Thai Income Tax

[tutsiwarrior]

I've decided to hire my wife as a consultant. She will now have to formally declare her income in this regard (paid by myself from an overseas bank account) and pay income tax. Is income tax paid monthly or yearly? Would she need to set up a 'business' to suit this arrangement? Any other helpful advice?

We need to be able to show proof of income (bank book) and proof of payment of tax for my immigration purposes.

Thanx...

[samran]

she needs to set herself up as a sole trader at the nearest tax office. No need to set herself up as a business. This will allow her to write off 70% of her earnings as expenses (without receipt) and the remainder will be counted as he income - taxable at the marginal rate. Means you can bring much more in tax free, but 30% of that should be at least 40K per month for your visa renewals. ie, you should be able to bring in circa 130K/month, of which only 40K will be taxable. All this info is courtesy of sunbelt who gave it to me for free, though you best should recheck it with a proper tax authority.

Check out my tax calulator here to see her tax liablity on the 40K

http://www.thaivisa.com/forum/index.php?ac...st&id=34841

[TerryLH]

"This will allow her to write off 70% of her earnings as expenses (without receipt) and the remainder will be counted as he income - taxable at the marginal rate. Means you can bring much more in tax free, but 30% of that should be at least 40K per month for your visa renewals. ie, you should be able to bring in circa 130K/month, of which only 40K will be taxable."

Samran

Are you saying the 40k must be taxable? I din't think there is anything about 40k taxable income, just 40k income. Why would she not be able to have 40k income, write off the normal expenses, and pay tax on whatever is left over?

A lot of people stay here on O visas without paying any taxes. Income or pensions from overseas are examples.

I'll read the link as soon as my speed is better. Very slow right now for some reason. Maybe the answer will be in there.

Terry

[samran]

"This will allow her to write off 70% of her earnings as expenses (without receipt) and the remainder will be counted as he income - taxable at the marginal rate. Means you can bring much more in tax free, but 30% of that should be at least 40K per month for your visa renewals. ie, you should be able to bring in circa 130K/month, of which only 40K will be taxable."

Samran

Are you saying the 40k must be taxable? I din't think there is anything about 40k taxable income, just 40k income. Why would she not be able to have 40k income, write off the normal expenses, and pay tax on whatever is left over?

A lot of people stay here on O visas without paying any taxes. Income or pensions from overseas are examples.

I'll read the link as soon as my speed is better. Very slow right now for some reason. Maybe the answer will be in there.

Terry

no, I am just talking about sole propitorship set ups. I'm making the assumption that for your extensions, they are going to want to see evidence of the wifes income, with tax paid on it. Even if immigration doesn't need tax receipts, if is her income, tax is going to have to be paid. Not because immigration says so, but because the revenue department says so.

[meom]

Not knocking the OP but I don't get the benefits of the structure he proposes when it comes to immigration. I don't really follow the current visa rules but wouldn't it be more easy and cheaper for the OP to get a "pension" visa or marriage visa?

[TerryLH]

"no, I am just talking about sole propitorship set ups. I'm making the assumption that for your extensions, they are going to want to see evidence of the wifes income, with tax paid on it. Even if immigration doesn't need tax receipts, if is her income, tax is going to have to be paid. Not because immigration says so, but because the revenue department says so. "

I'm still confused by this. Are you saying that the revenue department only recognizes the 'after expenses' amount as her income?

I would think that if she was paid 40k a month, she would deduct expenses and other deductions, then pay taxes on a much smaller number. I didn't think the revenue department set minimum amounts that taxes had to be paid on, (40k in your original scenario).

For immigration purposes, which this is all about, they would recognize a gross income (40k) and would just want to see taxes collected by the revenue department on whatever net the revenue dept says taxes are due on. I don't think imm has a minimum for the amount of taxes paid, just the gross income.

Even if you end up paying 0 baht because of deductions, as long as you file and get a reciept (showing 0), everyone should be happy.

Am I that far off?

Terry

Edited October 21, 2007 by TerryLH

[samran]

"no, I am just talking about sole propitorship set ups. I'm making the assumption that for your extensions, they are going to want to see evidence of the wifes income, with tax paid on it. Even if immigration doesn't need tax receipts, if is her income, tax is going to have to be paid. Not because immigration says so, but because the revenue department says so. "

I'm still confused by this. Are you saying that the revenue department only recognizes the 'after expenses' amount as her income?

I would think that if she was paid 40k a month, she would deduct expenses and other deductions, then pay taxes on a much smaller number. I didn't think the revenue department set minimum amounts that taxes had to be paid on, (40k in your original scenario).

For immigration purposes, which this is all about, they would recognize a gross income (40k) and would just want to see taxes collected by the revenue department on whatever net the revenue dept says taxes are due on. I don't think imm has a minimum for the amount of taxes paid, just the gross income.

Even if you end up paying 0 baht because of deductions, as long as you file and get a reciept (showing 0), everyone should be happy.

Am I that far off?

Terry

As i understand it, as a sole propriator, only the 'after expenses' amount is her income, at which point normal income taxes would be paid on this. Thats from an RD perspective. So to use a simple example, you get 100K in revenue as a sole propirator. The RD allows you to write off 70% as expenses, straight away. This leaves you with 30K which they will consider your personal income, and which you will pay normal rates of income tax on. Of course, out of her taxable personal income, she can still make a range of deductions: for having a spouse, contributions to social security, investments in long term funds, pension contributions, deductions for having childen. This will lower her tax liablity on that remaining 30K.

As for immigration, the only thing I am certain about is they want to see 40K per month in family income. Whether they are going to accept 40K in revenues from a sole trader before expenses are taken out, well, that is the million dollar question. But if they don't, then I suspect the OP is going to have to transfer a hel_l of a lot more in, so that 30% of this amount equals 40K per month.

[tutsiwarrior]

good discussion as it now raises the question of whether 40k is enough to consider this angle as most of us would not have been aware otherwise. So the spouse would have to claim 130k as monthly income to have 40k be taxable. Sheesh...most Thai CEOs don't make that much...

what about not choosing to write off any expenses (or simply not having any to write off) and paying the whole whack on the 40k?...for that matter, do do the wives of married falangs presently applying for visa extensions based upon the wife's contribution to family income have to show 130k monthly income or does the 70% write off apply to sole traders only?

Edited October 21, 2007 by tutsiwarrior

[samran]

70% applies to sole traders only. That is, automatic write off of expenses, without needing to show receipts. Above this threshold, you require receipts for everything.

For personal income tax purposes, there are tax deductions which can be made, which I mentioned before.

[tutsiwarrior]

70% applies to sole traders only. That is, automatic write off of expenses, without needing to show receipts. Above this threshold, you require receipts for everything.

For personal income tax purposes, there are tax deductions which can be made, which I mentioned before.

OK...so could she simply declare the monthly amounts that I transfer into her thai account from an overseas account as personal income and pay taxes on that and me not have to do nothin' about 'employing' her?

[samran]

a sole trader could be a noodle vendor who sells noodles. It isn't about being employed by anyone, except yourself. As such, you won't be employing your wife. She'll be employing herself, and writing invoices every month to you for services rendered.

All it takes is a small change of status down at the local revenue department office, and that is the extent of the paperwork. I looked into it for freelance consulting (I'm a Thai citizen), but in the end didn't need to do it.

Why I suggested it is that it enables her/you to bring a much large proportion of money into Thailand tax free.

[Cyberstar]

OK...so could she simply declare the monthly amounts that I transfer into her thai account from an overseas account as personal income and pay taxes on that and me not have to do nothin' about 'employing' her?

This doesn't sound like something I'd rely on. We're in the grey area where things depend on whatever the individual officer may pull out from the black box of possible extra documentation he's entitled to ask your wife to produce.

In my own case (wife and I both contributing to the 40K by means of regular Thai salaries from our own company) it didn't suffice with just bankbooks showing monthly entries of exact salary amounts and adequate tax documentation. Immigration also wanted to see employment contracts and company registration papers.

Basically, what you're talking about isn't but spousal allowance - which doesn't constitute any income TO the married couple, just an internal redistribution of funds. I think it's much safer to go for the sole proprietor-thing. The fact that it isn't but the same money received by and from the same persons is much less important than having a proper paper trail.

However, if i remember Sunbelts posting on this board correctly: you don't have to "accept" the 70% write off, but have the option of writing off the actual expenses. Particularly, if your actual expenses are less than the 70% - rest assured that RD, won't object - (you'd probably need to produce proper receipts for any declared expense also in this instance, though). Proper papertrails rule!

[tutsiwarrior]

OK...so could she simply declare the monthly amounts that I transfer into her thai account from an overseas account as personal income and pay taxes on that and me not have to do nothin' about 'employing' her?

This doesn't sound like something I'd rely on. We're in the grey area where things depend on whatever the individual officer may pull out from the black box of possible extra documentation he's entitled to ask your wife to produce.

In my own case (wife and I both contributing to the 40K by means of regular Thai salaries from our own company) it didn't suffice with just bankbooks showing monthly entries of exact salary amounts and adequate tax documentation. Immigration also wanted to see employment contracts and company registration papers.

Basically, what you're talking about isn't but spousal allowance - which doesn't constitute any income TO the married couple, just an internal redistribution of funds. I think it's much safer to go for the sole proprietor-thing. The fact that it isn't but the same money received by and from the same persons is much less important than having a proper paper trail.

However, if i remember Sunbelts posting on this board correctly: you don't have to "accept" the 70% write off, but have the option of writing off the actual expenses. Particularly, if your actual expenses are less than the 70% - rest assured that RD, won't object - (you'd probably need to produce proper receipts for any declared expense also in this instance, though). Proper papertrails rule!

very good...something else to be aware of: your friendly immigration officer's 'box of tricks' and a possible demand to demonstrate that the arrangement by which the family income requirement is met is suitable for his purposes...

will it ever end?

[torrenova]

Am I the only one who reads this as a guy wanting to pay 40k to satisfy immigration and it having nothing to do with bringing in money from abroad ?

The question remains unanswered here and elsewhere.

So which of these scenarios, if any, satisfies the wife / husband 40k thing

I get 40k from the ATM each month

My wife gets 40k from the ATM each month

My wife earns 40k

I earn 40k

My wife pays tax on 40k after deductions

This 40k is it gross or net

I read it most simplest that my wife makes 40k from somewhere (finds it in my back pocket so therefore as a cleaner). She then tells the authorities some crap about selling noodles or whatever and pays tax on the 40k minus allowances. I then get a visa on her income as her husband.

[samran]

I think it is all about the papertrail, as others have said.

Pulling it out of a wall probably won't satisfy the immigration folks, and would probably look dodgy to the RD people. The sole trading route is designed for everyone from noodle vendors, to freelance consultants who have a variety of clients.

[Irene]

I've decided to hire my wife as a consultant. She will now have to formally declare her income in this regard (paid by myself from an overseas bank account) and pay income tax. Is income tax paid monthly or yearly? Would she need to set up a 'business' to suit this arrangement? Any other helpful advice?

We need to be able to show proof of income (bank book) and proof of payment of tax for my immigration purposes.

Thanx...

To answer your questions, income is subject to withholding by a corporate payer whenever paid to an individual for service fees. But since you are the payer outside Thailand, no withholding on your part is necessary. It is the duty of the income recipient to declare her income half-yearly or yearly. If the fees are of professional nature, then half-year declaration is applicable. If not, at the end of the calendar year and by March 31, she has to declare her income and pay the tax. However, by choice, if she prefers to pay tax before due time, she can do so. Her expense allowance is restricted to 40% but not exceeding Baht 60,000 per year. (To be eligibble to other more liberal expense allowances, your wife's income would have to be in the nature of commercial services like hairdressing).

On your last paragraph, I do not understand why you need your wife's income and proof of tax payments

for your immigration purpose. I presume you and others understand this requirement.

[tutsiwarrior]

I've decided to hire my wife as a consultant. She will now have to formally declare her income in this regard (paid by myself from an overseas bank account) and pay income tax. Is income tax paid monthly or yearly? Would she need to set up a 'business' to suit this arrangement? Any other helpful advice?

We need to be able to show proof of income (bank book) and proof of payment of tax for my immigration purposes.

Thanx...

To answer your questions, income is subject to withholding by a corporate payer whenever paid to an individual for service fees. But since you are the payer outside Thailand, no withholding on your part is necessary. It is the duty of the income recipient to declare her income half-yearly or yearly. If the fees are of professional nature, then half-year declaration is applicable. If not, at the end of the calendar year and by March 31, she has to declare her income and pay the tax. However, by choice, if she prefers to pay tax before due time, she can do so. Her expense allowance is restricted to 40% but not exceeding Baht 60,000 per year. (To be eligibble to other more liberal expense allowances, your wife's income would have to be in the nature of commercial services like hairdressing).

On your last paragraph, I do not understand why you need your wife's income and proof of tax payments

for your immigration purpose. I presume you and others understand this requirement.

you need to be familiar with the 40k baht family income option for non - 'O' visa extension saga to understand the discussion...try reading the whole thread,,,

you must also understand that rational argument/discussion rarely apply when discussing thai immigration matters/requirements...

[torrenova]

Yeah, there are not many guys under 50 doing nothing who have wives earning 40k+ so there has been a lot of discussion on using the wife to technically earn 40k and pay tax which would allow the guy to piggy back on her income for an annual visa (thus negating the need and cost to get a non imm "O") etc.

As the grandfather 400k in the bank for husband visa has gone (now 40k per month which means the guy needs a WP as well and all that crap), there may be, in the future, a need to go back to the country of origin to get a non imm "O". Usually that is far more expensive than the tax on the wife's 40k "income".

[tutsiwarrior]

Yeah, there are not many guys under 50 doing nothing who have wives earning 40k+ so there has been a lot of discussion on using the wife to technically earn 40k and pay tax which would allow the guy to piggy back on her income for an annual visa (thus negating the need and cost to get a non imm "O") etc.

As the grandfather 400k in the bank for husband visa has gone (now 40k per month which means the guy needs a WP as well and all that crap), there may be, in the future, a need to go back to the country of origin to get a non imm "O". Usually that is far more expensive than the tax on the wife's 40k "income".

AFAIK a work permit is not presently required to extend a Non - imm 'O' visa issued on the basis of marriage...

but who knows what to expect next?...could well be that there may be a future requirement to return to the country of origin to obtain non - imm visas. I wonder about the number of expats (especially those with families and nowhere else to go) now living in Thailand illegally due to the increasingly draconian visa application procedures and how that number may increase with further tightening...

welcome to the 'underground'?