Its Happening - Law to Tax Overseas Income Now in Progress

[chiang mai]

5 minutes ago, SiamAndy said:

If they want to tax Resident expats, then they should also let us in on the 30 Baht health scheme as well.

You wouldn't want to be in that scheme, even if it was free...I seriously doubt you'd use it anyway.

[KannikaP]

54 minutes ago, newbee2022 said:

When I mentioned this a couple of weeks ago, I felt as 'stoned and feathered' by all those "I know all better" here on AN. 

Shame on you 🤗

Is it not TARRED and feathered?

[Kerryd]

And this is from an "ASEAN Briefing" dated 12 Feb 2024:

"Receive income inside or outside Thailand via:
 

Income from employment (wages, salaries, remuneration, etc.) assessable under Section 40 of the Revenue Code;

Income from business operations is assessable under Section 40.

Passive or property income (interest, dividends, rental income, goodwill, etc.) based on Article 41 paragraph 2 of the Revenue Code.
(I assume that covers "pension income" without them actually saying it. Goodwill includes "gifts" and "donations".)
 

Thai citizens and foreigners who are permanent residents will be subject to income tax, if they earn annual income at the following rates: 
(I'm guessing they changed "permanent residents" to "tax resident" at a later date.)
 

0 to 150,000 baht (US$4,177) is exempt from income tax;

More than 150,000 baht (US$4,177) and up to 300,000 baht (US$8,354) are subject to a 5 percent tax rate;

More than 300,000 baht (US$8,354) and up to 500,000 baht (US$13,923) are subject to a 10 percent tax rate;

More than 500,000 baht (US$13,923) and up to 750,000 (US$20,884) are subject to a 15 percent tax rate;

More than 750,000 (US$20,884) and up to 1 million baht (US$27,846) are subject to a 20 percent tax rate;

More than 1 million baht (US$27,846) and up to 2 million baht (US$55,683) are subject to a 25 percent tax rate;
 

Over 2 million baht (US$55,683) and up to 5,000,000 baht (US$139,201) are subject to a 30 percent tax rate; and

More than or more is subject to a 35 percent tax rate.

Now remember - if your pension is taxed in your home country, they are not supposed to be allowed to tax it again in Thailand regardless of how much you get (dependent on the clauses in your tax treaty - if any).
But it still counts towards your "total income".

AND ! If you have "other" taxable income, if it's less than 150,000 baht there's no tax.

However, this is Thailand. I'm guessing if you have 300,000 baht in "total" income that is "taxable" - they will tax the entire 300,000 baht and not deduct the first 150,000 that should be exempt.

This is also where they get you with the "total income" business.
Just like in Canada, they total all your income and use that to determine the tax rate. Then you get to take off deductions and exemptions. But even if the total "net income" remaining would put you in a lower tax bracket - you still get taxed at the higher rate.

That will no doubt cause a lot of confusion between the accountants, lawyers and low-level officials in the Thai Revenue Department who have to review the returns.

By rights, lets say your total income (pensions, rental income, digital nomad work, interest/dividends, etc) is 850,000 baht.
Your tax rate would be set at 20%.

But then they would (legally) have to deduct the amount that is "pension income". Lets say that's 750,000 baht.
Which leaves you with 100,000 baht in taxable income at 20% (20,000 baht).

Except ! Amounts up to 150,000 are supposed to be exempt. So theoretically you shouldn't pay any tax at all (in Thailand).

So now the beancounters and tax officials have to work out if they are allowed to levy the tax based on the entire total, or if they have to deduct (up to 150,000) baht from that total and then tax the rest.

That is going to cause a lot of headaches for years to come I suspect.

And when they realize how little they are actually making from it ? (I doubt they'll even notice if a flood of pensioners suddenly leave the country - and probably wouldn't care all that much either.)
 

[anrcaccount]

This reporting is misleading, and IMO scaremongering, especially the title, "It's happening" 

 

This reads like a reprint of an older story ( published June 6th in the BP)  with a few words changed, certainly partially copy and pasted. 

 

It is unclear whether anyone from the RD has been re-interviewed,  and really nothing new has come to light and there's nothing new to report.

 

All that is clear is that the RD is considering implementing some worldwide taxation changes, as was the case earlier this year. In the June report  it was "is amending" , now it is "drafting".

 

Nothing concrete. Nothing changed as of today. 

 

[Kerryd]

So they told ASEAN that the tax would apply to Thais and "permanent" residents.

Makes you wonder if something has been lost in translation perhaps ? Maybe they meant "long term residents" ?

Or maybe others think "permanent" residents and "long term Visa holders" are the same thing ?

Is there an actual draft of the actual regulation somewhere or is it still a "work in progress" somewhere ?

[FruitPudding]

I bet this doesn't happen.

[lordgrinz]

1 minute ago, FruitPudding said:

I bet this doesn't happen.

 

I wouldn't bet on it, but I will pray it doesn't happen.

[HappyExpat57]

I suspect renewing your extension will be tied in with proof of filing taxes. Nothing good will come of this to retirees.

[chiang mai]

11 minutes ago, KannikaP said:

Is it not TARRED and feathered?

He's different. 🙂

[Dogmatix]

10 hours ago, Danderman123 said:

All of my worldwide income is taxed in the USA, so no tax is due Thailand.

 

If your tax rate on your global income is higher in Thailand, you will have to pay on the difference in Thailand.  If  you can't present evidence of tax credits in a form acceptable to the RD or the difference in tax years means it is not available yet, you will have to pay Thai tax on the entire amount and claim tax credits from the IRS.  It is not as simple as it appears on the face of it.

[Dogmatix]

20 minutes ago, Kerryd said:

So they told ASEAN that the tax would apply to Thais and "permanent" residents.

Makes you wonder if something has been lost in translation perhaps ? Maybe they meant "long term residents" ?

Or maybe others think "permanent" residents and "long term Visa holders" are the same thing ?

Is there an actual draft of the actual regulation somewhere or is it still a "work in progress" somewhere ?

 

 

Something lost in translation. They meant tax residents, i.e. those spending at least 180 days or partial days in the Kingdom in a calendar/tax year.  The Revenue Code is nationality neutral. Nothing in it distinguishes Thai citizens or PRs from anyone else.

[Dogmatix]

1 hour ago, Gottfrid said:

The biggest problem here is not the taxation itself. The horrible thing is that they will just take the money, and we will not be included in neither health system nor any pension system.

 

That is true.  Foreign residents, including temporary residents,  in Western countries usually get those benefits, except in the US which has no universal healthcare for its own citizens (spends the money on export of war, death and destruction instead).  In the UK the only thing  most foreigners living there, whether on settlement visas or not, don't get if the vote which, considering the quality of politicians doesn't matter much.  Some even do get the vote, including the Irish and citizens of Commonwealth countries and the latter don't reciprocate.  Labour likes this because most of the foreigners vote for them.

[Taboo2]

This plan would not apply to Social Security or 401K or other pensions that are taxed in the US already.

 

 

[Dogmatix]

Would be nice, if they mentioned what year they hope this will take effect and whether the Ung Ing government supports it, since it has to go through parliament.  Last year's gift was announced in September and took effect from 1 Jan but that was just the RD chief making a short announcement that the relevant clause in the RD no longer meant what it clearly said. This time it has to go to the Council of State for vetting and pass 3 readings in parliament, unless the government claims it is an emergency, in which case it can be enacted through a Royal Decree, bypassing parliament.   Since it is a fairly radical change, my guess is that it would go through parliament but you never know  in this country.

 

 

 

[Dogmatix]

1 minute ago, Taboo2 said:

This plan would not apply to Social Security or 401K or other pensions that are taxed in the US already.

 

 

 

That's right in the case of US SS pensions and pensions from US government, state or local government employment because the US has the sole right to tax this income in the DTA.  I am know about 401K.  If no specifically exempted in the DTA, it would be taxable in Thailand.

 

Unfortunately very few other farang countries negotiated to exempt state pensions in their DTAs like the US did.  You will find that nearly all exempt only pensions from government employment.  However, it is arguable whether foreign state pensions are taxable because the wording in Section 40 covering pensions specifies only pensions from employment. It doesn't specify pensions that are not from employment.  Perhaps they will argue that the UK state pension is indirectly from employment because yhou don't get it, if you haven't worked.  But other pensions like the Australian Superannuation cannot be regarded as pension from employment because it is now payable to slackers who have never worked a day in their lives.  I wonder, if they will amend the wording to cover all foreign pensions but I doubt it as they are very lazy thinkers and probably haven't got round to this year.

[bkk6060]

1 hour ago, Gottfrid said:

I can read that you are still in playschool. Take your time now, and carefully calculate how much it´s worth for you, and then leave the tax changes to the grown ups.

A person would have to be clueless to not realize many people move here to meet younger women.  

The value to me is worth me staying here and paying some tax to enjoy what this country offers.

But, I guess Gottfrid if one does not like women they would not understand the value.  So glad that is not me.

[BangkokHank]

8 hours ago, tomacht8 said:

Well-off pensioners and foreigners with wealth will pay attention to how long they stay in Thailand in the future. Under 180 days and they will have no longer any problems. There are also other beautiful, sunny countries where they can spend there money.

I am doing that as we speak: Right now I am sitting in a five-star hotel right on the beach in sunny Nha Trang, Vietnam (for $50 a night), serving my time outside of Thailand in order to avoid paying taxes on the several hundred thousand dollars that I transferred into Thailand this year, as well as the couple hundred thousand dollar capital gain that I have made so far this year. So the Thai economy has lost the money I would have spent in Thailand but am spending in Vietnam instead - due to their misguided attempt to confiscate a chunk of my hard-earned money. And on the subject of spending money in Vietnam instead of Thailand, there is a good hospital here where I'll have a procedure done for $200 that I would have paid $2,000 for in Bangkok. So it looks like an all around loss for Thailand - and an all around gain for me. Serves them right if you ask me.

[Gottfrid]

Just now, bkk6060 said:

A person would have to be clueless to not realize many people move here to meet younger women.  

The value to me is worth me staying here and paying some tax to enjoy what this country offers.

But, I guess if one does not like women they would not understand the value.  So glad that is not me.

Another stupid comment after another..... Why would you start talk about not liking woman, as that was the point here?

Also, where was I mentioning I will not stay or that it´s not worth enough for me?

What I posted was that they only want us to pay, but will not give anything back in form of health care and social security.

Nice to hear that you are happy! Me too, married living together with two children.

[Dogmatix]

One thing I think they will not touch to protect wealthy politician with money from corruption offshore like one particularly famous and currently powerful family is offshore companies.  In the UK any offshore company with UK resident directors or have over a certain percentage of UK resident shareholders or that uses a UK address or holds meetings there is considered a UK company and liable to UK corporation tax. Thailand considers offshore companies to be Thai, only if they appear to be conducting business from Thailand.  It doesn't  matter if all the shareholders and directors are Thai residents.  So wealthy Thais can own their offshore assets through offshore companies and pay not tax on interest, dividends and capital gains in the company  The can also remit money to Thailand as corporate loans.  The only taxable event would be if a Thai resident shareholder receives a dividend or a salary from the company.  If they do eventually follow the UK and other farang countries in this, the super wealthy will still be able to add overseas nominees and other layers of concealment. 

[proton]

1 hour ago, Kerryd said:

The way it works is, you are expected to report ALL income you make outside (and/or inside) of Thailand.

Pension income that is already taxed in your home country still counts towards your total income even if there is a Tax Treaty between your country and Thailand.
However, Thailand wouldn't (legally) be allowed to tax that portion of your total income.

They would then total all your income, subtract the "personal deduction" and tax you on the balance (at whatever rate).

It's unlikely you will get any deductions for charity donations or medical expenses or anything else you would normally be able to deduct from your taxes back home.

However, if you also have to do taxes back home on the same income and Thailand has charged you more than your home country, you can (in some countries at least) claim the difference as a credit on your home country's taxes.

This is a link to the Government of Canada's list of Tax Treaties:
https://www.canada.ca/en/department-finance/programs/tax-policy/tax-treaties.html

Most of the treaties are virtually identical and include clauses for things like pensions taxed in one country can't be taxed in the other.
For the Phillipines:

Pensions and Annuities

1. Pensions and annuities arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in the Contracting State in which they arise. (Then some gibberish about "periodic pension payments".)

For Thailand:

Pensions

1. Pensions and other similar remuneration, whether they consist of periodic or non-periodic payments, for past employment, arising in a Contracting State and paid to a resident or the other Contracting State shall be taxable only in the first-mentioned State.

(Canada does not have, nor is negotiating a tax treaty with Cambodia so technically you could be fully taxed on all your income in your home country and in Cambodia.)

Also note: Tax treaties do NOT confer ANY "rights" to the person being taxed.

"No Taxation without Representation" is an "ideal" and "principle" - not a law.

 

 

So where would those allowances come in, is that just on the amount transfered into the country?

[proton]

9 minutes ago, bkk6060 said:

A person would have to be clueless to not realize many people move here to meet younger women.  

The value to me is worth me staying here and paying some tax to enjoy what this country offers.

But, I guess Gottfrid if one does not like women they would not understand the value.  So glad that is not me.

 

Yours is the monger tax then, should be a lot higher

[bkk6060]

2 minutes ago, proton said:

 

Yours is the monger tax then, should be a lot higher

Probably right.  Seems like a bargain at this point. 🙂

[aussienam]

Australian private pensions, many government employee pensions and old age government pensions are tax-exempt in Australia. 

Under our Dual Taxation Agreement our pensions will be liable to being fully taxed in Thailand (being one of the contractors states entitled to tax). 

 

Our system for private pensions entails an accumulation stage beforehand into Superannuation funds. It is a lower tax rate in Superannuation as an incentive for people to contribute more to have a private pension and not become a burden to the government. 

Pension phase allows tax-free income as a result. 

 

The Thailand incoming remittance tax enforcement planned, means any of my pension money coming into Thailand faces full tax.  A huge disincentive to remain in Thailand. If remaining here, one would plan on bringing in minimal amounts to keep tax low. I have calculated that my eventual planned pension amount would be taxed around 20%.  Thailand would have just upped 20% more expensive. A fluctuating currency where our dollar can drop from near 25 to 20 Baht adds another 20% increase in cost of living if money remitted during poor exchange periods.

 

That's a cost of living increase that has a huge impact.  If they go the next step as well on taxing global income, my pension amounts kept in Australia and accumulated for emergencies will also be taxed.  

Other investments also cause severe headaches.  Investment property rental income, whereby in Australia we can claim tax deductions for various things (depreciation of building and other fixtures, rates, insurance, property management fees, maintenance, etc). This means our tax liable can be reduced well below equivalent Thai tax income rates . 

 

Will TRD recognize valid claimable deductions entitled to in Australia or will it just see that only xyx% net tax was implemented on that rental income and therefore below Thai tax rates, meaning tax liable in Thailand? 

Capital gains tax. 

In Australia a primary residence when sold is untaxed gains. An investment property is only taxed 50% capital gains. 

Many expats fund their retirement from selling property, moving that money into Thailand and/or moving money into Super fund as contributions to convert to pension. 

If worldwide tax comes in, all the tax-free gains and pensions are not safe from Thailand tax laws.  

Our Australian tax year ends 30 June. Thailand ends 31 Dec. Do I need to then prepay tax by 31 Dec to synch my taxes with Thailand? I don't pay tax until assessed in Australia and when deadlines are due and that can take many months (delays from companies with tax reports).  

 

And now the need to have dual accountants and in Oz probably a half-year tax report with prepaid tax (to my loss).  International tax advice will be needed adding $$$$.  Paperwork, certifying documents, tracking sources of income. 

This is overwhelming and severely stressful.  Not the retirement I was after with my medical condition. Heart attack inducing stuff.  

Spending time out of Thailand each year to not be a tax resident will become extremely tiring and lonely for many who want a life with community, with friends, having a relationship. Long distant relationships are stressful. There will be breakups.  Thai ladies will lose financial support and that will impact down the line to their families etc.

 

Less time in Thailand means less being spent. It means not buying property, cars, furniture etc.  It means shorter leases and less possessions.  

Better to start again in a tax-friendly country if this debacle continues.  

 

I have heard of loopholes being announced and advisors mentioning funneling pensions etc via Hong Kong pensions/trusts set up there.  Because DTA between China and Thailand is tax free for that scenario.  Global tensions and geopolitics means potential risk IMO that is concerning to me.  

 

Gifting is an option but be wary of sending funds to a partner to skip tax and use that money yourself.  That is not the intended purpose of gifting and I would not be surprised if that potential loophole becomes restricted. Plus you need a partner and someone you really trust.  But if worldwide income tax is implemented there is no hiding tax-exempt (in your country) or untaxed (savings for example) money.  

 

Is Thailand worth all of this? Being reamed with tax?  Making it so much more expensive? And zero benefits offered to you?  It is no longer becoming an expats destination, rather a tourist one only.  So damned sad and an end of an era of being a much favoured destination.  This is a death knell.  

[EVENKEEL]

19 minutes ago, BangkokHank said:

I am doing that as we speak: Right now I am sitting in a five-star hotel right on the beach in sunny Nha Trang, Vietnam (for $50 a night), serving my time outside of Thailand in order to avoid paying taxes on the several hundred thousand dollars that I transferred into Thailand this year, as well as the couple hundred thousand dollar capital gain that I have made so far this year. So the Thai economy has lost the money I would have spent in Thailand but am spending in Vietnam instead - due to their misguided attempt to confiscate a chunk of my hard-earned money. And on the subject of spending money in Vietnam instead of Thailand, there is a good hospital here where I'll have a procedure done for $200 that I would have paid $2,000 for in Bangkok. So it looks like an all around loss for Thailand - and an all around gain for me. Serves them right if you ask me.

Is Bob with you?

[lordgrinz]

5 minutes ago, aussienam said:

Australian private pensions, many government employee pensions and old age government pensions are tax-exempt in Australia. 

Under our Dual Taxation Agreement our pensions will be liable to being fully taxed in Thailand (being one of the contractors states entitled to tax). 

 

Our system for private pensions entails an accumulation stage beforehand into Superannuation funds. It is a lower tax rate in Superannuation as an incentive for people to contribute more to have a private pension and not become a burden to the government. 

Pension phase allows tax-free income as a result. 

 

The Thailand incoming remittance tax enforcement planned, means any of my pension money coming into Thailand faces full tax.  A huge disincentive to remain in Thailand. If remaining here, one would plan on bringing in minimal amounts to keep tax low. I have calculated that my eventual planned pension amount would be taxed around 20%.  Thailand would have just upped 20% more expensive. A fluctuating currency where our dollar can drop from near 25 to 20 Baht adds another 20% increase in cost of living if money remitted during poor exchange periods.

 

That's a cost of living increase that has a huge impact.  If they go the next step as well on taxing global income, my pension amounts kept in Australia and accumulated for emergencies will also be taxed.  

Other investments also cause severe headaches.  Investment property rental income, whereby in Australia we can claim tax deductions for various things (depreciation of building and other fixtures, rates, insurance, property management fees, maintenance, etc). This means our tax liable can be reduced well below equivalent Thai tax income rates . 

 

Will TRD recognize valid claimable deductions entitled to in Australia or will it just see that only xyx% net tax was implemented on that rental income and therefore below Thai tax rates, meaning tax liable in Thailand? 

Capital gains tax. 

In Australia a primary residence when sold is untaxed gains. An investment property is only taxed 50% capital gains. 

Many expats fund their retirement from selling property, moving that money into Thailand and/or moving money into Super fund as contributions to convert to pension. 

If worldwide tax comes in, all the tax-free gains and pensions are not safe from Thailand tax laws.  

Our Australian tax year ends 30 June. Thailand ends 31 Dec. Do I need to then prepay tax by 31 Dec to synch my taxes with Thailand? I don't pay tax until assessed in Australia and when deadlines are due and that can take many months (delays from companies with tax reports).  

 

And now the need to have dual accountants and in Oz probably a half-year tax report with prepaid tax (to my loss).  International tax advice will be needed adding $$$$.  Paperwork, certifying documents, tracking sources of income. 

This is overwhelming and severely stressful.  Not the retirement I was after with my medical condition. Heart attack inducing stuff.  

Spending time out of Thailand each year to not be a tax resident will become extremely tiring and lonely for many who want a life with community, with friends, having a relationship. Long distant relationships are stressful. There will be breakups.  Thai ladies will lose financial support and that will impact down the line to their families etc.

 

Less time in Thailand means less being spent. It means not buying property, cars, furniture etc.  It means shorter leases and less possessions.  

Better to start again in a tax-friendly country if this debacle continues.  

 

I have heard of loopholes being announced and advisors mentioning funneling pensions etc via Hong Kong pensions/trusts set up there.  Because DTA between China and Thailand is tax free for that scenario.  Global tensions and geopolitics means potential risk IMO that is concerning to me.  

 

Gifting is an option but be wary of sending funds to a partner to skip tax and use that money yourself.  That is not the intended purpose of gifting and I would not be surprised if that potential loophole becomes restricted. Plus you need a partner and someone you really trust.  But if worldwide income tax is implemented there is no hiding tax-exempt (in your country) or untaxed (savings for example) money.  

 

Is Thailand worth all of this? Being reamed with tax?  Making it so much more expensive? And zero benefits offered to you?  It is no longer becoming an expats destination, rather a tourist one only.  So damned sad and an end of an era of being a much favoured destination.  This is a death knell.  

 

Keep in mind they are also promoting a farang only tax for those farangs who own Thai condos and homes when they buy or sell them, also farang only property taxes.

[Raindancer]

1 hour ago, HappyExpat57 said:

I suspect renewing your extension will be tied in with proof of filing taxes. Nothing good will come of this to retirees.

More scaremongering.  Read the RD news.  And the videos by tax consultants Thailand. 

 

The renewed tax implementation, has nothing to do with immigration  and renewal of extensions 

[Taboo2]

39 minutes ago, Dogmatix said:

 

That's right in the case of US SS pensions and pensions from US government, state or local government employment because the US has the sole right to tax this income in the DTA.  I am know about 401K.  If no specifically exempted in the DTA, it would be taxable in Thailand.

 

Unfortunately very few other farang countries negotiated to exempt state pensions in their DTAs like the US did.  You will find that nearly all exempt only pensions from government employment.  However, it is arguable whether foreign state pensions are taxable because the wording in Section 40 covering pensions specifies only pensions from employment. It doesn't specify pensions that are not from employment.  Perhaps they will argue that the UK state pension is indirectly from employment because yhou don't get it, if you haven't worked.  But other pensions like the Australian Superannuation cannot be regarded as pension from employment because it is now payable to slackers who have never worked a day in their lives.  I wonder, if they will amend the wording to cover all foreign pensions but I doubt it as they are very lazy thinkers and probably haven't got round to this year.

If your 401 is taxed, which most are, it is exempt.

[smedly]

they can't tax their own citizens, how the ## are they going  to tax foreigners overseas   

[connda]

2 hours ago, SiamAndy said:

If they want to tax Resident expats, then they should also let us in on the 30 Baht health scheme as well.

And provide an path for "tax residents" to become Permanent Residents based on their tax status, and to eventually be able to have a path to Citizenship as we are taxed like Thai citizens. 

[redwood1]

39 minutes ago, lordgrinz said:

 

Keep in mind they are also promoting a farang only tax for those farangs who own Thai condos and homes when they buy or sell them, also farang only property taxes.

 

Good idea.....Tax all those dirty farang condo owners until they are living on the street....While at the same time keep telling the world Thailands the hub for retirement.......lol........