Smell of trouble: Bangkok busts 7 Vietnamese for selling cannabis

[Khun Jean]

I was reading the tax rules again from Thailand and my home country The Netherlands.

Both countries state that someone will be a 'resident' for tax purposes when residing in the country more than 180 days.

At the moment i pay tax in Thailand, because i am employed by my own company, seems the proper thing to do.

What i was wondering about is how are these days in a country counted?

I presume from the day you enter until you leave one or more times during a year.

In my case this year and probably next year i will be around 170 days in Thailand followed by 175 days in The Netherlands, 21 days in New Zealand and then back in Thailand again for 170 days and the cycle probably repeats.

I am under the 180 days the next few years. I have unregistered myself from the Netherlands when i went to Thailand on a 'O'- marriage visa. I am not registered here in Thailand except the 90 days reporting.

In theory i would not be a resident anywhere. So why am i paying tax.

Edited December 21, 2010 by Khun Jean

[mellew]

why are you paying tax, 180days in 1 year, are you paying much tax maybe u can claim it back

[thailandbluegrass]

International laws state that a person is only legaly bound to pay tax in 1 country. If you pay taxes in the Netherlands then you can claim the money you make here in Thailand or anywhere else for your tax in Netherlands. Same if you decide to pay tax here in Thailand then all money you make back home you can also claim here.

When I used to do shut-downs in the oil trade back in Canada I got a letter of residency from Thailand and my tax card and when I worked back home we made A LOT of money in a short period of time so our taxes were between 50 - 60% or more. When I showed the company I worked for my documents they had no clue what to think but I told them a wanted to go "tax exempt" . They made me go to the Canada Revenue Services and get a letter stating that I could so I did. The company was pissed because now the accountants had more paper work to do but when I claimed tax here in Thailand on that money I would only pay about 11 - 28%.

You have to be careful though that you do not drop your citizenship in YOUR country though. For instance if I wanted to claim Thai Citizenship (why would I) and drop my Canadian Citizenship I would lose 25% of both my Canada pensions AND 25% of my Union pension which will be quite good when I retire.

If I were you and you want to stay legal here in the LOS and are working legite with a work permit and all then you should just pay the taxes here or one day you could find yourself on a plane back home when you least expect it.

Tax example here in LOS; If I was to work here and make 240,000 THB per month my tax here would be around 40,000 baht per month. Thats about 16%

[Khun Jean]

Yes i pay taxes in Thailand. And it is almost 40k a month. In The Netherlands it is at least double of that. I do however voluntarily keep up my payments for state retirement. All in all it saves about 70k a month. Not a small amount.

I was just intrigued by the idea that if you never stayed anywhere longer then 180 days, what would be the criteria to establish you residency for tax purposes, or are you nowhere a resident. I think there will not be a 'world' organisation that keeps track of you, so how would the individual countries ever know? If a passport shows you never longer than 180 days in a country, which country will "demand" tax payments.

Edited December 21, 2010 by Khun Jean

[Naam]

Yes i pay taxes in Thailand. And it is almost 40k a month. In The Netherlands it is at least double of that. I do however voluntarily keep up my payments for state retirement. All in all it saves about 70k a month. Not a small amount.

I was just intrigued by the idea that if you never stayed anywhere longer then 180 days, what would be the criteria to establish you residency for tax purposes, or are you nowhere a resident. I think there will not be a 'world' organisation that keeps track of you, so how would the individual countries ever know? If a passport shows you never longer than 180 days in a country, which country will "demand" tax payments.

it all depends on the legislation of individual countries of which you are either a citizen or where you live a certain time. some of them (like my home country Germany) do not grant any tax concessions even if you don't live there. being a German citizen you are liable to pay income tax if a condo or house (or any "liveable" place) is at your disposal "any time and unrestricted for living purposes". in 1989 i got licked and had to pay a substantial amount of backtaxes because i owned a home in Germany but was working and living abroad.

as far as the Netherlands are concerned you don't have to pay any taxes. i have a Dutch friend who lives in Pattaya 6 months a year and makes sure that he can prove to the Dutch authorities he was out of the country 185 days per calendar year.

however, for any amount earned in Thailand based on your work permit income tax liability exists, no matter how many days you spend in Thailand.

[thailandbluegrass]

Yes i pay taxes in Thailand. And it is almost 40k a month. In The Netherlands it is at least double of that. I do however voluntarily keep up my payments for state retirement. All in all it saves about 70k a month. Not a small amount.

I was just intrigued by the idea that if you never stayed anywhere longer then 180 days, what would be the criteria to establish you residency for tax purposes, or are you nowhere a resident. I think there will not be a 'world' organisation that keeps track of you, so how would the individual countries ever know? If a passport shows you never longer than 180 days in a country, which country will "demand" tax payments.

it all depends on the legislation of individual countries of which you are either a citizen or where you live a certain time. some of them (like my home country Germany) do not grant any tax concessions even if you don't live there. being a German citizen you are liable to pay income tax if a condo or house (or any "liveable" place) is at your disposal "any time and unrestricted for living purposes". in 1989 i got licked and had to pay a substantial amount of backtaxes because i owned a home in Germany but was working and living abroad.

as far as the Netherlands are concerned you don't have to pay any taxes. i have a Dutch friend who lives in Pattaya 6 months a year and makes sure that he can prove to the Dutch authorities he was out of the country 185 days per calendar year.

however, for any amount earned in Thailand based on your work permit income tax liability exists, no matter how many days you spend in Thailand.

Very true. And also no country "DEMANDS' tax. It is up to you to do your orn tax statements etc. Normally if you are not making money in a country you would not have to pay tax so it doesnt matter how many days you stay where, all that matters is "did you make money in that country for that particular tax year"?

I think you are confused with a clause that most countries (well especially in the Middle East) can allow you to work there for up to 180 days "TAX EXEMPT" and then after that you are required to pay your taxes.

[Khun Jean]

No, it is not a 'tax excempt'.

This is the text i based my question on (Thai tax law as of 2004). A similar text can be found for the Netherlands and i guess other countries.

Under the Revenue Code, an individual, Thai or foreign, who derives assessable

income from sources in Thailand is liable to pay personal income tax whether or not

such income is paid within or outside Thailand.

A person (Thai or foreign) who resides in Thailand at one or more times for an

aggregate period of 180 days or more in any tax (calendar) year will be regarded as a

resident of Thailand for tax purposes. A resident of Thailand is liable for personal

income tax on income from sources inside Thailand and on assessable income derived

from sources outside Thailand. However, the imposition of tax on income derived

outside Thailand will apply only to income derived and brought into Thailand in the

same year in which such income is earned. A non-resident is subject to pay tax only

on income from sources within Thailand (irrespective of the place of payment).

[thaihome]

No, it is not a 'tax excempt'.

This is the text i based my question on (Thai tax law as of 2004). A similar text can be found for the Netherlands and i guess other countries.

Under the Revenue Code, an individual, Thai or foreign, who derives assessable

income from sources in Thailand is liable to pay personal income tax whether or not

such income is paid within or outside Thailand.

A person (Thai or foreign) who resides in Thailand at one or more times for an

aggregate period of 180 days or more in any tax (calendar) year will be regarded as a

resident of Thailand for tax purposes. A resident of Thailand is liable for personal

income tax on income from sources inside Thailand and on assessable income derived

from sources outside Thailand. However, the imposition of tax on income derived

outside Thailand will apply only to income derived and brought into Thailand in the

same year in which such income is earned. A non-resident is subject to pay tax only

on income from sources within Thailand (irrespective of the place of payment).

They are two separate paragraphs dealing with two issues. The first paragraph states clearly, you make money in Thailand; you pay Thai tax on it. Does not say anything about residency.

The second paragraph deals with the residency issue which is important in the application of the various tax treaties that keep you from being taxed twice on the same income. The last sentence of the second paragraph again enforces, the first paragraph, you make money in Thailand, you pay Thai tax.

I agree there is no world registrar that keeps track of people’s claim of residency for tax purposes and I know several people that use that loophole to not pay any tax in any country. The first step in doing this is getting a contract that pays at least part of the salary offshore from whatever country you are living in and working in and then not declaring that offshore income in your home country either.

TH

[Naam]

Normally if you are not making money in a country you would not have to pay tax so it doesnt matter how many days you stay where, all that matters is "did you make money in that country for that particular tax year"?

i [not so] humbly beg to differ because this statement is not correct. fact is that in many countries you become liable to pay income tax on your worldwide income if you meet certain criteria, especially the length of stay even if you are a tourist/visitor. the best example is "The Greatest Nation on Earth™", also known as "The United States of America" where not only the 183 day rule applies but also the so-called "substantial presence" in the country. the latter is establishe by a formula/criteria. details here:

http://www.irs.gov/businesses/small/international/article/0,,id=96352,00.html

excerpt:

You will be considered a U.S. resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States on at least:

31 days during the current year, and

183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:

All the days you were present in the current year, and 1/3 of the days you were present in the first year before the current year, and 1/6 of the days you were present in the second year before the current year.

[Khun Jean]

No, it is not a 'tax excempt'.

This is the text i based my question on (Thai tax law as of 2004). A similar text can be found for the Netherlands and i guess other countries.

Under the Revenue Code, an individual, Thai or foreign, who derives assessable

income from sources in Thailand is liable to pay personal income tax whether or not

such income is paid within or outside Thailand.

A person (Thai or foreign) who resides in Thailand at one or more times for an

aggregate period of 180 days or more in any tax (calendar) year will be regarded as a

resident of Thailand for tax purposes. A resident of Thailand is liable for personal

income tax on income from sources inside Thailand and on assessable income derived

from sources outside Thailand. However, the imposition of tax on income derived

outside Thailand will apply only to income derived and brought into Thailand in the

same year in which such income is earned. A non-resident is subject to pay tax only

on income from sources within Thailand (irrespective of the place of payment).

They are two separate paragraphs dealing with two issues. The first paragraph states clearly, you make money in Thailand; you pay Thai tax on it. Does not say anything about residency.

The second paragraph deals with the residency issue which is important in the application of the various tax treaties that keep you from being taxed twice on the same income. The last sentence of the second paragraph again enforces, the first paragraph, you make money in Thailand, you pay Thai tax.

Correct. I am covered by the first paragraph.

At this moment my situation is as follows. My Hong Kong company owns shares in a Dutch company and is the owner of a few software products/licenses and also exports hardware products to Europe . These products are in use by Dutch companies. In Thailand i have a company that is a dealer of those software licenses. Dutch companies get an invoice from the Thai company, Hong Kong sends an invoice for the licenses sold. Thai company pays salaries (including mine) and because the Thai company is a dealer it gets about 30% commission on the sales. That 30% is enough to cover all costs, but there is only a little profit, because why pay 30% over the profit here when the Hong Kong company does not have to pay tax at all, because all income is from outside Hong Kong.

I setup this structure to make trace with China easier and also to have a solid base in Thailand but now my situation is different as i will travel more and the need for the Thai company is smaller. I still keep it but i can choose to pay lower salaries and keep more money in the Hong Kong company.

When i do that, and take out money from the Hong Kong "profits" to supplement the salary to cover living expenses this 180 days rule comes into play. I would actually like the Hong Kong company to just pay dividends because i amnot the only shareholder, but in my case where are they going to be taxed?

As said before i am never 180 days or more in a country.

Can i just report my Thai salary and pay taxes as i do now but a lot lower because i will pay myself the minimum salary for a foreigner being around 40.000 baht a month, and keep quiet about the profit or dividends from the Hong Kong company?

My feeling is that it can be done legally. Actually the same as you mentioned here:

I agree there is no world registrar that keeps track of people’s claim of residency for tax purposes and I know several people that use that loophole to not pay any tax in any country. The first step in doing this is getting a contract that pays at least part of the salary offshore from whatever country you are living in and working in and then not declaring that offshore income in your home country either.

TH

Naam and Thaihome,

Thanks for your comments!

[Naam]

Can i just report my Thai salary and pay taxes as i do now but a lot lower because i will pay myself the minimum salary for a foreigner being around 40.000 baht a month, and keep quiet about the profit or dividends from the Hong Kong company?

My feeling is that it can be done legally.

of course you can and it is perfectly legal.

[Bizz]

Give it to me and I will give you, APOSTOLIC ABSOLUTION.

[Khun Jean]

Bizz off!

[Bizz]

Bizz off!

ups buzz off.