Inheritance tax scares away the rich to invest in offshore trusts

[Lite Beer]

Inheritance tax scares away the rich to invest in offshore trusts

BANGKOK: -- Thai Financial Planner’s Association has voiced concern that more and more wealthy Thai citizens have transferred their assets and money to invest in offshore trusts as a result of the inheritance tax.

Thira Phutrakun, the president of the Thai Financial Planner’s Association, admitted today that he was concerned with the planned collection of inheritance tax which should begin at the end of the year.

He commented that the losses far outweigh any gains that such taxes affords as at the moment almost all wealthy Thais have transferred their assets such as lands, homes, condominiums and stocks to their children to avoid paying inheritance taxes.

More worryingly, a not insubstantial number of these have transferred their assets abroad to invest in offshore trusts which is a shame as Thailand will lose a substantial amount of investment capital which at the moment is very critical for the economic recovery of the country.

It is for this reason that he would recommend the Ministry of Finance to implement anti- trust laws alongside inheritance taxes to force the well heeled to invest more in the country thus slowing the outflow of capital from the country.

In conclusion he stated from personal experience that inheritance laws are impractical and many countries have stopped using them.

He advised the government to employ other forms of taxes such as VAT (Value Added Tax) to generate the required income.

Source: http://englishnews.thaipbs.or.th/inheritance-tax-scares-away-the-rich-to-invest-in-offshore-trusts

-- Thai PBS 2015-05-30

[apetley]

So forget inheritance tax, which would have imposed a slightly higher increase in the negligible tax the rich already pay and replace it with a rise in VAT, which will disproportionately hit the poorest.

[billd766]

Greed and not wanting to help the country.

Wonderful people, the rich in Thailand (or anywhere else for that matter).

[PilotEd]

Just pass a law that taxes any off shore trust owned by a Thai. And tax at a higher rate than if they kept their money here and invested it. It is relatively easy as the USA has a similar law forcing banks to report any accounts owned by Americans. Unfortunately the USA law has loop holes to aid the rich in hiding their trusts but just don't build those loop holes in.

Okay, okay I will wake up and stop dreaming.

[jinjin]

They tax what ur father gave you, tax ur son what you give them, any more left for the grandson???

[bonobo]

I went to a presentation by a large international investment firm, and the main purpose was to explain to rich Thais about offshore trusts in order to circumvent the new taxes.

[RachaRob]

Its the right of every person to try to reduce the amount of taxes they pay legally and if it means transferring YOUR money overseas then so be it.

[elgordo38]

So forget inheritance tax, which would have imposed a slightly higher increase in the negligible tax the rich already pay and replace it with a rise in VAT, which will disproportionately hit the poorest.

The rich are in charge not the government

[elgordo38]

Its the right of every person to try to reduce the amount of taxes they pay legally and if it means transferring YOUR money overseas then so be it.

The only reason it is legal is the fact that governments are slow in closing up loop holes. Americans are just now getting around to looking into this after most of the big money has already exited the country. Close the barn door after the horse has bolted. Example Burger King buys out Tim Hortons Coffee whose headquarters are in Canada. Burger King moves head office to Canada as the corporate tax there is 15% vs 40% in the USA. This whole conglomerate is owned by some Brazilian hedge fund or money mogul.There are no loop holes for us retired people. The government wants to know about what little money we have and where it is. This is another sign of a financially and morally bankrupt society/system.

[Lukecan]

Taxing the rich always backfires, nearly every country that has tried to tax the rich failed. Rich people are smart, they will find ways to get around the system and avoid paying that tax. The reason they are rich is because they are smart in the first place. Best way for governments to get extra money from them is to hike the value added tax on luxury items.

In Turkey for example value added tax on luxury cars like Ferrari can go as high as 200%

A ferrari california that costs 300k in US, is sold for 1 million in Turkey.

Inheritance tax etc won't work. They will liquidate and find other alternative investments.

[AJBangkok]

I really can't believe this guy. He is the head of the thai financial planners association. His job is to help people manage their wealth which includes minimizing future tax issues. He is asking the government to close a tax loophole which his potential client base benifit from because he doesn't get a fee On that money.

His clients should explain what a conflict of interest is before they fire him.

[fred Kubasa]

Too late, after announced new tax the wealthy became almost penniless !

BUT....... smart tax agencies cab easily FOLLOW THE MONEY !

[manarak]

Implement a wealth tax and not VAT and not inheritance tax !!

[Srikcir]

A gift tax should have also been passed ahead of the inheritance tax.

But the real remedy to wealth redistribution is to redo the tax rates in favor of lower income taxpayers.

[WorkingTourist]

I really can't believe this guy. He is the head of the thai financial planners association. His job is to help people manage their wealth which includes minimizing future tax issues. He is asking the government to close a tax loophole which his potential client base benifit from because he doesn't get a fee On that money.

His clients should explain what a conflict of interest is before they fire him.

What loophole is he trying to close?

What he is saying is that the inheritance tax is causing funds to leave Thailand, which should be a concern for everyone, and presumably using methods of questionable legality, which should be of even greater concern.

I am not familiar with Thai tax law or the offshore trust construct he refers to, but in Europe it is a common setup for tax evasion.

Someone who has flexibility in how they are paid will setup an offshore company and have most income sent directly to this company (placed in a tax haven). The ownership of the company may then be placed in a trust where the true owner’s family is setup as the beneficiaries.

Many financial advisors will claim that the setup is legal, but you can find just as many who will claim the opposite. The problem is that most of these constructs are guarded by secrecy, so it’s hard for the authorities to crack down on.

Btw: I thought Thailand had capital control, i.e. moving money out of Thailand requires paperwork and a stated reason. Of course people who export (from Thailand) has the advantage that payment can happen outside Thailand.

[CaptHaddock]

I notice that the article provides no data at all to support the claim that the rich are actually moving their assets offshore. That claim is only plausible to the extent that those assets are movable. In low-income countries like Thailand most wealth is held in physical assets, i.e. land and buildings. It is only in high-income countries that wealth is concentrated in financial assets that can be relocated offshore. For this reason an inheritance tax is particularly appropriate for Thailand.

Inheritance taxes are inherently progressive, although the current Thai version is not especially so. Naturally, the financial planner spokesman favors the inherently regressive VAT tax instead.

Edited May 31, 2015 by CaptHaddock

[gandalf12]

Can anyone tll me what is wrong with having money? This article is all about the bad side of having money. I doubt if there is any one person here that wouldnt want to reduce or cancel their tax liability so why are people with money being looked down on? If they have obtained it illegally then charge them with their illegal activities.

[BlackJack]

2 certainties in life death and taxes

[maidee]

so they all can move millions and billions without any problem with the banks , they don't have to prove where it came from

try that as a farang, you are not allowed to move money more than you put into this country