Heads up - did anyone see this in the bangkok post

[Kan Win]

http://www.bangkokpost.com/Business/14Oct2003_biz59.html

Tax Corner

Longer stay, greater tax

Unclear criteria on personal income tax may derail plan to promote long-stay tourism

LAW ALLIANCE LIMITED

The Thai government has been trying to promote the tourism industry in Thailand by way of various campaigns, such as the familiar Amazing Thailand and the new Unseen Thailand. Part of the campaigns is to promote Thailand as a place where foreigners can stay for a long period of time, i.e. more than one month, especially after their retirement, known as ``long stays''. The only condition is that the foreigners who come to stay in Thailand under the ``long-stay'' programme are prohibited from working in Thailand. Certainly, the government puts a lot of time and effort into this campaign by relaxing immigration regulations, among other things. The government figures that foreigners will bring in and spend a large amount of foreign currency and that this will be a shortcut to help boost the property market, such as residential condominium and leasehold property that remain unsold. More or less, it is believed to provide some excitement to the public, as well as the government's profile.

For tourists wishing to buy the package and stay peacefully in Thailand, they should ensure that their savings or pension received from the home country that will be brought to Thailand will not be subject to Thai tax. From time to time, we have experienced cases where cash brought to the country was required to be included in the tax base merely because the owner became a Thai tax resident despite the income being sourced outside Thailand. Similar questions have been raised for discussion with the Revenue Department and the Thai tourism authority.

Finally, the tax authority gave a clear answer: the brought-in savings (earned in the preceding years) will not be subject to personal income tax even if the tourists become Thai tax residents. However, pension received from the home country and brought to Thailand in the same calendar year will be subject to personal income tax in Thailand if the tourists reside in the country for a period or periods of 183 days or more in that calendar year. In the latter case, they must file a tax return and pay tax (if any) before departure.

The Revenue Department's response comes as no surprise, being consistent with previous answers in the past decade. But what most people would like to hear from the tax authorities most is what is the criteria to prove that the savings and pension brought to Thailand in any given year are earned in the preceding years so that they will not be subject to tax. This inquiry has not been answered.

For example, pensions are deposited every year in a tourist's offshore savings account as evidenced by the passbook. When the funds are withdrawn and brought into Thailand, the passbook will only show the sum withdrawn and transferred as well as the net balance, but no one can tell that the withdrawn amount came from the pension received by him in 2002 (which will be tax free in Thailand) or in the current year (which will be taxable in Thailand if he resides in the country for 180 days or more). In most cases, the sum can never be identified or matched.

One can predict that there could be three possibilities that the tax authority might undertake on this matter: (i) the bought-in money is deemed to be the pension earned in the current year _ more like LIFO (last in, first out method), which is taxable in Thailand if the tourist stays for 180 days or more in the relevant calendar year; (ii) the brought-in money is tax-free as it is deemed to be taken out from those of the preceding years _ similar to FIFO (first in, first out method); or (iii) as a matter of government policy to promote the programme, just let go of this issue.

Unfortunately, the Revenue Department's position has remained unanswered and so is the destiny of the tourist who wants to join the long-stay programme.

Should the tourist submit a tax return and pay tax on his/her retirement fund in this case? Of course, it is no fun seeing your pension or savings earned outside Thailand taxed in Thailand simply because it is brought into the country. So, if the government still wants this project to be viable, let's forget this issue!

- Prepared by Piphob Veraphong, Thanasak Chanyapoon and Prangtip Anantavipat. They can be reached at [email protected] or 02-651-5490.

[Whiplash]

Bah..  I think it's a another try to justify milking the farang out of more money.. call it 'government forced spending' instead of tax..  they don't want the farang to live here cheap, to get along just eating rice and namplick...

But if the longstay farang only has his/hers required funds in the Thai bank and never deposit his monthly pension or retirement check into a Thai bank, just let it sit in the bank of his/hers home country ??  and use the VISA card at the ATM when in need of money..

How can the government know on which amount to take the tax from ??   They cannot tax money that I never take into the country!

It's just another of thoose 'not very thought-out proposals' that we read or hear of on a pretty regular basis..  :cool: