Income Tax In Thailand

[lynchy]

I've received some conflicting info. I've been in touch with Sunbelt and they state I am not liable for Thai tax for work done outside of Thailand but I have just read the following:

Thailand adopts a rising scale taxation system on annual income earned (less permitted deductibles), as follows:

0-99,999 Baht: 0%

100,000 - 499,999 Baht: 10%

500,000 - 999,999 Baht: 20%

1,000,000 - 3,999,999 Baht: 30%

4,000,000 + Baht: 37%

Note: income tax is payable by residents on worldwide income generated provided that such income is remitted into Thailand within the same year as it is earned.

I'm planning to base myself in Thailand on a 1 year Business visa whilst working overseas and spending some time in the UK. Less than 90 days in UK and less than 180 days in Thailand.

Would the fact that I am spending less than 180 days a year in Thailand and the nature of my visa mean that I do not qualify as a resident so therefore not liable for Thai Tax??

Any advice welcome.

Cheers

Lynchy

[Naam]

"Would the fact that I am spending less than 180 days a year in Thailand and the nature of my visa mean that I do not qualify as a resident so therefore not liable for Thai Tax??"

*****

that's exactly the case.

quote: "Taxpayers are classified into "resident" and "non-resident". "Resident" means any person residing in Thailand for a period or periods aggregating more than 180 days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand on a cash basis, regardless where the money is paid, as well as on the portion of income from foreign sources that is brought into Thailand."

[sting01]

well, it's more comlicate thatn that

Case of a IT person working remote from phuket as sysadmin of a serbian server is also not liable to tax income. At least it was the case last year.

[Casanundra]

I have just attended a 2 day seminar on Double taxation agreements for Thailand and it all pretty much depends on the current double taxation rules of Thailand and your home country.

Thailand pretty much says that if you have established a PE (Permanant Establishment) which in the case of Thailand is 180 days, then you are liable for TAX on money earned in Thailand.

Under the rules, you You don't need an office or a residence to create a PE either because under Thai tax if you are meeting in a coffeee shop everyday to hold a business meeting that earns you money, then you are liable. If you are in a coffee shop or hotel lounge or wherever and surfing the Internet that earns you money, then you are liable under Thai TAX law providing that your PE is 180 days inside Thailand. The hard part for Thailand however is getting to them find you in the first place and proving that you are liable for tax.

With regards money earned overseas, then it depends on if you are declaring tax overseas or not, but let's put it this way, if your money is in an offshore account earning gross interest then don't declare it. If you have no intention of earning money 'officially' inside Thailand and can show savings to support your stay here. Don't declare it! if you are not getting a 1 year visa for marriage and don't need to show the 40k income (plus tax) for the visa per month then don't declare it either.

If you are from Canada and America then good luck because you are taxed on worldwide income and they will pursue you!

If you want to by pass Thai tax law then set up a company in the Cayman islands or Mauritious and then establish a sales office on behalf of your company in thailand and you are effectively as tax efficient as you can possibly be. If you are a Thai and you want to avoid capital gains on a house in the UK for example, then do what I just said in reverse for the UK and they can set up a house in the UK as part of a company without being liable for any capital gains what so ever... I wonder if that's what the ex PM old square face did?

[smilingjim]

I have just attended a 2 day seminar on Double taxation agreements for Thailand and it all pretty much depends on the current double taxation rules of Thailand and your home country.

Thailand pretty much says that if you have established a PE (Permanant Establishment) which in the case of Thailand is 180 days, then you are liable for TAX on money earned in Thailand.

Under the rules, you You don't need an office or a residence to create a PE either because under Thai tax if you are meeting in a coffeee shop everyday to hold a business meeting that earns you money, then you are liable. If you are in a coffee shop or hotel lounge or wherever and surfing the Internet that earns you money, then you are liable under Thai TAX law providing that your PE is 180 days inside Thailand. The hard part for Thailand however is getting to them find you in the first place and proving that you are liable for tax.

With regards money earned overseas, then it depends on if you are declaring tax overseas or not, but let's put it this way, if your money is in an offshore account earning gross interest then don't declare it. If you have no intention of earning money 'officially' inside Thailand and can show savings to support your stay here. Don't declare it! if you are not getting a 1 year visa for marriage and don't need to show the 40k income (plus tax) for the visa per month then don't declare it either.

If you are from Canada and America then good luck because you are taxed on worldwide income and they will pursue you!

If you want to by pass Thai tax law then set up a company in the Cayman islands or Mauritious and then establish a sales office on behalf of your company in thailand and you are effectively as tax efficient as you can possibly be. If you are a Thai and you want to avoid capital gains on a house in the UK for example, then do what I just said in reverse for the UK and they can set up a house in the UK as part of a company without being liable for any capital gains what so ever... I wonder if that's what the ex PM old square face did?

Rather worrying advice.

Income tax is charged depending on your residency situation. Last time I looked anyone who is resident in Thailand (more than 180 days in the tax year) is technically supposed to complete a Thai Tax Return.

There is tax avoidance - which is legal and tax evasion -which is illegal.

You seem to be advocating the latter. Tread carefully!!

[Casanundra]

Rather worrying advice.

Income tax is charged depending on your residency situation. Last time I looked anyone who is resident in Thailand (more than 180 days in the tax year) is technically supposed to complete a Thai Tax Return.

There is tax avoidance - which is legal and tax evasion -which is illegal.

You seem to be advocating the latter. Tread carefully!!

I am not advocating anything, I am just speaking out loud what many would think or say given the current tax position in Thailand and I was merely reporting the outcome of the conference which had in attendance two senior taxation guys from the Thai tax department. one was a Tax judge and the other was a senior tax enforecement officer and both of them went grey with shock at what they learnt in the conference while the remainder of the audience (tax lawyers and acountants) rubbed their hands together with collective glee at the opportunities.

Let's be honest here, Thailand does not have enough officers knowledgable in double taxation law to be able to follow it through and catch people. This will change in time but right now it's a case of 'catch me if you can'.

I don't advocate tax evasion but I do advocate working creatively within the boundaries of the 'current' law and I do know what they are.

[cclub75]

Rather worrying advice.

Income tax is charged depending on your residency situation. Last time I looked anyone who is resident in Thailand (more than 180 days in the tax year) is technically supposed to complete a Thai Tax Return.

There is tax avoidance - which is legal and tax evasion -which is illegal.

You seem to be advocating the latter. Tread carefully!!

On the contrary, excellent advise from Casanundra. And a lot of common sense.

I never understand, why we should be less thai than the Thais, for business/fiscal matters...

-yes, thai businessmen love offshore companies in BVI for instance (think about our Ex Great Leader), that allow them to reduce the taxable profit of their thai companies, by invoicing game.

-yes, thai businessmen run the cash machine at their companies, to reduce their personal taxable income and the taxable profit : house allowance, car allowance, diners, "customers entertainement", hookers, vacations up country ("seminars"), gifts, donations, commissions, you name it.

-yes, thai businessmen give and take bribe/kickback: suppliers, customers, civil servants. You name it.

-yes, thai businessmen, sometimes, have a double accounting system.

-yes, thai businessmen laugh mak mak about the so hype/western concept of "good governance" etc.

-yes thai businessmen love to bypass the market laws (monopoly, common price policy, sharing of informations to surcharge customers with "competitors", oops sorry, "partners" etc).

So, actually, I believe that many farangs have decided to be... thai. It's much more sanook. And much more efficient.

[smilingjim]

Rather worrying advice.

Income tax is charged depending on your residency situation. Last time I looked anyone who is resident in Thailand (more than 180 days in the tax year) is technically supposed to complete a Thai Tax Return.

There is tax avoidance - which is legal and tax evasion -which is illegal.

You seem to be advocating the latter. Tread carefully!!

I am not advocating anything, I am just speaking out loud what many would think or say given the current tax position in Thailand and I was merely reporting the outcome of the conference which had in attendance two senior taxation guys from the Thai tax department. one was a Tax judge and the other was a senior tax enforecement officer and both of them went grey with shock at what they learnt in the conference while the remainder of the audience (tax lawyers and acountants) rubbed their hands together with collective glee at the opportunities.

Let's be honest here, Thailand does not have enough officers knowledgable in double taxation law to be able to follow it through and catch people. This will change in time but right now it's a case of 'catch me if you can'.

I don't advocate tax evasion but I do advocate working creatively within the boundaries of the 'current' law and I do know what they are.

So "don't declare it" and "catch me if you can" isn't advocating tax evasion??? Not things to put in writing!

Thre is plenty of scope for good tax planning within the laws, especially using off-shore vehicles/accounts if appropriate.

My ex tax partner would have had a fit if I had written anything like this to any of my clients.

[smilingjim]

On the contrary, excellent advise from Casanundra. And a lot of common sense.

I never understand, why we should be less thai than the Thais, for business/fiscal matters...

-yes, thai businessmen love offshore companies in BVI for instance (think about our Ex Great Leader), that allow them to reduce the taxable profit of their thai companies, by invoicing game.

-yes, thai businessmen run the cash machine at their companies, to reduce their personal taxable income and the taxable profit : house allowance, car allowance, diners, "customers entertainement", hookers, vacations up country ("seminars"), gifts, donations, commissions, you name it.

-yes, thai businessmen give and take bribe/kickback: suppliers, customers, civil servants. You name it.

-yes, thai businessmen, sometimes, have a double accounting system.

-yes, thai businessmen laugh mak mak about the so hype/western concept of "good governance" etc.

-yes thai businessmen love to bypass the market laws (monopoly, common price policy, sharing of informations to surcharge customers with "competitors", oops sorry, "partners" etc).

So, actually, I believe that many farangs have decided to be... thai. It's much more sanook. And much more efficient.

Two wrongs don't make a right!

This practice isn't just done by Thai businessmen. In my experience UK businessmen "massage" the figures as much as they can. I used to work for the UK tax authorities and investigated enough of them. I then went over to the other side and spent a lot of time trying to reach settlements with the tax man for clients who had done so much massaging it was almost beyond belief!

As the Thais say "up to you" which way yo uwant to do it.

[Casanundra]

What clients are we talking about here on this forum then?

We are just chatting on an open forum designed to stimulate discussion are we not which is no different to having a chat in the pub with some friends.

Since when did a chat and a discussion about a subject get governed by some rule of professional conduct?

If you was paying me for advice then yeah great that's one thing but if you are sitting in a pub and over hear a conversation similar to this thread what are you going to do, jump up and run off to the 'thought' police and bubble us all in...

Blimey if I knew this thread was going to have the Thai secret police and their moral stanced cohorts sitting in then I would have got out my 1942 WWII posters out in order to inform everyone that walls have ears and telephones aren't secure and to be careful of people with flicked fringes and little moustaches.

[steveromagnino]

I think some degree of caution is needed in reading a forum.

Casundra explains (and so does CC75) how it is in Thailand, and what most people are doing. Similar to discussions on buying software at Pantip, discussing how to avoid excess baggage charges or paying 50b at the airport by walking upstairs. Incidentally, most of what they recommend is also done by non Thais worldwide; charging expenses, transfer pricing within a company, registration abroad etc - the straight out illegal stuff like bribes are often also paid by non Thai companies and lobbying govt, well there are some countries that are far more advanced in lobbying to get favrouable policy than Thailand :-)

If you want to hire either for tax planning advice, then their advice would probably be different (and I am not sure either can comment beyond what they know themselves, unless they are tax planners).

And if you are serious about minimising tax, you will do so. I personally feel that paying tax is not the worst thing in the world, mind you when my mum was paying the rate of 69c in the dollar back in NZ pre 1984, it did seem to me to be a tad high.....

[smilingjim]

What clients are we talking about here on this forum then?

We are just chatting on an open forum designed to stimulate discussion are we not which is no different to having a chat in the pub with some friends.

Since when did a chat and a discussion about a subject get governed by some rule of professional conduct?

If you was paying me for advice then yeah great that's one thing but if you are sitting in a pub and over hear a conversation similar to this thread what are you going to do, jump up and run off to the 'thought' police and bubble us all in...

Blimey if I knew this thread was going to have the Thai secret police and their moral stanced cohorts sitting in then I would have got out my 1942 WWII posters out in order to inform everyone that walls have ears and telephones aren't secure and to be careful of people with flicked fringes and little moustaches.

Dear Casanundra,

Old habits die hard. I have a professional background and was taught to always give best advice (within the law) and that's what I still do. You gave yours and I gave mine.

[kudroz]

I just want to correct a few things.

Thailand pretty much says that if you have established a PE (Permanant Establishment) which in the case of Thailand is 180 days, then you are liable for TAX on money earned in Thailand.

The term Permanent Establishment (hereinafter called "PE") isn't related to the 180 days rules. PE is a concept that was introduced by the OECD in the Double Taxation Agreements (hereinafter called "DTA") which is determined by looking at you're residence ties.

If you aggregate a stay of more than 180 days in a calendar year, you are deemed resident of Thailand for tax purposes.

(read here, "resident for tax purposes" not PE)

Under the rules, you You don't need an office or a residence to create a PE either because under Thai tax if you are meeting in a coffeee shop everyday to hold a business meeting that earns you money, then you are liable.

The term PE is used to define ones residence for tax purposes. Generally speaking, you are deemed to have a PE in the jurisdiction you have residential ties, generally abode, have a place of management, an office (with certain restrictions), etc.

Also you say: [...] under Thai tax law if you are meeting in a coffeee shop everyday to hold a business meeting that earns you money, then you are liable.

You are correct, but this is the case regardless if you have a PE or not.

If you are in a coffee shop or hotel lounge or wherever and surfing the Internet that earns you money, then you are liable under Thai TAX law providing that your PE is 180 days inside Thailand.

You are correct when you say: [...] If you are in a coffee shop or hotel lounge or wherever and surfing the Internet that earns you money, then you are liable under Thai TAX providing that your PE is 180 days inside Thailand.

But it has nothing to do with a PE. You are liable to Thai tax because this income will be deemed to be of Thai Source, and under the current Thai Tax laws, you are taxed on your Thai Source Income.

Thai Source Income is generally defined by "where are the services provided". I.e. : Someone is a web designer and resides in Phuket, and he is designing web sites for a company in USA. His income will be deemed to be Thai Source because the services are provided from Thailand - thus the income will be liable for Thai Taxes.

With regards money earned overseas, then it depends on if you are declaring tax overseas or not, but let's put it this way, if your money is in an offshore account earning gross interest then don't declare it. If you have no intention of earning money 'officially' inside Thailand and can show savings to support your stay here. Don't declare it! if you are not getting a 1 year visa for marriage and don't need to show the 40k income (plus tax) for the visa per month then don't declare it either.

I am a bit confused with what you are saying here, but Thailand does NOT levy taxes on Foreign Source Income - provided that such income isn't brought into Thailand in the same calendar year it was earned. I.e. : If you have interest income from savings you have in Switzerland, and you keep the interest income outside of Thailand, you will not be liable to pay taxes in Thailand. Although, you will be liable to pay withholding taxes in Switzerland on such interest income. If you've had your savings in a jurisdiction that does not impose withholding taxes on interest income and you didn't bring the interest income in Thailand - you wouldn't have to pay taxes on such income.

If you are from Canada and America then good luck because you are taxed on worldwide income and they will pursue you!

America is a large continent, and not a country. Perhaps you are reffering to the USA? If that's the case, USA levy taxes on their citizens regardless of their residence for tax purposes.

Canada levy taxes based on residence, therefore a Canadian citizen who has filled the form NR73 with the Canada Revenue Agency (Determination of Residency Status) and his deemed non-resident of Canada, will only be liable for Canadian Source Income.

If you want to by pass Thai tax law then set up a company in the Cayman islands or Mauritious and then establish a sales office on behalf of your company in thailand and you are effectively as tax efficient as you can possibly be.

hahaha, there's more to it than just that but it's too long and complicated to cover this in details.

[roderick17]

This is a very interesting and worrying subject. It seems to me that people coming to Thailand and taking out a retirement visa are likey to be residents for tax purposes. This would mean that income brought into LOS to fund their lifestyle would be subject to income tax levied by the Thai tax man.

Is the assumption correct ???

[lynchy]

Thanks for all the replies, will have to go through them more thoroughly but from what I can gather I shouldn't be liable for Thai Tax.

Like I said, I will be in Thailand for less than 180 days per year and will not be doing any work in Thailand and will not have a work permit.

With regards to paying tax in the UK, as long as I spend no more than 90 days there I qualify as non-resident. Non incidental work done in the UK can be taxed but I still have the same Tax allowances as a resident so it's unlikely to amount to much.

I'm perfectly happy paying little or no tax and for your information I'm just trying to maintain my present net salary level. If my employers benefit by the reduced cost in paying my wages they're are more likely to go for my proposal to re-locate to Thailand.

Cheers

Lynchy

[lynchy]

I am a bit confused with what you are saying here, but Thailand does NOT levy taxes on Foreign Source Income - provided that such income isn't brought into Thailand in the same calendar year it was earned. I.e. : If you have interest income from savings you have in Switzerland, and you keep the interest income outside of Thailand, you will not be liable to pay taxes in Thailand. Although, you will be liable to pay withholding taxes in Switzerland on such interest income. If you've had your savings in a jurisdiction that does not impose withholding taxes on interest income and you didn't bring the interest income in Thailand - you wouldn't have to pay taxes on such income.

Not quite sure what the above means. Are you saying that if I earn money overseas I cannot spend it in Thailand without being taxed on it? Or is it once it has been transferred to a Thai Bank account. Is this only the case for a resident (over 180 days a year) or also for non-resident?

If you were paid into a UK bank account and transferred it to a Thai account, how could they prove that the money was earned the same year.

I would imagine this is almost impossible to implement.

[Sophon]

I am a bit confused with what you are saying here, but Thailand does NOT levy taxes on Foreign Source Income - provided that such income isn't brought into Thailand in the same calendar year it was earned. I.e. : If you have interest income from savings you have in Switzerland, and you keep the interest income outside of Thailand, you will not be liable to pay taxes in Thailand. Although, you will be liable to pay withholding taxes in Switzerland on such interest income. If you've had your savings in a jurisdiction that does not impose withholding taxes on interest income and you didn't bring the interest income in Thailand - you wouldn't have to pay taxes on such income.

Not quite sure what the above means. Are you saying that if I earn money overseas I cannot spend it in Thailand without being taxed on it? Or is it once it has been transferred to a Thai Bank account. Is this only the case for a resident (over 180 days a year) or also for non-resident?

If you were paid into a UK bank account and transferred it to a Thai account, how could they prove that the money was earned the same year.

I would imagine this is almost impossible to implement.

It means that if you have income in one tax year and that income is transferred into Thailand in the same year, then technically you are required to pay Thai tax on the income.

Example:

A pensioner has no savings back home, but he has a monthly pension that he transfers into Thailand as soon as he receives it. As the pension is taxable income and is brought into Thailand in the same tax year, he should pay tax on it in Thailand. And as it is the only money he has, there can be no question as to the source of the money.

However, as you say it's not easy for the Thai tax authorities to prove. If the same pensioner also had some savings (as most have), he would of course choose to bring those savings into Thailand and leave the pension to "mature" back in Farangland. The following year the money from the pension will no longer be income but savings, and can quite legally be brought into Thailand tax free.

Since it's difficult to prove, and most people would not be liable for taxation anyway, there is no real attempt from the Thai tax authorities to tax such income.

Sophon

Edited October 21, 2006 by Sophon

[roderick17]

Thanks Sophon for that useful ( and very clear to read ) advice

Roderick

I am a bit confused with what you are saying here, but Thailand does NOT levy taxes on Foreign Source Income - provided that such income isn't brought into Thailand in the same calendar year it was earned. I.e. : If you have interest income from savings you have in Switzerland, and you keep the interest income outside of Thailand, you will not be liable to pay taxes in Thailand. Although, you will be liable to pay withholding taxes in Switzerland on such interest income. If you've had your savings in a jurisdiction that does not impose withholding taxes on interest income and you didn't bring the interest income in Thailand - you wouldn't have to pay taxes on such income.

Not quite sure what the above means. Are you saying that if I earn money overseas I cannot spend it in Thailand without being taxed on it? Or is it once it has been transferred to a Thai Bank account. Is this only the case for a resident (over 180 days a year) or also for non-resident?

If you were paid into a UK bank account and transferred it to a Thai account, how could they prove that the money was earned the same year.

I would imagine this is almost impossible to implement.

It means that if you have income in one tax year and that income is transferred into Thailand in the same year, then technically you are required to pay Thai tax on the income.

Example:

A pensioner has no savings back home, but he has a monthly pension that he transfers into Thailand as soon as he receives it. As the pension is taxable income and is brought into Thailand in the same tax year, he should pay tax on it in Thailand. And as it is the only money he has, there can be no question as to the source of the money.

However, as you say it's not easy for the Thai tax authorities to prove. If the same pensioner also had some savings (as most have), he would of course choose to bring those savings into Thailand and leave the pension to "mature" back in Farangland. The following year the money from the pension will no longer be income but savings, and can quite legally be brought into Thailand tax free.

Since it's difficult to prove, and most people would not be liable for taxation anyway, there is no real attempt from the Thai tax authorities to tax such income.

Sophon

[kudroz]

Generally speaking, pension income will be sourced in your home country (in the country where the pension arised). Thus, your pension would be taxed in your home country regardless if you have established a non-residence in your home country.

If you bring such pension income in Thailand where you are a tax resident, you would be liable to pay taxes - again - on that income. This is why Thailand has signed many Double Tax Agreement to avoid double taxation.

You can find the list of the countries with which Thailand has signed a tax treaty here: http://www.rd.go.th/publish/766.0.html

[kudroz]

I am a bit confused with what you are saying here, but Thailand does NOT levy taxes on Foreign Source Income - provided that such income isn't brought into Thailand in the same calendar year it was earned. I.e. : If you have interest income from savings you have in Switzerland, and you keep the interest income outside of Thailand, you will not be liable to pay taxes in Thailand. Although, you will be liable to pay withholding taxes in Switzerland on such interest income. If you've had your savings in a jurisdiction that does not impose withholding taxes on interest income and you didn't bring the interest income in Thailand - you wouldn't have to pay taxes on such income.

Not quite sure what the above means. Are you saying that if I earn money overseas I cannot spend it in Thailand without being taxed on it? Or is it once it has been transferred to a Thai Bank account. Is this only the case for a resident (over 180 days a year) or also for non-resident?

If you were paid into a UK bank account and transferred it to a Thai account, how could they prove that the money was earned the same year.

I would imagine this is almost impossible to implement.

It means that if you have foreign source income during one tax year, and during that same tax year you bring foreign money into Thailand - they will assume such money to be taxable up to the amount you declared in foreign source income for that same calendar year.

It is very easy to implement if you do not lie on your tax assessment return.

Edited October 21, 2006 by kudroz

[kudroz]

Thanks for all the replies, will have to go through them more thoroughly but from what I can gather I shouldn't be liable for Thai Tax.

Like I said, I will be in Thailand for less than 180 days per year and will not be doing any work in Thailand and will not have a work permit.

With regards to paying tax in the UK, as long as I spend no more than 90 days there I qualify as non-resident. Non incidental work done in the UK can be taxed but I still have the same Tax allowances as a resident so it's unlikely to amount to much.

I'm perfectly happy paying little or no tax and for your information I'm just trying to maintain my present net salary level. If my employers benefit by the reduced cost in paying my wages they're are more likely to go for my proposal to re-locate to Thailand.

Cheers

Lynchy

Obtaining non-residence is not as simple. Back in the days you could be a "perpetual traveller" and have no tax-residence anywhere - thus avoiding to pay taxes at all.

Nowaydays, governments are very reluctant to give non-resident status to their citizens (or previous residents); they will want to see that you have severed your economic, residential, family (spouse, dependants) ties with their country. Not only that but they will want to see that you have established new ties elsewhere and in many cases; that you are considered a resident for tax purposes in another jurisdiction.

And if that jusrisciction does not levy taxes on worldwide (foreign) income, they will want you to explain why you are moving in such jusrisdiction and you will need to satisfy them that your motivation is not tax avoidance.

Edited October 21, 2006 by kudroz

[lynchy]

Obtaining non-residence is not as simple. Back in the days you could be a "perpetual traveller" and have no tax-residence anywhere - thus avoiding to pay taxes at all.

Nowaydays, governments are very reluctant to give non-resident status to their citizens (or previous residents); they will want to see that you have severed your economic, residential, family (spouse, dependants) ties with their country. Not only that but they will want to see that you have established new ties elsewhere and in many cases; that you are considered a resident for tax purposes in another jurisdiction.

And if that jusrisciction does not levy taxes on worldwide (foreign) income, they will want you to explain why you are moving in such jusrisdiction and you will need to satisfy them that your motivation is not tax avoidance.

I've already spoken to HMRC in the UK and was informed that to be non-resident and therefore not liable for tax in the UK I must spend no more than 90 days in the UK. There is a form available to declare this prior to the tax year. You can also estimate a %age of non-incidental work in the UK and pay tax on that %age. This is agreed with the tax office, again prior to the tax year. You would still have the normal tax allowances and therefore have a small tax bill if any. At the end of the year a standard tax return is completed and any difference has to be paid or refunded. It makes no difference to the UK tax authorities if I will be paying tax or not in another country.

I am not moving to Thailand to avoid paying tax. I work all over the world as a service/commissioning engineer for a Marine electronics company and already spend a good proportion of my year overseas on relatively short trips. I want to base myself in Thailand because I like the place.

Edited October 22, 2006 by lynchy

[kudroz]

Obtaining non-residence is not as simple. Back in the days you could be a "perpetual traveller" and have no tax-residence anywhere - thus avoiding to pay taxes at all.

Nowaydays, governments are very reluctant to give non-resident status to their citizens (or previous residents); they will want to see that you have severed your economic, residential, family (spouse, dependants) ties with their country. Not only that but they will want to see that you have established new ties elsewhere and in many cases; that you are considered a resident for tax purposes in another jurisdiction.

And if that jusrisciction does not levy taxes on worldwide (foreign) income, they will want you to explain why you are moving in such jusrisdiction and you will need to satisfy them that your motivation is not tax avoidance.

I've already spoken to HMRC in the UK and was informed that to be non-resident and therefore not liable for tax in the UK I must spend no more than 90 days in the UK. There is a form available to declare this prior to the tax year. You can also estimate a %age of non-incidental work in the UK and pay tax on that %age. This is agreed with the tax office, again prior to the tax year. You would still have the normal tax allowances and therefore have a small tax bill if any. At the end of the year a standard tax return is completed and any difference has to be paid or refunded. It makes no difference to the UK tax authorities if I will be paying tax or not in another country.

I am not moving to Thailand to avoid paying tax. I work all over the world as a service/commissioning engineer for a Marine electronics company and already spend a good proportion of my year overseas on relatively short trips. I want to base myself in Thailand because I like the place.

Very good for you. But people reading here should take notice that not every country gives non-residence the same way. I was reffering to "governments" as being not the same for every jurisdiction.

[Naam]

"Although, you will be liable to pay withholding taxes in Switzerland on such interest income."

= rubbish! swiss banks only deduct taxes if you are a resident in any country of the European Union. submitted proof that you are a resident of Thailand means ZERO taxes.

[Naam]

Thanks for all the replies, will have to go through them more thoroughly but from what I can gather I shouldn't be liable for Thai Tax.

Like I said, I will be in Thailand for less than 180 days per year and will not be doing any work in Thailand and will not have a work permit.

With regards to paying tax in the UK, as long as I spend no more than 90 days there I qualify as non-resident. Non incidental work done in the UK can be taxed but I still have the same Tax allowances as a resident so it's unlikely to amount to much.

I'm perfectly happy paying little or no tax and for your information I'm just trying to maintain my present net salary level. If my employers benefit by the reduced cost in paying my wages they're are more likely to go for my proposal to re-locate to Thailand.

Cheers

Lynchy

Obtaining non-residence is not as simple. Back in the days you could be a "perpetual traveller" and have no tax-residence anywhere - thus avoiding to pay taxes at all.

Nowaydays, governments are very reluctant to give non-resident status to their citizens (or previous residents); they will want to see that you have severed your economic, residential, family (spouse, dependants) ties with their country. Not only that but they will want to see that you have established new ties elsewhere and in many cases; that you are considered a resident for tax purposes in another jurisdiction.

And if that jusrisciction does not levy taxes on worldwide (foreign) income, they will want you to explain why you are moving in such jusrisdiction and you will need to satisfy them that your motivation is not tax avoidance.

[Naam]

Nowaydays, governments are very reluctant to give non-resident status to their citizens (or previous residents); they will want to see that you have severed your economic, residential, family (spouse, dependants) ties with their country. Not only that but they will want to see that you have established new ties elsewhere and in many cases; that you are considered a resident for tax purposes in another jurisdiction.

And if that jusrisciction does not levy taxes on worldwide (foreign) income, they will want you to explain why you are moving in such jusrisdiction and you will need to satisfy them that your motivation is not tax avoidance.

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sorry "kudroz". i am (not so) humbly beg to differ. your information is ^$*&^(&*^

[kudroz]

Nowaydays, governments are very reluctant to give non-resident status to their citizens (or previous residents); they will want to see that you have severed your economic, residential, family (spouse, dependants) ties with their country. Not only that but they will want to see that you have established new ties elsewhere and in many cases; that you are considered a resident for tax purposes in another jurisdiction.

And if that jusrisciction does not levy taxes on worldwide (foreign) income, they will want you to explain why you are moving in such jusrisdiction and you will need to satisfy them that your motivation is not tax avoidance.

-----

sorry "kudroz". i am (not so) humbly beg to differ. your information is ^$*&^(&*^

You can differ all you want, but I stand firm on what I said above. I went thru the process myself.

For reference, you might want to check this form out. It is the form Canadian have to fil when they want to be recognized as non-resident.

http://www.cra-arc.gc.ca/E/pbg/tf/nr73/nr73-04e.pdf

[kudroz]

"Although, you will be liable to pay withholding taxes in Switzerland on such interest income."

= rubbish! swiss banks only deduct taxes if you are a resident in any country of the European Union. submitted proof that you are a resident of Thailand means ZERO taxes.

Dividends and Interest income paid by Swiss companies are subject to withholding taxes. If your interest income comes from a Swiss company (i.e. Bonds), you'll therefore be liable for withholding taxes prescribed in the DTA.

Also, certain interest-bearing investment held by EU resident are subject to withholding taxes.

Edited October 22, 2006 by kudroz

[kudroz]

"Although, you will be liable to pay withholding taxes in Switzerland on such interest income."

= rubbish! swiss banks only deduct taxes if you are a resident in any country of the European Union. submitted proof that you are a resident of Thailand means ZERO taxes.

I searched a bit for you

Here is a quote from this article of Business Week.

Switzerland has a 35% withholding tax on income earned on Swiss securities and deposits.

Here is a quote from MGI from their guide International Tax Guide for Switzerland.

The standard withholding tax rate on payments of dividends and interest on bank deposits and bonds to resident and non-resident companies and individuals is 35%. Residents are entitled to a refund if they have fully declared the income. There is no withholding from interest paid on ordinary loans (with some exceptions in cantonal law).

Here is a quote from Taxation.ch

The federal withholding tax (Verrechnungssteuer, impôt anticipé) is levied on certain passive income, namely:

* dividends (including liquidation proceeds)

* interest on bank loans and bonds

* lottery prices

* certain insurance payments (life insurance and private pensions)

The federal withholding tax rate on dividends and interest is 35%.

What you probably meant to say, is that the "EU Saving Directive" as explained here by Wikipedia, does not apply to EU non-resident.

It's ok, I know you're confused - it'll be probably best if you consult a tax attorney if your situation relates to the above.

[smilingjim]

Nowaydays, governments are very reluctant to give non-resident status to their citizens (or previous residents); they will want to see that you have severed your economic, residential, family (spouse, dependants) ties with their country. Not only that but they will want to see that you have established new ties elsewhere and in many cases; that you are considered a resident for tax purposes in another jurisdiction.

And if that jusrisciction does not levy taxes on worldwide (foreign) income, they will want you to explain why you are moving in such jusrisdiction and you will need to satisfy them that your motivation is not tax avoidance.

Every country has its own rules and it is important that individuals look at their own home countries rules to sort out if they are resident or not resident. Certainly in the UK the main question is of counting the days in any particular year and over a 4 year period. The OP is from the UK and doesn't have a problem.

Domicile (used to determine liability to UK Inheritance Tax) is a completely different story and is when they will look at whether you have severed all ties from the UK

I know of no tax legislation in the UK or elsewhere requiring citizens to prove they are resident in another country for tax purposes or explain why they are "moving in such a jurisdiction" Which countries do this?

I think all these postings demonstrate what a complex issue taxation is (further omplicated by the fact the legislation changes every year) and how important it is to look very carefully at ALL the facts before making any decisions. Best to seek professional advice if you are unsure.