Banking: Does 'thai Irs' Look At The Cash Flow Of Your Account?

[poorfarang]

In the USA when you move more then $10,000 around the IRS is notified about the transaction. Is there anything similar to this in Thailand? Im wondering if I will set off some alarms if I get a nice chunk of cash thrown into my account every month. (Dont worry im not selling drugs )

Do I need to worry about it?

[lingling]

Do I need to worry about it?

What is the source? Another bank account in your name? If so nothing to worry about (if you for example wire it in from a savings/investment account outside TH).

[poorfarang]

The money will be comming into my account mostly via bank transfer from other thai accounts. (not my own accounts)

[lingling]

The money will be comming into my account mostly via bank transfer from other thai accounts. (not my own accounts)

Then it is possible that the revenue department will ask you why those money are being transferred into your account. If it is income then the labor department could get involved too (if you don't have a work permit etc).

[poorfarang]

Ok, thats where my problem is.

It will be income, and no, I do not have a work permit.

I will be moving one of my website businesses into the thai market and if all goes well then it should generate a decent amount every month. I want to make it all by the books and legit but I was thinking for the first month I would just run it without an actual company or anything, just to see if it takes off as expected.

I dont want to setup a company only to find out that my idea is a flop.

Do I actually have to setup a company or is there an easy way for me to do this legitimatly? Obviously everything needs to be on the up and up...

[Heng]

It's a cash economy and a huge number of business operate as unregistered sole proprietorships. The biz brokers on site will naturally recommend for you to setup your company first.... but there aren't roving teams of IRS agents waiting to pounce if that's what you were worried about. Take the fear of the IRS in the US and divide by about 100 and then you have what people feel about the revenue department in Thailand. ONCE you get your company(s) setup, that's when you have to deal with your VAT registration, monthly income reporting, etc. Just MO of course.

That said, rereading your post, if it's a web business... why not setup incorporate offshore? I know of dozens doing this. Transactions offshore, income earned offshore, wire transfers made offshore. Then all you're doing is withdrawing the gravy in much smaller amounts to Thailand, like any other individual with overseas accounts.

[ovenman]

I seem to recall that there is some trigger amount that makes the Thai revenue authorities look at a single bank account transaction. I'd like to say that it was one million baht and then the threshold was lowered post-9/11 but I may be mis-remembering this. Anybody...?

[thohts]

My gf asked a few people about this (a lawyer and some who worked for the tax department).

Basically, if you are THAI, then the threshhold is about 1 million baht (per transfer or within a certain timeframe) for incoming transactions, and possibly balances.

Most of the wealthy Thais, she was told, keep their money in Hong Kong or Singapore.

If you are foreigner, there supposedly is no threshhold for the 'authorities' to be alerted. I have before transferred (incoming) 2 million baht a day without problems or questions, into a personal account (I'm not Thai).

Banks here love to convert their baht into dollars or Euro (selling baht when you transfer money from the US or so). No questions asked.

Now, getting the money OUT of Thailand is another issue entirely. This, for large amounts, is certainly very difficult.

[thohts]

Also, note that if you're a US citizen and have accounts overseas most likely the IRS knows of its existence (at least), especially if you're holding in any G7 country.

As long as you're outside of the US for more than 330 days a year, you are exempt from the first $80k in income. (Check the IRS website)

[poorfarang]

I am a US citizen and I am outside of the USA 330+ days a year.

So whats the deal with getting money out of thailand? Do they limit the size of cash you can transfer at one time or within a year or what?

[paperwerks]

Ok, poorfarang. I am not an expert on this yet myself but see two things missing from this discussion.

First, when you wire in over $20,000 then you need to get a foreign exchange certificate from your bank (the main headquarters only) This allows you to wire it out again at any time of your choosing. Thais can not just wire transfer out of the country easily. Falangs with Forex certificates can. They used to, and some people still do refer to them as Tor Tor 3's. My understanding is that if you have this then you can get another document at a later date to export the cash out again. If you don't have a forex cert., then you might have a problem getting the cash back out. GET AND KEEP all evidence of wire transfers!

Secondly, if you have a Thai (any foreign country) bank account with more than $10,000 in it you ARE REQUIRED to file some form (I foregt the name-others will know it) with the IRS or US Gov. This is ostensibly for anti money laundering reasons. Personally, after having the IRS sieze title to my house a few years back, I no longer play games with the IRS but I doubt they would ever know if you didn't file it.................

Good luck with your biz.

[poorfarang]

This money is not comming into thailand from me. It is money people will pay me.

So I take it that once I get paid then the money either stays in thailand with me or I can fly home with $10k on my person? Is this the only way?

[Phil Conners]

Just get an ATM card and withdraw the money with that.

[Misty]

You can transfer money out of Thailand using the Thai banking system, but depending on the amount of the transfer, or the frequency of your transfers, you may be asked to justify where the money came from. The banks are required to gather this information by the Bank of Thailand's Anti-Money Laundering Dept (there may also be a Thai Revenue Dept requirement).

I've transferred some pretty large sums out over the years--in the past it was relatively easy as I had a work permit. Recently, having no work permit, I did have to produce a ton of documents for the bank to show the BoT, including all my former tax filings and copies of my old work permits. But they did do the transfers, in each case the same day--so the system works, if you can establish that the funds are legitimate.

Good luck! Misty

Edited June 15, 2006 by Misty

[poorfarang]

So lets say I start a Thai company.

I provide a service and get paid via bank transfers from hundreds of small businesses each month. Lets just say that things are going really good and Im making 1 million baht a month (wouldnt that be great ) Now, since I have a thai company and everything is on the books, then I would be able to transfer my profit out of thailand?

What percentage of my money am I likely to pay in taxes? Im assuming that I will be able to write off "business expenses" and such before paying taxes to keep these number as low as possible.

I plan on spending quite a bit of money in Thailand but Id also like to send some back home or to an offshore account for other things in the future.

[Misty]

While I'm not an accountant, I believe you can transfer your profit out in the form of dividends you've paid to yourself (after the company has first paid 30% corporate tax on the profit, and you've paid 10% withholding tax on the dividend). You could also pay yourself a higher salary and transfer that out-- thereby lowering the corporate tax bill & need to pay withholding tax on the dividend--but you would then pay more in personal income tax.

Perhaps an actual accountant could chime in & clarify?

Cheers, Misty

[~G~]

So lets say I start a Thai company.

I provide a service and get paid via bank transfers from hundreds of small businesses each month. Lets just say that things are going really good and Im making 1 million baht a month (wouldnt that be great ) Now, since I have a thai company and everything is on the books, then I would be able to transfer my profit out of thailand?

What percentage of my money am I likely to pay in taxes? Im assuming that I will be able to write off "business expenses" and such before paying taxes to keep these number as low as possible.

I plan on spending quite a bit of money in Thailand but Id also like to send some back home or to an offshore account for other things in the future.

- You have to charge 7% of all services provided in Thailand (if your customers are abroad it's not required).

- You have to pay 30% corporate tax on profits.

- You will pay income tax if you withdraw the money as a salary.

- You will pay tax on dividends if you distribute such to yourself.

- You can't just make outgoing trasnfers straight from the company account without proper document (for example, paying a foreign supplier)

Shortly you will pay significant amount of tax when you come to withdraw the money from the company account. Income Tax is progressive so it depends on how much you wish to withdraw.

Yes, you can write expenses off but you have to have receipts for every such expense.

[poorfarang]

Wow, it sounds like they will be taking a lot of my money.

So lets just say that I use a USA internet service who is quiet expensive to run my business. So each month I can transfer them 100,000 baht for there services performed for my company?

I know I know, I need to talk to a qualified individual...