secondary. In this scenario, if it's possible that Thailand would collect more taxes on this rental income than the US, then obviously they would want you to file a tax return. Probably, however, unlikely, if you're a middle class US taxpayer. In this situation, I'd just not file a Thai tax return (since the US credit would kill all Thai tax collection). No tax evasion, of course. And easily explained if ever audited.

 

Anyway, the credit game seems to be on way -- with Thailand issuing the credits. And not much paperwork involved, that I can see.

 

[AreYouGerman]

17 minutes ago, CharlesHolzhauer said:

I'll spend my remaining years here in Thailand

 

We will see about that. You know, you only get 1 year temporary extensions. With the mad brute, the US, on the loose, we can never know for sure when they will start a war in the region. And Thailand for sure won't side with the losers.

[smew]

Crazy, so, we are being treated as citizens without the citizen status, privileges and benefits, and visa costs and double pricing and no acces to local hospitals, pay at home country and pay taxes here.. it better be a big joke

[AreYouGerman]

Just now, smew said:

Crazy, so, we are being treated as citizens without the citizen status, privileges and benefits, and visa costs and double pricing and no acces to local hospitals, pay at home country and pay taxes here.. it better be a big joke

 

Nobody forced you to come.

[CharlesHolzhauer]

1 hour ago, Sheryl said:

Hopefully they will have English language version by 2025. (or 2026 if new law comes into effect as of 2025).

 

1 hour ago, JimGant said:

You miss the whole point on the new policy, which won't care about any money brought in -- only income earned in the current tax year, that per DTA, is taxable by Thailand. Nevertheless, all that money in your pre 2024 bank account is now savings, not current year income. Feel free to remit it, or not, as there's no longer a tax angle to it.

I guess Mike's Simple Tax Guide needs to be reviewed accordingly. 

[Celsius]

Went to immigration today to extend my "Thai wife" e visa for 60 days. Last year I have not done 90 days report even once on my 1 year marriage extension. Before being granted an extension wifey had to go to 90 day desk to get me reported living in her house. I had my penalty money ready for being a bad boy last year.

 

Nada. They could not even figure it out that i skipped 3 90 day reports last year.

 

How are they going to implement this tax exactly????

 

 

[Dogmatix]

1 hour ago, Sheryl said:

Hardly an authoritative source and the article seems to conflate whether tax is owed/income is taxable with whether required to file. It also sites a section of the Revenue Code (41) which as far as I can determine, does not deal specifically with who is required to file a return.

 

AFAIK it remains the case that people with no assessable income are not required to file.  Also remains the case that there is no penalty for failure to file if you owe no Thai tax.

 

I really do not think the Thai RD wants to start receiving  a lot of null returns.

 

Now what is true is that, IF this change to the law is enacted and IF it applies to foreign nationals, many more of them will have assessable income/owe Thai taxes than was previously the case.

 

But that is not at all the same as requiring all foreigners to file a tax return.

 

Actually Sheryl there is a requirement to file a tax return, if you have assessable income from employment of 120k a year and income from other sources of 60k and the penalty for not filing is 2k.  I seem to recall this was introduced a few years back in the Prayut govt.  However, there is no known case of low income people being fined, if they didn't owe any tax.  The RD has an ongoing initiative to track down people who should be paying tax and write to them to tell them to file tax returns which they claim to be quite successful.  But there has been no mention of tracking down people who should have filed nil tax returns but didn't and I think they would be wary of a backlash, plus the cost would not be worth it to try to collect a 2k fine from people who can't afford that.  The latest stats showed that several million more people filed tax returns than actually paid tax but many of those were probably claiming tax refunds. 

[CharlesHolzhauer]

6 minutes ago, AreYouGerman said:

We will see about that.

Who will see about that?

[Dogmatix]

8 minutes ago, Celsius said:

Went to immigration today to extend my "Thai wife" e visa for 60 days. Last year I have not done 90 days report even once on my 1 year marriage extension. Before being granted an extension wifey had to go to 90 day desk to get me reported living in her house. I had my penalty money ready for being a bad boy last year.

 

Nada. They could not even figure it out that i skipped 3 90 day reports last year.

 

How are they going to implement this tax exactly????

 

 

I expect they plan to use the CRS data.  You have an overseas bank account and they receive a CRS report that says income and inflows into that account were x thousand widgets last year. You receive a letter from the RD asking you to clarify how much of that inflow was income. Doesn't mean that will be done efficiently but I guess that is what they have in mind.  They have been getting AI on board to track down local tax dodgers and should be able to devise platforms to use AI to sift through CRS reports. 

[Gknrd]

People don't realize how easy it will be to implement this. You guys that are stuck in the Analog age need to get up to speed. Thailand is fixing to rake the remaining expats over the coals. They don't want you in Thailand , how do they get rid of you. They slowly start making it to expensive to live there and force you out.  It started a few years ago and is going to schedule. 

[lordgrinz]

6 minutes ago, Gknrd said:

People don't realize how easy it will be to implement this. You guys that are stuck in the Analog age need to get up to speed. Thailand is fixing to rake the remaining expats over the coals. They don't want you in Thailand , how do they get rid of you. The slowly start making it to expensive to live there and force you out.  It started a few years ago and is going to schedule. 

Until the poor people who benefit most from our bringing money here realize their gravy train has ended, then they hang the current administration from trees.

[EVENKEEL]

Personally I think everyone who gets SS, a pension, 401K $, maybe some interest earned on savings, a little rent, whatever, whatever and claims all that on Fed US taxes take a deep breath and relax. Somehow we're supposed to file all that here in Thailand again????? Does anyone see the folly in all this? It won't effect the vast majority of us. 

[Gknrd]

4 minutes ago, lordgrinz said:

Until the poor people who benefit most from our bringing money here realize their gravy train has ended, then they hang the current administration from trees.

Not going to happen in Thailand. Thailand is basically a communist country. The only way I see change is if China falls. Then you might see some change. The bad thing is that will take a decade or three. By that time Thailand will have purged all expats from the west.

[EVENKEEL]

11 minutes ago, Gknrd said:

People don't realize how easy it will be to implement this. You guys that are stuck in the Analog age need to get up to speed. Thailand is fixing to rake the remaining expats over the coals. They don't want you in Thailand , how do they get rid of you. The slowly start making it to expensive to live there and force you out.  

Oh no, run for the hills. They're coming for us. Drama queen comes to mind.

[Dogmatix]

2 hours ago, Sheryl said:

Hopefully they will have English language version by 2025. (or 2026 if new law comes into effect as of 2025).

 

I just did a back of the envelope calculation based on my 2023 income and what I would owe in Thai tax and in taxes to the US would be more or less the same. So a total wash, just a lot more paperwork and claiming of tax credits.

 

But that's me, and I have always been having to pay tax to the US.  People who have been managing to avoid tax anywhere, and US citizens with foreign income exempted from US tax, may start to owe more in taxes than before/owe taxes for the first time.

 

The Thai online version is quite hard to use, as it not made user simple because they have to base it on the sections of the Revenue Code and messages keep popping up in tiny Thai characters telling you something is wrong.  I doubt they will do an English online version, as they don't allow you to use the English hard copy versions which are only for guidance and often full of mistakes. The most common mistake is that they don't bother to update the English version when a new clause is added and just cut and paste the old one for a year or two but change the date, so the enumeration of the English doesn't match.  I have spotted this several times over a few years. 

 

For most Americans that file fully to the IRS, this should not result in much extra tax but for non-US people with investments offshore structured to be non-taxable, this will be devastating. What is quite unfair, in a sense, is that domestic Thai investments have a very benign tax regime.  Capital gains on Thai stocks are tax free.  Dividends are taxed at a flat rate of 10% which does not affect your tax rate. Sales of Thai property are taxed on a transaction basis which also doesn't affect your overall tax rate and is usually works out at much less than, if gains were just lumped in with your income.

[topt]

4 minutes ago, EVENKEEL said:

It won't effect the vast majority of us. 

You are presupposing that the "vast majority"are from the US I presume?

 

I don't have any stats but I doubt that.........and as @Dogmatix mentions some of us will be potentially royally stuffed........

[MeePeeMai]

13 minutes ago, JimGant said:

 

Of course, your govt pensions and social security are strictly US business -- and need not be reported to TRD, as they're exclusively taxable by the US. IRAs, private pensions, annuities-- to name three -- are primarily taxable by Thailand. So, you just self-declare this income on your Thai tax return -- no official paperwork needed. And since Thailand is primary taxation authority, there's no credit due from the US: Thailand, as primary taxation authority, gets to keep all the taxes -- and issues a credit to the US to absorb. So there's NO US tax credit against Thai taxes.

 

On the US side, you don't need any official paperwork from TRD to take a credit against your US taxes -- you just do it, based on the numbers you derived from you Thai tax return. Since you don't have to file your US return until June, plenty of time to file a Thai tax return, and get the amount to credit. 

 

One other example -- rental income from a US property -- is a mix, with the US as primary taxation authority (but not exclusive taxation authority), and Thailand as secondary. In this scenario, if it's possible that Thailand would collect more taxes on this rental income than the US, then obviously they would want you to file a tax return. Probably, however, unlikely, if you're a middle class US taxpayer. In this situation, I'd just not file a Thai tax return (since the US credit would kill all Thai tax collection). No tax evasion, of course. And easily explained if ever audited.

 

Anyway, the credit game seems to be on way -- with Thailand issuing the credits. And not much paperwork involved, that I can see.

 

 

Thanks for the reply Jim.

 

I reviewed the tax treaty a while back but need to revisit it again to fully grasp it.

 

As I understand, my IRA is taxable in the US as that money was earned while living and working in the US during my career and the Federal taxes due on that money are "delayed" until I take distributions from that IRA.  I don't see how Thailand has primary rights to taxation on that IRA and I'm pretty sure uncle Sam will stake a full claim on that money even if I am residing in Thailand now.

 

Then there's my ROTH IRA for which I have already paid the Federal and State taxes (on the principle) when I did the conversions from my Traditional IRA.  The growth (or gains) from the ROTH are tax free in the US.  I wonder how the Thai R.D. would look at this scenario?

 

As there are no ROTH IRA's here in Thailand and if they chose to tax only the gains on that ROTH money (whenever I take a distribution), then there is the commingled funds consisting of of post tax principle along with the tax free (US) capital gains and proving how much of it is principle vs gains etc.   

 

If I took out the entire balance at once then it might be simple but if I only take some out every year then it could get messy. 

 

If they want to see a US tax return every year to confirm my annual "income" then this might be opening a can of worms.

 

It sounds like a roll of the dice and I can see potential challenges ahead for my personal situation.

 

 

 

 

 

 

 

[jayboy]

27 minutes ago, Dogmatix said:

there is a requirement to file a tax return

 

Is there in a situation where there is no assessable income? For example if an expatriate resident only remitted savings acquired before 31.12.2023 and retained current income in an overseas account.Then there would be no need to file a return, right?

 

Of course a situation where Thailand taxed global income, and abandoned the remittance method would put us in a different situation.

[Dogmatix]

3 hours ago, Neeranam said:

Thailand approved its first spot in Bitcoin ETF, with One Asset Management joining the growing list of jurisdictions approving regulated Bitcoin funds.

https://bitcoinmagazine.com/business/thailand-approves-the-first-spot-bitcoin-etf

 

Since gains on funds are tax exempt, this will be a way to hold bitcoin tax free under global taxation.  However, I am confused by the article that says it is an ETF (exchange traded fund) that will be restricted to high net worth investors.  How will they stop low net worth investors from buying it after the initial distribution to HNWs?  Is it really going to be a open ended mutual fund that is only tradable through the fund manager and not an ETF at all?  If anyone can buy it once it is listed, there is no much point restricting the initial distribution.  If only HNW's can buy it on the exchange, liquidity will be a problem and it might trade at large discounts to the bitcoin it holds which would make it fail.  Curious as to what the real plan is which is not apparent from the press release.

[Fairynuff]

So if I have to spend a maximum of 179 days a year here so be it. 

[Dogmatix]

3 minutes ago, jayboy said:

 

Is there in a situation where there is no assessable income? For example if an expatriate resident only remitted savings acquired before 31.12.2023 and retained current income in an overseas account.Then there would be no need to file a return, right?

 

Of course a situation where Thailand taxed global income, and abandoned the remittance method would put us in a different situation.

 

That is correct. Under the 2024 system if you remitted less that 120k of income from employment or occupational pension or less than 60k from other sources and had no local income,  there is no need to file.  Or probably in practice, if you have no income over the threshold.  You could easily have enough savings in Thailand or income from Thai dividends taxed at a flat rate of 10% that don't need to be declared.

[beammeup]

Can you explain 'gains on funds are tax exempt'?

[Doctor Tom]

On 6/5/2024 at 4:34 PM, beammeup said:

So this only affects individuals with income over 1 billion Baht?

I'm working on it, but so far, not very successfully.  

[UWEB]

2 minutes ago, Doctor Tom said:

I'm working on it, but so far, not very successfully.  

Yeah, the first one is always the most difficult one.

[Neeranam]

5 minutes ago, Dogmatix said:

 

Since gains on funds are tax exempt, this will be a way to hold bitcoin tax free under global taxation.  However, I am confused by the article that says it is an ETF (exchange traded fund) that will be restricted to high net worth investors.  How will they stop low net worth investors from buying it after the initial distribution to HNWs?  Is it really going to be a open ended mutual fund that is only tradable through the fund manager and not an ETF at all?  If anyone can buy it once it is listed, there is no much point restricting the initial distribution.  If only HNW's can buy it on the exchange, liquidity will be a problem and it might trade at large discounts to the bitcoin it holds which would make it fail.  Curious as to what the real plan is which is not apparent from the press release.

Not sure but this might be intended to limit exposure to investors who can afford the risk or meet the regulatory standards. It could also affect the price and liquidity, similar to what happened at Grayscale Bitcoin Trust (GBTC). A limited investor base could reduce the trading volume and potentially cause the ETF to trade at a discount to the value of the bitcoin it holds.

[Dogmatix]

I know the Thaksin govt is putting the RD under huge pressure to get more tax from anywhere it can but, having just reinterpreted the law to tax post 2024 remittances, you would think they would be well advised to make that work first.  There is still nowhere to claim tax credits for foreign tax on the tax return forms, nor any reference to them in the Revenue Code.  Application of DTAs is a very complex subject and usually involves hundreds of pages of regulations which they have obviously not intention of doing.  

 

They started off saying this was aimed mainly at Thais investing overseas and for fairness but have dropped all that pretence already.  Wealthy Thais can still easily avoid paying tax on current overseas income under this proposal because then can do their investments through family office companies in tax efficient jurisdictions that don't tax capital gains or dividends like Hong Kong and Singapore.  That way they only have to pay Thai tax, if they decide to pay some of the income out in dividends, and can otherwise continue to accumulate their wealth tax free.  I am sure Thaksin has a whole army of these family offices working for him overseas.  Given that wealthy Thais have an easy way round this, it is extremely questionable that it will generate significant incremental tax revenue. 

 

As with the current remittance tax, the wealthy retirement sector that they seem keen to attract, will take a hit.  It blows up the LTR visa tax exemption on remittances as the LTR visa holders will have to pay tax on their overseas income before they remit it, rendering the Royal Decree exemption redundant.