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

[JimGant]

16 hours ago, Mike Teavee said:

That's my point, in the UK HMRC has clear guidelines that if you use a Foreign Credit Card to purchase Goods or Services in the UK and then pay the resulting bill using money from a Foreign Bank Account you are remitting money into the UK.

If memory serves, the remitting taxation aspect for UK taxpayers pertains only to non domiciled residents -- and is where taxation on credit card purchases is covered. Non dom "residents" is a strange animal, at least it appeared so when I tried to figure out from HMRC literature on how you become one.

Any Brits out there a non dom UK resident? If so, could you explain how you acquired this status -- and how you tie break your Thai tax residency status with your UK tax residency status. Thanx.

[topt]

42 minutes ago, JimGant said:

Any Brits out there a non dom UK resident? If so, could you explain how you acquired this status

If you mean a British citizen who has managed to get non domiciled status then @sometimewoodworker posted in a thread about that but, AFAIK, he is not UK tax resident.

44 minutes ago, JimGant said:

and how you tie break your Thai tax residency status with your UK tax residency status

You don't necessarily - if I understand what you are asking. You can be tax resident in both places in the same year - partly complicated by the fact that the tax years are different periods.

[sometimewoodworker]

1 hour ago, topt said:

AFAIK, he is not UK tax resident.

I am a U.K. tax payer, I am not a U.K. tax resident 

[JimGant]

1 hour ago, topt said:

You can be tax resident in both places in the same year

Well, no -- not for treaty purposes. All treaty language gives the country of residence priority in taxation rights for many categories of income -- either exclusionary or primary. So, there can't be a "both" situation.

 

The language for tie breaking residence situations in most DTAs is pretty straightforward: Where do you live most of the year; what country has your primary residence; etc. Can't reach an agreement? Well, then you go to the "competent treaty authorities" for a decision (who the he-- are they -- and how would you ever engage with them......). Oh well.

[sidneybear]

3 hours ago, JimGant said:

memory serves, the remitting taxation aspect for UK taxpayers pertains only to non domiciled residents --

The remittance tax for non-domiciled UK residents is no more. It was cancelled by the Starmer government. 

[chiang mai]

1 hour ago, JimGant said:

Well, no -- not for treaty purposes. All treaty language gives the country of residence priority in taxation rights for many categories of income -- either exclusionary or primary. So, there can't be a "both" situation.

 

The language for tie breaking residence situations in most DTAs is pretty straightforward: Where do you live most of the year; what country has your primary residence; etc. Can't reach an agreement? Well, then you go to the "competent treaty authorities" for a decision (who the he-- are they -- and how would you ever engage with them......). Oh well.

 

Well, yes!

 

@topt

 

"It is possible to be resident for tax purposes in more than one country at the same time. This is known as dual residence".

 

https://www.litrg.org.uk/international/double-taxation/dual-tax-residence

[topt]

1 hour ago, sidneybear said:

The remittance tax for non-domiciled UK residents is no more. It was cancelled by the Starmer government. 

Even they don't move that quickly........

Changes were actually proposed by the Conservative govt. and Labour will apparently run with similar from April 2025 - 

https://www.charlesrussellspeechlys.com/en/insights/expert-insights/private-wealth/2024/regime-change-the-beginning-of-the-end-of-the-remittance-basis/

 

 

[anrcaccount]

2 hours ago, sidneybear said:

The remittance tax for non-domiciled UK residents is no more. It was cancelled by the Starmer government. 

 

Good point.

 

So soon, it appears we don't have anywhere in the world that taxes foreign credit card spending ( India excepted, which is trying to introduce a heavily critiqued rule with many permutations regarding this)

 

It's ludicrous to believe that foreign credit card spending will be taxed in Thailand. Anyone worrying about that, is worrying unnecessarily. 

[Lorry]

9 hours ago, JimGant said:

Well, no -- not for treaty purposes. All treaty language gives the country of residence priority in taxation rights for many categories of income -- either exclusionary or primary. So, there can't be a "both" situation.

 

The language for tie breaking residence situations in most DTAs is pretty straightforward: Where do you live most of the year; what country has your primary residence; etc. Can't reach an agreement? Well, then you go to the "competent treaty authorities" for a decision (who the he-- are they -- and how would you ever engage with them......). Oh well.

There are DTAs where you can be tax resident in both countries. 

Things get very complicated then. 

[ukrules]

53 minutes ago, Lorry said:

There are DTAs where you can be tax resident in both countries. 

Things get very complicated then. 

 

Also it's very possible (easy in fact) to be non resident in any country depending on where you come from and how long ago you left your country of citizenship - that's the only potential snag - where you come from originally. Some countries don't like to let go.

 

 

[JimGant]

9 hours ago, chiang mai said:

"It is possible to be resident for tax purposes in more than one country at the same time. This is known as dual residence".

Ok. But for tax treaty purposes, where, again, you have to determine which country is your tax treaty country of tax residence ('cause of the exclusionary or primary taxation rights language), you have to resort to the treaty's tie breaker language. From the link you provided:

Quote

For a period of dual residence, double taxation agreements are particularly important in resolving any double taxation which may arise. When interpreting a double tax treaty for a dual residence period, you need to work out in which country you are resident for the purposes of the treaty. This is usually determined by a series of ‘tie-breaker’ tests to determine that country. Usually this is the country which is:

1. the country where you have a permanent home available to you,

 

[chiang mai]

16 minutes ago, JimGant said:

Ok. But for tax treaty purposes, where, again, you have to determine which country is your tax treaty country of tax residence ('cause of the exclusionary or primary taxation rights language), you have to resort to the treaty's tie breaker language. From the link you provided:

 

 

A fairly easy to read explainer which says that the SRT can make a person UK tax resident, even if the number of days spent in another country, makes them tax resident there also. Whilst technically not tax resident perhaps in the UK under formal rules, tax that arises there is still due and payable. The net affect being tax residency in two countries.

 

https://www.uhy-uk.com/insights/becoming-non-uk-resident-can-you-escape-grasp-uk-taxation

[topt]

4 hours ago, chiang mai said:

Whilst technically not tax resident perhaps in the UK under formal rules, tax that arises there is still due and payable. The net affect being tax residency in two countries.

Guilty as charged unfortunately..........

[chiang mai]

Just now, topt said:

Guilty as charged unfortunately..........

Me too, you're not alone.

[JimGant]

7 hours ago, chiang mai said:

The net affect being tax residency in two countries.

So, the UK-Thai tax treaty is worthless, i.e., you can't use the treaty's tie breaker language to determine which country has primary taxation rights, and the other secondary taxation rights? This would mean double taxation, which I doubt an expat Brit would stand for....

 

But, hey, King George tried SRT a few centuries ago, telling Americans they were honorary British residents, for tax purposes. We know how that ended.

[chiang mai]

1 minute ago, JimGant said:

So, the UK-Thai tax treaty is worthless, i.e., you can't use the treaty's tie breaker language to determine which country has primary taxation rights, and the other secondary taxation rights? This would mean double taxation, which I doubt an expat Brit would stand for....

 

But, hey, King George tried SRT a few centuries ago, telling Americans they were honorary British residents, for tax purposes. We know how that ended.

"the UK-Thai tax treaty is worthless, i.e., you can't use the treaty's tie breaker language to determine which country has primary taxation rights, and the other secondary taxation rights?"

 

I don't know the answer or how this reloves.

[Lorry]

Today's Bangkok Post has an article how the city government wants to drag street vendors into the formal economy. 

One of many requirement for street vendors: they must be in  the RD system (with not more than 300,000 income after deducting Business-related costs)

 

People who post "most Thais don't pay taxes" should read it.

(But they will probably say "oh, they will never enforce it")

[chiang mai]

9 minutes ago, Lorry said:

Today's Bangkok Post has an article how the city government wants to drag street vendors into the formal economy. 

One of many requirement for street vendors: they must be in  the RD system (with not more than 300,000 income after deducting Business-related costs)

 

People who post "most Thais don't pay taxes" should read it.

(But they will probably say "oh, they will never enforce it")

If those street vendors work as self employed and take the standard deduction of 60% of sales as costs, that 300k per year maximum income can easily be doubled, assuming they can sell the volume (and many do). 50k a month for net income is at least three times the average national wage. Tax deductions for the self employed are effectively a government subsidy (and it used to be a 80% deduction!) except few realise that.

 

 

[Lorry]

37 minutes ago, chiang mai said:

If those street vendors work as self employed and take the standard deduction of 60% of sales as costs, that 300k per year maximum income can easily be doubled, assuming they can sell the volume (and many do). 50k a month for net income is at least three times the average national wage. Tax deductions for the self employed are effectively a government subsidy (and it used to be a 80% deduction!) except few realise that.

 

 

You are right,  but all the other requirements (must have a welfare card and receive welfare, must pay installments for a NHA house, cannot employ foreigners, max stall size 3sqm) mean, only "poor Thai" can be a street vendor

[chiang mai]

2 minutes ago, Lorry said:

You are right,  but all the other requirements (must have a welfare card and receive welfare, must pay installments for a NHA house, cannot employ foreigners, max stall size 3sqm) mean, only "poor Thai" can be a street vendor

Nevertheless, it's a great way to get out of poverty and make some money, with almost no tax, as long as they are prepared to work hard.

[metisdead]

A post with multiple quotes that were misquoted has been removed:

 

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Some posts discussing another member have been removed, please stay on topic.

[Delight]

The big problem with this method _it will kill the property development market.

In my view they will apply taxation to the gross income of expats -a credit being applied for tax already paid .

Therefore expats can bring in as much money as they please -without being taxed.

 

This is my guess.

 

If the Thai tax authorities have any sense then a ceiling will apply-maybe maximum 60,000 Baht per tax year.

All the foregoing is pure speculation on my part -only time will tell

 

[sidneybear]

On 9/19/2024 at 5:53 PM, anrcaccount said:

 

Good point.

 

So soon, it appears we don't have anywhere in the world that taxes foreign credit card spending ( India excepted, which is trying to introduce a heavily critiqued rule with many permutations regarding this)

 

It's ludicrous to believe that foreign credit card spending will be taxed in Thailand. Anyone worrying about that, is worrying unnecessarily. 

Data exchange and data matching gets better and better. I'd say that it's a matter of time before any kind of spending, anywhere, is traceable back to wherever you're supposed to be paying tax. Let's enjoy our freedom while we can.

[sidneybear]

On 9/19/2024 at 5:14 PM, topt said:

Even they don't move that quickly........

Changes were actually proposed by the Conservative govt. and Labour will apparently run with similar from April 2025 - 

https://www.charlesrussellspeechlys.com/en/insights/expert-insights/private-wealth/2024/regime-change-the-beginning-of-the-end-of-the-remittance-basis/

 

 

April 25 is only a few months away, so I'd call it a fast change. The very next tax year after Starmer got elected. 

[chiang mai]

I've been trying to understand how and when employers must deduct tax from employees but I couldn't find any answer. I was trying to better understand how and why so few  Thai people file tax returns. I eventually concluded that the system is partially to blame.

 

Self employment is the cheapest and easiest method of doing business in Thailand, it doesn't require an accountant, a legal company name and the tax breaks are excellent. Over 50% of people work using this method which legally requires the individual to file a tax return, and pay taxes, twice a year.

 

The TRD Standard Deduction doesn't require receipts and allows the tax payer to deduct 60% of the cost of sales as input costs. That means they can hire people and pay them, without having to deduct tax. It also means the people who are hired can work in the same way. 

 

This system means the TRD never knows that the worker has hired people and paid them hence they don't know that tax is due. And since the self employed person never has to disclose details about their employees (because of the standard deduction), none of those payments are ever seen in a tax audit. 

 

Most people don't bother to register with TRD as self employed because they know the generous tax deductions (60% cost of sales as input) mean that most will not have to pay tax and apparently the TRD doesn't want null returns. A self employed worker in Thailand can easily turn over 700k baht per year and have taxable earnings under their TEDA level yet still take home 30k or more per month.

 

"Self-employed workers make up over half (roughly 53 per cent) of all workers in Thailand. As figure 1 shows, own-account work is the most common form of self- employment, comprising roughly 34 per cent of all employment, followed by contributing family workers (17 per cent) and employers (2 per cent)".

 

https://www.wiego.org/sites/default/files/publications/file/wiego-policy-brief-n31-bangkok.pdf

[Yumthai]

6 hours ago, chiang mai said:

I've been trying to understand how and when employers must deduct tax from employees but I couldn't find any answer.

Employers in Thailand will be responsible for withholding taxes from their employees. They need to submit a monthly withholding tax return (PND 1) to the Revenue Department within the first seven days of the next month, at which point the payment was made. They must pay the tax due when filing for the return.

 

Employers generally assess WHT based on employee's annualized total income (including wages, commissions, bonus,...) less allowances - of what they are aware of. WHT rate could be anything between 0-35%.

 

In addition (to file annually):

PND 1 Kor: Summary of all personal withholding tax filed with the government, including the director’s, employees’ salary details and taxes paid throughout the year.

 

[chiang mai]

2 minutes ago, Yumthai said:

Employers in Thailand will be responsible for withholding taxes from their employees. They need to submit a monthly withholding tax return (PND 1) to the Revenue Department within the first seven days of the next month, at which point the payment was made. They must pay the tax due when filing for the return.

 

Employers generally assess WHT based on employee's annualized total income (including wages, commissions, bonus,...) less allowances - of what they are aware of. WHT rate could be anything between 0-35%.

 

In addition (to file annually):

PND 1 Kor: Summary of all personal withholding tax filed with the government, including the director’s, employees’ salary details and taxes paid throughout the year.

 

I'm pretty sure this rule only holds true for legal entities such as limited companies or larger, it's certainly not true of all employers. An employer has to register with TRD to get an account number before they can withhold tax and I don't believe that will be granted to a self employed person., 

[Yumthai]

5 minutes ago, chiang mai said:

I'm pretty sure this rule only holds true for legal entities such as limited companies or larger, it's certainly not true of all employers. An employer has to register with TRD to get an account number before they can withhold tax and I don't believe that will be granted to a self employed person., 

Sure, I'm referring to legally registered entities.

Sole trader/proprietorship is not the best structure to hire people, however I find nowhere they are not required to file WHT returns when needed.

[chiang mai]

21 minutes ago, Yumthai said:

Sure, I'm referring to legally registered entities.

Sole trader/proprietorship is not the best structure to hire people, however I find nowhere they are not required to file WHT returns when needed.

We don't agree in that case. I know first hand of businesses not only here in Thailand but also in the UK that turn over millions but are operated by self employed people. My UK management company turns over 3.5 million Pounds per year but the business is run by the  self employed owner. Here in Thailand, my wife worked for four years for a major tourist attraction that had over 15 staff, each was hired as an hourly worker  but everyone worked 40 hours per week. The business was run by a husband and wife team, both of whom are self employed.....my wife was responsible for her own taxes, because of the hourly worker status. 

[Yumthai]

2 hours ago, chiang mai said:

We don't agree in that case. I know first hand of businesses not only here in Thailand but also in the UK that turn over millions but are operated by self employed people. My UK management company turns over 3.5 million Pounds per year but the business is run by the  self employed owner. Here in Thailand, my wife worked for four years for a major tourist attraction that had over 15 staff, each was hired as an hourly worker  but everyone worked 40 hours per week. The business was run by a husband and wife team, both of whom are self employed.....my wife was responsible for her own taxes, because of the hourly worker status. 

I'm not saying you can't hire as a sole business owner, just that WHT filings should be required as well.