Thailand Income Tax And Teachers

[Martian]

Hi All,

A forum search turned up no specific information. Does anyone have any information regarding the "elusive and purported" Thai income tax exemption for first and/or second year teacher in Thailand? Given the salaries offered in Thailand, it would be advantageous for anyone starting to teach in Thailand to receive this exemption. The EP director at my future school is "looking into it" as if they haven't any experience with this.

Any specific form or submission information would be greatly appreciated.

At worst, is there a website with this information that one can visit and become enlightened?

Regards,

Martian

Edited October 30, 2008 by Martian

[PeaceBlondie]

Martian, in a thread earlier this year on ThaiVisa, I think it was lanny who made the point about this. I looked, but cannot find the thread. In addition to the regular income tax exclusion on earned income earned abroad, there is a tax treaty with Thailand and the USA. I thought that the treaty mainly went one way - allowing US citizens to be exempt if they teach for a govt school in Thailand. I quoted Articles 27.1 a) and 23.1 of the treaty to exempt my earnings, although it was not necessary. I understood lanny or somebody to say the treaty works in reverse, exempting Thai tax as well, but I was not sure. Or, maybe the reverse is that Thai nationals working in the USA are exempt from Thai tax. I will try to post a link to the treaty.

[Martian]

Thanks for the information PB. I am familiar with the USA tax codes regarding this as I worked in Thailand from 1999-2004 and didn't pay any US tax for that period. I also do recall a thread where this was lightly discussed because you said something about your school boss probably having a Peace Blondie withholding party or something to that effect.

I am looking for the Thai law and/or forms and submitting guidelines to get relief from the Thai tax based on "newby' teacher status and not pay both USA and Thai (first 2 years?) income tax. Is it possible to do this....I don't know but some people on this forum seem quite confident that it is. I just want to take advantage of this program IF it is available to me.

As well, does anyone know if it is possible to report your foreign income to the USA Social Security Administration to be included in your records towards your benefits? I know it isn't much but every little bit helps and it could keep one qualified for disability should something unforeseen happen. There is some kind of rule about working 5 years previous to a disability claim.

Thanks!

Martian

[culicine]

There has been talk on ww.tes.co.uk forums about a tax exemption for teachers (from the UK, I guess), for 2 years. However it seems the teachers need to return to the UK after the two years to be able to claim it. I'm not 100% sure about that though. Might be worth making a posting in the 'teaching overseas' forum on that site if you don't get any response here.

[PeaceBlondie]

Martin, self employment by a US citizen makes him liable to pay SECA tax and earn SS credits for retirement and disability. Yes, I think the disability eligibility ends after five years of no current earnings. Do not recall exact numbers, but try www.ssa.gov

But employment in a foreign school, as an employee, is not subject to FICA tax on the wages, so you cannot pay that. If you worked self employed for a language center, that is subject to SECA. Your earnings can be exempt from income tax, exempt from FICA as an employee, or subject to SECA as self-employed.

[Loaded]

If you have time, watch a documentary called "America: Freedom to Fascism". You can find it on googlevideo. It examines whether the IRS actually has a legal right to collect federal taxes. The US constitution stated that your personal labor cannot be taxed and the 16th Amendment was never ratified (you are led to believe it was). It quotes Supreme Court judges and court judgements to support this. There is no law that states you must pay federal tax on your personal labor!

It's easy to dismiss the above as crankish. Please watch then give an opinion. The argument is very strong.

Sorry I can't answer you question directly.

[Loaded]

Double Post due to the antiquity of my hardware.

Edited November 1, 2008 by Loaded

[JSixpack]

If you have time, watch a documentary called "America: Freedom to Fascism". You can find it on googlevideo. It examines whether the IRS actually has a legal right to collect federal taxes. The US constitution stated that your personal labor cannot be taxed and the 16th Amendment was never ratified (you are led to believe it was). It quotes Supreme Court judges and court judgements to support this. There is no law that states you must pay federal tax on your personal labor!

It's easy to dismiss the above as crankish. Please watch then give an opinion. The argument is very strong.

Sorry I can't answer you question directly.

Just another scam. Wesley Snipes went down that road with every possible argument. "On April 24, 2008, Snipes was sentenced to three years in prison for willful failure to file federal income tax returns under 26 U.S.C. § 7203. While defense lawyers urged leniency, prosecutors argued that Snipes should be made an example of because of his fame. Kahn was sentenced to ten years in prison, and Rosile was sentenced to four and half years in prison [Kahn and Rosile, his tax advisors]." --Wikipedia

His penalty would have been much worse, but won acquittal on most charges on the grounds of his being an ignorant fool. He's still going to pay the tax owed and more. If he can't avoid tax with such arguments, you can't either. Don't try it.

Edited November 1, 2008 by JSixpack

[Loaded]

If you have time, watch a documentary called "America: Freedom to Fascism". You can find it on googlevideo. It examines whether the IRS actually has a legal right to collect federal taxes. The US constitution stated that your personal labor cannot be taxed and the 16th Amendment was never ratified (you are led to believe it was). It quotes Supreme Court judges and court judgements to support this. There is no law that states you must pay federal tax on your personal labor!

It's easy to dismiss the above as crankish. Please watch then give an opinion. The argument is very strong.

Sorry I can't answer you question directly.

Just another scam. Wesley Snipes went down that road with every possible argument. "On April 24, 2008, Snipes was sentenced to three years in prison for willful failure to file federal income tax returns under 26 U.S.C. § 7203. While defense lawyers urged leniency, prosecutors argued that Snipes should be made an example of because of his fame. Kahn was sentenced to ten years in prison, and Rosile was sentenced to four and half years in prison [Kahn and Rosile, his tax advisors]." --Wikipedia

His penalty would have been much worse, but won acquittal on most charges on the grounds of his being an ignorant fool. He's still going to pay the tax owed and more. If he can't avoid tax with such arguments, you can't either. Don't try it.

But who are the scammers? US Government or the citizen who doesn't pay tax on his/her labour because the US Constitution states that do so you are a slave. The land of the free is no longer true. A government body that has extra-judicial power to arrest, confiscate and imprison, that is unaccountable to anyone - especially courts - and there's no right to appeal. Scary stuff in a 'free' country. The introduction of the Patriot Act has further eroded freedoms in the land of the free. Americans have been told they are being protected from the evils of Al Queda. The British Foreign Secretary Robin Cook resigned when Bush and Blair lied to their people over the true reason for Iraqi invasion and introduced laws to curtail personal freedoms. Cook told the Britsh Parliament that Al Queda was basically a fantasy concocted by Bush/Chenney etc to dupe and scare the American people in to accepting the removal of rights and freedoms and to find an external scapegoat that will be used to justify the removal of democracy. It's a mirror of the burning of the Reigstag Building in Hitler's 1930s Germany. German people inside the political system didn't know the road they were on. Many in 1945 still thought their government was only protecting them from those nasty commies and jews.

[Martian]

"Angles" such as what Loaded has presented are pretty commonly known but aren't however recognized or accepted in reality...thus the power of the IRS as it stands right now. Laws are only as good as the interpretations made that particular judge at that particular moment...thus resulting in the lack of consistency from time to time. If laws and their implementation were black and white, legal systems would be far less fickle.

It is also widely held that the income tax was implemented only to pay for world war 2 and the government has illegally held on to the privilege. This might be the amendment Loaded is referring to. At any rate, the reality is that despite what might be found buried in the constitution or law books, the IRS seems to yield a lot of power in such matters and anyone should want to avoid a face-off with the IRS if at all possible....unfortunate.

America has a legal system, not a justice system.

Martian

[Martian]

Update:

According to my future EP director, the school's accountant has stated that the 2-year teacher exemption from Thai income tax was rescinded two years ago. Apparently it is no longer available. If anyone knows of any information refuting this position, please speak up and provide any supporting links or documentation you might have.

I just want to make sure this isn't one of those things where someone makes a statement, wrong or right, just to make the situation go away.

Regards,

Martian

[PeaceBlondie]

Update:

According to my future EP director, the school's accountant has stated that the 2-year teacher exemption from Thai income tax was rescinded two years ago. Apparently it is no longer available. If anyone knows of any information refuting this position, please speak up and provide any supporting links or documentation you might have.

I just want to make sure this isn't one of those things where someone makes a statement, wrong or right, just to make the situation go away.

Regards,

Martian

That might be right. There is a rumour that the tax treaty was not renewed.

[steadfast7]

i've been offered a job in a government high school in Chiangrai. However, as I'm offering to teach twice a week for free, in exchange for a work permit, I'm now wondering if I'll be asked to report salary or pay income tax? Is it even legit to get a work permit under these conditions, or will I crawling up the crack of a shady employment system?

anyone come across this type of situation?

thanks.

[Ijustwannateach]

This has all been very interesting, but let's try to get back to taxes and teaching in Thailand, 'kay?

As a point of interest, if your salary ever DOES get officially put on the books in Thailand, you WILL be paying tax on it- and as you edge upwards in salary, that tax can become significant and so can the errors in withholding by your employer. At some schools, it is common for teachers to pay thousands of baht come taxtime every year. To reduce this burden, it is possible to invest in real estate, life insurance, bonds, stocks, and other Thai securities to get significant tax breaks.

It is probably worth checking this out about the time you start to earn 60K or so per month.

[tvaddict]

The UK has a double taxation treaty with Thailand.

You have to present your P45/60 to prove however that you just left UK before arriving in Thailand.

If you went elsewhere first ( eg. spent one year in China) then you will only have one year exemption ( if any- not sure on this)

Anyway, I as many others that I work / worked with have been eligible and not paid.

On this thread is the only place where I've hear of the treaty being closed- news to me and to all the teachers I know - I doubt its true.

You do HAVE to depart the country before the 2 years ( from arrival date in passport) is up. You can then return , even a day later and start with a clean slate, only this time you will be paying tax.

To: ijuswannateach,

By the way, I'd like to hear your ideas on how you can get exemptions from tax by investing in property here if you don't have a Thai passport as legally you can't own property--- if there is a way let me know as I could save some money this way!!!

[Ijustwannateach]

^You can get tax savings from property investments if you do so through a marriage, I believe (I'm not great on the details regarding joint filing possibilities, so for that you'll need to go to the investment wonks in the jobs forum).

[Thormaturge]

Some readers may recall me as Chang on the Ajarn.com website.

Three years ago I responded to a post on Ajarn by Baidjenkee concerning the Double Taxation treaty relief available to most teachers in certain circumstances. Since then I have obtained over $ 2,million in refunds from the Thai Revenue department, and have gained a thorough insight into the rumours surrounding this relief.

I have almost completed an article for Ajarn which I shall be happy to post here explaining the nonsensical ideas going around but to deal with a couple of the above points:

A. There is a new UK-Thailand double taxation treaty awaiting ratification. This has been the case for several years but changes in the Thai government have delayed the process. If the new treaty follows the OECD model then the exemption for teachers who previosuly resided in th UK will come to an end. Until the new treaty is ratified the old 1981 treaty remains in force and the teaching exemption still applies.

B. The exemption applies to a teaching "visit" for up to two years. There is some debate as to what constitutes a visit but I have successfully argued that a teacher who leaves Thailand and returns a day later has ended one visit and commenced a second one. That said, it is very common for a Revenue Officer, confronted with a passport showing just a one day absence, to argue that it is necessary to have left Thailand for a month. If the gap is a month they will argue the absence should have been two months. Six month absence? No problem, you should have been out of the country for a year. They would rather have their teeth pulled without anaesthetic than hand a Farang all of his tax back. If you have a gap of a year or more we come to an entirely different and even more absurd argument but I shall save that for the article.

Finally for now, Article 21 of the agreement with China provides a three year exemption, not one year.

Edited May 4, 2009 by Thormaturge

[Thormaturge]

I have finally completed this article for Ajarn.com now. It is, by its nature, a tad technical in parts, and quite lengthy, but I trust it proves enlightening. I shall wait for Phil to do what he wants with it before putting anything more on here.

[aussiebebe]

Is the OP refering to people who teach in Thailand for less than 2 years and can get their withheld salary-tax refunded? I think teachers can go to their local Revenue Department office and submit a form, but it takes a few months and you can't claim if your stay in Thailand for more than two years. I think that this means you can work tax-free in Thailand, how does this relate to paying income tax in your home country?

[Phatcharanan]

The UK has a double taxation treaty with Thailand.

You have to present your P45/60 to prove however that you just left UK before arriving in Thailand.

If you went elsewhere first ( eg. spent one year in China) then you will only have one year exemption ( if any- not sure on this)

Anyway, I as many others that I work / worked with have been eligible and not paid.

On this thread is the only place where I've hear of the treaty being closed- news to me and to all the teachers I know - I doubt its true.

You do HAVE to depart the country before the 2 years ( from arrival date in passport) is up. You can then return , even a day later and start with a clean slate, only this time you will be paying tax.

Agree with the above. We are taking on a new influx of ex-pats and our school are still advising on the tax-free situation for them.

[Thormaturge]

My article on Double Taxation Agreements is now on the www.ajarn.com home page. As I stated, the exemption for teachers who were previously in China (or Dubai) is three years. Very few tax offices understand this and most simply use the country of nationality to determine a claim, if they apply treaty relief at all.

Care needs to be taken over the 1981 UK agreement since a new treaty is waiting to be ratified. If it follows the OECD model then the exemption for teachers will cease. We can be sure it will remain for 2009 but 2010 is uncertain at this point.

In general I have no difficulty with tvaddict's post but don't tell the poor souls at Regent's, Shrewsbury and Harrow because they are being told a totally different story by their HR.

[nattyfish]

I am a new Teacher in Thailand and my school year starts this week. My employer is asking for something from the US Embassy saying i'm eligible so that I can be exempt from my first 2 years of taxes. As far as I can tell I am eligible for this exemption in my first 2 years due to the Tax treaty. However, it is unclear to me how to go about making this a reality!

I've read the long article on Arjarn and it is helpful, yet doesn't seem to tell you what to do about having the taxes NOT withheld from the get go - seems easier to do it this way and not fight with the thai tax people for a refund later - sounds like that would be a battle i don't want to fight.

Is anyone out there a Teacher from the US not paying taxes thier first 2 years? How is it working out and what have you done about your US taxes?

Does anyone know what "form" or letter I would get from the US embassy to present to my thai school for exemption?

Thank you!!

[Martian]

I am a new Teacher in Thailand and my school year starts this week. My employer is asking for something from the US Embassy saying i'm eligible so that I can be exempt from my first 2 years of taxes. As far as I can tell I am eligible for this exemption in my first 2 years due to the Tax treaty. However, it is unclear to me how to go about making this a reality!

I've read the long article on Arjarn and it is helpful, yet doesn't seem to tell you what to do about having the taxes NOT withheld from the get go - seems easier to do it this way and not fight with the thai tax people for a refund later - sounds like that would be a battle i don't want to fight.

Is anyone out there a Teacher from the US not paying taxes thier first 2 years? How is it working out and what have you done about your US taxes?

Does anyone know what "form" or letter I would get from the US embassy to present to my thai school for exemption?

Thank you!!

I've not found any new information about this since last year. This past year I basically had all of my withheld income taxes returned (sans pension amount) because of the amount of income I made and my exemptions such as being married. I'm not sure, but I have heard that once you finish employment in Thailand, you can apply to the Thai Social Security division to have any of the money withheld for the Thai PENSION plan returned to you.

Martian