Legal Position? Based Los, Working Remotely Uk

[mac.wheeler]

as I said, there are some differences that specifically apply to e-commerce

But surely anyone who finds themselves in this remote working grey area, just needs to incorporate a company in their home nation (costs peanuts), become an employee of their own company, and then organise a type B for themselves. They are then "doing business" for their employer whilst they are in Thailand?

[kudroz]

If you are a Director who is on PAYE in the UK and you are also resident in Thailand for tax purposes, you will be liable to pay tax in Thailand on your salary from the UK on the basis of your being a resident in Thailand and working in Thailand, but this will be nullified by the double taxation agreement. (You already pay tax in the UK, so don't need to pay in Thailand.)

You got it wrong. The Double Taxation Agreement "DTA" says that you must pay taxes in the country where the income arises. If the UK company's director is paid for activities carried out in Thailand, such income is taxable in Thailand. Furthermore, if the "mind and management" of the UK company is partly in Thailand, it creates a Permanent Establishment "PE" in Thailand for the UK company. The profits attribuable to the activities carried out in Thailand are taxable in Thailand.

Nutshell: UK Director's salary is taxable in Thailand if his activities are carried out in Thailand (DTA Article 17). Managing a UK company from Thailand creates a Thai tax liability for the profits attributable to the activities carried out in Thailand (DTA Article 5 par 2(a), Article 8 par 1).

Example: John is the director of DESIGN LTD. a UK Limited Company. John has been living in Thailand for 3 months and he is the only bloke in his company. John finds customers and performs web design work using his laptop and internet connection in Pattaya. John's customers pays DESIGN LTD. in a UK bank account, and John never transfers that money to Thailand. -- DESIGN LTD income is taxable in Thailand as per the DTA and the Thai Revenue Code. John is legally responsible to remit taxes on behalf of DESIGN LTD as per the Thai Revenue Code.

The DTA doesn't say that if you pay taxes in one country you don't have to pay it in another per se. An individual or a company can have a tax residence in more than one country at the same time. The DTA clarifies in which country such income shall be taxed. The other country will relieve (tax credit) from the tax paid in the first country (DTA Article 6).

You got a nonimmigrant B visa because this allows you to carry out the work that you do for your UK employer in Thailand.

A visa is an "entry permit", nothing else. The Non-Imm B visa qualifies you for a stay of 90-days and to apply for a work permit. It doesn't allow you to engage in restricted trade or work.

If you are not working, and you are resident in Thailand, you are liable to pay tax on your share dividends only if you bring that income into Thailand and not otherwise (is this correct, anyone?)

If you are a shareholder and do not manage nor give directions to the company, dividend distributions not remitted to Thailand are not taxable.

Edited July 19, 2008 by kudroz

[kudroz]

I might just add that there is a paradox in the statements conveyed by telecommuters portraying their situation as "barely-legal". Some people are saying that many laws are not enforced in Thailand such as prostitution.

The difference is that you will see police officers in the streets in Pattaya where prostitution is accepted and tolerated. But you won't see Revenue/Labour Department officials (not clerks) accepting this telecommuting no-tax no-permit idea. These same taxation laws are being enforced thoroughly in Thailand with larger corporations subject to regular audits -- exposing their non-compliance with the aforementioned laws -- whereas the farang telecommuter "flies-under-the-radar".

Those laws exists and are being enforced. If you are found, you are likely to face deportation, heavy taxation charges, prison time and fees, whilst if you are found taking a bar girl home, you are likely to get a grin from law enforcement officials.

[Jimjim]

Those laws exists and are being enforced. If you are found, you are likely to face deportation, heavy taxation charges, prison time and fees,

If this is true, can you give us an example beyond the law in writing?

[Paul MBMG]

as I said, there are some differences that specifically apply to e-commerce

But surely anyone who finds themselves in this remote working grey area, just needs to incorporate a company in their home nation (costs peanuts), become an employee of their own company, and then organise a type B for themselves. They are then "doing business" for their employer whilst they are in Thailand?

you could probably do it and 'get away' with it

but it's not really in the spirit and it depends how long you'd want to continue operating etc

You could 'get away' with a lot of things

but that doesn't make them right or mean that there won't be problems one day!

[12DrinkMore]

Phuket Gazette:

http://www.phuketgazette.com/issuesanswers...ils.asp?id=1038

"The retirement visa prohibiting employment means that you cannot do any kind of work "for anyone else" even if you don't receive pay or any other reward for it.

For example, you cannot be a writer who sends your stories to publish in journals or newspapers, even if you don't get paid, or work as a volunteer translating documents free of charge.

However, this doesn't mean that you cannot do work for your daily life at your home. You are still able to clean the dishes, cut grass, cook or whatever in your home, just as anyone does in their normal daily lives."

Tuesday, June 24, 2008 Janya Yingyong, an officer at the Phuket Provincial Employment Office Work Permit Section.

SO YOU ARE ALL ILLEGAL WORKERS SENDING IN COMMENTS TO THAIVISA.

[lopburi3]

Actually you do seem to be able to work on a retirement extension of stay these days (again).

[laxman1960]

Kate,

One man/woman band's can not get legal here. I will not go into all the criteria required but to get a WP you must have a company set up in Thailand c/w paid up capital and for each expat employed four Thais have to be employed. The expat has to be paid a certain wage (this varies from country to country the expat comes from, UK is near the top of the pile) Just keep your head down so to speak. Good luck

This is not correct. You do not require 4 Thai staff in order to get a WP, you do need them if you want to apply for Extension of Stay based on business. The wage requirement for US/UK is 50,000B per month. See Lopburi 3's responses here and in other threads.

[tomo22]

Phuket Gazette:

http://www.phuketgazette.com/issuesanswers...ils.asp?id=1038

"The retirement visa prohibiting employment means that you cannot do any kind of work "for anyone else" even if you don't receive pay or any other reward for it.

For example, you cannot be a writer who sends your stories to publish in journals or newspapers, even if you don't get paid, or work as a volunteer translating documents free of charge.

However, this doesn't mean that you cannot do work for your daily life at your home. You are still able to clean the dishes, cut grass, cook or whatever in your home, just as anyone does in their normal daily lives."

Tuesday, June 24, 2008 Janya Yingyong, an officer at the Phuket Provincial Employment Office Work Permit Section.

SO YOU ARE ALL ILLEGAL WORKERS SENDING IN COMMENTS TO THAIVISA.

Lovely comment.

[Trevor]

So long as you keep below the authorities' radar, all this talk about legality or illegality is a nonsense -- especially in such an endemically-corrupt country as Thailand. They should be grateful we come and spend our money here instead of hounding us over trivialities.

[bkk_mike]

If you are a Director who is on PAYE in the UK and you are also resident in Thailand for tax purposes, you will be liable to pay tax in Thailand on your salary from the UK on the basis of your being a resident in Thailand and working in Thailand, but this will be nullified by the double taxation agreement. (You already pay tax in the UK, so don't need to pay in Thailand.)

You got it wrong. The Double Taxation Agreement "DTA" says that you must pay taxes in the country where the income arises. If the UK company's director is paid for activities carried out in Thailand, such income is taxable in Thailand. Furthermore, if the "mind and management" of the UK company is partly in Thailand, it creates a Permanent Establishment "PE" in Thailand for the UK company. The profits attribuable to the activities carried out in Thailand are taxable in Thailand.

The country where the income arises...

If you are connected to the office network, and, at least in my case, using telnet to talk to a remote Unix server, does the income arise when I type on the keyboard, or on the machine the command is executed on? (especially as it's the latter I'm being paid for...)

If you are not working, and you are resident in Thailand, you are liable to pay tax on your share dividends only if you bring that income into Thailand and not otherwise (is this correct, anyone?)

If you are a shareholder and do not manage nor give directions to the company, dividend distributions not remitted to Thailand are not taxable.

What's the rule if you pay yourself in dividends from a company abroad that you do control? (i.e. what I used to do in the UK before IR35 was pay myself the minimum wage as salary, and the rest as dividends. - This is because you have to pay employee AND employer NI contributions if you pay it all as salary... and before someone says that would be a fair level of taxation - you're NOT entitled to unemployment benefit if you lose your contract...)