Thailand to tax residents’ foreign income irrespective of remittance

[John Drake]

58 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.

 

 

Pretty much what I thought. I'm beginning to wonder if on the visa issue they might just go in the opposite direction, making things easier or even lower cost. They've still got time to bury the tax stuff. But the visa "reform" is now two months away. 

[Mike Lister]

12 minutes ago, John Drake said:

 

 

Pretty much what I thought. I'm beginning to wonder if on the visa issue they might just go in the opposite direction, making things easier or even lower cost. They've still got time to bury the tax stuff. But the visa "reform" is now two months away. 

Much ado about nothing......we can only hope.

[Dogmatix]

I found the post below on the UK HMRC's community website forum.  It is a response to an enquiry by an HMRC staffer.  Of note is the last underlined sentence where HMRC says that in all its DTAs income and gains arising from property arising from property in the UK are taxable in the UK.  This is not actually what it says in the Thai DTA with the UK which says income from immoveable property "may" be taxed in the contracting party where the property is situated.  However, it is logical for the UK to receive tax on rental and gains from UK property and clearly HMRC's interpretation of "may" in this case is actually "shall".  The Thai RD has said clearly that it also plans to exercise its right under the DTA to tax Thai tax residents on income from UK.  I know from my own experience that the UK tends to recognise the sole right of the state where income arises to tax that income, regardless of whether the DTA says "may" or "shall" which is a logical and practical approach.  Part of the inheritance I received from my father was a house he owned in Spain.  Despite him being UK domiciled and HMRC having the right to tax his estate's assets in Spain at a higher rate, our tax adviser told us that HMRC leaves Spanish assets alone, as long Spanish tax is paid, even if it is less. 

 

Thailand's grasping approach of wanting to tax the living daylights out of all foreign income, regardless of whether it is taxed in the country it arises or not is going to lead to serious problems which will probably drive many residents away.  The UK is clearly not going to give up its right to tax income arising in the UK and will probably expect to come to a gentlemanly understanding with Thailand that it will not exercise its own right to tax income arising from from the UK. But, if not, that will just too bad for taxpayers caught in both tax nets.  For UK landlords in Thailand this will be a right PITA. They may be able to claim a UK tax credit for 1 Jan to 5 April when they file their Thai taxes but will not be able to for 6 April to 31 December, meaning that they will have to pay Thai tax in full for that portion of the year and claim a UK tax credit for it.  In addition they are required to file a PND 94 half year tax return in September and a full year PND 91 in March for rental income which is taxed on an entirely different basis to rental income the UK.  In addition, capital gains are taxed more aggressively in Thailand than in the UK, although few Thais ever have to pay CGT because listed stocks and domestic property are exempt from it.

 

If the RD is unwilling to even consider exempting overseas sourced pensions that are already subject to tax in the country of origin for the sake of collecting a pittance in incremental tax from foreign pensioners, they will obviously not consider doing the same for any other time of income.  BTW British pensioners will also have a similar problem to that described above in that, even though UK tax may have been withheld, they will not be able to claim tax credits from tax paid from 6 April to 31 December in their Thai tax returns because they won't have filed their UK tax returns until after the deadline for Thai tax returns. 

 

 

"Posted 10 months ago by HMRC Admin 20 

 

Hi Raymond_33,

If you are not resident in the UK, but have UK savings and investments (such as interest or alternative finance receipts from banks or building societies, unit trusts, National Savings and Investments, or dividends from UK companies), the income is taxable in the UK.  

If you are not resident in the UK, then you are not taxable in the UK, on your non UK income or gains.
If there is a double taxation agreement between your country of residence and the UK, then you may find that salaries, wages and other remunerations, as well as pensions including state pension arising in the UK, are not taxable in the UK, but are taxable in your country of residence.  In all double taxation agreements the UK has with other countries, income and gains arising from property in the UK, are taxable in the UK.  A tax return must be completed every year."

 

 

[Dogmatix]

1 hour 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.

 

It is not her idea. It was announced that they planned to move to global tax when the interpretation was announced and she was still at the Comptroller General's office or had just arrived at the RD.  It is something from within the RD triggered by their accession to CRS which provides the means, the silly OECD aspirations and above all by pressure from Tony on the RD to collect every last baht in tax it can to fund his digital wallet scam. 

 

One thing is certain.  The RD's concept of implementation with no clarifications or supporting regulations and intending to tax everything, regardless of whether it has been subject to tax already or will be subject to tax in the following overseas tax year will drive away as many expats/ prevent them from coming as the tax itself. I think there can be little doubt that incremental tax collected net of tax and foreign inflows lost will be negative. Apart from runnning counter to the intend to promote more long term tourism, it also runs counter to Srettha's plans to promote more foreign investment in property with 99 year leases and 75% condo ownership.  Even under the current remittance tax regime, many plans to buy property in Thailand have been cancelled by expats, including one of my close friends who after 30 yeasr or so as an expat is now also planning to live elsewhere for more than 180 days a year. 

[Metapod]

I have 20 year Thai Elite, own multiple properties here and have lived here for over a decade. 

 

This change just means I will have to be a temporary resident in Thailand and spend less than 180 days a year here. I'll also be investing abroad instead as I no longer feel comfortable investing more into Thailand with the direction they want to go with tax. Thailand is going from one of the most favourable tax systems to one of the worst in the world. It's nuts.

 

I might also need to consider moving somewhere else for my main "home" as I don't want to be limited in my main home base if I have kids in future that need schooling.

 

Probably make a move to Bali for a while as the offer a 5 year visa that doesn't tax offshore earnings.

[ukrules]

5 hours 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.

 

I'm hoping to see a real world example of the 'laffer curve' play out here - that would make them a global laughing stock and also pay for their foolishness.

 

[MeePeeMai]

23 minutes ago, Metapod said:

Thailand is going from one of the most favourable tax systems to one of the worst in the world. It's nuts.

 

I agree 100%. 

 

I left Thailand on June 16th after 7+ years and I will NEVER set myself up for full time retirement again in Thailand.

 

They could cancel both of these tax traps (the tax on Remittances and the proposed Global Tax tax residency) and back peddle saying: don't worry / don't leave etc..... but my dreams of living in Thailand full time have been permanently shattered.  I will live and spend my money elsewhere (on principle if for no other reason).

[Lorry]

3 hours ago, Dogmatix said:

One thing is certain.  The RD's concept of implementation with no clarifications or supporting regulations and intending to tax everything, regardless of whether it has been subject to tax already or will be subject to tax in the following overseas tax year will drive away as many expats/ prevent them from coming as the tax itself. I think there can be little doubt that incremental tax collected net of tax and foreign inflows lost will be negative. Apart from runnning counter to the intend to promote more long term tourism, it also runs counter to Srettha's plans to promote more foreign investment in property with 99 year leases and 75% condo ownership.  Even under the current remittance tax regime, many plans to buy property in Thailand have been cancelled by expats, including one of my close friends who after 30 yeasr or so as an expat is now also planning to live elsewhere for more than 180 days a year.

I am not so sure about this. 

(BTW In Europe,  the tax plans were flanked by a simultaneous PR campaign promoting Thailand as a cheap tropical paradise to retire.)

You may be right about Western expats. 

I don't know how many of the Russians have well-paying Russian WFHO-jobs. One of them remits what a handful of European pensioners remit. 

And if the grand plan is to sell Thailand to the Chinese they really need taxation of worldwide income,  Chinese immigrants are not going to make money only in Thailand. 

[aldriglikvid]

Perhaps off-topic (and the mods can delete): two established realtors told me that they now have formal cancelations were the clients explicitly mentions the "new tax uncertainty" as the specific reason. 

 

In the context that Thailand launched a very sizeable stimulus package aimed directly at the real estate sector only a couple of months ago, I'm somewhat fascinated on how they let this uncertainty work against said stimulus. 

 

 

[Mike Lister]

The more I think about the possibilities, the more likely it appears that a two tier system will develop. Low(er) income types are likely to be ignored for tax purposes (unless an excuse is needed to catch them out, for whatever reason) whilst evaders and high income people are likely to be actively pursued. That negates the need for any kind of link to visa renewal at Immigration, which would only add another layer of complexity and bureaucracy to an already stressed system.

 

Over time, the number of people filing tax returns, even low income types, will increase as taxpayers attempt to stay on the safe side of the rules and that will increase the tax take somewhat. Dubious or criminal elements of the foreign resident community will be under significantly increased threat that they didn't file a return, the good old, Al Capone gotcha approach. Meanwhile, the tax agent/tax filing agent community will grow, until such time as everyone is required to file a return, at some distant point in the future. Meanwhile, face is saved all round and later next year, the program will be proclaimed a roaring success.

 

I see a perfect fit with no downside, anywhere.

[Metapod]

44 minutes ago, Mike Lister said:

The more I think about the possibilities, the more likely it appears that a two tier system will develop. Low(er) income types are likely to be ignored for tax purposes (unless an excuse is needed to catch them out, for whatever reason) whilst evaders and high income people are likely to be actively pursued. That negates the need for any kind of link to visa renewal at Immigration, which would only add another layer of complexity and bureaucracy to an already stressed system.

 

Over time, the number of people filing tax returns, even low income types, will increase as taxpayers attempt to stay on the safe side of the rules and that will increase the tax take somewhat. Dubious or criminal elements of the foreign resident community will be under significantly increased threat that they didn't file a return, the good old, Al Capone gotcha approach. Meanwhile, the tax agent/tax filing agent community will grow, until such time as everyone is required to file a return, at some distant point in the future. Meanwhile, face is saved all round and later next year, the program will be proclaimed a roaring success.

 

I see a perfect fit with no downside, anywhere.

 

No downside? 

 

It's going to be an absolute ball ache trying to stay compliant for expats who have international funds and it's going to chase away all the high earners. Probably the worst part is how Thailand combines PIT with capital gains. Noone making serious money is going to stick around to pay 35% tax for nothing in return when there are other options out there.

 

Just from personal anecdote, I know more than 5 people personally who earn 20million+ thb a year here that have either left or are planning to leave specifically due to these impending tax changes. Several others earning less than I know are also leaving.

 

Will the old entrenched pensioners stick around? Perhaps, but the wealthy won't.

[Mike Lister]

5 minutes ago, Metapod said:

 

No downside? 

 

It's going to be an absolute ball ache trying to stay compliant for expats who have international funds and it's going to chase away all the high earners. Probably the worst part is how Thailand combines PIT with capital gains. Noone making serious money is going to stick around to pay 35% tax for nothing in return when there are other options out there.

 

Just from personal anecdote, I know more than 5 people personally who earn 20million+ thb a year here that have either left or are planning to leave specifically due to these impending tax changes. Several others earning less than I know are also leaving.

 

Will the old entrenched pensioners stick around? Perhaps, but the wealthy won't.

There's no downside to the Revenue or the Thai government, nobody too much cares that some overhead is imposed on wealthier foreigners, in order to make them pay tax. It's up to them if they want to leave, I doubt they will pay less tax "back home".

[motdaeng]

36 minutes ago, Metapod said:

 

I know more than 5 people personally who earn 20million+ thb a year here that have either left or are planning to leave specifically due to these impending tax changes. Several others earning less than I know are also leaving.

 

sorry, off topic: why would someone earning 20 million per year live in a country like thailand?

could it be that you exaggerated a little bit? 

 

[Raindancer]

1 minute ago, motdaeng said:

 

sorry, off topic: why would someone earning 20 million per year live in a country like thailand?

could it be that you exaggerated a little bit? 

 

And as this topic is on " foreign income remitted to Thailand"

I don't see the relevance of the post, as these so called millionaire earners, should be paying income/ business tax anyway.

 

[Ben Zioner]

11 hours ago, John Drake said:

 

 

Pretty much what I thought. I'm beginning to wonder if on the visa issue they might just go in the opposite direction, making things easier or even lower cost. They've still got time to bury the tax stuff. But the visa "reform" is now two months away. 

I read this as "wishful thinking" but I can't blame you.

[Ben Zioner]

3 minutes ago, Raindancer said:

And as this topic is on " foreign income remitted to Thailand"

You've missed the "irrespective of remittance" bit of the headline.

[Raindancer]

1 minute ago, Ben Zioner said:

You've missed the "irrespective of remittance" bit of the headline.

I was differentiating on income earned in Thailand, to income remitted to Thailand from outside of Thailand.   Thus deemed " foreign remittances".

[Karma80]

13 minutes ago, motdaeng said:

 

sorry, off topic: why would someone earning 20 million per year live in a country like thailand?

could it be that you exaggerated a little bit? 

 

Because up until this year, as a Thai taxpayer, you didn't pay tax on income remitted into the country in a different year it was earned. Essentially, this left you paying nothing in Thailand personally. Because there are no CFC rules, if your company was incorporated in a jurisdiction with low or no corporation tax, you could easily drive your tax obligation to no/single digits. The remittance rule change could leave you not too worried and worked around, but worldwide taxation is a different beast entirely. And more than that, what comes next in the land of instability? CFC Rules?
 

[Ben Zioner]

42 minutes ago, Mike Lister said:

There's no downside to the Revenue or the Thai government, nobody too much cares that some overhead is imposed on wealthier foreigners, in order to make them pay tax. It's up to them if they want to leave, I doubt they will pay less tax "back home".

I looked at France, a country I could move to without visa. As a family of four I'd pay there 13000 Euros, here it would be 20000. Now factor in the costs of relocation, French tuition for the kiddies, etc.. So not worth it.

[Mike Lister]

1 minute ago, Ben Zioner said:

I looked at France, a country I could move to without visa. As a family of four I'd pay there 13000 Euros, here it would be 20000. Now factor in the costs of relocation, French tuition for the kiddies, etc.. So not worth it.

The other bits and pieces would more than compensate for me personally but we're all different. 

[daveAustin]

52 minutes ago, Metapod said:

 

No downside? 

 

It's going to be an absolute ball ache trying to stay compliant for expats who have international funds and it's going to chase away all the high earners. Probably the worst part is how Thailand combines PIT with capital gains. Noone making serious money is going to stick around to pay 35% tax for nothing in return when there are other options out there.

 

Just from personal anecdote, I know more than 5 people personally who earn 20million+ thb a year here that have either left or are planning to leave specifically due to these impending tax changes. Several others earning less than I know are also leaving.

 

Will the old entrenched pensioners stick around? Perhaps, but the wealthy won't.

They couldn’t care less and in fact it is a win win since certain parts of government (etc) think there’s already too many foreigners living in Thailand full time. All in all a dumb move however when they’re trying to attract inward investment. 

[sathornlover]

1 hour ago, Mike Lister said:

There's no downside to the Revenue or the Thai government, nobody too much cares that some overhead is imposed on wealthier foreigners, in order to make them pay tax. It's up to them if they want to leave, I doubt they will pay less tax "back home".

I completely agree with you, especially your assumption in the previous post.
 

But if the world income principle comes into force in Thailand, then as a married person I would have to pay considerably more income tax in Thailand and my types of income would probably be taxed twice because my country's DTA does not cover this!

 

I don't even want to talk about the bureaucratic effort and especially not about the counter calculation. What does my country give me for paying taxes and what does Thailand give me for having to pay so much tax?

 

But as I said, I completely agree with you, that will not interest the decision-makers in Thailand at all. Cases like mine are more of anecdotal nature and are certainly already factored in and I also believe that Thailand cannot avoid this change! I don't want to waste any more words on the way it is implemented and above all how it is communicated. Apart from that, they are incompetent and can't do any better! That's why I wouldn't indulge in any more illusions.

 

We had already decided for at least two years to leave Thailand in 2026 when my wife retires, because we had long been of the opinion that Thailand would only be suitable as a temporary residence in the winter months when we were older, but even that would only be limited by the precarious environmental conditions. Now, due to the dynamic development in tax issues, we will probably bring forward our final departure from Thailand next year...

[Celsius]

1 hour ago, Mike Lister said:

It's up to them if they want to leave, I doubt they will pay less tax "back home".

 

What kind of a silly comment is this?

 

Most places "back home" people have security, healthcare, no visa hassles, no 90 day reporting, full rights as citizens.

 

If I am to go "back home" I would get free healthcare, free dental, various refund checks (carbon tax, GST). Then, of course, I could get a job or even better open my own company and work legally without any hassles or reporting or stress unlike in Thailand where they expect me to pay tax.

 

 

[Mike Lister]

1 minute ago, Celsius said:

 

What kind of a silly comment is this?

 

Most places "back home" people have security, healthcare, no visa hassles, no 90 day reporting, full rights as citizens.

 

If I am to go "back home" I would get free healthcare, free dental, various refund checks (carbon tax, GST). Then, of course, I could get a job or even better open my own company and work legally without any hassles or reporting or stress unlike in Thailand where they expect me to pay tax.

 

 

My remarks referred to the cheaper tax option, not where the better benefits exist!

 

Personally, I see these things as trade offs, lower or higher direct taxes, higher or none existent indirect local taxes, free immediate health care versus a long waiting list, higher crime versus lower crime, good weather versus bad, and so on and so on. I only commented on one aspect, the tax rate, not on everything else.

[Celsius]

5 minutes ago, Mike Lister said:

My remarks referred to the cheaper tax option, not where the better benefits exist!

 

Personally, I see these things as trade offs, lower or higher direct taxes, higher or none existent indirect local taxes, free immediate health care versus a long waiting list, higher crime versus lower crime, good weather versus bad, and so on and so on. I only commented on one aspect, the tax rate, not on everything else.

 

 

But yet here you comment on other aspects, mostly putting Thailand is such a positive spin.

 

BTW, other countries have private healthcare too (called a 2-tier system), often cheaper than Thailand. No waiting lists and hospitals are fully insured against malpractice, 

 

 

 

 

[Mike Lister]

1 minute ago, Celsius said:

 

 

But yet here you comment on other aspects, mostly putting Thailand is such a positive spin.

 

BTW, other countries have private healthcare too (called a 2-tier system), often cheaper than Thailand. No waiting lists and hospitals are fully insured against malpractice, 

 

 

 

 

I'm comparing like for like, the tax system here versus elsewhere, nothing more, nothing less. If you want to compare other aspects of life here, go right ahead.

[redwood1]

So whats the master plan here?

 

To make retired expats spend the last years of their life bogged down in a confusing murky tax hell until they are dead?

 

And to add salt to the wound give them absolutely zero benefits....While at the same time letting the vast majority of the Thais continue to not pay any taxes especially the very very rich who have their money protected  in offshore accounts.. 

[Celsius]

3 minutes ago, Mike Lister said:

I'm comparing like for like, the tax system here versus elsewhere, nothing more, nothing less. If you want to compare other aspects of life here, go right ahead.

 

I compared it and then you compared it.

 

And I will continue comparing it because even my wife who has the best insurance in Thailand money can buy (Life insurance, company insurance, health insurance and social security that she paid in for the past 20 years) knows first hand that healthcare in Thailand sucks and more than 50% of the time her insurance does not even pay.

 

Forgot to add accident insurance that she pays monthly. So that is 5 insurance policies.

 

 

[Presnock]

On 6/23/2024 at 2:52 PM, 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.

what does the Canadian DTA with Thailand say about your pension (is it a Canadian government pension?)?

[Mike Lister]

2 minutes ago, redwood1 said:

So whats the master plan here?

 

To make retired expats spend the last years of their life bogged down in a confusing murky tax hell until they are dead?

 

And to add salt to the wound give them absolutely zero benefits....While at the same time letting the vast majority of the Thais continue to not pay any taxes especially the very very rich who have their money protected  in offshore accounts.. 

I think the master plan as you call it is to expand the tax base and make more people pay tax, but to do so without generating mass upset or creating huge amounts of new bureaucracy. Think, low hanging fruit but only where the fruit is a decent size.