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

[Mike Lister]

5 minutes ago, Dogmatix said:

One point that is generally overlooked is that many expats living in Thailand off foreign source income were in violation of the Revenue Code prior to the effective date of P. 161/2566. The 1987 ruling clarified that foreign source income remitted to Thailand in the same tax year it was earned was assessable for Thai tax.  Anyone who got their pension remitted direct to Thailand was very obviously required to file a tax return and pay Thai tax, subject of course to DTA tax credits.  If those expats start filing a tax return for the first time in 2025 and the RD sees the evidence of pension being remitted direct to Thailand that was obviously in place before Jan 2024, they are quite entitled to ask how long the expat has been receiving this income in Thailand.  Then they are entitled to do an audit going back 10 years, if tax returns were not filed, and arbitrarily assess tax, penalties and interest. Given that the RD didn't really attempt to enforce the tax on same tax year remittances in the past, it seems unlikely that they will do this now as a matter of policy.  However, as we know that much is left up to the discretion of individual officers and inspectors, some of whom enjoy low hanging fruit, we cannot say the risk of this happening is zero. 

 

I interpret, rightly or wrongly, 1 January 2024 as being the start date and that in general, any event prior to that date will be given a pass, excluding of course blatant tax evasion and large scale  tax fraud. This is merely my opinion however.

[Dogmatix]

12 hours ago, BE88 said:

The question that many ask themselves and I ask myself too is whether we will be asked when we renew our visa if we have filed our taxes? If this is the case, but it remains to be confirmed what will happen in concrete terms, let's assume that I don't declare anything and that they don't give me an extension of the visa, obviously I will have to leave when the visa expires, but I have the possibility of leaving and requesting another visa or Will I be marked as persona non grata? The issues in this case follow one another and could go very distant and not pleasant.

 

For those who are not far behind the 560,000 should ask themselves if the game is worth the risk.

 

I think not really likely for some time.  It is quite legal for someone to live in Thailand without having even enough assessable Thai income to have to file a tax return. You could have 100 mil invested in the SET and live off dividends subject to 10% withholding tax but take the legitimate option not to include in your assessable income or file a tax return.  Your retirement visa could be done on the lump sum basis. 

 

It would need an Immigration order that tax returns are required for visa renewals or perhaps enforcement of the existing law for tax clearance certificates on visa renewal or leaving the country.  Ultimately it is possible, if Immigration and the RD decide to coordinate on this.  Consider the case of VAT registration required for a WP.  I operated a business that only exported services and therefore had no VATable income and would ordinarily have not had to register for VAT.  However, to get a WP the business had to register for VAT and file monthly VAT returns showing zero VATable income.  In fact today we still have to do that long after I no longer need WPs, as the only easy way to get out out of VAT registration is to wind up the company.

[topt]

4 hours ago, Mike Lister said:

Reading some of the recent posts on tax made me realise that several members do not really understand where we are with the tax issue and are looking far beyond what the issues really are. 

 

Somebody wrote, "this tax policy is such a mess that we can expect changes in the future, I think we all know this. There's already been discussion on what the Thai government will have to change for this policy to even have the slightest chance of being even the least bit effective."  

 

The Thai tax system and the Revenue Code (tax rules) have existed for decades. For better or worse, those things represent a system whereby tax is collected, albeit many people pretend it doesn't exist and ignore it. One small change was made to a single tax rule and this has ensnared foreigners into the tax net, along with nationals who were evading it.

 

Today there are two problems. The TRD's problem is the tax net is too small, there aren't enough people in the net, paying tax. The second problem is ours, not the TRD's. The first part of our problem is that we don't understand all the rules and the way the system operates. The second part is that in the absence of that knowledge, some of us seem to expect it will function in the same way the tax system does in our home country or according to our own logic. Those expectations are not realistic. Suggesting that the tax policy is a mess isn't really relevant because it's existed for a long time, anyway, how would we know when we don't fully understand what it comprises and how it operates! 

 

Expecting a change in policy or awaiting some sort of big announcement is a cop out, what those people are really saying is, "I don't understand how the system operates so I will do nothing except wait and see". Trying to fill the knowledge gaps with hypothesis and conjecture is only useful to a degree, beyond that point it breeds paranoia and fear because the "whatiffery" becomes fact in the minds of some people and they begin planning and acting on the basis of assumption, which is a very bad thing.

I didn't want to take a specific part out of context hence quoting the whole post but I am reminded of the saying 

"You can lead a horse to water but you cannot make it drink" or similar............

 

I do admire your patience  

[Dogmatix]

Another point from  the French embassy video was that the Thai guy, who couldn't speak French, said in English that expenditures on a foreign credit card in Thailand are deemed as remittances.  He said that taxpayers who use foreign credit cards in Thailand would have to submit their credit card statements, presumably translated into Thai, if not in English.  This must apply to debit cards and ATM withdrawals too. He didn't say what part of the tax return form this income should be declared on but logically you have to declare the income used to pay the card bills, rather than the expenditures made with the income, assuming it is a assessable income in the first place.  In fact the credit card statements are merely proof of remittance, not of income, but he didn't make this point.  Nowhere else have they said that taxpayers need to provide proof of remittance, only of income and of tax credits. 

 

He didn't mention the use of foreign credit cards to order goods to be shipped to Thailand.  They can argue that the goods were remitted to Thailand but that seems a bit of a stretch to me.  Same with air tickets bought abroad for use in exiting or entering Thailand. 

 

I know some expats who live from ATMs and foreign credit cards without ever remitting anything to Thailand. I expect they will carry on as before without filing tax returns.

[Mike Lister]

With @Dogmatix permission I will extract that comment so that others can better see it.

 

"Another point from  the French embassy video was that the Thai guy, who couldn't speak French, said in English that expenditures on a foreign credit card in Thailand are deemed as remittances.  He said that taxpayers who use foreign credit cards in Thailand would have to submit their credit card statements, presumably translated into Thai, if not in English". @JimGant

[Mike Lister]

Here's the list of unknowns, in case anyone is feeling brave:

 

k) - how does the TRD distinguish between principal (funds from legacy investments, inheritance, original investment principal) versus earnings (interest, dividends, remuneration) from commingled funds, determination of applicable foreign currency exchange rates for tax assessment, etc. 

 

P) - Returned to the list: The issue of whether income earned in a year when tax resident but remitted to Thailand in a year when not tax resident………….is it taxable? Many contradictory reports on this, even from within TRD and tax consultants themselves. 

 

Q) - Does the TRD regard credit card spending in Thailand, using a foreign credit card, assessable income. The early indication from the TRD at an embassy meeting is yes, it does.

 

R) - Is foreign loan monies remitted to Thailand, considered assessable income, eg for the purchase of a vehicles, condos, property, etc. 

 

S) -  If a foreigner gifts offshore assessable income, direct to a Thai resident, is the foreigner required to report that income, as if they themselves had received it directly?

[Lacessit]

Mike, you said tax returns ( correct me if I am wrong ) are filed after June 30. Anyone who is tax resident ( >180 days ) should leave Thailand June 27.

 

If I have entered Thailand on two occasions - September 2023, March 2024 does that not mean I don't have to file a tax return?

 

The 2023 entry was after 8 months out of Thailand.

[Mike Lister]

52 minutes ago, Lacessit said:

Mike, you said tax returns ( correct me if I am wrong ) are filed after June 30. Anyone who is tax resident ( >180 days ) should leave Thailand June 27.

 

If I have entered Thailand on two occasions - September 2023, March 2024 does that not mean I don't have to file a tax return?

 

The 2023 entry was after 8 months out of Thailand.

Correct, because your time spent in Thailand spanned two tax years.

[Mike Lister]

31 minutes ago, Celsius said:

 

Why did you quote this post. It is a complete and utter rubbish.

 

Can you name me 1 country on the planet that does this?

The UK does this with non-doms, per the HMRC regulations quoted previously on several occasions. Our job here is to try and identify the rules, not whether they are followed, not whether they are sensible and not whether they are utter rubbish or not....only what they are.

[JohnnyBD]

3 hours ago, Mike Lister said:

The UK does this with non-doms, per the HMRC regulations quoted previously on several occasions. Our job here is to try and identify the rules, not whether they are followed, not whether they are sensible and not whether they are utter rubbish or not....only what they are.

I don't doubt that the Thai RD person actually said that about CC purchases, but It needs to be written in their rules, guidelines or regulations, and not just coming from this one person's opinion at a video sit-down. This gets back to whether CC purchases for Big Macs need to be included on your tax returns or not. It needs to be kept on the issues list until something in writing comes from the TRD. It is not appropriate to take one person's word as the rule of law, especially if they cannot back it up with something in writing from their own TRD agency.

[UKresonant]

2 hours ago, JohnnyBD said:

I don't doubt that the Thai RD person actually said that about CC purchases, but It needs to be written in their rules, guidelines or regulations, and not just coming from this one person's opinion at a video sit-down. This gets back to whether CC purchases for Big Macs need to be included on your tax returns or not. It needs to be kept on the issues list until something in writing comes from the TRD. It is not appropriate to take one person's word as the rule of law, especially if they cannot back it up with something in writing from their own TRD agency.

But I don't think SWIFT, or Wise or Rev, WU, feature in the RD's rules, why would CCs? It is just another way of transmitting the funds.

[JohnnyBD]

30 minutes ago, UKresonant said:

But I don't think SWIFT, or Wise or Rev, WU, feature in the RD's rules, why would CCs? It is just another way of transmitting the funds.

There's a big difference. When you transmit funds from your bank using SWIFT or even ATM withdrawals with your debit card, those come directly out of your bank account, it's your monies being sent over. When you make a CC purchase, the foreign CC company is sending their money to cover your purchases. You have a credit line that you can charge up to, then you pay them back afterwards. But, it's their money that's being sent over, not your's. That issue is on the "issues list" and is not yet resolved.

[UKresonant]

6 minutes ago, JohnnyBD said:

There's a big difference. When you transmit funds from your bank using SWIFT or even ATM withdrawals with your debit card, those come directly out of your bank account, it's your monies. When you make a CC purchase, the foreign CC company is sending their money to cover your purchases. You have a line of credit that you can draw on which is a loan, then you pay them back afterwards. That issue is on the "issues list" and is not resolved yet.

So that would work perhaps if you spend on the CC in Dec whilst resident in TH, but did not pay the bill using overseas funds until Jan in the next year, which will be a non resident year.  I suppose the credit card bill could be paid from pre2024 savings, or not taxed in Thailand funds/income, would be fine..

 

 

[UKresonant]

Recently had my pension indexations, and one of my 'not taxed in Thailand' pensions gives me 205 THB (after tax) a day now to remit!  

[Dogmatix]

21 hours ago, JimGant said:

Only on interest earned in the bank account. Are you asking it they'll deduct taxes on all wired money into their bank? Use your noodle -- how would they determine what part of that wired money is income, or not?

 

The question of whether withholding tax would be deducted from foreign remittances was asked in the French embassy video and the French speaking RD lady said, "Fortunately not".

[Dogmatix]

7 hours ago, Celsius said:

 

Why did you quote this post. It is a complete and utter rubbish.

 

Can you name me 1 country on the planet that does this?

 

Yes, Thailand plans to do it and my post was not nonsense. I was simply reporting on what was said in the French embassy video to try to be of some help to those who cannot understand French.  It will be extremely difficult for the RD to enforce taxation of foreign credit card expenditures in Thailand by tax residents but that is what they said they will do.  It will probably rely largely on self assessment.

[Dogmatix]

On 5/22/2024 at 8:03 AM, Mike Lister said:

I interpret, rightly or wrongly, 1 January 2024 as being the start date and that in general, any event prior to that date will be given a pass, excluding of course blatant tax evasion and large scale  tax fraud. This is merely my opinion however.

 

I would say it is not that the RD will give people a pass in respect of assessable foreign source income remitted in the tax year it was earned in years prior to 2024 due to P. 2161/2566 but that they have for the most part given a pass since the ruling in 1987 that clarified that foreign source income remitted in the tax year it was earned was assessable. This has been largely unenforced. 

[Mike Lister]

1 hour ago, UKresonant said:

But I don't think SWIFT, or Wise or Rev, WU, feature in the RD's rules, why would CCs? It is just another way of transmitting the funds.

Agreed, that's just the transport.

[JohnnyBD]

11 minutes ago, Mike Lister said:

Agreed, that's just the transport.

I disagree, it's a loan and not income. But, you're entitled to your opinion and I'm entitled to my opinion. Until we get a legal opinion from the TRD, no one can say for sure it's the law. That's why it's still on the "issues list", right?

[Mike Lister]

2 minutes ago, JohnnyBD said:

I disagree, it's a loan and not income. But, you're entitled to your opinion and I'm entitled to my opinion.

It's on the list of unknowns, awaiting further input and clarification.

 

Q) - Does the TRD regard credit card spending in Thailand, using a foreign credit card, assessable income. The early indication on this point is yes, it does.

[Dogmatix]

I raised this in Part I but don't have an answer yet.  Excluding US social security which is taxable only in the US under the US DTA, how should taxpayers declare state pensions they remit from other countries? 

 

There is no state pension in Thailand and consequently there is nowhere to declare income from a state pension in the Thai tax return forms. The closest equivalent in Thailand is an old age allowance which I believe is not assessable.  I have been collecting this paltry allowance for a few years, just because I have paid Thai taxes and am entitled to it.  It never occurred to me to declare it for tax until now but I just searched in Thai for opinions as to whether it is assessable or not.  I didn't find anything definitive yet but chats on sites like Pantip show divided opinion. Some say it is assessable and some not.  My personal opinion is that it is not.  There is no documentation available to verify this allowance. You just apply at the district office and receive it indefinitely with never any proof of life certificates requested.  If assessable, the RD would mention it somewhere in PND 90 and 91, in my view, and would either demand documentation to verify it, which is impossible, or would have confirmation directly linked to the RD from the Finance Ministry which it doesn't, although it does have electronic links to other sources of income and deductions - deductions verified by e-receipts pop right up in your personal tax return account when you log in with a message asking if you wish to claim them. 

 

State pensions are clearly not income from employment and there is an argument that they are no different from Thai old age allowances and therefore not assessable, assuming the the latter is indeed not assessable.  There could be an argument that the are indirectly income from employment because you don't usually get them without having worked and paid contributions.  I suspect the RD would make this argument to avoid letting state pensions slip out of its net but it is a fairly big stretch IMHO that might not stand up in the Tax Court. I suppose they could also argue it is income from investment, if you have to make contributions, but that is a stretch too. The UK DTA doesn't mention state pensions other than pensions paid to retired civil servants.  The DTA I have seen that mentions them is the US DTA vis a vis social security. The UK DTA doesn't mention private pensions either for that matter and nor does the RC but they can easily be deemed income from employment or investment.. 

[Dogmatix]

Re the view that remittances generated by use of foreign credit card payments being not remittance of income but short term loans advanced by the credit card provider.  I can see the logic to that but doubt it would hold up in the tax court.  It certainly wouldn't apply to direct debit cards or ATM withdrawals direct from a bank account. I think a loan would need a specific loan agreement and to come in as a lump some, not in dribs and drabs as the taxpayer makes his purchases. 

 

Theoretically you could pay off your credit card with tax exempt pre-2024 income but I think that all remittances via foreign credit card, debit card or ATM withdrawal are going to be deemed assessable, is self assessed or, if the RD somehow finds out about them. 

[Mike Lister]

35 minutes ago, Dogmatix said:

I raised this in Part I but don't have an answer yet.  Excluding US social security which is taxable only in the US under the US DTA, how should taxpayers declare state pensions they remit from other countries? 

 

There is no state pension in Thailand and consequently there is nowhere to declare income from a state pension in the Thai tax return forms. The closest equivalent in Thailand is an old age allowance which I believe is not assessable.  I have been collecting this paltry allowance for a few years, just because I have paid Thai taxes and am entitled to it.  It never occurred to me to declare it for tax until now but I just searched in Thai for opinions as to whether it is assessable or not.  I didn't find anything definitive yet but chats on sites like Pantip show divided opinion. Some say it is assessable and some not.  My personal opinion is that it is not.  There is no documentation available to verify this allowance. You just apply at the district office and receive it indefinitely with never any proof of life certificates requested.  If assessable, the RD would mention it somewhere in PND 90 and 91, in my view, and would either demand documentation to verify it, which is impossible, or would have confirmation directly linked to the RD from the Finance Ministry which it doesn't, although it does have electronic links to other sources of income and deductions - deductions verified by e-receipts pop right up in your personal tax return account when you log in with a message asking if you wish to claim them. 

 

State pensions are clearly not income from employment and there is an argument that they are no different from Thai old age allowances and therefore not assessable, assuming the the latter is indeed not assessable.  There could be an argument that the are indirectly income from employment because you don't usually get them without having worked and paid contributions.  I suspect the RD would make this argument to avoid letting state pensions slip out of its net but it is a fairly big stretch IMHO that might not stand up in the Tax Court. I suppose they could also argue it is income from investment, if you have to make contributions, but that is a stretch too. The UK DTA doesn't mention state pensions other than pensions paid to retired civil servants.  The DTA I have seen that mentions them is the US DTA vis a vis social security. The UK DTA doesn't mention private pensions either for that matter and nor does the RC but they can easily be deemed income from employment or investment.. 

Whenever I've filed my Thai tax returns, the TRD has not bothered to enter my US SSc into their system and has regarded it as excluded income.

[UKresonant]

38 minutes ago, Dogmatix said:

Re the view that remittances generated by use of foreign credit card payments being not remittance of income but short term loans advanced by the credit card provider.  I can see the logic to that but doubt it would hold up in the tax court.  It certainly wouldn't apply to direct debit cards or ATM withdrawals direct from a bank account. I think a loan would need a specific loan agreement and to come in as a lump some, not in dribs and drabs as the taxpayer makes his purchases. 

 

Theoretically you could pay off your credit card with tax exempt pre-2024 income but I think that all remittances via foreign credit card, debit card or ATM withdrawal are going to be deemed assessable, is self assessed or, if the RD somehow finds out about them. 

In country spending I think is quite clear, however booking and  paying flights with a CC outwith Thailand, I would struggle with the concept of  tax reach extending past the airport door,  (At an extreme what proportion of an international flight would be in Thai Airspace).

[Mike Lister]

I have attempted to declutter the thread by removing posts that were chatty and contain low value information relative to the topic. I do this from time to time to keep the thread more easily readable.

[Bangkok Barry]

If they are now demanding that foreigners pay tax, will they provide forms etc in English, the main language that foreigners understand?

 

I have in mind no longer transferring  money over for living expenses from my UK income each month, but charging supermarket shopping to my UK credit card. If I bring nothing over and have no income in Thailand, they can't tax nothing.. Credit card charges are not that high and the bills would be paid monthly with no interest, and I also wouldn't pay the (admittedly modest) transfer fee to Wise. Any expenses can by paid from what money I have here now.

[thailand49]

On 5/19/2024 at 4:45 PM, Mike Lister said:

We do not believe that is possible in the short to medium term or even probable in the longer term.

For years I have a number of accounts some with my wife name joint. Money place into all accounts have been taxed prior. Although I live here way over the 180 days I return home yearly to file my taxes.

Each times these accounts obtain interest right after a tax is removed.

I dont see taxes being removed from my Thai son nor my wife personal accounts.

Does your answer pertain to my situation?

[thailand49]

On 5/19/2024 at 4:45 PM, Mike Lister said:

We do not believe that is possible in the short to medium term or even probable in the longer term.

For years I have a number of accounts some with my wife name joint. Money place into all accounts have been taxed prior. Although I live here way over the 180 days I return home yearly to file my taxes.

Each times these accounts obtain interest right after a tax is removed.

I dont see taxes being removed from my Thai son nor my wife personal accounts.

Does your answer pertain to my situation?

[Mike Lister]

2 minutes ago, Bangkok Barry said:

If they are now demanding that foreigners pay tax, will they provide forms etc in English, the main language that foreigners understand?

 

I have in mind no longer transferring  money over for living expenses from my UK income each month, but charging supermarket shopping to my UK credit card. If I bring nothing over and have no income in Thailand, they can't tax nothing.. Credit card charges are not that high and the bills would be paid monthly with no interest, and I also wouldn't pay the (admittedly modest) transfer fee to Wise. Any expenses can by paid from what money I have here now.

All the tax forms are available in English, as are the instructions

 

https://www.rd.go.th/english/65308.html

[Mike Lister]

5 minutes ago, thailand49 said:

For years I have a number of accounts some with my wife name joint. Money place into all accounts have been taxed prior. Although I live here way over the 180 days I return home yearly to file my taxes.

Each times these accounts obtain interest right after a tax is removed.

I dont see taxes being removed from my Thai son nor my wife personal accounts.

Does your answer pertain to my situation?

All savings accounts are subject to 15% with holding tax, some banks will not deduct the tax, for the first 20k of interest earned, as along as you show them your Tax ID card. That tax is not with held on children's accounts. The tax is capable of being reclaimed by filing a return at the end of the year, subject to the usual tax rules regarding income etc.