Income Tax

[technocracy]

Well in reality if the address on your off-shore bank is a UK address - you should be paying tax on it in the UK . . . just hope the IR doesn't have a fishing trip to your bank . . . then again it's only in the IoM and Channel Islands they've been prodding around.

But you can have a UK "Care Of" address and still not be a UK tax resident.

Many people I know do this as it's pretty hard getting mail when your

drill rig is running all over the high seas. Oh, and many of us never spent

a day in the UK for years on end ... did our R&Rs in other places.

Naka.

Yes I know you can have a care of address - it's just many people use their UK address as the account holders address also . . . which isn't wise.

[Naam]

it should not take more than seconds to answer the simple question "income taxable if not transferred in the same year when earned?"

The way it works with international firm is generally

1. You submit your questions

2. They may or may not perform due diligence on your person depending of the kind of services your require from their firm. For general tax advise, it is generally not required.

3. They will send you an engagement letter

4. They will send you a proposal re your questions

5. They will send you an invoice

besides... the "reputable advice" or "opinion" won't be worth the paper on which it is written if the thai revenue department disagrees.

That's why it's called a tax opinion letter and not a tax ruling. Thai tax regulations says that certain penalties can be avoided if you have relied on reputable professional advice and have substantial legal authority for your actions.

the answer to a simple question (like the one i mentioned) should not be given in form of an "opinion". the answer is either "YES" or "NO" and should include the relevant part of thai law on which the answer is based.

when i was a "U.S. Person" (a foreigner but liable to pay income tax to the IRS) i paid every year a small fee (like an insurance premium) which held my tax solicitor liable for any wrong advice. if this is the case in Thailand too (as you stated above) please provide a relevant link. by the way, is there any definition for "reputable professional advice"? i have strong doubts.

[GreenSnapper]

I'm rather hesitant to pay 15000 Bt just to answer a simple question which can be solved by checking the official regulations. Isn't there a "reputable" Thai tax consultant who would do it for a much smaller fee?

I'm still considering to retire in Thailand in the next 1-2 years, and the tax issue is an important one, as important as the visa issue.

At the moment I believe that if no retirees pay taxes there, I won't be the first one to do it. Following the 2-account approach I outlined above, I will be on quite a safe road from what I know so far.

Edited October 14, 2007 by GreenSnapper

[Naam]

IF Grant Thornton is right (quod esset demonstrandum!)

quote: A resident of Thailand is taxed on income earned in Thailand and on income

earned offshore which is brought into Thailand in the year the income is earned.

then there is no need to bend over backwards or thinking of various accounts and financial constructions. all what it takes is to instruct the bank to make a single transfer every year on jan 2nd with a value date of jan 1st. as simple as that.

[younghusband]

Does anyone know if the Thai tax folks consider pension and U.S. Social Security benefits as income? I've been here for 5 years now on a "retirement visa" and immigration hasn't said a thing so far during the yearly peeks at my Thai bank account and my ATM activity on my US bank account. Except for the rare check written to deposit a larger sum, all my cash arrives here via ATM.

The tax treaty between the United States and Thailand clearly says that social security benefits and other similar public pensions sourced (originates) in the United States are only taxable in the United States.

You should also file a Thai tax return in March, which you will declare to have 0 payable tax income and claim treaty benefits on the income you've remitted to Thailand. Practically, most people don't file.

Thanks Kudroz I find your contributions very clear and informative.One question which you might know the answer to is the practical impact of not filing a Thai tax return.I'm not talking about people who are avoiding or evading Thai tax but those who are "resident", have no Thai income and live off past years savings being remitted from the US.I know a couple of people in this category who I have advised not to bother with filing a return but I'm concerned my advice might be wrong.Any thoughts?

[kudroz]

Thanks Kudroz I find your contributions very clear and informative.One question which you might know the answer to is the practical impact of not filing a Thai tax return.I'm not talking about people who are avoiding or evading Thai tax but those who are "resident", have no Thai income and live off past years savings being remitted from the US.I know a couple of people in this category who I have advised not to bother with filing a return but I'm concerned my advice might be wrong.Any thoughts?

For expatriates whose tax residence is in Thailand, I would suggest that it is advantageous to file a tax return because:

1. It evidences your tax residency

Depending of your country of origin you might be asked, upon return, to provide evidence that you were a tax resident in another jurisdiction. Thailand is a great jurisdiction for tax planning purposes because it doesn't tax foreign sourced income. For everyone with foreign capital gains, interest, dividend income, etc - Thailand is a preferred choice to have your tax residence. You want to evidence your tax residence in Thailand as much as possible.

2. It eases dealing with various Thai institutions

In my own experience, I have found it easier to deal with banks, immigration and the labour department. It explains how someone of working age and without a work permit can live and support himself in Thailand.

To answer your question, most people I know do not file income tax return when their payable income tax is null or negligible. I do not think that the regional revenue departments care either-way.

[kudroz]

IF Grant Thornton is right (quod esset demonstrandum!)

quote: A resident of Thailand is taxed on income earned in Thailand and on income

earned offshore which is brought into Thailand in the year the income is earned.

then there is no need to bend over backwards or thinking of various accounts and financial constructions. all what it takes is to instruct the bank to make a single transfer every year on jan 2nd with a value date of jan 1st. as simple as that.

Where a tax opinion letter comes in handy, is when you want to know how does the Thai tax authorities define "savings" and how this is interpreted and dealt with with a particular regional revenue department. An international firm can provide you with jurisprudence cases and other interpretation of the Thai revenue code.

There is nothing certain and they might be wrong. But what I know for certain is that their opinion is better educated than mine. At the end of the day I chose to rely on their advise because it makes more sense to me than what 'bobo' said on some internet forum or at the local beer bar. You go with whatever makes your feel comfortable. To each is own.

[GreenSnapper]

IF Grant Thornton is right (quod esset demonstrandum!)

quote: A resident of Thailand is taxed on income earned in Thailand and on income

earned offshore which is brought into Thailand in the year the income is earned.

then there is no need to bend over backwards or thinking of various accounts and financial constructions. all what it takes is to instruct the bank to make a single transfer every year on jan 2nd with a value date of jan 1st. as simple as that.

If that works, it would be even easier.

But kudroz wrote above, that the money remitted to Thailand must come from a fixed term deposit which matures in the following year. I haven't found any reference to that.

I still believe that having 2 accounts, where one will only be used for the money transfer, is the better option, just in case someone asks, you can show that account.

And I also believe that it is not necessary to consult some reputable international company. The question is not a complicate matter, but a rather common one. A Thai tax consultant should be able to answer that question. I'm quite sure, Thais with offshore accounts face the same situation.

[Naam]

IF Grant Thornton is right (quod esset demonstrandum!)

quote: A resident of Thailand is taxed on income earned in Thailand and on income

earned offshore which is brought into Thailand in the year the income is earned.

then there is no need to bend over backwards or thinking of various accounts and financial constructions. all what it takes is to instruct the bank to make a single transfer every year on jan 2nd with a value date of jan 1st. as simple as that.

If that works, it would be even easier.

any transfer made which is valued 1st of january has to be income of the year before, i.e. no taxes (assuming the statement from Grant Thornton is correct).

[sonicdragon]

IF Grant Thornton is right (quod esset demonstrandum!)

quote: A resident of Thailand is taxed on income earned in Thailand and on income

earned offshore which is brought into Thailand in the year the income is earned.

then there is no need to bend over backwards or thinking of various accounts and financial constructions. all what it takes is to instruct the bank to make a single transfer every year on jan 2nd with a value date of jan 1st. as simple as that.

If that works, it would be even easier.

any transfer made which is valued 1st of january has to be income of the year before, i.e. no taxes (assuming the statement from Grant Thornton is correct).

It's hard to argue with this logic

It's also hard to understand why the rule would be as mentioned, which makes me doubt that it is in fact correct as stated.

It's also hard to understand why, since all the data is available through the immigration department, the revenue department does not check and at least issue tax returns to those who are here legally on extensions of stay. I know the the right hand of government doesn't usually know what the left hand is doing and that might be more often the case in thailand than many other countries, but still, it's a ready source of tax revenue and it seems odd that they don't even attempt to collect it.