Thailand to tax residents’ foreign income irrespective of remittance

[Lorry]

10 minutes ago, daveAustin said:

$10k (equiv) a time

covers just a nice weekend getaway with a couple of decent girls

[Klonko]

2 hours ago, FruitPudding said:

 

… So under the current tax laws, for example, I could send money from overseas to my daughter's bank account in Thailand as a gift and it would be tax free?

If the money is traditional support (e.g., as per TRD statement, not used to buy a Ferrari) and not covering your own expenses in Thailand.

[brian2322]

4 hours ago, AreYouGerman said:

 

Yes, according to stats of GDP by 'personal remittance' we basically have no influence on the Thai economy as a whole. However on a personally level, we change entire families.

 

https://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS?locations=TH

 

Very enlightening link.  Thailand at 1.8% of GDP vs. 9.4% in Philippines and 8.9% in Cambodia.  For the Philippines I suspect most of those remittances are from Filipinos working overseas.  Cambodia may be similar, citizens working in neighboring ASEAN countries?  

 

[jaideedave]

4 hours ago, AreYouGerman said:

 

You won't. Depending on the DTA you could even pay less. If no DTA, then you gonna pay double.

 

The main issue is however for probably most of retirees: Extra bureaucratic stress + you have to file for taxes, meaning you will have to document everything and pay an accountant.

 

Also, for people having f. ex. a dividend paying broker account under a Caribbean offshore company, de facto paying 0% taxes, suddenly have to file and pay income taxes.

AYG,I'm a Canuck non resident receiving pensions from Canada. There is a gov't form (NR5) you can file to have your income taxed as if you were resident.(based on worldwide income) I've filed for a few years now and have the  official letter stating I pay "0" tax which I don't. I'm wondering how Somchai at TRC will react when I present my letter?  

I suppose wait and see because there are no precedents.

[kinyara]

6 hours ago, Mike Lister said:

What if somebody who you'd done work for, gave you some money and called it a gift, would that deserve to escape tax, just because somebody called it a gift?

 

What if somebody gave yo a gift of money in order to escape their tax liability, would that still be a tax free gift for everyone?

 

Here's what we know about Gift Tax in Thailand, from the tax guide linked below. As you can see, the picture is less than clear:

 

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.

 

 

 

 

Re the above tax exemptions can you confirm my understanding is correct.

 

I'm a 58 year old single guy therefore qualifying for the 60,000 tax free allowance. Technically if I brought in only up to that amount I would not have to file a tax return. 

 

However if I brought in up to 210,000 baht although I would still pay zero tax I technically would have to file a tax return. ( 150k of assessable income but it would be at 0% rate ).

 

I'm only asking because I could potentially limit my 25/26 tax exposure by bringing in 210,000 tax free this year, albeit I think I'd technically have to file.

[Mike Lister]

1 hour ago, jaideedave said:

AYG,I'm a Canuck non resident receiving pensions from Canada. There is a gov't form (NR5) you can file to have your income taxed as if you were resident.(based on worldwide income) I've filed for a few years now and have the  official letter stating I pay "0" tax which I don't. I'm wondering how Somchai at TRC will react when I present my letter?  

I suppose wait and see because there are no precedents.

I didn't understand your post. Please confirm:

 

You are Canadian who lives in Thailand?

 

You receive your pensions from Canada?

 

The NR5 is a Canadian form that allows you to be taxed as if a Canadian resident?

 

You pay zero Canadian tax?

 

 

From a Thai tax perspective, what matters is how much assessable income you remit to Thailand, the NR5 letter doesn't mean much in Thailand, other than to confirm you don't pay Canadian tax which probably doesn't interest Thailand, unless you invoke a DTA.

 

 

 

 

[Mike Lister]

57 minutes ago, kinyara said:

 

Re the above tax exemptions can you confirm my understanding is correct.

 

I'm a 58 year old single guy therefore qualifying for the 60,000 tax free allowance. Technically if I brought in only up to that amount I would not have to file a tax return. 

 

However if I brought in up to 210,000 baht although I would still pay zero tax I technically would have to file a tax return. ( 150k of assessable income but it would be at 0% rate ).

 

I'm only asking because I could potentially limit my 25/26 tax exposure by bringing in 210,000 tax free this year, albeit I think I'd technically have to file.

Yes, that's correct. The 60k is the Personal Allowance.

[AreYouGerman]

5 hours ago, jaideedave said:

AYG,I'm a Canuck non resident receiving pensions from Canada. There is a gov't form (NR5) you can file to have your income taxed as if you were resident.(based on worldwide income) I've filed for a few years now and have the  official letter stating I pay "0" tax which I don't. I'm wondering how Somchai at TRC will react when I present my letter?  

I suppose wait and see because there are no precedents.

 

These are very country specific aspects and this might be a "loophole" which is fixed after 10 years, or it won't ever or it will be very soon. Some countries include that in their DTAs that a minimum amount of taxes have to be paid, otherwise the full taxes of the country of your residency (ie. 183 days+) will be due.

[redwood1]

4 hours ago, Mike Lister said:

Yes, that's correct. The 60k is the Personal Allowance.

 

60K for a personal allowance.....Is this a joke.....Even poorest of Thais could barely live off this in a year...Much less any farang... Yea 60K a year must have been a good income about 1970 or so....

[Mike Lister]

3 minutes ago, redwood1 said:

 

60K for a personal allowance.....Is this a joke.....Even poorest of Thais could barely live off this in a year...Much less any farang... Yea 60K a year must have been a good income about 1970 or so....

That's just one of the TEDA, there are others that will take an older person up to over 550k baht.

[AreYouGerman]

6 hours ago, brian2322 said:

 

Very enlightening link.  Thailand at 1.8% of GDP vs. 9.4% in Philippines and 8.9% in Cambodia.  For the Philippines I suspect most of those remittances are from Filipinos working overseas.  Cambodia may be similar, citizens working in neighboring ASEAN countries?  

 

 

Yes, indeed. I suspect the biggest amount of the 1.8% addition to Thailand's GDP doesn't even come from us but from Thais working overseas. Imagine, there are only 4400 German pensions (official) being sent to Thailand.

[kinyara]

9 hours ago, redwood1 said:

 

60K for a personal allowance.....Is this a joke.....Even poorest of Thais could barely live off this in a year...Much less any farang... Yea 60K a year must have been a good income about 1970 or so....

Where do you get the notion that people would expect to live off a personal tax allowance for a year ? That idea doesn't even hold any reality back in the UK where I'm from.

[Lorry]

4 hours ago, kinyara said:

Where do you get the notion that people would expect to live off a personal tax allowance for a year ?

Maybe he got this idea from the German Constitutional Court or other European law systems?

What I take from AN is that in the US the basic tax-free income seems so be quite high,  too.

 

But he is mistaken in considering only 60,000. Here should add 150,000 (tax rate 0%). So it's 210,000 tax-free.

Many Thais live on 210,000.

[jaideedave]

19 hours ago, Mike Lister said:

I didn't understand your post. Please confirm:

 

You are Canadian who lives in Thailand?

 

You receive your pensions from Canada?

 

The NR5 is a Canadian form that allows you to be taxed as if a Canadian resident?

 

You pay zero Canadian tax?

 

 

From a Thai tax perspective, what matters is how much assessable income you remit to Thailand, the NR5 letter doesn't mean much in Thailand, other than to confirm you don't pay Canadian tax which probably doesn't interest Thailand, unless you invoke a DTA.

 

 

 

 

Yes to all 4 of my statements. I'm beginning to believe that you're correct in that the Thai tax folks would only be interested in how much I bring into LOS...

[Celsius]

6 minutes ago, jaideedave said:

Yes to all 4 of my statements. I'm beginning to believe that you're correct in that the Thai tax folks would only be interested in how much I bring into LOS...

 

You are getting taxes as a non resident. NR5 form is not a form for non residents to get taxed as residents....especially not on world wide income 

[jaideedave]

7 minutes ago, Celsius said:

 

You are getting taxes as a non resident. NR5 form is not a form for non residents to get taxed as residents....especially not on world wide income 

There is also a Schedule 217 involved here.

" Form NR5, Application by a Non‑Resident of Canada for a Reduction in the Amount of Non‑Resident Tax Required to be Withheld"

This is what I did.

[Lorry]

Today the Bangkok Post runs an editorial quite critical of the new taxation schemes (remittances and world wide taxation).

No new information,  of course. 

They stress that DTAs are not going to rescue the average pensioner (this has been said on this forum many times,  but most members don't believe it).

A highlight: the RD should communicate "clearly snd effectively" - 555!

 

BTW just next to it is an opinion piece about Big Joke. Coincidence, of course.

 

[Celsius]

30 minutes ago, jaideedave said:

There is also a Schedule 217 involved here.

" Form NR5, Application by a Non‑Resident of Canada for a Reduction in the Amount of Non‑Resident Tax Required to be Withheld"

This is what I did.

 

This form is used to reduce the tax withheld for non residents.

 

As in my example the condo I am renting out would be taxed at 25% before all the expenses. This form allows me to claim all the expanses and reduce tax to 25% AFTER the expenses. That is it.

 

Nothing to do with Thailand.

[Mike Lister]

41 minutes ago, Lorry said:

Today the Bangkok Post runs an editorial quite critical of the new taxation schemes (remittances and world wide taxation).

No new information,  of course. 

They stress that DTAs are not going to rescue the average pensioner (this has been said on this forum many times,  but most members don't believe it).

A highlight: the RD should communicate "clearly snd effectively" - 555!

 

BTW just next to it is an opinion piece about Big Joke. Coincidence, of course.

 

It doesn't say that about DTA.

[jaideedave]

56 minutes ago, Celsius said:

 

This form is used to reduce the tax withheld for non residents.

 

As in my example the condo I am renting out would be taxed at 25% before all the expenses. This form allows me to claim all the expanses and reduce tax to 25% AFTER the expenses. That is it.

 

Nothing to do with Thailand.

Prior to my NR5 ruling CRA withheld the standard 25% tax on Canadian income (pensions) as a non resident.Yes nothing to do with LOS but I'm concerned TRD will be taxing my monthly remittance in spite of the fact CRA does not. Waiting game.

 

[Lorry]

31 minutes ago, Mike Lister said:

It doesn't say that about DTA.

We cannot quote the Bangkok Post but I would recommend everybody to read themselves what they say about DTAs

[Mike Lister]

2 minutes ago, Lorry said:

We cannot quote the Bangkok Post but I would recommend everybody to read themselves what they say about DTAs

Me too!

[kinyara]

3 hours ago, Lorry said:

Maybe he got this idea from the German Constitutional Court or other European law systems?

What I take from AN is that in the US the basic tax-free income seems so be quite high,  too.

 

But he is mistaken in considering only 60,000. Here should add 150,000 (tax rate 0%). So it's 210,000 tax-free.

Many Thais live on 210,000.

 

Germany's single person tax free allowance is even less than the UK's so his point was still absolute nonsense. Good luck trying to live in Germany for a year on less than 12,000 Euros. 

 

Thailand's tax system is favourable tax wise to low income earners and I agree many Thais can survive on 210,000 tax free. That's at odds with the criticism made in the post I replied to.

 

[TheAppletons]

1 hour ago, Lorry said:

<SNIP>

They stress that DTAs are not going to rescue the average pensioner (this has been said on this forum many times,  but most members don't believe it).

<SNIP>

 

 

 

  Yeah, that's not what it says about DTAs at all.  In fact, it stresses that Thailand has 61 DTAs in place to prevent double taxation though the author opines that claiming a foreign tax credit may be inconsistent or cumbersome.

 

  Says nothing about the "average pensioner" being at risk because they won't be "rescued" by DTAs.  It does say that for people who are citizens of countries without a DTA, double taxation may be a concern.

 

  The piece concludes with a recommendation that Thailand actually expands its network of DTAs.

[Lorry]

5 hours ago, TheAppletons said:

 

  Yeah, that's not what it says about DTAs at all.  In fact, it stresses that Thailand has 61 DTAs in place to prevent double taxation though the author opines that claiming a foreign tax credit may be inconsistent or cumbersome.

 

  Says nothing about the "average pensioner" being at risk because they won't be "rescued" by DTAs.  It does say that for people who are citizens of countries without a DTA, double taxation may be a concern.

 

  The piece concludes with a recommendation that Thailand actually expands its network of DTAs.

As I said,  I recommend everybody to read thre piece himself

[Raindancer]

23 minutes ago, Lorry said:

As I said,  I recommend everybody to read thre piece himself

I've read it and I agree with previous posters, that it didn't say what you claimed regarding DTAs and pensioners.

 

All this hot air around a "proposed" tax implementation and speculation, from so many unqualified sources and media outlets/ forums. 

 

I will gladly wait until everything is published, and if (and its a big IF), it comes to pass, I will adapt and apply what is necessary to abide within the TRD requirements.

[Mike Lister]

15 minutes ago, Raindancer said:

I've read it and I agree with previous posters, that it didn't say what you claimed regarding DTAs and pensioners.

 

All this hot air around a "proposed" tax implementation and speculation, from so many unqualified sources and media outlets/ forums. 

 

I will gladly wait until everything is published, and if (and its a big IF), it comes to pass, I will adapt and apply what is necessary to abide within the TRD requirements.

I must admit I am starting to wonder what might happen regarding taxation. I understand where the TRD Director General is coming from  and I don't doubt she will get there at some point. But the state of the economy, government finances, low spending on capital goods and lower spending per capita by tourists, all combine to make me wonder if now is the right time to try and implement something like this. The more people who get scared off by the tax picture, the less favorable the short term outcome. Ditto the visa reviews, if that comes down on the wrong side, it will further squeeze an already squeezed economy.

[NoDisplayName]

11 minutes ago, Mike Lister said:

I must admit I am starting to wonder what might happen regarding taxation. I understand where the TRD Director General is coming from  and I don't doubt she will get there at some point. But the state of the economy, government finances, low spending on capital goods and lower spending per capita by tourists, all combine to make me wonder if now is the right time to try and implement something like this. The more people who get scared off by the tax picture, the less favorable the short term outcome. Ditto the visa reviews, if that comes down on the wrong side, it will further squeeze an already squeezed economy.

 

Remember where you are, sir!

First response to lower sales is to raise prices to compensate.

[Raindancer]

5 minutes ago, Mike Lister said:

I must admit I am starting to wonder what might happen regarding taxation. I understand where the TRD Director General is coming from  and I don't doubt she will get there at some point. But the state of the economy, government finances, low spending on capital goods and lower spending per capita by tourists, all combine to make me wonder if now is the right time to try and implement something like this. The more people who get scared off by the tax picture, the less favorable the short term outcome. Ditto the visa reviews, if that comes down on the wrong side, it will further squeeze an already squeezed economy.

Absolutely.   I personally see this as a power play by the Director of TRD.   Some Thai governmental officials love power.   And like to make a name for themselves. 

 

MaoTseTung said something along the lines of"  just because you have the power to make a ruling, doesn't necessarily make it right to invoke it, just because you can.

 

I understand her rationale,  but I really don't think it will affect the majority of expat retirees with DTAs.   After all there is also a  huge number of working Thais, who also don't pay tax.

 

Finally, I think that this resurgence of an existing income tax regulation was designed for some of those people in Thailand ( Thais and foreigners) bringing in large profits from overseas investments without declaring them to TRD.  Hence this " (one Size fits all) sledgehammer ruling to crack a nut.

 

But I stand to be corrected.😁

 

Personally, I will not be leaving Thailand before the 180 day ruling.   I'm happy enough to resolve any possible tax implications, as and when and if they arise. 

[Mike Lister]

33 minutes ago, Raindancer said:

Absolutely.   I personally see this as a power play by the Director of TRD.   Some Thai governmental officials love power.   And like to make a name for themselves. 

 

MaoTseTung said something along the lines of"  just because you have the power to make a ruling, doesn't necessarily make it right to invoke it, just because you can.

 

I understand her rationale,  but I really don't think it will affect the majority of expat retirees with DTAs.   After all there is also a  huge number of working Thais, who also don't pay tax.

 

Finally, I think that this resurgence of an existing income tax regulation was designed for some of those people in Thailand ( Thais and foreigners) bringing in large profits from overseas investments without declaring them to TRD.  Hence this " (one Size fits all) sledgehammer ruling to crack a nut.

 

But I stand to be corrected.😁

 

Personally, I will not be leaving Thailand before the 180 day ruling.   I'm happy enough to resolve any possible tax implications, as and when and if they arise. 

I can easily imagine a scenario where not much happens, except the new rule is enacted, but the TRD does not proactively enforce it, except on a very selective basis, that would make lots of sense to me. There's no traction in chasing smaller fish, it's too labor intensive with almost no reward yet it remains useful to net the bigger fish and the evaders. The downside to that scenario is that everyone will still need to play by the new rules, in case one day a bigger net is cast.