Thailand to implement CRS exchange of information

[Guderian]

A friend just sent me this. Thailand is to fully implement GATCA/CRS exchange of information by 2022.

 

https://home.kpmg.com/xx/en/home/insights/2017/03/tnf-thailand-status-of-common-reporting-standard-implementation.html

 

I can’t find much on this topic on the board but here’s a thread I started last year with some background:

 

https://www.thaivisa.com/forum/topic/957393-fatca-form-from-barcalys-international/

 

At the moment, with the Thai RD being very relaxed about overseas income, and generally not having a clue which expats are actually tax-resident here under the 6-month rule, it doesn’t seem like a show-stopper.

 

If the Thais change the rules regarding taxation of overseas income to include savings as well as current income, however, then things would change drastically. Especially so for countries with no tax treaty with Thailand, like the UK. In principle you would then end up with your British pension being double-taxed, once in the UK and once in Thailand, with no relief from either party.

 

Does anybody know anything more?

[Guderian]

No replies?

 

Does that mean nobody is concerned, or else there's nobody on this forum with signifcant tax-free offshore income and investments? I find that a bit hard to believe.

 

Or is it too arcane a subject for people to be bothered understanding the implications?

 

 

[lkn]

On 5/18/2017 at 2:48 PM, Guderian said:

If the Thais change the rules regarding taxation of overseas income to include savings as well as current income, however, then things would change drastically. Especially so for countries with no tax treaty with Thailand, like the UK. In principle you would then end up with your British pension being double-taxed, once in the UK and once in Thailand, with no relief from either party.

But this doesn’t have anything to do with CRS. If Thailand joins the CRS then they will send an annual report to your government stating that you have a bank account in Thailand and its balance.

 

I don’t see why you think CRS implies that they’ll start to tax foreign income, it’s actually the opposite that is the purpose of CRS, e.g. if you have significant offshore income that gets deposited to your bank account in Thailand, this will be reported to the British government, and they may want an explanation of why you have not paid tax on these money.

[Guderian]

12 hours ago, lkn said:

But this doesn’t have anything to do with CRS. If Thailand joins the CRS then they will send an annual report to your government stating that you have a bank account in Thailand and its balance.

 

I don’t see why you think CRS implies that they’ll start to tax foreign income, it’s actually the opposite that is the purpose of CRS, e.g. if you have significant offshore income that gets deposited to your bank account in Thailand, this will be reported to the British government, and they may want an explanation of why you have not paid tax on these money.

You haven’t understood it. Many foreign retirees here have offshore investments and income in offshore tax havens like Jersey, Panama, Dubai, or Gibraltar. They’ve all signed up to CRS so now any bank you use in those countries (and pretty much all other serious countries as they’ve all joined CRS) will make an annual report of the money that arrives in your account to your home tax authorities.

 

That in itself is no problem, most people concerned will be out of their home country for long enough every year that they won’t be resident there for tax. When Thailand was outside CRS it was also no problem, as there was no reason for your local taxman to report your (legally tax-free) offshore income to the

Thai RD.

Now that Thailand is joining up any and all offshore income will end up being reported to the Thai RD who will have to decide if it’s taxable or not.

 

At the moment, as long as it’s not remitted into Thailand in the year during which it’s made, it’s not taxable, but they may change that. Then anybody with offshore income will end up paying full Thai tax on it.

 

Worse still, for anybody with a pension or other income that’s already taxed in their home country, it will now be taxable in Thailand as well. Unless Thailand has a tax treaty with your home country you will end up being double-taxed on any and all income from your home country as well as paying Thai tax on any formerly tax-free offshore income.

 

This may not affect people working in Thailand who don’t have any overseas income, but for people who’ve chosen to retire here it’s a potential game changer. Few people will want to pay 50%+ tax on their pension just for the delight of living in Thailand.

[topt]

4 hours ago, Guderian said:

You haven’t understood it. Many foreign retirees here have offshore investments and income in offshore tax havens like Jersey, Panama, Dubai, or Gibraltar. They’ve all signed up to CRS so now any bank you use in those countries (and pretty much all other serious countries as they’ve all joined CRS) will make an annual report of the money that arrives in your account to your home tax authorities.

 

 

That in itself is no problem, most people concerned will be out of their home country for long enough every year that they won’t be resident there for tax. When Thailand was outside CRS it was also no problem, as there was no reason for your local taxman to report your (legally tax-free) offshore income to the

Thai RD.

Now that Thailand is joining up any and all offshore income will end up being reported to the Thai RD who will have to decide if it’s taxable or not.

 

 

At the moment, as long as it’s not remitted into Thailand in the year during which it’s made, it’s not taxable, but they may change that. Then anybody with offshore income will end up paying full Thai tax on it.

 

 

Worse still, for anybody with a pension or other income that’s already taxed in their home country, it will now be taxable in Thailand as well. Unless Thailand has a tax treaty with your home country you will end up being double-taxed on any and all income from your home country as well as paying Thai tax on any formerly tax-free offshore income.

 

 

This may not affect people working in Thailand who don’t have any overseas income, but for people who’ve chosen to retire here it’s a potential game changer. Few people will want to pay 50%+ tax on their pension just for the delight of living in Thailand.

Guderian if you read your own OP it states that this still has to be passed into Thai law and "is expected" to be implemented in 2022........

With respect this is the view of a consulting company. It may happen earlier or conversely may not happen at all.

 

Even if it comes to pass as lkn says this is just about reporting. Enacting laws to then tax said remittances is a whole other story.  Also unless you are actually tax registered in Thailand and your offshore/home country knows this then they are unlikely to be telling the Thai RD anything.......more likely Thai banks will need to tell the relevant European/US/Oz etc banks about your deposits and any interest received.

So yes if they do something it may be game changing but at the moment I would suggest that the jury is well and truly out to lunch on this........

 

[lkn]

On 5/18/2017 at 2:48 PM, Guderian said:

If the Thais change the rules regarding taxation of overseas income to include savings […] In principle you would then end up with your British pension being double-taxed, once in the UK and once in Thailand, with no relief from either party.

In addition to what has already been written, i.e. that CRS is just about reporting of your account’s balance at the end of the year, and this reporting would be from Thailand to Europe/Australia/America, you are making a rather unlikely assumption about Thailand passing laws to tax overseas savings, and even owned by foreigners. This would be extremely controversial and rather unprecedented!

 

Furthermore, there is actually a U.K./Thailand tax treaty to avoid double taxation: https://www.gov.uk/government/publications/thailand-tax-treaties

 

So the only problem I see with Thailand joining CRS is if you receive income in a tax haven, bring that to Thailand, and then rely on your home government not knowing about this, as after CRS, Thailand will report your end-of-year balance to your government, so your government may wonder why your Thai account balance has increased by 10 million baht in a year where you only declared income corresponding to one million baht.

 

[Guderian]

13 hours ago, lkn said:

In addition to what has already been written, i.e. that CRS is just about reporting of your account’s balance at the end of the year, and this reporting would be from Thailand to Europe/Australia/America, you are making a rather unlikely assumption about Thailand passing laws to tax overseas savings, and even owned by foreigners. This would be extremely controversial and rather unprecedented!

 

Furthermore, there is actually a U.K./Thailand tax treaty to avoid double taxation: https://www.gov.uk/government/publications/thailand-tax-treaties

 

So the only problem I see with Thailand joining CRS is if you receive income in a tax haven, bring that to Thailand, and then rely on your home government not knowing about this, as after CRS, Thailand will report your end-of-year balance to your government, so your government may wonder why your Thai account balance has increased by 10 million baht in a year where you only declared income corresponding to one million baht.

 

 

Thanks, I didn’t know about the tax treaty, since they don’t index the state pension due to there being no (social security?) treaty I'd assumed that tax came under the same blanket. Evidently not, though.

 

I’m not concerned with HMRC as I’m non-resident for UK tax so whatever I make overseas doesn’t matter to them, they’re only interested in money arising in the UK. I’m more concerned about Thailand changing its stance on not taxing income from overseas as long as it’s not remitted into Thailand in the year that it’s made. But as you say, there’s a long time to go and nobody knows what will change, so maybe I’m just worrying too much.

[Naam]

On 5/20/2017 at 3:46 PM, Guderian said:

Now that Thailand is joining up any and all offshore income will end up being reported to the Thai RD who will have to decide if it’s taxable or not.

 

 

At the moment, as long as it’s not remitted into Thailand in the year during which it’s made, it’s not taxable, but they may change that. Then anybody with offshore income will end up paying full Thai tax on it.

 

a change is of course possible but highly unlikely. simple reason: the tax exemption "not remitted into Thailand..." applies also to Thais. do i need to say more?

[Naam]

3 hours ago, Guderian said:

there’s a long time to go and nobody knows what will change, so maybe I’m just worrying too much.

don't worry, be happy 

[Naam]

16 hours ago, lkn said:

In addition to what has already been written, i.e. that CRS is just about reporting of your account’s balance at the end of the year, and this reporting would be from Thailand to Europe/Australia/America

there's no such thing like Thai authorities reporting holdings of any person (except U.S. and Eritrean citizens) to any government as long as these persons have their tax residence in Thailand.

 

what you seem to forget is that Thai authorities will receive reports from financial institutions located offshore pertaining to the holdings of Thailand tax residents.

 

the latter is Guderian's concern.