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

[chiang mai]

52 minutes ago, Yumthai said:

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

You see the problem, as long as TRD allows all self employed to group all their expenses in the standard deduction, there is no requirement to disclose wages paid to others.

[Yumthai]

1 hour ago, chiang mai said:

You see the problem, as long as TRD allows all self employed to group all their expenses in the standard deduction, there is no requirement to disclose wages paid to others.

I don't get it. You mean there is no requirement to disclose wages paid to other employees?

 

https://www.thailand.go.th/issue-focus-detail/006_115

 

"SME entrepreneurs, whether operating as individuals, such as a sole proprietor, ordinary partnership, or a group of persons that is not a legal entity, or as legal entities, such as a limited company, limited partnership, or legal entity partnership, when paying income types that the law specifies should have taxes withheld at source, must follow these procedures:

1. Have and use a taxpayer identification number (except for individuals who do not have to pay Value Added Tax, who should use their citizen identification number instead).
2. Deduct tax at source every time income is paid, which the law requires to be deducted at source, at the rate specified by the law.
3. Issue a certificate of withholding tax at source to the tax deductee as evidence for filing the income tax return. If it involves the government, an organization of the government, a municipality, a sanitary district, or another local administration organization, the paying officer should issue a receipt for the tax that has been deducted to the income recipient.
4. Remit the withheld tax within seven days from the end of the month in which the income was paid, to the local branch of the Revenue Department where the person obliged to withhold income tax at source has their office."

 

 

Found this other 2023 doc below quite comprehensive although not up-to-date regarding last overseas income remittance changes:

https://www.grantthornton.co.th/globalassets/1.-member-firms/thailand/media/doing-business-in-thailand-2023-_may.pdf

 

Edited September 23 by Yumthai

[chiang mai]

20 minutes ago, Yumthai said:

I don't get it. You mean there is no requirement to disclose wages paid to other employees?

 

https://www.thailand.go.th/issue-focus-detail/006_115

 

"SME entrepreneurs, whether operating as individuals, such as a sole proprietor, ordinary partnership, or a group of persons that is not a legal entity, or as legal entities, such as a limited company, limited partnership, or legal entity partnership, when paying income types that the law specifies should have taxes withheld at source, must follow these procedures:

1. Have and use a taxpayer identification number (except for individuals who do not have to pay Value Added Tax, who should use their citizen identification number instead).
2. Deduct tax at source every time income is paid, which the law requires to be deducted at source, at the rate specified by the law.
3. Issue a certificate of withholding tax at source to the tax deductee as evidence for filing the income tax return. If it involves the government, an organization of the government, a municipality, a sanitary district, or another local administration organization, the paying officer should issue a receipt for the tax that has been deducted to the income recipient.
4. Remit the withheld tax within seven days from the end of the month in which the income was paid, to the local branch of the Revenue Department where the person obliged to withhold income tax at source has their office."

 

 

 

 

 

 

That raises more questions than it answers!

 

1) A sole proprietor and a self employed person are not the same things.

 

"A self-employed individual simply means the person works for him or herself. It's just a business term. A sole proprietor refers to someone who owns a business by themselves".

 

https://www.hellobonsai.com/blog/sole-proprietorship-vs-self-employed#:~:text=Since a sole proprietor operates,owns a business by themselves.

 

2) "when paying income types that the law specifies should have taxes withheld at source, must follow these procedures".

 

If the individuals TEDA are more than the wages?  And what are those income types?

 

3) If the entity must withhold tax and forward them to the TRD, how do they do that as a self employed person (which is not a legal entity) and therefore ineligible to obtain a TRD  employers account?

 

EDIT TO ADD: An excellent find however!

 

 

 

 

 

 

 

 

Edited September 23 by chiang mai

[chiang mai]

"I don't get it. You mean there is no requirement to disclose wages paid to other employees?"

 

If a self employed person uses another self employed person for a specific job, they are not an employee. Even if the self employed person who does the hiring, contracts with another self employed person, that is a contractual relationship and not an employment contract of employer and employee. The cost of that....let's call it sub-contracting,....are all hidden within the 60% standard deduction  and there is no requirement to declare them or with hold tax.

 

 

[Yumthai]

8 minutes ago, chiang mai said:

If a self employed person uses another self employed person for a specific job, they are not an employee. Even if the self employed person who does the hiring, contracts with another self employed person, that is a contractual relationship and not an employment contract of employer and employee. The cost of that....let's call it sub-contracting,....are all hidden within the 60% standard deduction  and there is no requirement to declare them or with hold tax.

Can an unregistered self-employed legally hire an employee or a contractor, and thus not file any WHT return?

[chiang mai]

2 minutes ago, Yumthai said:

Can an unregistered self-employed legally hire an employee or a contractor, and thus not file any WHT return?

Good question....dunno!

 

In theory there's no hiring involved, it's more of a prime contract/sub contractor relationship perhaps but definitely not an employee.

 

My wife is self employed and she hires workers and pays them by the hour, all paid daily....that expense is never seen by TRD because it's inside the standard deduction. She' s not a legal entity but she is registered as self employed and files returns.

[Lorry]

18 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. 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

Would this work for a foreigner with a DTV?

700k tax-free is not bad.

[chiang mai]

4 hours ago, Lorry said:

Would this work for a foreigner with a DTV?

700k tax-free is not bad.

I don't think so. If I understand things correctly, the DTV requires an employer that is acceptable to the IMMI and I doubt that self employed would meet that need.

[Presnock]

On 9/20/2024 at 9:50 AM, chiang mai said:

"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.

JUst imagine, we expats can't figure out all the ins and outs of the taxation schemes based on our country's laws - so how with the Thai Revenue Department be able to come to what WE consider a fair interpretation - TIT so they will decide for Thai side  in any quesionable treaties...my opinion.

[chiang mai]

2 minutes ago, Presnock said:

JUst imagine, we expats can't figure out all the ins and outs of the taxation schemes based on our country's laws - so how with the Thai Revenue Department be able to come to what WE consider a fair interpretation - TIT so they will decide for Thai side  in any quesionable treaties...my opinion.

Issues like these appear from time to time and not just in DTA's. They need trained lawyers to interpret the rules, perhaps that can't be easily done and need to go back  to the diplomatic channel. The fact that you and I can't come up with a simple obvious answer, doesn't mean that much really.

[Presnock]

16 minutes ago, chiang mai said:

Issues like these appear from time to time and not just in DTA's. They need trained lawyers to interpret the rules, perhaps that can't be easily done and need to go back  to the diplomatic channel. The fact that you and I can't come up with a simple obvious answer, doesn't mean that much really.

That is why the tax agents are jumping for joy looking for all the new clients.  I personally am thankful to all the original expat notes in the forum that enabled me to fully understand where I stand in relations to the tax schemes and the DTA, best visa for me.  I do hope that some announcements from the revenue department concerning the schemes becomes available so we can stop/start new volume of ideas/opinions.  At times fairly entertaining but at other times can be just boring.  Best of luck to all.

[chiang mai]

3 minutes ago, Presnock said:

That is why the tax agents are jumping for joy looking for all the new clients.  I personally am thankful to all the original expat notes in the forum that enabled me to fully understand where I stand in relations to the tax schemes and the DTA, best visa for me.  I do hope that some announcements from the revenue department concerning the schemes becomes available so we can stop/start new volume of ideas/opinions.  At times fairly entertaining but at other times can be just boring.  Best of luck to all.

This is exactly why I don't believe that anyone should be consulting with Thai tax accountants just yet, not even Big 4 accountants, not until the TRD has provided some clarity. Thai's are not known for their propensity to say, "I don't know", it's more likely that you'll get a guess or a fudged answer. Let's face it, TRD cannot leave these issues open, not if they really want people to file tax returns. All of this may mean a bit of a scramble in January or February but there doesn't seem to be a different sp;ution that's good.

[Presnock]

1 hour ago, chiang mai said:

This is exactly why I don't believe that anyone should be consulting with Thai tax accountants just yet, not even Big 4 accountants, not until the TRD has provided some clarity. Thai's are not known for their propensity to say, "I don't know", it's more likely that you'll get a guess or a fudged answer. Let's face it, TRD cannot leave these issues open, not if they really want people to file tax returns. All of this may mean a bit of a scramble in January or February but there doesn't seem to be a different sp;ution that's good.

AMEN on that!

[Yumthai]

11 hours ago, chiang mai said:

Good question....dunno!

 

In theory there's no hiring involved, it's more of a prime contract/sub contractor relationship perhaps but definitely not an employee.

 

My wife is self employed and she hires workers and pays them by the hour, all paid daily....that expense is never seen by TRD because it's inside the standard deduction. She' s not a legal entity but she is registered as self employed and files returns.

 

WHT filing is mandatory for payments >= 1,000 THB.

 

"Payments to service providers amount to 1000 THB and payments less than 1000 THB to long-term contractors, such as telephone and internet companies, are subject to withholding tax. Exceptions include payments to non-taxpayers such as BOI companies and governmental organizations."

 

I've been told (Thai entrepreneur) that self-employed incurring expenses requiring WHT by law has to register a legal form. Can't find any official source though.

 

In practice and broadly, informal (undeclared) business owners hire contractors for business purposes and pay them cash. Nothing is declared hence illegal.

 

[chiang mai]

3 minutes ago, Yumthai said:

 

WHT filing is mandatory for payments >= 1,000 THB.

 

"Payments to service providers amount to 1000 THB and payments less than 1000 THB to long-term contractors, such as telephone and internet companies, are subject to withholding tax. Exceptions include payments to non-taxpayers such as BOI companies and governmental organizations."

 

I've been told (Thai entrepreneur) that self-employed incurring expenses requiring WHT by law has to register a legal form. Can't find any official source though.

 

In practice and broadly, informal (undeclared) business owners hire contractors for business purposes and pay them cash. Nothing is declared hence illegal.

 

That can't be right. What that says is that any time a business pays somebody for a service they must withhold tax and forward it to the TRD.

[Yumthai]

7 minutes ago, chiang mai said:

What that says is that any time a business pays somebody for a service they must withhold tax and forward it to the TRD.

Yes indeed. I had to file WHT for any relevant expense when I run my Co. Ltd. back in the day.

Edited September 24 by Yumthai

[chiang mai]

3 minutes ago, Yumthai said:

Yes indeed. I had to file WHT for any relevant expense when I run my Co. Ltd. back in the day.

So if you pay your telephone bill you must withhold WHT! I don't think so.

[Yumthai]

3 minutes ago, chiang mai said:

So if you pay your telephone bill you must withhold WHT! I don't think so.

As a registered entity and certain conditions, Yes. You can get proper information from a Thai accountant.

 

https://www.forvismazars.com/th/en/insights/doing-business-in-thailand/tax/withholding-tax-in-thailand

 

The following will require the deduction of WHT:

1. Expenses greater than 1,000 Baht; and
2. Expenses less than 1,000 Baht for which a long term contract is in place (e.g. telephone)

[chiang mai]

3 minutes ago, Yumthai said:

As a registered entity and certain conditions, Yes. You can get proper information from a Thai accountant.

 

https://www.forvismazars.com/th/en/insights/doing-business-in-thailand/tax/withholding-tax-in-thailand

 

The following will require the deduction of WHT:

1. Expenses greater than 1,000 Baht; and
2. Expenses less than 1,000 Baht for which a long term contract is in place (e.g. telephone)

Oh wait, we some how made a giant leap from withholding income tax from employees to the deduction of WHT from suppliers......not the same thing, we need to leap back again.

[Yumthai]

1 minute ago, chiang mai said:

Oh wait, we some how made a giant leap from withholding income tax from employees to the deduction of WHT from suppliers......not the same thing, we need to leap back again.

Same in term of WHT filing obligation, just the rates may change.

All information is linked there, if you need further info I suggest you approach a Thai accounting firm.

[Presnock]

To expats re some agent info:

  expattaxthailand.com - provided a webinar today on pensions of different countries - some exempt due to DTA's others not which by now most of us already know.  They mentioned that if one has no assessable income (i.e. only have exempted govt pension or social security) then one does not need to get a Thai tax number nor file any tax form.

 In addition he said that they will give one a 15 minute FREE consultation on one's taxes so if not too convoluted then should be able to help folks.  They also have tax prep help,

 75K, 12K and 24K depending on how much help is needed. They also have webinars set for DTA's and other tax filing issues in the future.  One can contact them and register for the webinars (FREE) via computer (ZOOM).   I notice someone has asked about the 800K for visa if it is taxable.  Normally, if it is in the first half of the year, and then the person remitted it into a Thai bank, unless the person stayed 180 or more days that calendar year, it wouldn't be taxed but if one did remit the 800K early in the year and stayed the

180+ days, then it would be taxable.  Some bit about the source of the 800K pre 2024 savings or whatever - a good question for one considering depositing the money to check with someone who might know for sure. He also said that his office has all the DTA's with Thailand if folks wanted to check on their particular country.   Goodluck to all!

[OJAS]

1 hour ago, Presnock said:

180+ days, then it would be taxable.  Some bit about the source of the 800K pre 2024 savings or whatever - a good question for one considering depositing the money to check with someone who might know for sure.

 

If the source was assessable then taxable, but if non-assessable then not taxable, I would have thought. So would depend on the individual financial circumstances of those intending to make deposits.

[Mike Teavee]

1 hour ago, Presnock said:

75K, 12K and 24K depending on how much help is needed

Am assuming that was a typo & the basic level service is 7.5K… 

 

[JimGant]

On 9/20/2024 at 2:12 AM, 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.

We seem to be on a semantics circle jerk....

Let me show this quote again:

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

So, if you live more than 180 days per calendar year in Thailand -- and have a UK private pension that you remit to Thailand during this year -- then per the tie breaker rules in the UK-Thai DTA -- Thailand is your country of residency for the purpose of the DTA. Thus, you pay taxes on the private pension to Thailand. And per DTA, NO tax is payable to the UK. Double taxation is avoided.

Unfortunately, the UK-Thai DTA is silent on private pensions. But OECD and UN Model tax treaty language holds that income not described in any DTA article is exclusively taxable in country of residency (as determined by the DTA).

[Presnock]

14 minutes ago, Mike Teavee said:

Am assuming that was a typo & the basic level service is 7.5K… 

 

 

14 minutes ago, Mike Teavee said:

Am assuming that was a typo & the basic level service is 7.5K… 

 

OOOOOOOOOPs!  my mistake, that is correct....7.5K

[Lorry]

5 hours ago, chiang mai said:

I don't think so. If I understand things correctly, the DTV requires an employer that is acceptable to the IMMI and I doubt that self employed would meet that need.

The DTV has been promoted (not only for employed remote workers,  but also) for "freelancers" right from the beginning,  and I don't see that's changed. The required proof is the "professional portfolio" showing "freelancer status" (as seen on all the websites of Thai embassies, copied from the original MFA explanations).

Sounds a lot like self-employed to me.

 

The very first AN member who reported he got a DTV @LivinLOSdid not have employment (but he owned a company).

On 7/23, @HauptmannUKreported a vlogger got one. That guy is vlogging as a hobby, so what if he starts to make a bit of money?

 

I didn't delve into it more,  as it's not relevant for me at the moment. 

But it sounds interesting. 

[chiang mai]

16 minutes ago, JimGant said:

We seem to be on a semantics circle jerk....

Let me show this quote again:

So, if you live more than 180 days per calendar year in Thailand -- and have a UK private pension that you remit to Thailand during this year -- then per the tie breaker rules in the UK-Thai DTA -- Thailand is your country of residency for the purpose of the DTA. Thus, you pay taxes on the private pension to Thailand. And per DTA, NO tax is payable to the UK. Double taxation is avoided.

Unfortunately, the UK-Thai DTA is silent on private pensions. But OECD and UN Model tax treaty language holds that income not described in any DTA article is exclusively taxable in country of residency (as determined by the DTA).

Decide, and then satisfy two governments that your decision was right, good luck with that.

[NoDisplayName]

1 hour ago, Presnock said:

 I notice someone has asked about the 800K for visa if it is taxable.  Normally, if it is in the first half of the year, and then the person remitted it into a Thai bank, unless the person stayed 180 or more days that calendar year, it wouldn't be taxed but if one did remit the 800K early in the year and stayed the 180+ days, then it would be taxable.

 

I ran into this in 2018 when first attempting to apply for a TIN in order to file returns to have withholding returned.

 

Lady at the tax office (Bangkapi) warned me that the 800K remitted for visa might be taxable, without going into detail.  Later that day, I learned about current year income and prior savings right here on this very forum.  Thanks, guys!

[chiang mai]

36 minutes ago, Lorry said:

The DTV has been promoted (not only for employed remote workers,  but also) for "freelancers" right from the beginning,  and I don't see that's changed. The required proof is the "professional portfolio" showing "freelancer status" (as seen on all the websites of Thai embassies, copied from the original MFA explanations).

Sounds a lot like self-employed to me.

 

The very first AN member who reported he got a DTV @LivinLOSdid not have employment (but he owned a company).

On 7/23, @HauptmannUKreported a vlogger got one. That guy is vlogging as a hobby, so what if he starts to make a bit of money?

 

I didn't delve into it more,  as it's not relevant for me at the moment. 

But it sounds interesting. 

I know almost nothing about the DTV, other than it needs employment. If as you say, it is possible to be self employed under DTV rules, for sure that's the way to go because of the tax benefits.

[Presnock]

9 hours ago, Presnock said:

JUst imagine, we expats can't figure out all the ins and outs of the taxation schemes based on our country's laws - so how with the Thai Revenue Department be able to come to what WE consider a fair interpretation - TIT so they will decide for Thai side  in any quesionable treaties...my opinion.

expattaxthailand.com advertises a DTA - UK/Thailand webinar in the near future.,  It is free, just register with them and they will give you a date/time.  I did the US pension remittance webinar today and it confirmed all that I have learned to date about my finances/taxes.  Plus they give a 15 minute free consultation on one's taxes too.