Expats in Thailand urged not to worry about negative income tax

[chiang mai]

2 minutes ago, topt said:

 @chiang mai        Here is a copy from 2018 - I think they filled in a little more info in later years but I have never previously heard that anyone could get a refund of tax withheld from bank interest without a TIN.

 

 

 

Many thanks,

 

I think that probably constitutes what I referred to previously as "the short form" that is neither the PND 90 or 91. 

 

I bow to others recall regarding the TIN, I can't remember what the process was.

[topt]

1 minute ago, chiang mai said:

I bow to others recall regarding the TIN, I can't remember what the process was.

I remember it well as took visits to 2 different offices and they filled in what seemed like 50 pages of paperwork in Thai - most of which was left blank.

At the end of it they printed off a little yellow piece of paper the size of a large credit card with my Tin on it and a few other details.

[Lorry]

37 minutes ago, chiang mai said:

Many thanks,

 

I think that probably constitutes what I referred to previously as "the short form" that is neither the PND 90 or 91. 

 

I bow to others recall regarding the TIN, I can't remember what the process was.

My tax office nowadays "fills out" (ie leaves mostly blank) a PND 90 and makes you sign it.

Sometimes they even investigate:

Officer: คุณไม่มีรายได้อื่น

Farang: grunts

 

[JackGats]

One thing I find reassuring in this whole story: Thailand has made it repeatedly clear one is not a tax resident in TH if one stays less than 180 days in Thailand. Few countries are so black-and-white about tax residency status.

[Eudaimonia]

It looks like PwC has updated their website yesterday. The new tax summary for Thailand includes one significant paragraph with vast ramifications:

 

"If a Thai resident earns foreign-sourced income in 2024 and brings it into Thailand in the same year or any subsequent year, they will be subject to PIT on that income, regardless of whether they are resident in Thailand at the time." (emphasis mine)

 

https://taxsummaries.pwc.com/thailand/individual/significant-developments

[Lorry]

57 minutes ago, Eudaimonia said:

 

It looks like PwC has updated their website yesterday. The new tax summary for Thailand includes one significant paragraph with vast ramifications:

 

"If a Thai resident earns foreign-sourced income in 2024 and brings it into Thailand in the same year or any subsequent year, they will be subject to PIT on that income, regardless of whether they are resident in Thailand at the time." (emphasis mine)

 

https://taxsummaries.pwc.com/thailand/individual/significant-developments

This was to be expected, see the TRD's Q&A

No idea how they will enforce this - tax bills for people who may not be here for years (the only way I can think of would be a WHT on all foreign remittances). Tax bills for remittances from income earned years ago.

 

This seems to become a very hostile tax environment. 

[ukrules]

19 minutes ago, Lorry said:

This was to be expected, see the TRD's Q&A

 

Well this is the 'worst case' interpretation, it's what I have been assuming will happen - as in plan for the worst and hope for the best.

The best case scenario would have been that you can earn in any year when you're non tax resident and then remit in a subsequent year when you are tax resident and not be subject to tax on the money earned in a non resident year.

This 'worst case' scenario would simply require non residence in both the year when the investments were liquidated AND the year when they were remitted, could be the same year of course or over multiple years.

I acted accordingly and left the country and plan to remain non resident for at least a few years. Assets have been liquidated but apart from a token amount they will not be remitted in 2024, but I won't be resident for years to come and the dust will have long settled on this matter by then.

 

I definitely made the right decision for me in my circumstances to leave this year, I was going to wait until next year which would have been a big mistake.

 

Edited yesterday at 07:21 AM by ukrules

[Yumthai]

1 hour ago, Eudaimonia said:

"If a Thai resident earns foreign-sourced income in 2024 and brings it into Thailand in the same year or any subsequent year, they will be subject to PIT on that income, regardless of whether they are resident in Thailand at the time."

Practically unenforceable. People who are not tax resident do not file a tax return. People who are tax resident file a tax return for one year at a time (income from the previous year) not several past years income.

Edited yesterday at 07:27 AM by Yumthai

[chiang mai]

1 hour ago, Eudaimonia said:

 

It looks like PwC has updated their website yesterday. The new tax summary for Thailand includes one significant paragraph with vast ramifications:

 

"If a Thai resident earns foreign-sourced income in 2024 and brings it into Thailand in the same year or any subsequent year, they will be subject to PIT on that income, regardless of whether they are resident in Thailand at the time." (emphasis mine)

 

https://taxsummaries.pwc.com/thailand/individual/significant-developments

The quote refers to Thai resident rather than tax resident, presumably they mean Thai citizen. That would fit well for a Thai citizen, meaning they cannot escape Thai tax by not becoming non tax resident for a year.

[ukrules]

3 minutes ago, chiang mai said:

The quote refers to Thai resident rather than tax resident, presumably they mean Thai citizen. That would fit well for a Thai citizen, meaning they cannot escape Thai tax by not becoming non tax resident for a year.

 

The usage of the word resident is a contentious issue as it could mean one of two things.

 

I really do wonder if they mean tax resident, after all the subject of this linked page is tax.
 

[chiang mai]

16 minutes ago, ukrules said:

 

The usage of the word resident is a contentious issue as it could mean one of two things.

 

I really do wonder if they mean tax resident, after all the subject of this linked page is tax.
 

People here on visa's are not residents but can be tax residents, and of course, they are not citizens. I'm going with the idea they mean Thai citizen. But not good or clear from PWC on this, which is surprising..

Edited yesterday at 07:52 AM by chiang mai

[ukrules]

1 minute ago, chiang mai said:

People here on visa's are not residents but can be tax residents, and of course, they are not citizens. I'm going with the idea they mean Thai citizen. But not good very clear from PWC on this, which is surprising..

 

 

I was thinking more along the lines of permanent residents, I've seen them referred to as 'residents' elsewhere before but can't recall what it was related to, it was something official though.....

[Yumthai]

11 minutes ago, ukrules said:

I was thinking more along the lines of permanent residents, I've seen them referred to as 'residents' elsewhere before but can't recall what it was related to, it was something official though.....

What PwC means is in the link: "A Thai resident means a person residing in Thailand at one or more times for a period equal to 180 days in any tax (calendar) year."

[chiang mai]

6 minutes ago, Yumthai said:

What PwC means is in the link: "A Thai resident means a person residing in Thailand at one or more times for a period equal to 180 days in any tax (calendar) year."

 

"If a Thai resident earns foreign-sourced income in 2024 and brings it into Thailand in the same year or any subsequent year, they will be subject to PIT on that income, regardless of whether they are resident in Thailand at the time".

 

Using that interpretation, that means any tax resident is taxable on foreign sourced income, even if they are not tax resident.....say what!!!

[ukrules]

57 minutes ago, chiang mai said:

Using that interpretation, that means any tax resident is taxable on foreign sourced income, even if they are not tax resident.....say what!!!

 

I do believe they are talking about funds earned in previous years when non resident (less than 180 days) and remitted later while resident (tax resident).

They did make this very clear before issuing the additional clarification which excluded income prior to Jan 1, 2024 - so based on that clarification I assumed the worst possible scenario - they will tax you if you're a resident when you remit anything earned on or after Jan 1, 2024.

Simple really.

 

Edited yesterday at 09:06 AM by ukrules

[chiang mai]

1 minute ago, ukrules said:

 

I do believe they are talking about funds earned in previous years when non resident (less than 180 days) and remitted later while resident (tax resident).

They did make this very clear before issuing the additional clarification which excluded income prior to Jan 1, 2024 - so based on that clarification I assumed the worst possible scenario - they will tax you if you're a resident when you remit anything earned on or after Jan 1, 2024.

Simple really.

 

I need a nice lay down, in a darkened room.

[ukrules]

6 minutes ago, chiang mai said:

I need a nice lay down, in a darkened room.

 

Why? This was always a default interpretation as far as I was concerned.

[Lorry]

1 hour ago, ukrules said:

 

I do believe they are talking about funds earned in previous years when non resident (less than 180 days) and remitted later while resident (tax resident).

They did make this very clear before issuing the additional clarification which excluded income prior to Jan 1, 2024 - so based on that clarification I assumed the worst possible scenario - they will tax you if you're a resident when you remit anything earned on or after Jan 1, 2024.

Simple really.

 

Their Q&As say just the opposite:

 

Income earned in a year you were not a tax resident will not be taxed even if remitted in a year you are a tax resident (practical importance: a Thai working for several years in Israel can repatriate his Israeli earning whenever he wants,  they won't be taxed in Thailand).

Income earned in a year you were a tax resident will be taxed whenever you bring it to Thailand. They didn't say this explicitly,  but by omission,  and their Q&As have always sounded like this. 

 

I didn't dare to believe it, because the practicalities would be mind-boggling and would need a new system of filing taxes. (I have written about it early in the first tax thread).

Now PwC are the latest to confirm it - you cannot get much more authoritative than that. 

 

In the current system of filing taxes,  this is impossible to enforce (as Yumthai has pointedout). That's why I say "hostile".

 

3 hours ago, ukrules said:

I acted accordingly and left the country and plan to remain non resident for at least a few years. Assets have been liquidated but apart from a token amount they will not be remitted in 2024, but I won't be resident for years to come and the dust will have long settled on this matter by then.

Good decision.

[JackGats]

5 hours ago, Eudaimonia said:

...

 

"If a Thai resident earns foreign-sourced income in 2024 and brings it into Thailand in the same year or any subsequent year, they will be subject to PIT on that income, regardless of whether they are resident in Thailand at the time." (emphasis mine)

 

https://taxsummaries.pwc.com/thailand/individual/significant-developments

I take it "regardless of whether they are resident" should be interpreted as "regardless of whether they were resident".

[Eudaimonia]

1 hour ago, JackGats said:

I take it "regardless of whether they are resident" should be interpreted as "regardless of whether they were resident".

 

The way I see it, foreign-source income of a tax resident of Thailand earned after 1.1.2024 will be taxed when remitted, regardless of tax residency status during the year of remittance.

 

The original guidelines by the Revenue Department did not explicitly state this, but PwC is not the first to point it out.

 

Focusing on tax residency during the year of remittance would create an enormous loophole: Rich Thais could stay in Thailand and keep collecting millions offshore, then move abroad for 186 days every 5 or 10 years to remit it all tax-free.

 

Logically, the Revenue Department wants to prevent that. But from a taxpayer's perspective, this is getting complicated.

 

[Mike Teavee]

6 hours ago, chiang mai said:

 

"If a Thai resident earns foreign-sourced income in 2024 and brings it into Thailand in the same year or any subsequent year, they will be subject to PIT on that income, regardless of whether they are resident in Thailand at the time".

 

Using that interpretation, that means any tax resident is taxable on foreign sourced income, even if they are not tax resident.....say what!!!

I understand it to mean that any income you earn whilst Thai Tax Resident is taxable when you remit it even if you are not Tax Resident in the year it was remitted. 

 

E.g. If I earn £20,000 this year but leave it in the UK & remit it next year when I'm not Thai Tax Resident then the income is still taxable.

 

This discussion has been had before & the counter argument is "If I spend less than 180 days in Thailand then I'm not Thai Tax Resident so I don't have to file a return", but that is wrong, you can spend zero days in Thailand & be Tax Resident if you have Thai Sourced income so the question is whether there's any difference between you having taxable Thai sourced income (say from rental properties) & remitting taxable income (i.e. Income earned whilst you were Tax Resident in Thailand) when it comes to filing a return.  

 

When it comes to remitting large amounts of money (Sales of property, PCLS etc...) Then I'd make sure I was non Thai Tax Resident in the year the income was "Earned" & try to be in the year it was "Remitted" (Though this isn't necessary).

 

Edited 18 hours ago by Mike Teavee

[Lorry]

20 minutes ago, Mike Teavee said:

I understand it to mean that any income you earn whilst Thai Tax Resident is taxable when you remit it even if you are not Tax Resident in the year it was remitted. 

 

E.g. If I earn £20,000 this year but leave it in the UK & remit it next year when I'm not Thai Tax Resident then the income is still taxable.

 

This discussion has been had before & the counter argument is "If I spend less than 180 days in Thailand then I'm not Thai Tax Resident so I don't have to file a return", but that is wrong, you can spend zero days in Thailand & be Tax Resident if you have Thai Sourced income so the question is whether there's any difference between you having taxable Thai sourced income (say from rental properties) & remitting taxable income (i.e. Income earned whilst you were Tax Resident in Thailand) when it comes to filing a return.  

 

When it comes to remitting large amounts of money (Sales of property, PCLS etc...) Then I'd make sure I was non Thai Tax Resident in the year the income was "Earned" & try to be in the year it was "Remitted" (Though this isn't necessary).

 

Agreed.

In a year you are not a tax resident, you will still be obliged to file a tax return if you remit money in this year that was earned in some former year when you were a tax resident. 

 

A snowbird who is a tax resident in 2025, but not in 2026, should be careful not to spend money in 2026 that was earned in 2025.

At the very least,  even stays in Thailand of only several months will require careful tax-planning.

Doesn't sound like my idea of fun.

Edited 18 hours ago by Lorry

[Guavaman]

On 10/16/2024 at 8:17 PM, topt said:

Here is a copy from 2018 - I think they filled in a little more info in later years but I have never previously heard that anyone could get a refund of tax withheld from bank interest without a TIN.

TRD form ค.10 is a request for refund of tax. On the (old) form provided, the data fields are as follows:

 

1. Name and TIN (below and not filled in); to the right is the Thai National ID No., filled in by hand starting with 0 99 ......   The English "TIN No."  is misplaced over the field for the Thai ID No. 

 

[Rhys]

Did the Anutin Weed King make it to this ministry as well?

[chiang mai]

8 hours ago, Guavaman said:

TRD form ค.10 is a request for refund of tax. On the (old) form provided, the data fields are as follows:

 

1. Name and TIN (below and not filled in); to the right is the Thai National ID No., filled in by hand starting with 0 99 ......   The English "TIN No."  is misplaced over the field for the Thai ID No. 

 

Many thanks for that GM, I thought I remembered there was a "short form" for reclaiming tax paid on interest.

 

@anrcaccount take note, TRD form 10 is my "thought bubble".

[chiang mai]

Now I've had some sleep and looked at this again, I agree with @Eudaimonia @Lorry and @Mike Teavee. 

 

If (for example) you are going to sell your overseas property and remit those funds to Thailand, before returning the following tax year, both the sale and the remittance must be completed in the same year that you are not Thai tax resident, if you are to escape Thai tax.

 

There always was some uncertainty about whether only the year of remittance or year of sale, made the event taxable. Increasingly, it now appears that both the year the transaction took place, AND the year of remittance are equally as important. 

 

In practical terms, I don't think this is a major event that makes a lot of difference. A person who was going to use the non-residency option. to remit funds to escape Thai tax. always needed to be not tax resident for the year anyway. This new finding doesn't mean they have to spend more or less time outside the country, only that they complete all related activities in the same year.

 

[Lorry]

5 hours ago, chiang mai said:

In practical terms, I don't think this is a major event that makes a lot of difference.

It doesn't matter much for people who live here more or less all year.

 

It matters a lot for snowbirds (or others,  who stay here part-time, like O&G),

No snowbird I know has ever wasted a thought on Thai taxes. 

Now, they will have to carefully plan their stays in Thailand according to the tax situation,  keep good records, especially documenting when the money they spend here was earned. 

I am sure they will like this a lot, everybody spending a whole winter on Thai beaches must miss tax forms.

[TroubleandGrumpy]

6 hours ago, chiang mai said:

Now I've had some sleep and looked at this again, I agree with @Eudaimonia @Lorry and @Mike Teavee. 

 

If (for example) you are going to sell your overseas property and remit those funds to Thailand, before returning the following tax year, both the sale and the remittance must be completed in the same year that you are not Thai tax resident, if you are to escape Thai tax.

 

There always was some uncertainty about whether only the year of remittance or year of sale, made the event taxable. Increasingly, it now appears that both the year the transaction took place, AND the year of remittance are equally as important. 

 

In practical terms, I don't think this is a major event that makes a lot of difference. A person who was going to use the non-residency option. to remit funds to escape Thai tax. always needed to be not tax resident for the year anyway. This new finding doesn't mean they have to spend more or less time outside the country, only that they complete all related activities in the same year.

 

I am not so sure that this is the case.  PWC issued this 'significant development' on 16 October.

 

Thailand - Individual - Significant developments (pwc.com)

 

Last reviewed - 16 October 2024

On 15 September 2023 and 20 November 2023, The Revenue Department issued No. Paw. 161/2566 and Paw. 162/2566 regarding personal income tax (PIT) for a Thai resident who brings assessable income into Thailand from abroad. This order shall come into force for assessable income brought into Thailand from 1 January 2024 onwards.

According to this order:

• A Thai resident means a person residing in Thailand at one or more times for a period equal to 180 days in any tax (calendar) year.
• If a Thai resident earns foreign-sourced income in 2024 and brings it into Thailand in the same year or any subsequent year, they will be subject to PIT on that income, regardless of whether they are resident in Thailand at the time.

This is obviously the opinion of PWC, and therefore not fact, but if TRD has just released this 'significant development' then that second paragraph is a huge worry for all Expats in Thailand, or thinking of living/working in Thailand in the future. My initial read is that it means even if you bring it into Thailand in 2025 or afterwards, it is taxable income. But it also 'reads' that if you earn any income after 1 January 2024, you are liable to pay income taxes to Thailand if ay anytime in the future you become a tax resident in Thailand.

 

Surely that is not the intention and it is ridiculous that TRD would require any new Expat who becomes a tax resident in Thailand in 2030, to be liable to pay income taxes on any income earned overseas after 1 January 2024.  Surely they mean that if you were a tax resident in 2024 and earned money overseas in 2024, but then brought it into Thailand in say 2026 when you were not a Thai tax resident, that money was still taxable income.

[ukrules]

53 minutes ago, TroubleandGrumpy said:

But it also 'reads' that if you earn any income after 1 January 2024, you are liable to pay income taxes to Thailand if ay anytime in the future you become a tax resident in Thailand.

 

To me it means if you were tax resident in 2024 and earned foreign sourced income but remitted zero and then became non resident in 2025 and even subsequent years and at some point remit some or all of it they will tax you in the year of remittance regardless of whether you are a tax resident during the year the year of remittance which would obviously be a future year.

 

The liability is triggered based on residency at the time of making what I'm going to call 'the capital gain'.

 

This is how I've been working it out  - make a load of money in a year when you're tax resident then that money is always taxable when remitted - for the rest of your life, even if you're a non resident - because it was earned when you were a resident.

I suspect PWC could have made this little memo a bit clearer by adding '...of remittance' onto the end of the statement.

 

That foreign sourced income diagram with the check boxes clears this up nicely.

Edited 2 hours ago by ukrules

[RupertIII]

20 minutes ago, ukrules said:

To me it means if you were tax resident in 2024 and earned foreign sourced income but remitted zero and then became non resident in 2025 and even subsequent years and at some point remit some or all of it they will tax you in the year of remittance regardless of whether you are a tax resident during the year the year of remittance which would obviously be a future year.

 

The liability is triggered based on residency at the time of making what I'm going to call 'the capital gain'.

 

This is how I've been working it out  - make a load of money in a year when you're tax resident then that money is always taxable when remitted - for the rest of your life, even if you're a non resident - because it was earned when you were a resident.

 

I assume this refers only to realised capital gains, not unrealised.