I've been denied entry to Thailand - Now What ! ?

[monty1412]

Company , has grossed up my salary including company car allowance plus pension fund payments and will pay me through internediatary company in Thailand some 5M Baht per annum with 600K housing allowance.

Any of you wise owls know legit ways to reduce tax under Thai tax system ???

Also see that hSBC are offering 12%+ on HSBC Vietnam accounts in VND.. anybody doing offshore banking with HSBC ??

Cheers

[KamnanT]

Short answer: For salaried employees paid in Thailand, the scope for legitimate tax minimisation is rather narrow. Take best advantage of what few deductions there are (LTF, RMF, life insurance, mortgage interest). Wherever possible, keep income-earning assets offshore and don't repatriate the income to Thailand, at least not in the tax year in which it is earned. Keep in mind that while Thai personal income tax rates are not low, neither are they particularly high especially by European standards. Assuming your gross income (incl. housing allowance) is THB 5.6M, you are single and you take full advantage of the above deductions, your taxable income would be THB 4.31M, on which you would pay THB 1,149,700 in tax, or an overall effective tax rate of about 20%. You would pay more than that in just about any European country (including the UK) and in many parts of the US.

Edited July 27, 2011 by KamnanT

[monty1412]

Short answer: For salaried employees paid in Thailand, the scope for legitimate tax minimisation is rather narrow. Take best advantage of what few deductions there are (LTF, RMF, life insurance, mortgage interest). Wherever possible, keep income-earning assets offshore and don't repatriate the income to Thailand, at least not in the tax year in which it is earned. Keep in mind that while Thai personal income tax rates are not low, neither are they particularly high especially by European standards. Assuming your gross income (incl. housing allowance) is THB 5.6M, you are single and you take full advantage of the above deductions, your taxable income would be THB 4.31M, on which you would pay THB 1,149,700 in tax, or an overall effective tax rate of about 20%. You would pay more than that in just about any European country (including the UK) and in many parts of the US.

great information many thanks. Are life insurance premiums deductible here ??? Is this whole of life type policies or straight term insurance.

[KamnanT]

great information many thanks. Are life insurance premiums deductible here ??? Is this whole of life type policies or straight term insurance.

The premiums for life insurance policies issued by Thai insurers (or foreign insurers registered in Thailand) are deductible to a maximum of THB 100,000 per annum. Term life policies with a minimum 10 year duration qualify but any health or accident insurance component of the premium needs to be excluded (a number of Thai insurance companies sold combined policies that were 90% health and 10% life so that policyholders could deduct the premiums under this provision).

I am unsure about whole life policies.

[monty1412]

great information many thanks. Are life insurance premiums deductible here ??? Is this whole of life type policies or straight term insurance.

The premiums for life insurance policies issued by Thai insurers (or foreign insurers registered in Thailand) are deductible to a maximum of THB 100,000 per annum. Term life policies with a minimum 10 year duration qualify but any health or accident insurance component of the premium needs to be excluded (a number of Thai insurance companies sold combined policies that were 90% health and 10% life so that policyholders could deduct the premiums under this provision).

I am unsure about whole life policies.

Again great info many thanks for your help. Rgds monty

[stat]

Short answer: For salaried employees paid in Thailand, the scope for legitimate tax minimisation is rather narrow. Take best advantage of what few deductions there are (LTF, RMF, life insurance, mortgage interest). Wherever possible, keep income-earning assets offshore and don't repatriate the income to Thailand, at least not in the tax year in which it is earned. Keep in mind that while Thai personal income tax rates are not low, neither are they particularly high especially by European standards. Assuming your gross income (incl. housing allowance) is THB 5.6M, you are single and you take full advantage of the above deductions, your taxable income would be THB 4.31M, on which you would pay THB 1,149,700 in tax, or an overall effective tax rate of about 20%. You would pay more than that in just about any European country (including the UK) and in many parts of the US.

You seem to very knowledgabel on this subject. One additional question how do the Thai tax authorities determine which income has been remitted to thailand? I am basically using my credit card here and have no account whatsoever here in Thailand. CC yields next to nothing. Sometimes I fill up my cc account from other offshore accounts you see a problem here?

Thanks!

[KamnanT]

You seem to very knowledgabel on this subject. One additional question how do the Thai tax authorities determine which income has been remitted to thailand? I am basically using my credit card here and have no account whatsoever here in Thailand. CC yields next to nothing. Sometimes I fill up my cc account from other offshore accounts you see a problem here?

Thanks!

As with many aspects of tax law, technology frequently outpaces legislation. Before credit and debit cards, remittances were in the form of a bank draft, traveller's cheque or telegraphic transfer and were thus more easily tracked. Payment cards and their international networks now mean that tens of millions of international transactions take place every day.

While technically using a foreign-issued credit card in Thailand could be considered a remittance (the merchant's bank in Thailand settles the transaction, via a clearing organisation, with your card issuing bank overseas) you are correct in suggesting that it is highly unlikely that the Thai Revenue Department would become aware of these transactions unless there was another reason for them to investigate your circumstances. I take it that, as you have no bank account in Thailand, you are not locally employed or self-employed? If so, you will almost certainly never come to the Revenue Department's attention.

[stat]

Thanks for you mail KamnanT !

My problem ist that I would need a certificate of tax residency in Thailand that can only be obtained from the tax authority due to the European Savings Directive. Not sure if I shoot myself in the foot here by applying for it. The right honorable Naam has pointed out that even if I apply the Thai tax authority would send me packings as I do not have a work permit so they dont care.

Interest on my cc account in Europe is next to nothings. Will they look for other accounts from which I have transferred money to this account. Basically I will not transfer any interest or capital gained from the same year but would hate to explain 80 transactions as I am a busy trader.

Thanks!

[Arkady]

In the past many companies gave expats two contracts: an onshore one from the Thai company for work performed in Thailand; and an offshore one from an offshore company for work performed offshore during trips abroad. Technically, if you don't remit the money earned abroad to Thailand within 12 months it is not taxable. Not so many Western companies will do this any more, as their compliance people these days tend to construe it as aiding and abetting tax evasion.

Otherwise, claim all the allowances you can while they still last. Things like the LTF, RF and life insurance deductions will probably not last much longer, as Pheua Thai will have to squeeze the middle class further to transfer more of their wealth to the rural poor (the rich will not be touched). If you want to feel good make a donation of up to B70k in cash to a bona fide Thai educational institution and get a double deduction. Since you will be paying a top rate of tax of 37% on B5.6m a year, the B70k donation will only cost you B18.2K after you get your tax refund. This deduction will probably disappear soon too.

Edited July 29, 2011 by Arkady