Income Tax

[cshort64]

Good Morning All;

As it is tax season again here in Thailand it is time to be shocked at what I have paid or will need to pay to the local tax establishment. I have a couple of questions and am hoping for some advise.

Background: American living here working for multi-national married to Thai national with 4 children.

1. We have just had our 4th son, I heard some talk of a 20,000 baht tax credit for new baby born this year, is this correct?

2. Are any hospital or medical bills tax deductable as my insurance did not cover the birth and hospitalization?

3. I have heard from my employer only 3 of my children are deductable, is that accurate, we get 17,000 per year for each child now, do we get more or can we deduct anything for the 4th?

4. I have a RMF and Provide Fund payments, parental deductions, medical insurance or wife's parents, these all reduce tax, but is there more I can be doing?

Any suggestions on reducing the tax burden would be helpful. I could purchase a condo or home and deduct the interest but that is only 100,000 baht per year I believe (correct me if I'm wrong)

I look forward to any suggestions.

Cheeers

C

[samran]

if you've been paying into social security for the 7 months before your son was born, then you'll be able to get 15,000 baht in cash as sort of a 'baby bonus'. Apply though the local SS office.

You'll also get 100 baht per month/per child (or something small like that) through the SS as well. All straight into your bank account. Apply through SS as well.

Apart from all of the stuff that you've described above, not much can be done.

The most you can do after this is asked to be paid offshore. Only monies remitted to Thailand are taxed. And then, only in the year that they are earned.

[cshort64]

Thank You, your information is quite helpful, I will have my HR department check with SS department for Thailand and see how I can do as you suggest.

Regarding your point about being paid overseas. Just to be clear, if I was to be paid into a bank in Singapore for example, or Hong Kong, where the tax rates are lower than here, I would be able to eliminate by tax burden here in Thailand or would I have to pay taxes on money I wired in from my bank overseas?

Cheers

C

[Naam]

if I was to be paid into a bank in Singapore for example, or Hong Kong, where the tax rates are lower than here, I would be able to eliminate by tax burden here in Thailand or would I have to pay taxes on money I wired in from my bank overseas?

-if a part of your salary is paid into a Singapore or Hong Kong account and you are a resident of Thailand neither Singapore nor Hong Kong will levy any taxes.

-if you transfer in 2011 money from abroad which you have earned (or claim you have earned) in 2010 no taxes due in Thailand.

[cshort64]

<br />

if I was to be paid into a bank in Singapore for example, or Hong Kong, where the tax rates are lower than here, I would be able to eliminate by tax burden here in Thailand or would I have to pay taxes on money I wired in from my bank overseas?

<br /><br />-if a part of your salary is paid into a Singapore or Hong Kong account and you are a resident of Thailand neither Singapore nor Hong Kong will levy any taxes.<br /><br />-if you transfer in 2011 money from abroad which you have earned (or claim you have earned) in 2010 no taxes due in Thailand.<br />

<br /><br /><br />

Hmm, sounds to me like an opportunity for tax free living....or am I missing something........

[lanny]

<br />

if I was to be paid into a bank in Singapore for example, or Hong Kong, where the tax rates are lower than here, I would be able to eliminate by tax burden here in Thailand or would I have to pay taxes on money I wired in from my bank overseas?

<br /><br />-if a part of your salary is paid into a Singapore or Hong Kong account and you are a resident of Thailand neither Singapore nor Hong Kong will levy any taxes.<br /><br />-if you transfer in 2011 money from abroad which you have earned (or claim you have earned) in 2010 no taxes due in Thailand.<br />

<br /><br /><br />

Hmm, sounds to me like an opportunity for tax free living....or am I missing something........

Not quite. You will still need a work permit here and that requires a minimum salary paid locally. In addition, the Revenue Department will want a "reasonable" salary to be reported.

Remember: "Pigs get fat, Hogs get slaughtered."

If you reduce your Thai taxes, you also reduce the credit available against your US taxes. So, if you make enough, you would just be trading one tax for another.

Edited February 2, 2011 by lanny

[Naam]

<br />

if I was to be paid into a bank in Singapore for example, or Hong Kong, where the tax rates are lower than here, I would be able to eliminate by tax burden here in Thailand or would I have to pay taxes on money I wired in from my bank overseas?

-if a part of your salary is paid into a Singapore or Hong Kong account and you are a resident of Thailand neither Singapore nor Hong Kong will levy any taxes.

-if you transfer in 2011 money from abroad which you have earned (or claim you have earned) in 2010 no taxes due in Thailand.

Hmm, sounds to me like an opportunity for tax free living....or am I missing something........

we have a winner! but completely tax free might not apply to the OP who works in Thailand. for those living in Thailand based on retirement visas (like me) it applies beauty-&lt;deleted&gt;-fully.

[cshort64]

Thank you for the feedback this has been helpful discussion. I understand where you are coming from and I don't wish to put myself in any 'iffy' position with the Thai governmnet, I guess I will stick to the tax adjustments they give us to work with, it is unfortunate to loose 50K baht per month.....oh well.....

Thanks again I appreciate the information.

Cheers

C

[samran]

Nothing iffy about it. Plenty of people earn enough locally to qualify for a work permit and their thai based living costs covered and the rest is paid offshore.

Don't feel bad about using the system to your advantage, thems the laws.

The UK has similar laws that they don't tax offshore incomes of 'non-domiciled' residents of the UK, hence why London is a favourite destination of russian oligarchs.

[Soutpeel]

<br />

if I was to be paid into a bank in Singapore for example, or Hong Kong, where the tax rates are lower than here, I would be able to eliminate by tax burden here in Thailand or would I have to pay taxes on money I wired in from my bank overseas?

<br /><br />-if a part of your salary is paid into a Singapore or Hong Kong account and you are a resident of Thailand neither Singapore nor Hong Kong will levy any taxes.<br /><br />-if you transfer in 2011 money from abroad which you have earned (or claim you have earned) in 2010 no taxes due in Thailand.<br />

<br /><br /><br />

Hmm, sounds to me like an opportunity for tax free living....or am I missing something........

Its called a double contract, and you need to get buy in from your company..some companies will do it, others will not....its not tax free but reduced taxation

Your company puts you on a "salary" in Thailand, which is the amount declared on your WP (they need to be smart about this and dont put something too low)

Company pays your income tax every month on the "declared" salary in Thailand

The balance of your salary is paid into an overseas account, somewhere like Singapore or Hong Kong, where if non resident, no tax payable

It is also preferable that the "company" transfering the salary to the overseas account is not Thai based, therefore eliminating any paperwork from a Thai based company to the overseas account.

But based on the above info you have a few challanges going this route:

1. If you have been working here for a few years and paying "normal" tax in thailand, and then the amount reduces significantly, you may draw attention to yourself by the Thai tax authorities

2. As mentioned some companies will entertain this, others will not

3. As a US citizen you basically have a near zero chance of getting an offshore account open in Singapore or Hong kong, these days they will not touch US citizens, courtesy of your IRS.

Although I believe the double contract is not illegal per se in Thailand, I understand it borders on being illegal

[samran]

I'm guessing the double contracting could be viewed as suspicious from a work permit perspective, especially if you are performing that work in Thailand for a foreign entity, which would require you to have a work permit for that second contract.

If however some of your job description was performed outside of Thailand - for example you travel alot - and you were compensated outside of the country, then I can't seen how it would be problematic.

I never had a problem with it as I hold Thai citizenship as well - so no work permit issues. And the revenue department clearly states that revenues kept outside of Thailand aren't taxable (unless repatriated in the year they are earned).

If I were you I would have more of a think about what your goals are in Thailand. If you are looking to evenutally apply for PR and citizenship, then a healthy salary in Thailand (this counts as +80,000 baht/month by some reports) then you'll need to maintain a fair chunk of your income onshore to impress the residency + citizenship people.

Edited February 3, 2011 by samran

[Soutpeel]

I'm guessing the double contracting could be viewed as suspicious from a work permit perspective, especially if you are performing that work in Thailand for a foreign entity, which would require you to have a work permit for that second contract.

If however some of your job description was performed outside of Thailand - for example you travel alot - and you were compensated outside of the country, then I can't seen how it would be problematic.

I never had a problem with it as I hold Thai citizenship as well - so no work permit issues. And the revenue department clearly states that revenues kept outside of Thailand aren't taxable (unless repatriated in the year they are earned).

If I were you I would have more of a think about what your goals are in Thailand. If you are looking to evenutally apply for PR and citizenship, then a healthy salary in Thailand (this counts as +80,000 baht/month by some reports) then you'll need to maintain a fair chunk of your income onshore to impress the residency + citizenship people.

For all intents and purposes the "second" contract doesnt exist in Thailand, only contract applicable is the primary one one which the WP is issued, therefore no issues with a second WP

The "double contract" works best if the company in Thailand utilises a "branch" office out side of Thailand to administer the "second" contract, therefore the salary concerned has never been Thailand to start with and there is no paper trail of salary transfers from Thailand, which fits in with revenue dept stating monies kept outside of Thailand are not taxable

People on a double contacts in Thailand are down on the books for typically THB 80k to 100k month and income tax is paid on these amounts, so should somebody want to persue PR at some point would be ok.