Thai gov. to tax (remitted) income from abroad for tax residents starting 2024 - Part II

[oldcpu]

31 minutes ago, JimmyTobacco said:

 

Well, how would the Thai RD even find out that the person in question has a business elsewhere, say HK, Dubai, Estonia, etc., one of the countries where non-residents can quite easily setup a company?

 

 

Possibly we are not talking about the same things.

 

The Thai RD can find out that one brings money into the country via wire transfer. Whether they decide to act upon that is up to them.  Perhaps their 'curiousity' or 'investigation' triggered if a certain amount of money is reached ?  I don't know their criteria.

 

If  they do decide to act, and if they decide to question an individual (who is a Thai tax resident) as to the source of one's income and why it is not in a tax return, then I assume that the individual will then have to prove the funds are not assessable.  

 

I assume the Thai government will only act if they are concerned there could be tax avoidance - but as I noted before, I am no tax expert.

[JimmyTobacco]

1 hour ago, oldcpu said:

 

Possibly we are not talking about the same things.

 

The Thai RD can find out that one brings money into the country via wire transfer. Whether they decide to act upon that is up to them.  Perhaps their 'curiousity' or 'investigation' triggered if a certain amount of money is reached ?  I don't know their criteria.

 

If  they do decide to act, and if they decide to question an individual (who is a Thai tax resident) as to the source of one's income and why it is not in a tax return, then I assume that the individual will then have to prove the funds are not assessable.  

 

I assume the Thai government will only act if they are concerned there could be tax avoidance - but as I noted before, I am no tax expert.

 

Maybe not? What I mean is: if the Thai government is assuming certain people to be tax residents who are on certain types of visas that do not allow them to open businesses or bank accounts in Thailand, thus forcing them to open businesses and bank accounts elsewhere, how do they expect to succesfully tax these people? Certainly it would be easier if they allowed people to setup self-employed businesses in Thailand with bank accounts to make it a little easier for them to file taxes as well.

 

Ok the person in question would need money to live off. But let's say he uses a foreign credit card and gets money from the ATM only. Hard to trace. Although at some point the Thai RD could ask for bank statements proving some kind of transfer or money into Thailand. Anything to go at. If they see that the individual is not declaring any income.

 

But what if this person has 5 million baht in savings from previous tax years. That's a lot to live off for a long time in Thailand without earning anything.

[oldcpu]

1 hour ago, JimmyTobacco said:

But what if this person has 5 million baht in savings from previous tax years. That's a lot to live off for a long time in Thailand without earning anything.

 

As of 31-Dec-2023 , until some of the tax aspects are clarified , that is in essence what I am doing, albeit I am on a different visa and we are likely talking about a different amount of money.  As you note - one can go for many years with such an approach, and it is compliant with Thai RD instruction 161 and with Thai RD order 162.  Hopefully within a few years things should be much more clear.

 

In the mean time still,   thou, be subject to Thai tax law if one decides to stay long enough to be a Thai tax resident - which means one should be familiar with any DTA with the country of one's income, ...  and also maintain good records for the global funds one had prior to 1-Jan-2024 , and also good records of transactions after that date, in case one wishes to bring more funds into Thailand - and still be able to credible prove ( if audited ) when the income was earned.

[oldcpu]

1 hour ago, JimmyTobacco said:

 

Maybe not? What I mean is: if the Thai government is assuming certain people to be tax residents who are on certain types of visas that do not allow them to open businesses or bank accounts in Thailand, thus forcing them to open businesses and bank accounts elsewhere, how do they expect to succesfully tax these people? Certainly it would be easier if they allowed people to setup self-employed businesses in Thailand with bank accounts to make it a little easier for them to file taxes as well.

 

 

Reference the DTV visa - it is still relatively new.   I suspect with time it will be possible to open a Thai bank account with that visa, ....  and for all I know it may be feasible now with some banks (and/or agents).

[sometimewoodworker]

On 11/11/2024 at 9:17 AM, The Cyclist said:

Collecting tax from foreigners who are tax resident is a by-product of why it is happening. And I still happen to believe that in the spirit of what a DTA is for, If the money that is remitted has already been taxed in the home Country it will not be taxed again in Thailand.

Your belief regarding the DTA’s effects is in direct opposition to the RD rules/law. Unless the DTA SPECIFICALLY exempts that income. Note the highlighted wording un section 2 specifically 

“The resident country retains the right to tax the income which was already taxed in the source country‘

the resident country is Thailand the source countries are outside Thailand q.e.d.

 

 

[sometimewoodworker]

17 hours ago, JimmyTobacco said:

Well, how would the Thai RD even find out that the person in question has a business elsewhere

The TRD doesn’t have an interest in your businesses. They are interested in the funds you remitted to Thailand and if they are assessable or not. It is your job to provide proof of their assessable nature, if assessable that they exceed the (or do not exceed) the allowances, then you must pay tax on them. That tax may be reduced by a credit in the amount of actual tax paid in a foreign country is the effect of the DTA’s

 

The net effect of setting up a business in a zero/low taxation state is to increase the amount of Thai tax you must pay when you remit that money to Thailand 

 

You seem to have fallen into the trap of thinking that the TRD doesn’t not tax foreign taxed income. The TRD specifically states it can/will tax that income 

 

Quote

The resident country (Thailand ) retains the right to tax the income which was already taxed in the source country

 

[The Cyclist]

32 minutes ago, sometimewoodworker said:

Your belief regarding the DTA’s effects is in direct opposition to the RD rules/law. Unless the DTA SPECIFICALLY exempts that income. Note the highlighted wording un section 2 specifically 

 

Thanks for that. You should maybe have read the rest of my comments.

 

And I also do not belive that what I said is contradictory to what is said in the RD rules and laws.

 

I said I believed that if the RD applied the spirit of a DTA, then income that was already taxed in home country would not be taxed again in Thailand.

 

At no point did I say that Thailand would not, or could not tax it.

[sometimewoodworker]

1 minute ago, The Cyclist said:

I said I believed that if the RD applied the spirit of a DTA, then income that was already taxed in home country would not be taxed again in Thailand.

And as I pointed out your belief is wrong. As is demonstrated by the exact wording on the TRD website quoted earlier in this thread 

specifically 

“The resident country (Thailand) retains the right to tax the income which was already taxed in the source country”

6 minutes ago, The Cyclist said:

At no point did I say that Thailand would not, or could not tax it.

And how does that stack against your belief that the TRD won’t tax it?

 

[The Cyclist]

22 minutes ago, sometimewoodworker said:

The resident country (Thailand) retains the right to tax the income which was already taxed in the source country”

 

This is not in dispute

 

Which might by why I have suggested to other posters to err on the side of caution and if they are remitting income from abroad, that is not specifically exempt / non taxable in Thailand due to a DTA. If it exceeds the 60k / 120k / 220k limits, seek the advice of the RD dept, or pay for a Service through a tax consultancy.

 

What I said, and what you are referring to, is the spirit of a DTA, which is to avoid double taxation.

 

It will be entirely up to the RD If they apply the spirit of a DTA, or whether they apply the letter of the RD Code / Law.

 

They actually have the ability / flexibility to go either way.

[sometimewoodworker]

2 hours ago, The Cyclist said:

What I said, and what you are referring to, is the spirit of a DTA, which is to avoid double taxation.

There is no sprit involved. There is the letter of the agreement.

 

The agreement is to avoid taxing the same money  at a higher rate than the maximum in either country .

 

The principal is that the highest rate of tax should be paid, be that in one country or two is immaterial, often a single payment in the source country, but there is nothing to prevent taxation in both countries, for most income. There is no sprit that supports only one country taxation.

 

The immense misconception that the vast majority of people fall into is thinking that “because I have paid tax I one country I do not have to pay tax in the other country“. This is only true if the tax due in the first country is greater than the tax due in the second country.

 

2 hours ago, The Cyclist said:

seek the advice of the RD dept

 

I have heard of nobody getting that kind of assistance.

[chiang mai]

24 minutes ago, sometimewoodworker said:

There is no sprit involved. There is the letter of the agreement.

 

The agreement is to avoid taxing the same money  at a higher rate than the maximum in either country .

 

The principal is that the highest rate of tax should be paid, be that in one country or two is immaterial, often a single payment in the source country, but there is nothing to prevent taxation in both countries, for most income. There is no sprit that supports only one country taxation.

 

The immense misconception that the vast majority of people fall into is thinking that “because I have paid tax I one country I do not have to pay tax in the other country“. This is only true if the tax due in the first country is greater than the tax due in the second country.

 

 

I have heard of nobody getting that kind of assistance.

The TRD staff will help and advise, if you ask them....I have several times on various matters and they have always been most accommodating.

[The Cyclist]

23 minutes ago, sometimewoodworker said:

I have heard of nobody getting that kind of assistance.

 

Then I suggest you read a couple of threads where people, including myself, have taken the time and effort to visit their local RD Office and you can read for yourself where RD Offfices have offered assistance and advice.

 

26 minutes ago, sometimewoodworker said:

The agreement is to avoid taxing the same money  at a higher rate than the maximum in either country .

 

The principal is that the highest rate of tax should be paid, be that in one country or two is immaterial, often a single payment in the source country, but there is nothing to prevent taxation in both countries, for most income. There is no sprit that supports only one country taxation.

 

I will direct you to the FAQ sections on the RD website. Where it states that the most beneficial tax rate to the taxpayer should be applied 

 

Its question 5 here

 

https://www.rd.go.th/english/23520.html

 

Therefore it would not surprise me  if money was already taxed for the RD to ignore it for tax purposes.

 

You, of course, are free to think whatever you like.

[digital]

49 minutes ago, The Cyclist said:

 

Then I suggest you read a couple of threads where people, including myself, have taken the time and effort to visit their local RD Office and you can read for yourself where RD Offfices have offered assistance and advice.

 

 

I will direct you to the FAQ sections on the RD website. Where it states that the most beneficial tax rate to the taxpayer should be applied 

 

Its question 5 here

 

https://www.rd.go.th/english/23520.html

 

Therefore it would not surprise me  if money was already taxed for the RD to ignore it for tax purposes.

 

You, of course, are free to think whatever you like.

 

That would be nice, but doesn't it just mean between one states domestic tax rate and the DTA (if it specifies a lower rate), rather than the most beneficial rate between the two states?

[The Cyclist]

8 minutes ago, digital said:

 

That would be nice, but doesn't it just mean between one states domestic tax rate and the DTA (if it specifies a lower rate), rather than the most beneficial rate between the two states?

 

You would need to ask the RD how they interpret it.

 

If I submit a tax return for income from the UK which has already been taxed, complete with the tax paperwork. I can imagine that the RD could wave it through without further Thai taxation, rather than going  through a process that means getting into tax credits and refunds, and such like.

 

Not saying they will, but I could understand it they did.

[sometimewoodworker]

59 minutes ago, The Cyclist said:

 

I will direct you to the FAQ sections on the RD website. Where it states that the most beneficial tax rate to the taxpayer should be applied 

 

Its question 5 here

 

https://www.rd.go.th/english/23520.html

 

Therefore it would not surprise me  if money was already taxed for the RD to ignore it for tax purposes.

The U.K. Thailand DTC has only 3 categories that give rates; interest, royalties and dividends, this means that the vast majority of income is not restricted and so assessable for tax at the prevailing rates.

 

It is certainly possible that the TRD may not enforce the letter of the law, there are numerous cases of people with assessable income over the proscribed limit for reporting but under the various allowances so having zero tax to pay being told to go away and not file a tax return.

 

But then it is the difference between the letter of the law and the practice of the TRD, there is also the cost benefit analysis practiced by the TRD, if you owe millions in tax the TRD are likely to ensure you pay everything due if you get audited 

[The Cyclist]

5 minutes ago, sometimewoodworker said:

It is certainly possible that the TRD may not enforce the letter of the law,

 

Thank you.

 

That was all I was saying. There is every possibility that remitted income already taxed, might not be taxed again in Thailand.

 

It is possible, which is nowhere near saying that is what will happen.

[digital]

On 11/10/2024 at 8:24 PM, The Cyclist said:

 

 

* Any other forms of Income, that comes across as might, could, or possible be taxed elsewhere, or is even not mentioned.

 

Is the very reason that I suggest people should should go their RD Office, armed with relevant paperwork and let the RD direct you as to whether you need to file a tax return, how to apply DETA's, and how much, if anything, you may have to pay in tax. If that income exceeds

 

* 120,000 Baht for a single person

 

* 220,000 Baht for a couple who file jointly.

 

I cannot say that I have read the Canada - Thai DTA, but if you have a specific question, I would certainly dig into it and give you my opinion on a route that you might care to go down.

 

 

 

As you say many things are might, could, or possible, in the DTA
 

I have been advised very differently to what the 2 very heavily promoting advisors are saying, who are promoting their filing and obtaining a TID services, especially around the DTA for capital gains property (real estate).

 

Even if there is liability it's not easy to understand what the Thai tax liability may be, as regards deductions or how the gain is calculated, again I have seen different ways of working it out,

A visit to the TRD is ok but they really won't understand the fine details of all the DTA, but it needs to be clearer before a taxable event not after it, how can there be any planning without knowing.

[The Cyclist]

8 minutes ago, digital said:

A visit to the TRD is ok but they really won't understand the fine details of all the DTA, but it needs to be clearer before a taxable event not after it, how can there be any planning without knowing.

 

That is very possible. And the major reason why I have said on numerius occassions, that there is a possibility that if you rock up at the RD to declare your remitted income that has already been taxed elsewhere, they will simply tell you to go away or no need to file.

 

Having proof with you, that it has already been taxed, would help massively.

 

There would simply be too much work involved 

 

1. Go through someones annual remittance

 

2. Apply TEDA's

 

3. Subtract tax already paid

 

4. You owe us Baht 50.

 

They could do this, but I have ny doubts.

 

Of course, it would be a different story for people who are remitting millions of Baht per year, in income that might or could be taxable in Thailand. Such as CG, stocks and shares and whatever else is a bit of a grey area.

 

Those people are highly unlikely to be asking questions on this forum and will simply hire the services of a proper tax advisor / accountant. Who will deal with the RD on their behalf, including any  issues that might arrise.

 

The only real issue that I can see, is people that have different sources of income paid into an account in their home Country, then remit to Thailand, and then try to claim it as savings / pre-taxed income or any other combination.

 

If monies are direct deposited to Thailand such as pensions etc, the transfer code that comes with the remittance will tell the BoT, the RD, and anyone else interested, exactly what that remittance comes from and what it is for.

 

[stat]

On 11/10/2024 at 2:05 PM, chiang mai said:

If you get stuck, post your query and others will help clarify the terms.

There is no one here (me included) who can understand DTAs sufficient enough. A lot of the laws stipulated in a DTA are opaque at best. Every good lawyer or consultant will tell you this.

 

Remember:

"If you are not completely confused by quantum mechanics, you do not understand it"

[sometimewoodworker]

5 hours ago, stat said:

There is no one here (me included) who can understand DTAs sufficient enough.

The complete DTC I agree with your comment.

 

However i understand the very few sections that are relevant to me this current year.

 

It is not rocket science though the language try’s its best to simulate the complexity by being as brief as possible.

5 hours ago, stat said:

A lot of the laws stipulated in a DTA are opaque at best.

There are no laws in DTC’s. There are clauses in the various (about 61) agreements.

 

Your misconceptions may explain your difficulties.

[chiang mai]

12 hours ago, stat said:

There is no one here (me included) who can understand DTAs sufficient enough. A lot of the laws stipulated in a DTA are opaque at best. Every good lawyer or consultant will tell you this.

 

Remember:

"If you are not completely confused by quantum mechanics, you do not understand it"

I don't agree with this and never have. There are relatively straight forward easy to understand components of DTA's that lay people can readily understand. This fact alone means everyone should at least read their DTA and try to understand it. There are, of course, complex aspects that are more difficult, depending on your particular situation but to suggest they are all too difficult and that nobody should try, is wrong.

[JimGant]

On 11/13/2024 at 12:14 PM, sometimewoodworker said:

“The resident country retains the right to tax the income which was already taxed in the source country‘

Bunk. If DTA says certain income, like govt pensions, are "exclusively taxable" by source country -- that's it. Thailand has no authority to tax same.

 

But, using the US-Thai DTA: Thailand has "exclusive taxation" on US source private pensions. But -- because of the "savings clause" integral to the DTA -- the US also can tax these private pensions, although their taxation authority becomes secondary to Thailand's. And, as such, the US has to absorb a tax credit for the Thai taxes paid. Thus, Thailand gets to keep all taxes paid, and the US collects none -- if credit exceeds US tax bill. Or, collects the difference between US tax bill and the Thai tax credit. Result: You, the taxpayer, end up paying a tax bill equivalent to tax bill of the higher taxing country.

 

Now, Thailand could, in the above example, decide to abrogate their "exclusive taxation" privilege of private pensions. This is a so-called "override," and is frowned against by the OECD, but is allowed if it doesn't violate the spirit of the DTA, mainly, avoiding double taxation.

https://repository.law.umich.edu/book_chapters/330/

 

But, Thailand would be daft to override this "exclusive taxation" privilege -- and forego taxes needed for its coffers. Thus, their best avenue is to say nothing about excusing taxation, if taxes are paid in home country. As such -- in my case -- if I remitted my private pension income into Thailand -- and it amounted to "taxable income," because it exceeded TEDA and the freebie bracket -- I'd file a Thai tax return (if it didn't, I wouldn't -- with no chance of any repercussions of note). Thus, Thailand would collect taxes from me, they otherwise wouldn't had they put out a dictate of "no need to file Thai tax return for income taxes, if paid in home country." The final result: My total tax bill for the year wouldn't be any different if I only had to pay taxes to the US: Because the US has to "eat," via credit, the taxes I paid to Thailand (if any). And, if I had no Thai "taxable income" after subtracting out TEDA -- then no additional effort needed to get a TIN and file a Thai tax return. [But, if I owed Thai taxes, and had to file -- I could easily do this by mail, and not wasting time, gas, and parking by going to TRD. No big deal.]

[sometimewoodworker]

5 hours ago, JimGant said:

On 11/13/2024 at 12:14 PM, sometimewoodworker said:

“The resident country retains the right to tax the income which was already taxed in the source country‘

Bunk. If DTA says certain income, like govt pensions, are "exclusively taxable" by source country -- that's it. Thailand has no authority to tax same.

So you are saying that the THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF THE KINGDOM OF THAILAND are not posting the truth!!!

 

you really should understand the DTC. You should also learn to actually read and understand before posting.

 

I never suggested that certain forms of income are not exempt from taxation in one country. So by putting up a straw man, then knocking it down you have proved nothing.

 

I have zero interest in the USA / Thai DTA, what you are claiming could be true or it could be a misplaced fabricated.

 

 

[JimGant]

1 hour ago, sometimewoodworker said:

I have zero interest in the USA / Thai DTA, what you are claiming could be true or it could be a misplaced fabricated.

 

I have no interest in UK-Thai DTA either. My retort was to your "The resident country retains the right to tax the income which was already taxed in the source country". Which, the US-Thai DTA says is BS. So, too, I believe most, if not all DTAs, don't give blanket taxation rights to resident countries on certain, specific incomes defined in the DTAs.

[chiang mai]

9 hours ago, JimGant said:

I have no interest in UK-Thai DTA either. My retort was to your "The resident country retains the right to tax the income which was already taxed in the source country". Which, the US-Thai DTA says is BS. So, too, I believe most, if not all DTAs, don't give blanket taxation rights to resident countries on certain, specific incomes defined in the DTAs.

"most, if not all DTAs, don't give blanket taxation rights to resident countries on certain, specific incomes defined in the DTAs".

 

The operative words being, specific incomes, rather than all income.

 

It is clear that many (not all) DTA's give the resident country the right to tax specific types of income, that have already been taxed. This does not mean taxed completely a second time but taxed at a higher rate, which takes into account the tax already paid overseas. In a simple example, solely  for demonstration purposes, income of a specific  type may be taxed at 20% in the home country but because of the stepped tax bands, it may be taxed over at 25% with a credit becoming available for the 20% tax already paid. But for the lay person to understand the total impact of that measure, they would need to factor in the difference between their home country TEDA equivalent and Thai TEDA, which could go either way, based on the country of origin. They would also need to understand the tax treatment of ALL their different types of income, some of which my be treated more favorably, some less so.

 

[The Cyclist]

18 hours ago, JimGant said:

This is a so-called "override," and is frowned against by the OECD, but is allowed if it doesn't violate the spirit of the DTA, mainly, avoiding double taxation.

 

You are getting into a conversation with a poster who believes 

 

On 11/13/2024 at 4:03 PM, sometimewoodworker said:

There is no sprit involved. There is the letter of the agreement.

 

A better, and easier to understand phrase might be, that Thailand has discretion to tax, or not tax income covered by a DTA that has already been taxed in the other Country.

 

After all, the spirit of a DTA is to avoid Double Taxation.

[The Cyclist]

2 hours ago, chiang mai said:

In a simple example, solely  for demonstration purposes, income of a specific  type may be taxed at 20% in the home country but because of the stepped tax bands, it may be taxed over at 25% with a credit becoming available for the 20% tax already paid.

 

Covered this a few posts up.

 

FAQ's on the RD website. Question 5. The answer given is to apply the tax rate that is  most beneficial to the taxpayer.

 

Which in your example. would be the 20% paid in the home Country.

 

 

[sometimewoodworker]

53 minutes ago, The Cyclist said:

After all, the spirit of a DTA is to avoid Double Taxation.

You may believe in sprits, goolies, gosties, angels, devils, gods and whatever myths and imaginary entities you like that doesn’t make them real, millions do and their belief still makes no difference 

 

The U.K. D.T.C is specifically designed for the “Elimination of Double Taxation” see article 23 for the details read the complete DTC

 

However as @chiang mai has tried to explain double taxation does not mean that no income can taxed in both countries (some income is exclusively tax in one or the other country). As he has explained it means that the total tax paid on that income is the highest assessed in one or the other country, credit being given for tax paid in the lower taxing country.

12 hours ago, JimGant said:

My retort was to your "The resident country retains the right to tax the income which was already taxed in the source country". Which, the US-Thai DTA says is BS.

The bold statement was from the U.K. Thai government’s DTC

 

You should learn that the the US-Thai DTA only governs the taxation between the USA and Thailand and while I can’t be bothered to read it, I am sure that the language you attribute to it is wrong on you part, if not a deliberate lie the best interpretation is that you are incorrect completely confused or can’t understand the language.

[sometimewoodworker]

34 minutes ago, The Cyclist said:

 

Covered this a few posts up.

 

FAQ's on the RD website. Question 5. The answer given is to apply the tax rate that is  most beneficial to the taxpayer.

 

Which in your example. would be the 20% paid in the home Country.

There you are picking words specifically talking about certain categories of income as defined in specific articles and applying it to other categories of income.

 

This is direct contradiction to the principle in the DTC/DTA that (unless specifically excluded) you must pay the highest tax assessed not the lowest.

 

 

[The Cyclist]

4 minutes ago, sometimewoodworker said:

The U.K. D.T.C is specifically designed to “Elimination of Double Taxation” see article 23 for the details read the complete DTC

 

Do you understand the quote above ? Especially the " Elimination of Double Taxation " 

 

Probably a few ways that " Elimination of Double Taxation " can take place. Thailand has the discretion to adopt which method it adopts.

 

For example.

 

1. Applying the most beneficial tax rate to the taxpayer.

 

2. Using the tax credit and refund system

 

3. Ignoring " Assessable Income " for tax purposes, if that income has already been taxed.

 

I have read the UK - Thai DTC, the only article that really interests me is Article 19 ( 2 ) ( a )

 

For every other Article, where it says might, could or possibly be taxed in Thailand. Does not mean that it will be taxed in Thailand, especially if it has already been taxed in the UK. See the 3 points above.

 

And a person is not going to get a definitive answer on that, until they rock up at their RD Office, complete with all paperwork and the RD Office gives them a definitive  answer.

 

You appear to have totally misunderstood the purpose of this slight tweak

 

Which was to close a loophole where people were avoiding paying tax. It is not to hammer people who are already paying tax.