Don’t kill the golden goose! Tax reforms may drive away expats

[flexomike]

5 minutes ago, chiang mai said:

 

Do you have a problem with me thinking something or having a particular belief?

 

"FWIW I think an AVERAGE spend of 65k per month across all long stay visa holders is far too high". 

 

And I suppose you do understand how averages work, don't you! In order to have an average of 65k, there would be highs and lows that went well above and well below that figure in order to arrive at an average of 65k. That would include the circle of people you know and a lot of pensioners on the maximum UK State Pension of 221 Pounds per week, which is only 41k baht per month.

Its all about the quality of life. I prefer to do whatever I want and live my life to the fullest.

[Expat68]

24 minutes ago, flexomike said:

Well of course the country doesn't run on expats, but a lot of small communities are greatly helped by the money that they spend, mom and pop shops hiring laborers supporting all the businesses in the neighborhood. Thailand as a country will not be hurt by expats departing but a lot of people will be. I have several people that I hire on a regular basis and if I leave they loose my financial input.

They forget when COVID was at its highest the communities relied on expats money

[metisdead]

Some inflammatory bickering posts have been removed:

• Please be polite and respectful to others
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[Eudaimonia]

7 hours ago, WhatsNext said:

Thai income tax is actually pretty high, if you have over 1 million THB per year, it already is 25% and goes up to 35% in the last bracket. It's more than some EU member states. 

 

Oh, Thailand will be way worse than any country in the EU. At least for those of us financing our retirement with investments.

 

Normal countries allow you to use capital losses to offset capital gains. This means that if you lose money on one investment, you can subtract that loss from your profits on other assets, lowering the amount of tax. For example, if you make 10,000 EUR in profit but lose 6,000 EUR on another investment, you would only pay taxes on the remaining 4,000 EUR, which is your net gain.

 

In Thailand, if you lose money on one investment, you cannot use losses to reduce the taxes you owe on profits from other investments. If you make a profit of 1 million baht on one investment but lose 950,000 baht on another, you still pay tax on the entire 1 million, as if no loss occurred.

 

Because of this, the effective tax rate in Thailand can easily be over 35%, 50%, or even over 100%.

[MarkBR]

2 hours ago, flexomike said:

Well of course the country doesn't run on expats, but a lot of small communities are greatly helped by the money that they spend, mom and pop shops hiring laborers supporting all the businesses in the neighborhood. Thailand as a country will not be hurt by expats departing but a lot of people will be. I have several people that I hire on a regular basis and if I leave they loose my financial input.

Agreed, the problem is those at the top care not one iota about the people below them in the society hierarchy and that includes farang.

[Klonko]

4 hours ago, ukrules said:

 

That's not going to happen, it's pretty much a global thing with perhaps one notable exception where they genuinely believe they're special and tax their citizens globally regardless of residency.

 

Unfortunately the <180 day or half year rule is not a generally accepted principle. E.g. my home country applies the concept of main residence irrespective of time spent, and I think Germany starts taxing  > 3 months (consecutive?) stays.

[JimGant]

On 9/11/2024 at 1:45 PM, NoDisplayName said:

Thailand has it's own exemptions and allowances, and will tax the foreign income BEFORE those exemptions/allowances were applied.

Nope.

Here's what my taxes would look like if Thailand went to the worldwide system -- actually, it wouldn't be any different than if they stuck with the remittance system.

What I'm looking at here is what income would be taxable by both the US, and by Thailand -- per the DTA:

My Air Force pension, and Social Security would be exempt from Thai taxes. But my Required Minimum Distribution (RMD) from my IRA would now be primarily taxable by Thailand -- and secondarily taxable (because of the treaty's saving clause) by the US.

My Standard Deduction with the US would be, for single, age over 65, $16,200 (TY 2024).

For Thailand, my so-called TEDA (Standard Deduction equivalent), comprising for a single over age 65, with a pension payment, and including the 150k freebie: 500,000 baht ($15,200, at latest FX rate - 32.8)

Ok. Now my RMD is all into the US tax bracket of 22% ('cause the govt pension and SS get me there). So, my average RMD for the last few years -- of $20,000 -- would be well into taxable income territory -- and at 22%, would cost me $4,400 in US taxes.

Now, this RMD of $20,000 is the equivalent of 656,000 baht (again, FX of 32.8). And to get into Thai taxable income territory, I need to exceed their equivalent of Standard Deduction, which as we outlined, was the 500,000 TEDA. And we do get into taxable income territory. Thus, my taxable Thai income is: 156,000 baht.

Which amounts to 8,100 baht in taxes, or $247 -- which is $4,153 less than what I pay the US on this same RMD -- which, of course, can be subtracted from my US taxes, as a credit, leaving me with the same tax bill I would have, if I only paid US taxes, and not Thai taxes. Hmmmm. Maybe it's not time to relocate....

And what if my US taxable RMD, plus maybe some interest income from both the US and Thai banks -- equaled $40,000? Again, I'm still in the 22% US tax bracket (for a tax bill of $8,800); but have now crept into the Thai 20% tax bracket. However, most taxation occurs at lower bracket rates, so my effective Thai tax rate is 13%, or 107,400 baht, or $3,274. Again, much less than the US -- and completely available as a tax credit against US taxation.

Hey, I'm not sure of how much of an average Yank I am -- I have about 30% of my securities in mutual funds, held by my standard IRA. So, all my cap gains are taxable as ordinary income, both in the US and in Thailand. But for Yanks heavily involved in individual stocks, and thus get a great tax advantage on US taxes for long term cap gains -- and qualified dividends -- well, then, they'll take a hit, as Thailand won't reciprocate those nice US tax breaks. So, yeah, maybe a few Yanks looking to vacate.

But, I surmise my example is more the norm for Yanks -- and I won't be losing some American pals.

 

 

[NoDisplayName]

5 minutes ago, JimGant said:

But, I surmise my example is more the norm for Yanks -- and I won't be losing some American pals.

 

 

You missed the point.

 

The IRS provides for certain allowances and deductions, as well as special rates on specific types of income, that Thailand does not recognize.

 

Forget the 'taxable' amount after Thai deductions and allowances.  This is about total assessable income.

 

Assessable income under worldwide taxation will be all your income streams, disregarding IRS deductions and allowances.

 

The DTA may cover certain types of pensions, but it does not include the IRS standard deduction, it does not include offsetting losses against gains, and it does not include IRS tax brackets on particular income streams.

 

MY annual return ($0 due to IRS on $15K interest/dividends and $45 LTCG) will result in a $10,000 tax liability to Thailand on 2 million baht income, every year, with zero tax credit on my US return.  That's assuming no losses were taken against capital gains, in which case the tax bill increases.

 

Your kilometerage may vary.

[redwood1]

39 minutes ago, NoDisplayName said:

 

You missed the point.

 

The IRS provides for certain allowances and deductions, as well as special rates on specific types of income, that Thailand does not recognize.

 

Forget the 'taxable' amount after Thai deductions and allowances.  This is about total assessable income.

 

Assessable income under worldwide taxation will be all your income streams, disregarding IRS deductions and allowances.

 

The DTA may cover certain types of pensions, but it does not include the IRS standard deduction, it does not include offsetting losses against gains, and it does not include IRS tax brackets on particular income streams.

 

MY annual return ($0 due to IRS on $15K interest/dividends and $45 LTCG) will result in a $10,000 tax liability to Thailand on 2 million baht income, every year, with zero tax credit on my US return.  That's assuming no losses were taken against capital gains, in which case the tax bill increases.

 

Your kilometerage may vary.

 

Or get your tax planing to fit in with the natural pastime of zero tax planning...

 

No record keeping of any kind means nothing to file not that you could be bothered to file anyways and even if you did file you would get zero in return....So to make this simple...

 

The formula looks like

ZERO + ZERO +ZERO= ZERO......  And thats it , your done...

[jayboy]

On 9/17/2024 at 5:50 PM, flexomike said:

Well of course the country doesn't run on expats, but a lot of small communities are greatly helped by the money that they spend, mom and pop shops hiring laborers supporting all the businesses in the neighborhood. Thailand as a country will not be hurt by expats departing but a lot of people will be. I have several people that I hire on a regular basis and if I leave they loose my financial input.

 

You may well be correct.However you can be certain beyond any doubt that the benefits you describe (and with which I agree) are of no relevance or interest to the politicians and officials who determine tax policy in Thailand.

[Schoggibueb]

We know the official announcement from 2023, but to date (as of September 2024) there is no concrete information from the authorities on how taxpayers are recorded, whether and how much taxes are to be paid, how double taxation agreements are taken into account... and what steps need to be taken . Why? The responsible authorities themselves don’t know (yet). This is not an assumption, but is based on the fact that, according to its own statement, the responsible ministry still has to examine the details and procedures.

 

Stay relaxed, it will take a long time until clarity becomes clear. The decision-making processes in Thailand take time and are subject to constant change. Do not do anything, for example to apply for a tax number (TIN) from a tax office. Many foreigners are currently doing this, but they are usually simply turned away. So don't let the media unsettle you. Many reports are based on guesswork and even publish incorrect tax calculation examples.

 

Source: (in German only) immo-th.com/aktuell-einkommensbesteuerung-fur-auslander-in-thailand-german-version/

[NoDisplayName]

1 hour ago, redwood1 said:

The formula looks like

ZERO + ZERO +ZERO= ZERO......  And thats it , your done...

 

Except when a tax clearance certificate is required for an extension, or for a tax resident to leave the country......

 

And that's it, you're done!

[JimGant]

2 hours ago, NoDisplayName said:

Forget the 'taxable' amount after Thai deductions and allowances.  This is about total assessable income

This is about taxable income, which is assessable income after Thai deductions, allowances, free 150k are deducted. Nothing left, no taxable income. Certainly this is not about "total assessable income," which is meaningless, if there's no taxable income after the deductions.

 

2 hours ago, NoDisplayName said:

Assessable income under worldwide taxation will be all your income streams, disregarding IRS deductions and allowances.

Assessable income, for Thai taxation purposes, will be all that income the DTA says is taxable by Thailand. This could be, for example, private pensions, which Thailand has primary taxation rights on -- or rental income from US property, which Thailand has secondary taxation rights on. Or it's not assessable income, like US govt pensions. IRS deductions and allowances play NO role in the Thai taxation equation -- only the deductions and allowances in their tax rules. It's only when certain deductions and allowances, like the US good-deal for long term cap gains, which Thailand doesn't copy, that you find the disparity will hurt the Yank taxpayer. For the simplistic tax return that I highlighted for my situation, the Yank will not be hurt by these new Thai tax rules.

 

[NoDisplayName]

2 minutes ago, JimGant said:

For the simplistic tax return that I highlighted for my situation, the Yank will not be hurt by these new Thai tax rules.

 

My mistake.  I forgot all tax returns are simplistic.

 

The Yanks all have nothing to worry about then.

 

[Danderman123]

5 hours ago, Schoggibueb said:

We know the official announcement from 2023, but to date (as of September 2024) there is no concrete information from the authorities on how taxpayers are recorded, whether and how much taxes are to be paid, how double taxation agreements are taken into account... and what steps need to be taken . Why? The responsible authorities themselves don’t know (yet). This is not an assumption, but is based on the fact that, according to its own statement, the responsible ministry still has to examine the details and procedures.

 

Stay relaxed, it will take a long time until clarity becomes clear. The decision-making processes in Thailand take time and are subject to constant change. Do not do anything, for example to apply for a tax number (TIN) from a tax office. Many foreigners are currently doing this, but they are usually simply turned away. So don't let the media unsettle you. Many reports are based on guesswork and even publish incorrect tax calculation examples.

 

Source: (in German only) immo-th.com/aktuell-einkommensbesteuerung-fur-auslander-in-thailand-german-version/

So, what's going to happen on March 1, 2025 when the Farang in the village is supposed to file their taxes?

[lordgrinz]

22 minutes ago, Danderman123 said:

So, what's going to happen on March 1, 2025 when the Farang in the village is supposed to file their taxes?

 

I don't know, but I'm stocking up on popcorn 🍿 for the eventual posts here on AN.

[still kicking]

10 minutes ago, lordgrinz said:

 

I don't know, but I'm stocking up on popcorn 🍿 for the eventual posts here on AN.

Not being American I stock up on Chang (hate popcorn)

[Danderman123]

15 minutes ago, lordgrinz said:

 

I don't know, but I'm stocking up on popcorn 🍿 for the eventual posts here on AN.

I'm not staying in Thailand for more than 179 days this year, so I can sit back next year and see how or if these new regulations are enforced.

 

I'll probably transfer US funds this year and zero next year, which will obviate paying taxes in Thailand in 2026. Unless they go with worldwide taxation. That will make it difficult to leave Thailand since everyone will be leaving if they tax worldwide income.

[lordgrinz]

4 minutes ago, Danderman123 said:

I'm not staying in Thailand for more than 179 days this year, so I can sit back next year and see how or if these new regulations are enforced.

 

I'll probably transfer US funds this year and zero next year, which will obviate paying taxes in Thailand in 2026. Unless they go with worldwide taxation. That will make it difficult to leave Thailand since everyone will be leaving if they tax worldwide income.

 

Sent mine over last year, will send none this year, and maybe send none next year (it will be tight, but doable). That should allow some room to see what everyone else goes through first, or if WorldWide income becomes a reality, that could become a real game changer.