Do Teachers Have To Pay Back Taxes After 2 Years?

[Paterno]

If an American teacher is exempt from taxes for the first 2 years (I think this is the case), do they have to pay taxes for the exempt years if they continue to work in Year 3? I know they would pay taxes on Year 3 income but not sure about the tax exempt years.

Thanks in advance!

[Ijustwannateach]

Since the taxes are exempt they are exempted. There are no back taxes for those years because they have been exempted.

[Paterno]

Thanks! I thought the taxes could have been a special case exemption with the treaty with the expectation the employee would return back to the States.

[Thormaturge]

The exemption contained within the Thailand-US tax treaty relates to teachers who resided in the USA...not to American nationals.

The Canadian and South African treaties, for example, do not contain exemptions for teachers, and therefore American teachers who lived in those (and many other countries) prior to Thailand are not entitled to an exemption.

Many schools, including the British Council, are getting this hopelessly wrong and failing to deduct tax from teachers who should be paying.

Insofar as what happens in the third year, where a school applies the exemption by not deducting tax it does so subject to Thai regulations in addition to the treaty, in which case a teacher who did not have tax deducted from his salary for the initial two-year visit will have to pay tax for those first two years if he remains at the school for a third year, since the exemption is for a maximum two-year visit. If the visit is for three years then the entire visit becomes taxable.

[Paterno]

Does anyone know of someone having to pay back taxes? What happens if the teacher changes schools after year 1?

Year 1=No tax at school

Year 2=No tax at new school

Year 3=???????????

[Phatcharanan]

The exemption contained within the Thailand-US tax treaty relates to teachers who resided in the USA...not to American nationals.

The Canadian and South African treaties, for example, do not contain exemptions for teachers, and therefore American teachers who lived in those (and many other countries) prior to Thailand are not entitled to an exemption.

Many schools, including the British Council, are getting this hopelessly wrong and failing to deduct tax from teachers who should be paying.

Insofar as what happens in the third year, where a school applies the exemption by not deducting tax it does so subject to Thai regulations in addition to the treaty, in which case a teacher who did not have tax deducted from his salary for the initial two-year visit will have to pay tax for those first two years if he remains at the school for a third year, since the exemption is for a maximum two-year visit. If the visit is for three years then the entire visit becomes taxable.

Absolutely incorrect.

Regardless of how long a teacher works here, that teacher is exempt from income taxes for a maximum 2 year period providing that he came to Thailand from a country that has the tax treaties in force. Should that teacher stay for a 3rd year............there is NO requirement to pay back taxes for the initial 2 year tax exempt period. Claim for tax refunds through the Revenue Department.

http://www.rd.go.th/publish/21973.0.html

[Thormaturge]

Phatcharanan.... teachers who thought as you do are currently being handed prohibition notices preventing them from leaving the country after having been presented with tax demands for their first two years. The situation differs as between those who claim a refund direct fro mthe Revenue Department and those who receive their salaries gross. My article refers.*Direct Link edited out*

Edited May 28, 2012 by Scott
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[Scott]

A direct link to another site has been edited out. Please be aware that it is against the rules to post a direct link to another commercial site.

[Phatcharanan]

Phatcharanan.... teachers who thought as you do are currently being handed prohibition notices preventing them from leaving the country after having been presented with tax demands for their first two years. The situation differs as between those who claim a refund direct fro mthe Revenue Department and those who receive their salaries gross. My article refers.*Direct Link edited out*

Could you please send to my PM one of those forms? Personal information can be redacted if required.

I say this because I left to work in Qatar and I have been in Thailand for quite a while............and I had no problem nor tax to pay for those two years.

However, have those 'teachers that you know' been in Thailand before as a tourist? I have heard of the Revenue Department classing any type of initial visit as the commencement of the 2 year exemption period.

Other than that, the tax treaty between the UK and Thailand is still current.

[Thormaturge]

The difficulty is not with the teachers' past visits as tourists but in the method by which they have been granted relief.

There is Thai legislation (conveniently only published in Thai) which provides for schools to pay teachers' salaries gross, so they do not have to wait for the end of their contract in order to claim. This legislation adds a caveat that where this treatment is applied they may not continue to work at the same school beyond that two year period. This is what teachers are falling foul of and what I was referring to above.