Snake on side of road On Nut

[paul771]

Hi

I am british and non uk resident for tax purposes there as I have lived in Thailand for 7 years. I was wondering if anyone here has had any experience with paying taxes in Thailand that have come from foreign trading income. I trade US shares using a US based online broker. I read a post somewhere here and it was mentioned that only profits transferred to Thailand within 12 months are taxable. Is this correct and if so, does anyone know what the current tax rates here are for this type of income?

Many thanks :jap:

[Doc50]

I am not sure.

But on face value there would seem to be no reason or advantage to reporting

that type of income to the Thailand government.

[bushwacker]

Although I am not from the UK, I had similar questions before retiring here. I received the same 12 month answer that you have received. Which IMHO is a bit crazy when you think that you do not have to identify to Thailand where your money comes from. So for example, if the trading/dividend/interest was deposited into a checking or savings account and then brought here then there would be no paper trail if you wanted to be within the 12 months.

I did receive an opinion from a Law Firm in Thailand in 2008, and they said to me that money earned in another country is taxed in the other country and nothing needs to be done here in Thailand.

The ruling document of course is the Tax Treaty between Thailand and the UK, and maybe Thailand and the USA. You would need to work your way through these to understand the exact details. It is not easy nor is it fun. Your situation is a bit more complicated than the average investor because you are a UK person, dealing with USA trades while living in Thailand. I would think that the USA is the country that you need to be more concerned with. They want to tax everything that even has the slightest hint of US involvement.

But all this should have been set up when you opened your account. If you completed it properly, then the broker knows you are a UK citizen and all taxes should be taken off at source. If you did not complete it correctly and he thinks you are a US dude, then the US tax department can come after you at anytime and even freeze assets!

Nothing is ever easy.

:jap:

[elektrified]

I can only tell you what I was told by a stock broker in Thailand, and that is you are taxed 10% on dividends/interest received from Thai shares or mutual funds and of course no capital gains, but that there are no taxes on the income received from investments outside of Thailand. I have no idea if this is accurate. It is only what I was told by a broker at a large International firm with offices in Bangkok.

[elektrified]

I did receive an opinion from a Law Firm in Thailand in 2008, and they said to me that money earned in another country is taxed in the other country and nothing needs to be done here in Thailand.

That would seem the case. I get charged 35% tax (taken right off the top) on my dividends received from Swiss and other European shares. Most countries, I would think, have exemptions from double-taxation.

[paul771]

I am not sure.

But on face value there would seem to be no reason or advantage to reporting

that type of income to the Thailand government.

One potential disadvantage might be if in the future I decided to move back to the UK, the tax authorities there might want to see proof that all taxes have been paid in Thailand on any money being brought back to the UK. Without proof they may well decide that the tax is payable there.

[paul771]

Although I am not from the UK, I had similar questions before retiring here. I received the same 12 month answer that you have received. Which IMHO is a bit crazy when you think that you do not have to identify to Thailand where your money comes from. So for example, if the trading/dividend/interest was deposited into a checking or savings account and then brought here then there would be no paper trail if you wanted to be within the 12 months.

I did receive an opinion from a Law Firm in Thailand in 2008, and they said to me that money earned in another country is taxed in the other country and nothing needs to be done here in Thailand.

The ruling document of course is the Tax Treaty between Thailand and the UK, and maybe Thailand and the USA. You would need to work your way through these to understand the exact details. It is not easy nor is it fun. Your situation is a bit more complicated than the average investor because you are a UK person, dealing with USA trades while living in Thailand. I would think that the USA is the country that you need to be more concerned with. They want to tax everything that even has the slightest hint of US involvement.

But all this should have been set up when you opened your account. If you completed it properly, then the broker knows you are a UK citizen and all taxes should be taken off at source. If you did not complete it correctly and he thinks you are a US dude, then the US tax department can come after you at anytime and even freeze assets!

Nothing is ever easy.

:jap:

Yes I agree that the 12 month remittance rule seems a bit strange. With regards my trading account, although it is US based it is designed for non US international investors. You can change your country of residence in the account settings easily and they didn't seem too bothered when I queried it. I think the initial agreement was that as a non US citizen, it would be the country of my residence collecting any tax owed on gains. However, you've now got me a little paranoid about any potential US tax department involvement so I'll have to check in more detail!

[paul771]

I did receive an opinion from a Law Firm in Thailand in 2008, and they said to me that money earned in another country is taxed in the other country and nothing needs to be done here in Thailand.

That would seem the case. I get charged 35% tax (taken right off the top) on my dividends received from Swiss and other European shares. Most countries, I would think, have exemptions from double-taxation.

Looking at my records I've had some dividend withholding tax taken off directly from the broker at 15% but nothing from trading gains.

[chiangmaibruce]

Oh boy, this thread really needs a Thai tax accountant to step in and clarify things. Unfortunately I'm not that person, and at the risk of winding up with egg on my face, I offer the following:

Paul, in terms of your last comment I would expect that the amount of withholding tax retained would depend on whether you had provided the broker with a US TIN (tax identification number). If you did provide the TIN, then the level of withholding tax would depend on the provisions of the tax treaty in place with your country of residence, and the particular type of investment/income in question.

If you didn't provide a TIN (or if no tax treaty is in place) then you would be subject to a significantly higher level of withholding tax (in the US). This information can be found in the IRS web site.

If you are a tax resident of Thailand (spend more than 180 days per year here) then you are obliged to declare all income earned including foreign-sourced income regardless of whether tax has been deducted in the source country or not.

Edited September 7, 2011 by chiangmaibruce

[paul771]

Oh boy, this thread really needs a Thai tax accountant to step in and clarify things. Unfortunately I'm not that person, and at the risk of winding up with egg on my face, I offer the following:

Paul, in terms of your last comment I would expect that the amount of withholding tax retained would depend on whether you had provided the broker with a US TIN (tax identification number). If you did provide the TIN, then the level of withholding tax would depend on the provisions of the tax treaty in place with your country of residence, and the particular type of investment/income in question.

If you didn't provide a TIN (or if no tax treaty is in place) then you would be subject to a significantly higher level of withholding tax (in the US). This information can be found in the IRS web site.

If you are a tax resident of Thailand (spend more than 180 days per year here) then you are obliged to declare all income earned including foreign-sourced income regardless of whether tax has been deducted in the source country or not.

I don't have a US TIN and being a non US resident/citizen, I wasn't required to enter one on the W-8BEN US withholding tax form during my original account application either. I would imagine that my withholding tax rate is lower precisely because of the US/UK treaty you mentioned. Regardless, withholding tax is not really an issue for me as I rarely hold shares long enough to get any dividends. It's tax on income from trading gains that is my main concern. In the UK it's called capital gains tax and is separate from income tax.

[chiangmaibruce]

Well that's interesting to hear. The company I dealt with insisted on me first obtaining a TIN prior to me submitting the withholding tax form.

Anyway back to your OP. Yes you are correct about the not paying tax on income not transferred to Thailand within 12 months. And to the best of my knowledge your US income is simply pooled with your other declared income and taxed at the normal income tax rates as contained in the Revenue Dept's web site, less tax paid, deductables etc. There is no capital gains tax in Thailand.

PS: If you were interested in a general introduction to the Thai tax system ... visit the Price Waterhouse Coopers Thailand web site where you can download a free Thailand Tax Guide

http://www.pwc.com/th/en/publications/index.jhtml

Edited September 7, 2011 by chiangmaibruce

[paul771]

Well that's interesting to hear. The company I dealt with insisted on me first obtaining a TIN prior to me submitting the withholding tax form.

Anyway back to your OP. Yes you are correct about the not paying tax on income not transferred to Thailand within 12 months. And to the best of my knowledge your US income is simply pooled with your other declared income and taxed at the normal income tax rates as contained in the Revenue Dept's web site, less tax paid, deductables etc. There is no capital gains tax in Thailand.

PS: If you were interested in a general introduction to the Thai tax system ... visit the Price Waterhouse Coopers Thailand web site where you can download a free Thailand Tax Guide

http://www.pwc.com/th/en/publications/index.jhtml

Thanks for the info and the link. I'll download the tax guide and hopefully get some more answers :jap:

[fletchsmile]

If you are resident in Thailand (basic rule 180 days or more per yer), then you are taxed on your income derived from employment or business in Thailand regardless of where it is paid.

For income outside Thailand, it will be subject to Thai tax where it is remitted into Thailand in the year where it is derived. People frequently misquote 12 months, whereas it depends on the year derived. The Thai tax year conveniently coincides with the Thai calendar year. So if you earned money in 2010 and remit in 2011 that should be OK, but if earned and remitted in 2011 that would be taxable.

How this is proved in practice is the interesting point, as usually people's bank accounts are multipurpose with capital, income, capital gain, loans, etc.

Just in case ever challenged, my solutions to our issue are simply to maintain decent records so I could justify if asked where and when the money originated. Plus for dividend income and interest I transfer it into a separate bank account in the year when earned ("current year earnings). Have a separate account for "previous year's" earnings, and at the end of the year move from current year account to previous year account. I've seen people in Thailand open a new bank account every year, and this is not uncommon for charities etc.

[sumgai]

Is the remittance based taxation still valid?

Has anyone had trouble with Thai authorities on this or being asked for statements?

[jamesthailand]

I believe so. The legal advice I received was that to avoid taxation the income had to spend 1 calendar year (ie a period from 1st Jan to 31st Dec) overseas before being remitted to Thailand. For example, if you received income in August 2011, the earliest you could remit it would be 1st January 2013. I was also advised that income received in each calendar year needed to be kept in a separate account until it had become safe to remit.

[Naam]

I believe so. The legal advice I received was that to avoid taxation the income had to spend 1 calendar year (ie a period from 1st Jan to 31st Dec) overseas before being remitted to Thailand. For example, if you received income in August 2011, the earliest you could remit it would be 1st January 2013. I was also advised that income received in each calendar year needed to be kept in a separate account until it had become safe to remit.

i call on all "believers" and "thinkers" to refrain from adding any worthless 2 Satangs thus confusing the Thai tax issue which is quite clear:

Taxpayers are classified into “resident” and “non-resident”. “Resident” means any individual residing in Thailand for a period or several periods in total of at least 180 days in a tax year (January 1 – December 31). A resident of Thailand has a duty to pay tax on income remitted from a source in Thailand as well as on any income from a foreign source in connection with the taxpayers’ employment or business carried on abroad or a property situated abroad, and that income is remitted into Thailand within the year that the taxpayer receives that income.

http://www.rd.go.th/...ish/6045.0.html

in other words... foreign income generated in 2012, e.g. interest credited abroad on dec31, 2012 and transferred value one day later to Thailand is not taxed.

[jamesthailand]

Thanks for the link.

I'm just relaying the advice I received from a highly experienced Thai lawyer. I just checked again with him, and showed him the passage you quoted, and he confirmed that his understanding is as I described it. I find this a bit surprising, because the passage does seem pretty clear. On the other hand, it's not uncommon for English-language information on Thai web sites to be inaccurate. I've asked him to check into it, and I'll post when I get an answer. I do hope your interpretation is the right one: it would significantly simplify things for me.

Do you by any chance have a link to the official Thai-language regulations on this issue?

[Naam]

Thanks for the link.

I'm just relaying the advice I received from a highly experienced Thai lawyer. I just checked again with him, and showed him the passage you quoted, and he confirmed that his understanding is as I described it. I find this a bit surprising, because the passage does seem pretty clear. On the other hand, it's not uncommon for English-language information on Thai web sites to be inaccurate. I've asked him to check into it, and I'll post when I get an answer. I do hope your interpretation is the right one: it would significantly simplify things for me.

Do you by any chance have a link to the official Thai-language regulations on this issue?

sorry, i had the link but can't find it. TV-member "Samran" was kind enough to post the link (thai and english version) in ThaiVisa a couple of years ago. perhaps you can find it using the search function.

by the way, the English version of the government link is crystal clear, written neither in Thinglish nor in Pidgin but in proper English.

crystal clear is also that your lawyer insists on "his understanding". why would a Right Honourable Thai Lawyer, Esq. admit that he told BS to a Farang and lose face?

[jamesthailand]

I got a reply from my lawyer. Section 41, paragraph 2 of the Thai Revenue Code states:

A resident of Thailand who in the previous tax year derived assessable income under Section 40 from an employment or from business carried on abroad or from a property situated abroad shall, upon bringing such assessable income into Thailand, pay tax in accordance with the provisions of this Part.

(The corresponding Thai is here.) Thus, if in 2012 you bring into Thailand income earned abroad in 2011 you are liable to pay tax on that income. If you bring it into Thailand in 2013, you are not.

[jamesthailand]

More from my lawyer. Another lawyer in the same firm takes a different view and thinks that income earned abroad in 2011 can safely be brought into Thailand in 2012. (I'm not sure how he get's that from the wording of the revenue code.)

My conclusion is that it's not clear. The safest course is to keep income earned abroad for an entire calendar year, but you'll probably be OK if it's brought in the calendar year following the calendar year in which it was earned.