Thailand to tax residents’ foreign income irrespective of remittance

[John Drake]

14 minutes 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)?

 

MFP doesn't worry about much other than doing a gender purge of its own members. Otherwise, they're completely silent and useless. Prayuth and the army, however, must be looking at this and getting quite a chuckle, as PTP commits one economic blunder after another. Like me (Prayuth is better), I think they're going to come back with the biggest I toldya so in the last 20 years.

[Ben Zioner]

1 hour ago, CharlesHolzhauer said:

This is very sad indeed. Thank you for the work and effort you put into the tax issues. You will be missed. Mike, I wish you well!

Mike's efforts are IMHO have shown what is needed to give added value to this forum. I like people who try to structure things. 

[atpeace]

2 hours ago, MeePeeMai said:

 

I understand, but it's helped me a lot by way of forcing me to examine my potential Thai tax situation.  It's also prodded me to look deeper into the USA/Thai tax treaty and try to figure out what I will be up against if this becomes law.  I have also learned a lot from others on the current Thai tax rules as well as allowing me to adjust my plan B and C accordingly.

 

I too want the facts but it's too early to get any right now.  Going over scenarios and being prepared can't hurt though.

 

 

Hard to fault your logic. Your situation is obviously different than mine and you have more possible tax issues I assume. I'm trying to empathize with others fear but apparently have not succeeded.  

 

As for my situation, preparing would be of little advantage.  If the tax laws are changed, there is not much I can do now that I think would make it any easier.  I no longer own property here and don' intend to in the near term. Possibly the reason for my lack of concern.  My relationship with my GF of 4 years is my biggest concern.  I'm sure she would follow me if I moved but how would that impact our future is undetermined.  She has investment properties here and other obligations. We are both under 60 and very healthy so I think we could adjust but I hope we never have to move.

 

I love it here in Thailand and have been here for the most part since 1998.  That is why I occasionally read these tax threads for information.  From my perspective, people on AN are more confused than they were in October last year when the first tax thread appeared.  I myself have gained possibly no further knowledge that wasn't acquired that first week in October. 

 

 Some posters rant about the impacts of the new laws and their intentions to leave without providing a valid source of their concern other than a what if and that does frustrate me.  I would rather  have posts about what has been implemented or will be implemented and not these IMO crazy scenarios presented as facts. With that said, this thread isn't about what I need 🙂

[redwood1]

14 minutes ago, Ben Zioner said:

Mike's efforts are IMHO have shown what is needed to give added value to this forum. I like people who try to structure things. 

 

Mikes millions of posts have quietly been egging on the whole stinking chaotic unfair tax mess and have been trying to giving it validity......Validity that it in no way deserves.....I am still not quite sure what his motive is,but a house can not be built on rotting foundation..

[Misty]

6 hours ago, Thailand J said:

If a US person earned that income in US from capital gain or dividend, the personal exemption is $14600, next $47025 is taxed at 0%, above that the tax rate is 15%.

assuming US1=36B.

Bt3,000,000 is about $83333.

The tax would be ($83333-$14600-$47025)x.15 =$3256, about Bt117,000

 

Bt117000 US tax compared to Bt617,000 thai tax in your example. That is additional Bt500,000 for the tax payer even with tax credit.

 

I used 25% as someone had noted they paid 25% tax on I think it was rental income in Canada, and that they didn't want to pay 35% to Thailand.  Point simply being that the Thai tax owed may not be that high.

 

And yes, I agree with your US example, as long as it's a long term capital gain and not a short term capital gain where the US tax would be 3x higher.

[Lorry]

2 hours ago, daveAustin said:

Good points in theory but what has any of that got to do with non immigrants?

All these people I mentioned (except the Russians ) typically live here on non-immigrant visa.

Anyway,  the new tax situation does not only apply to people holding a non immigrant visa.

 

If Thailand taxes the global income of all it's tax residents, it does what most countries do. The map has been posted many times. (The odd man out regarding taxation is actually the US)

Go to Vietnam,  Germany, or the US on whatever visa, live there for more than 6 months (often for decades) and don't pay taxes.  You will see where this will land you. And, no, you cannot own land in Vietnam as a foreigner if you pay taxes,  you cannot vote for Biden or Trump because you pay US taxes,  you do not get free healthcare in Germany because you pay German taxes. 

 

Most Westerners are here by their free will,  because they get something in Thailand they didn't get at home - cheap prices, nice weather, beautiful girls or beautiful temples,  whatever. 

Grow up and stop taking your cake and eating it!

 

 

[AreYouGerman]

1 hour ago, Lorry said:

you do not get free healthcare in Germany because you pay German taxes.

 

That's right. You just have to have the right skin color (non White) or the correct passport (from a Muslim or African country). Then you not only get 'free' (not free, just paid by taxes) healthcare in Germany, but 500 EUR cash per person + apartment paid. And if you bring kids (you just import them later once you made it to Germany), it's 250 EUR per kid. So, if you choose to come with 7 person, Germany will give you around 2250 EUR cash + 1000 EUR for the apartment + healthcare worth 500 EUR + 5x 100 EUR for Kindergarten, totaling 4250 EUR! And it's all free, you don't have to work! German citizens love to pay 45% taxes for that! They just do!

 

Before this Germany gets 1 EUR in tax money from me, I would pay Thailand's tax.

 

 

[Gknrd]

12 hours ago, MeePeeMai said:

 

I've only lived here for 7 years but now I feel so tarnished that I don't even want to come back and spend 179 days a year here anymore (on principle). 

 

Why should I come here (even as a tourist) and spend my money after being treated like this?  I'm leaving on June 16th and I will be back next year only to sell my pickup, my motorbikes and everything else I bought here (and then I'll be leaving for good).  

 

I'm just glad I didn't sell everything I own in the US (house, truck, motorcycle etc.).  This is exactly the reason I didn't cut ties and sell everything in the in my home country because I knew something like this could happen here someday.

 

To say that I am very disappointed would be a huge understatement but I'll just take it on the chin and move on.

 

You are probably a 1% er... I congratulate you.  I did the same.  

 

[jayboy]

3 hours ago, Lorry said:

If Thailand taxes the global income of all it's tax residents, it does what most countries do. The map has been posted many times. (The odd man out regarding taxation is actually the US)

 

Haven't you got this the wrong way round? Most countries don't tax global income of residents.The US is the odd man out because it does require its citizens to pay tax on global income

[QuantumQuandry]

19 minutes ago, jayboy said:

Haven't you got this the wrong way round? Most countries don't tax global income of residents.The US is the odd man out because it does require its citizens to pay tax on global income

 

US taxes global income of it's non-resident citizens.

 

Many countries tax global income of it's resident citizens.

[Thailand J]

5 hours ago, Misty said:

 

I used 25% as someone had noted they paid 25% tax on I think it was rental income in Canada, and that they didn't want to pay 35% to Thailand.  Point simply being that the Thai tax owed may not be that high.

 

And yes, I agree with your US example, as long as it's a long term capital gain and not a short term capital gain where the US tax would be 3x higher.

In 2023 If a US person had $83333 short term capital gain, which is taxed as ordinary income, after standard deduction of $13850 taxable income would be $69483 and the tax would be $10,592, about 318,312 B. Compare that with 617000B in your example. Thai tax is almost double the US tax.

[jayboy]

52 minutes ago, QuantumQuandry said:

 

US taxes global income of it's non-resident citizens.

 

Many countries tax global income of it's resident citizens.

 

Thanks.Got it now.

[Lorry]

1 hour ago, jayboy said:

 

Haven't you got this the wrong way round? Most countries don't tax global income of residents.The US is the odd man out because it does require its citizens to pay tax on global income

You are the second one who gets it wrong.

The first one was Sheryl, so you are in good company. 

JimGant tried to correct her, see above.

Here one more time:

 

You comingle 2 different things:

 

1. WHO has to pay taxes?

 

Most - actually almost all - countries say: everybody who lives in our country. We don't care about his nationality,  we don't care he is a foreigner or not, we only care whether he lives here or not. 

This "lives" is called tax residence. 

It's usually defined as a stay inside the country of about 6 months or more (Thailand: 180 days or more in 1 calendar year, Vietnam: 183 days within 12 consecutive months,  Taiwan: 183 days within a year). Some countries use a "domicile" as definition of living (Germany), some countries mix both definitions (Taiwan, UK).

A citizen of this country doesn't have to pay income tax in his country if he doesn't have tax residence there. A Thai living in Taiwan doesn't have to pay Thai income tax (very different from the US: an American living in Taiwan still has to pay American income tax if there is no DTA).

This is called a residence based tax system.

From the map you can see, almost all countries use this. Similar maps have been posted several times in the tax threads.

 

https://www.terratrends.net/features/2/005/tax-systems

 

Some, very few, countries - basically the US and Eritrea - use a citizen based tax system: their citizens have to pay American/Eritrean income tax no matter where they reside,  as long as they don't renounce their citizenship. 

 

2. For WHAT do you have to pay taxes?

A citizen based tax system obviously taxes worldwide income. 

Residence based tax systems come in 2 flavors:

A territorial system only taxes income sourced in this country (Philippines work like this for foreigners).

But most residence based tax systems tax worldwide income, once it has been established that you are a tax resident. 

 

So, to correct your post:

Most countries DO tax global income - of tax residents.The US is the odd man out because it does require its CITIZENS to pay tax on global income, no matter where they reside.

 

 

[Lorry]

1 hour ago, jayboy said:

 

Thanks.Got it now.

555

Don't read my long explanation, then. 

[bg53]

1 hour ago, Lorry said:

 

 

2. For WHAT do you have to pay taxes?

A citizen based tax system obviously taxes worldwide income. 

Residence based tax systems come in 2 flavors:

A territorial system only taxes income sourced in this country (Philippines work like this for foreigners).

But most residence based tax systems tax worldwide income, once it has been established that you are a tax resident. 

 

 

 

 

 

Worldwide basis of taxation also comes in 2 flavors:

 

1. Assessable income inbound.

2. Assessable income worldwide.

 

 

The comment attributed to the RD official is of the second variety.

 

[expatsoon]

On 6/7/2024 at 5:07 PM, CharlesHolzhauer said:

I personally withdrew (cautiously postponed) my application for a LTR, as the new visa rules to be publicized in September may be surprising to the pensioners and/or people with a certain age in one way or another.

 

I think that was a wise decision as I have read the Government is now talking about revoking the tax free status of LTR visa holders.

[sidneybear]

On 6/5/2024 at 4:51 PM, bg53 said:

If Thailand taxes on a worldwide basis, there will be a mass exodus of expats.

Taxing worldwide income is nothing new. Australia does it. 

[bg53]

2 minutes ago, sidneybear said:

Taxing worldwide income is nothing new. Australia does it. 

 

It's new for Thailand, and there are options around it in nearby countries.

[expatsoon]

1 hour ago, expatsoon said:

 

I think that was a wise decision as I have read the Government is now talking about revoking the tax free status of LTR visa holders.

 

I meant changing the LTR visa "17%" flat tax to worldwide income tax on scale!

[redwood1]

4 hours ago, sidneybear said:

Taxing worldwide income is nothing new. Australia does it. 

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

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

[saintdomingo]

17 hours ago, CharlesHolzhauer said:

This is very sad indeed. Thank you for the work and effort you put into the tax issues. You will be missed. Mike, I wish you well!

I wish him well too.

[jayboy]

8 hours ago, Lorry said:

555

Don't read my long explanation, then. 

I read it with interest.A good explainer.Thanks

[Mike Lister]

Let me leave you with these thoughts.

 

Concentrate on this year, the return next January and the things you know are certain.

 

Set aside the scaremongering and panic of what could happen next year because they may not happen at all, or at least not as currently thought.

 

Look beyond or ignore the knee jerk responses of some posters, the unfounded worry alone will do more damage than they are worth.

 

I rate the chances of this being fully implemented by January next year, as very low.

[sidneybear]

37 minutes ago, redwood1 said:

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

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

That's not true anymore. Thailand has a large middle class of people on salaries who all pay personal income tax.

[SHA 2 BKK]

6 hours ago, expatsoon said:

 

I think that was a wise decision as I have read the Government is now talking about revoking the tax free status of LTR visa holders.

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

[lordgrinz]

5 hours ago, sidneybear said:

Taxing worldwide income is nothing new. Australia does it. 

 

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

[bg53]

28 minutes ago, Mike Lister said:

Let me leave you with these thoughts.

 

Concentrate on this year, the return next January and the things you know are certain.

 

Set aside the scaremongering and panic of what could happen next year because they may not happen at all, or at least not as currently thought.

 

Look beyond or ignore the knee jerk responses of some posters, the unfounded worry alone will do more damage than they are worth.

 

I rate the chances of this being fully implemented by January next year, as very low.

 

First, I want to show my appreciation for what you did on AN about tax issues.

 

Second, a reaction doesn't have to be binary (no reaction or full on panic). Look at options and find ways to get around the iceberg. 

 

 

 

[Misty]

11 hours ago, Thailand J said:

In 2023 If a US person had $83333 short term capital gain, which is taxed as ordinary income, after standard deduction of $13850 taxable income would be $69483 and the tax would be $10,592, about 318,312 B. Compare that with 617000B in your example. Thai tax is almost double the US tax.

 

 

Yes, in fact that's what I said in my previous post as well, so I'm glad we agree.  If it's short term gains (or unqualified dividends), the US tax would be 3x higher than your initial example of US tax owed, which assumed only long-term gains/ qualified dividends.

 

As previously, my initial example wasn't about the US (never mentioned the US), it was for someone who said they owed 25% tax on rental income in Canada and they didn't want to pay 35% in Thailand.

 

Many folks on here are posting as if any/all income will be taxed at 35%. The example I posted showed that the effective Thai tax rate would be 20.7%. Not great, but it's not a flat 35%.

 

Hope that helps!

 

 

[NorthernRyland]

23 hours ago, atpeace said:

You seem extremely hostile and frustrated.  Can you share how this new tax is going to impact you.

 

  I'm from the USA with ample saving to live here until I die.  I have interest income as well as investment income ( not much and many years I have a loss 😞 ).  I'll get social security in the near future as well as private pension funds and some of that money will be sent to Thailand to fund my retirement.

 

What's your point? You have tons of money so why are we complaining about taxes? How about this, you pay your fair share since you like taxes and cover any pending taxes of us aseannow members. Then we'll stop complaining and bothering you.

[Misty]

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.

 

According to the table as of now in SE Asia the tax systems of Vietnam, Philippines and Myanmar differ from Singapore, Hong Kong, Malaysia, and Thailand on these 3 parameters.

https://en.wikipedia.org/wiki/International_taxation