Pay Tax To Thai Government Or To English Government?

[4.real]

I receive pensions from UK.

I pay income tax to the U.K as these pensions are 'paid from England'.

My friend who is an english accountant informs me that I can choose to pay my income tax to Thai;land .

Does anyone do this and would I be better off paying to Thailand?

My status in U.K is 'non resident'.

Thanks ,in advance, for any response.

4.Real

[Soutpeel]

You will be taxed at source...ie the UK, even if non-resident and the payments orginate in the UK...so your accountant friend is wrong, you wouldnt not have the option of paying tax in Thailand in this case.

[AyG]

Whatever you do, your pensions will be taxed in the UK, though you still get the standard tax bands, including the zero band.

Ii think the confusion may be that you can now arrange for the UK state pension to be paid directly into a Thai bank account. (The situation with private pension providers will vary according to the provider - some will, some won't.) This doesn't affect the taxation.

[4.real]

Thanks ,both for your response.

I will pass on your comments to my friend in England.

4.Real

[4.real]

Having heard again from my friend I learn that there IS a dual taxation agreement [including pensions] between UK and Thailand.

Go to www.hmrc.gov.uk and then type DTdigest into the search box.

Has anyone used this ? Although it says I cannot claim for state pension it states that I can claim for my private pension.

I.M.O If I can remove this pension from my uk 'earnings'this would lower my taxable income [state pension] in UK to a non taxable sum.

Thanks all in advance of any response.

[Soutpeel]

Having heard again from my friend I learn that there IS a dual taxation agreement [including pensions] between UK and Thailand.

Go to www.hmrc.gov.uk and then type DTdigest into the search box.

Has anyone used this ? Although it says I cannot claim for state pension it states that I can claim for my private pension.

I.M.O If I can remove this pension from my uk 'earnings'this would lower my taxable income [state pension] in UK to a non taxable sum.

Thanks all in advance of any response.

Yes there is a dual tax agreement, but this I believe, (not an expert in this) is in place so you are not liable for doubled taxation on income, ie both Thailand and UK agree than if you pay tax on income in one country, you will not be taxed in the "other" country on the same money, but dont belive it allows you to choose were you pay tax per se

In your case the income is "earned" in the Uk, you would be taxed in the UK at source, and Thailand would not tax the amount again if you can prove tax had been paid in the UK.

[AyG]

Having heard again from my friend I learn that there IS a dual taxation agreement [including pensions] between UK and Thailand.

Although it says I cannot claim for state pension it states that I can claim for my private pension.

Sorry, the agreement only covers government pensions (i.e. pensions paid to former government employees), which is why I didn't mention it in my previous posting. It does not cover state pensions or private pensions.

The actual wording is in the digest is:

"Treaty does not include an article dealing with Non-Government pensions. Also, no relief for State Pension or 'trivial commutation lump sum'."

A private pension falls under the category of "non-government".

Edited July 6, 2011 by AyG

[Soutpeel]

Having heard again from my friend I learn that there IS a dual taxation agreement [including pensions] between UK and Thailand.

Although it says I cannot claim for state pension it states that I can claim for my private pension.

Sorry, the agreement only covers government pensions (i.e. pensions paid to former government employees), which is why I didn't mention it in my previous posting. It does not cover state pensions or private pensions.

The actual wording is in the digest is:

"Treaty does not include an article dealing with Non-Government pensions. Also, no relief for State Pension or 'trivial commutation lump sum'."

A private pension falls under the category of "non-government".

good point..

[PattayaParent]

Yes there is a dual tax agreement, but this I believe, (not an expert in this) is in place so you are not liable for doubled taxation on income, ie both Thailand and UK agree than if you pay tax on income in one country, you will not be taxed in the "other" country on the same money, but dont belive it allows you to choose were you pay tax per se

In your case the income is "earned" in the Uk, you would be taxed in the UK at source, and Thailand would not tax the amount again if you can prove tax had been paid in the UK.

Doesn't it mean that the total tax you pay would be no greater than the highest amount levied between the countries?

So for example you pay tax at source in UK, but if the tax due in Thailand was a higher amount you would have to pay the balance to the Thai tax authority.

An Aussie mate just got hit by the Aussie tax authorities this way, he paid tax on salary in Thailand at a lower rate than in Aus and now they want their 1/2 pound of flesh in the form of the balance.

[Soutpeel]

Doesn't it mean that the total tax you pay would be no greater than the highest amount levied between the countries?

So for example you pay tax at source in UK, but if the tax due in Thailand was a higher amount you would have to pay the balance to the Thai tax authority.

An Aussie mate just got hit by the Aussie tax authorities this way, he paid tax on salary in Thailand at a lower rate than in Aus and now they want their 1/2 pound of flesh in the form of the balance.

Understand this is "recent" change under Aussie tax laws, and yes same here know of quite a few Aussie guys who have been "reamed" by the Aussie tax man as well.

Dont think if this is the case in the UK./Thailand.......Yet... .....think if you have paid tax in either one of the countries then the tax burden has deemed to have been met and the "other country will not impose further taxes irrespective of the tax amount paid.

[AyG]

Doesn't it mean that the total tax you pay would be no greater than the highest amount levied between the countries?

No. In theory you could have to pay Thai income tax at the standard rate on your pension income. In other words, you'd be taxed twice on the same income. (That's why these treaties are put in place - to avoid unfair double taxation.)

(If the situation is reversed, i.e. Thai income received in the UK, the maximum total tax is indeed the higher of the two countries' rate.)

In practice, I've never heard of anyone being taxed in Thailand on their UK pension income.

It's often said that the Thai tax authorities will tax foreign income if it's received in the same tax year as it was generated. (This would apply to a pension remitted directly to Thailand.) I have no idea if this is true or not. It might just be barstool accountant talk. If it is true the safest course would be to keep your pension income offshore for 12 months before remitting it to Thailand.

[JimGant]

An Aussie mate just got hit by the Aussie tax authorities this way, he paid tax on salary in Thailand at a lower rate than in Aus and now they want their 1/2 pound of flesh in the form of the balance.

Interesting. Googling on Aussie tax rules, you're only subject to taxation on worldwide income if you're a resident of Oz. If, however, you've taken up residency abroad ("your usual home is overseas, and you do not intend to live in Australia"), you're considered a non-resident and subject to Oz taxation only on Oz-derived income.

Perhaps becoming a "non-resident" deprives you of some other government benefits, so paying Oz on worldwide income is the lesser evil..... Otherwise, declaring yourself an expat should divorce your Thai income from Oz taxation....

Anyway, no such option for us Yanks. We have to declare all our worldwide income on our US tax return -- expat be damned. But, yeah, we do get a tax credit for the full amount of any Thai income tax paid.

And Limey expats could be in for a rude awakening...if they visit GB for more than 10 days (or so the following article suggests):

HERE

[JimGant]

Doesn't it mean that the total tax you pay would be no greater than the highest amount levied between the countries?

Yes. And no less than the highest amount either -- for income subject to taxation by both countries.

In the US situation, via the tax treaty with Thailand, every tax baht paid to Thailand is 'refunded' in full via a tax credit on your US return -- but only up to the total amount due on your US return, i.e., it is a so-called "non refundable" tax credit, meaning Uncle Sam won't (of course) give you more credit than the US tax owed. So, if the tax owed to Thailand is more than that owed to the US, your tax due, then, is the higher Thai amount (with nothing owed to the US). If more is owed under US tax scales, Thailand gets their full amount due -- and the US gets the difference. Either way, you're stuck paying the highest amount due under either country's tax code.

The US-Thai tax treaty apparently doesn't give first dibs to the US on taxation of private pensions (only government pensions). So, in theory anyway, some income we Yanks get over here should be declared to Thai tax authorities. Then, when we file our US returns, any Thai taxes paid would be fully refunded via tax credit. Thus we'd be in the same out-of-pocket situation -- assuming US taxes higher -- whether or not we declared anything to Thai tax authorities. No big deal, then, except for the hassle of extra paperwork.

But Thailand, as far as I know, has never pushed for 'their share' of taxes. And, yes, there is something in Thai law about taxation on imported money only in same year generated -- so maybe they realize workarounds would be found.

If it is true the safest course would be to keep your pension income offshore for 12 months before remitting it to Thailand.

Interestingly, Thailand certainly knows some countries, like Switzerland, don't tax their expats. So, yeah, a direct deposit of pension from one of these countries would not be advisable -- as a tax treaty against double taxation doesn't resonate...when there's no "double" involved. In fact, I'm not sure I'd even want to wave an 'income statement' for annual renewal at Immigration either....

Edited July 6, 2011 by JimGant

[PattayaParent]

An Aussie mate just got hit by the Aussie tax authorities this way, he paid tax on salary in Thailand at a lower rate than in Aus and now they want their 1/2 pound of flesh in the form of the balance.

Interesting. Googling on Aussie tax rules, you're only subject to taxation on worldwide income if you're a resident of Oz. If, however, you've taken up residency abroad ("your usual home is overseas, and you do not intend to live in Australia"), you're considered a non-resident and subject to Oz taxation only on Oz-derived income.

Perhaps becoming a "non-resident" deprives you of some other government benefits, so paying Oz on worldwide income is the lesser evil..... Otherwise, declaring yourself an expat should divorce your Thai income from Oz taxation....

Anyway, no such option for us Yanks. We have to declare all our worldwide income on our US tax return -- expat be damned. But, yeah, we do get a tax credit for the full amount of any Thai income tax paid.

And Limey expats could be in for a rude awakening...if they visit GB for more than 10 days (or so the following article suggests):

HERE

My mate ws working for an Aussie company out of their head office while he was here so not classed as a non-resident.

[Mosha]

Just remember that the limit for paying Tax is supposed to go to 10K GBP before being liable to pay tax.

[AyG]

Please ignore.

Edited July 7, 2011 by AyG