Thailand tax changes

[10tazione]

from https://www.thaienquirer.com/50744/thai-government-to-tax-all-income-from-abroad-for-tax-residents-starting-2024/

[...] According to the document, “…those that have earnings from occupation or business abroad or wealth that is located abroad…and has brought these assets into Thailand…must factor this into their personal income tax for the year.”

The program will begin January 1, 2024 and apply only to tax residents in Thailand meaning tourists and short term workers will be exempt. Also exempt will be those who have been taxed in a foreign country that has a standing Double Tax Agreement with Thailand. [...]

[fedssocr]

They also followed up later to indicate that things like US retirement income that's taxed in the US is exempt because of treaty obligations. It seems that the aim is to go after Thai tax avoiders

[vinapu]

People in this situation when as residents of one country are required to report income from another country need to check Tax Treaty or Double Tax Agreement between two counties in question very carefully or seek qualified advice.

Not always fact that income is taxed in other country means that is exempt from taxation in country of residence. Some countries use concept of foreign tax credit instead when taxes paid to foreign country are accounted  for but if additional tax obligation is created they still may need to pay difference.

to illustrate how it works (scenario and numbers are made up )

Thai resident must report income of equivalent of  100 000 baht from Tuvalu on which 10 000 baht tax was paid there.

If that 100 000 generates 12 345 tax in Thailand  he still may need to pay up that 2345.

[Midguy1]

KPMG have issued a briefing note:  https://kpmg.com/us/en/home/insights/2023/09/tnf-thailand-interpretation-foreign-sourced-income-thailand-tax-residents1.html

[Gaybutton]

Moral panic takes over the expats and Thai taxation furor

By Barry Kenyon

September 23, 2023

The fear that retirees and other non-working expats are about to be taxed on their overseas pension income has created a field-day for internet warriors, click baiters and nervous long-term visa holders. But calmer reality suggests it may be premature to start packing your bags in utter disgust.

The Thai revenue department has recently stipulated that, from the next calendar year, “earned income from overseas” will be liable for personal income tax for those (Thais or foreigners) spending up to 180 days a year in the country. This is, in fact, an old revenue rule but has been updated to close the loophole in which those liable delayed transferring their income until a later year.

To pay personal income tax you need a TIN (tax identification number) issued by the revenue department. Without that there can be no income tax liability and, one assumes, most foreign retirees have never heard of a TIN and certainly haven’t got one. The latest move is clearly aimed at currency traders, those involved in stock market trading and anyone holding earned foreign income in an offshore account for over twelve months to avoid tax. They have always been the target.

The new ruling has nothing whatever to do with your visa which is irrelevant to tax status anyway. Let’s take a simple example. Those holding an Elite visa or an annual retirement extension might, or might not, spend more than six months a year in Thailand. There is evidence that many Chinese holders of Elite regularly come in and out of Thailand but do not clock up 180 days per annum. On the other hand, a tourist Brit or an American (amongst others) could easily reach 180 days by entering the country by air several times via the 30 days visa-exempt rule, extending at immigration and making an occasional visa run.

Thus the issue is whether or not the revenue department has now extended the residence rule (180 days in a year) to include permanent sun worshippers, expats married or with families to support, adult students learning Thais and a diverse assembly of pensioners in their 60s, 70s and beyond. Thai law and financial regulations are often kept deliberately vague and the 100 words of the Thai language devoted to the subject in question in the latest revenue announcement certainly don’t provide a definitive answer. Nor do the translations in English provided on social media.

Many active on social media are advising panicky expats to wait for a broader explanation from the revenue. Fine, except that there may never be one. If the sole purpose is to catch those TIN holders who have delayed sending their income to Thailand, there’s nothing more to say. But if there is a real attempt to punish financially all expats, as suggested, one can only imagine the bureaucratic chaos, daily huge queues at revenue offices (with too few staff to cope and knowing nothing of double taxation treaties) and the total collapse of international financial confidence. Within days, a Thai general would appear on the TV, accompanied by somber military music, to explain why tanks were in the streets of Bangkok. Apologies for the inconvenience.

https://www.pattayamail.com/latestnews/news/moral-panic-takes-over-the-expats-and-thai-taxation-furor-441317

[10tazione]

"Your visa which is irrelevant to tax status anyway"

Is that correct? I thought the Long Term Resident Visa has some special tax rules / exemptions (tax excemption for overseas income + 17% tax rate for higly skilled professionals), so the visa can't be irrelevant to tax status?

 "Without [TIN] that there can be no income tax liability"
Is that correct? Sounds weird to me, like "If I don't apply for TIN I don't need to pay tax?", but surely there would be some obligation to apply for a TIN under certain circumstances, or how is this sentence meant?

 

[Gaybutton]

2 hours ago, 10tazione said:

surely there would be some obligation to apply for a TIN under certain circumstances, or how is this sentence meant?

Under certain circumstances, yes.  I don't believe living in Thailand under the retirement visa is one of those circumstances.  I think what most of us on the boards who stay longer than 180 days per year in Thailand are concerned about is the retirement visa.  As long as I've lived in Thailand, which has been under the retirement visa from day 1,  I have never been asked to apply for, notified, had anything mentioned to me by immigration, or anything else about a TIN.  No mention by any news articles, postings by legal authorities, embassies, banks, or visa services, about a TIN.

Apply for a TIN?  I doubt it works that way.  If you need a TIN, you would be informed and assigned one.

In other words, I don't know who is required to have a TIN, but obviously not required for the retirement visa.  I would guess that foreigners in Thailand for business purposes are the ones who might have to have a TIN.

If those of us under the retirement visa are ever required to pay this tax or asked to obtain a TIN, I'll be very surprised.  I don't even know who you would have to contact, what you would have to do, or where you would have to go to get one.

I suggest that people worried about it stop worrying.  I've lived in Thailand probably much longer than most reading this and nothing about income tax, a TIN, or anything else about paying tax has ever been mentioned to me.  If retirees were required to have a TIN, I would think we would have been informed many years ago.  I truly believe few, probably none of us, are going to be subject to any upcoming tax regulations.

 

 

[10tazione]

The following source reveils that you must apply for a TIN if you are a foreigner and have assessable income.
For having assessable income, you must either have

• income from a source in Thailand (selling your body?)
• income from a source outside Thailand and being a Thailand resident; Thailand resident is residing 180 days or more / year in TH

Wether income outside Thailand is assessable or not depends on the double tax agreement with the respective country. For example, a pension from the USA currently is not assessable income. So if you have nothing else, currently you don't need a TIN. If you have other income, you would have to study the law in more depth.

Therefore, at least for some types of income like pensions, If they wanted to change that, they would need to change some/most? of those 61 double tax agreements ...

https://www.rd.go.th/english/21987.html

https://www.rd.go.th/english/38306.html

[10tazione]

... and btw, I am not worried, I am not moving (yet) to Thailand.

[vinapu]

Definitely issue raised hell of debate and no wonder, it's about money. My country has very well established laws and procedures related to taxing foreign income and still often there's confusion and rightly so. 

Double tax agreement and tax treaties are following usually similar principles but devil is in particulars. It's why my advice to everybody who is or may plan to become Thai resident is to find out if there's tax treaty between his country and Thailand, obtain copy from the web and study it carefully with COOL HEAD, without any preconceived notions. 

One may find that his income is clearly listed as exempt and stop worrying right away but also surprise may await that is was supposed to be taxed where he resides and fact that he was never asked about the matter or was not aware of may not be relevant, at least for last couple years , depending of Thai statue of limitations.

Don't assume that if say, Vanuatu pension is exempt, Samoa one also will be. It should work that way but it is not.

There was recent discussion about British pension received abroad and we know that if received in Canada or Australia is not indexed  but if paid to USA or Slovakia it is.

Logic? no. Fair ? again no,  but taxation is not about fairness , is about extracting money from general population.

Another issue which may affect your tax situation is whether you maintain home in your other country or don't have permanent residence there.

So calm down everybody and do your due diligence.

[vinapu]

6 hours ago, Gaybutton said:

But if there is a real attempt to punish financially all expats, as suggested, one can only imagine the bureaucratic chaos, daily huge queues at revenue offices (with too few staff to cope and knowing nothing of double taxation treaties) and the total collapse of international financial confidence. Within days, a Thai general would appear on the TV, accompanied by somber military music, to explain why tanks were in the streets of Bangkok.

I'm surprised that such level headed guy as Mr. Kenyon quoted by gaybutton above could come with such a nonsense. Coup d'etat over taxing affluent resident foreigner's income is surely thing neither  Andersen nor Grimm brothers or other fairly tales authors would have invented.

As for international financial confidence closing any tax loophole rather strengthens it than weakens. There's nothing unknown to science about taxing  foreign income earned by residents as general principle although a lot of strange regulations can be found. We just need to find if they  apply to us or not. That's all.

Another example of strange quirk : if in my country I received pension and interest income  from USA ( I wish) and each had some tax deducted by USA before paid to me , I can claim against my obligation  tax deducted from pension  but not one deducted from interest . Why ? because USA is not supposed to deduct tax from interest paid to residents of my country.

Simple? Easy?  Now you know what I mean about cool head.

[KeepItReal]

It is always best to consult with an actual professional that knows the topic. My Certified Public Accountant knows more about double tax agreements and tax resident status than I would ever care to approach. I pay her a reasonable feel for a consultation every year where I get the right advice aimed at my circumstances.  It's hard to beat. 

[10tazione]

26 minutes ago, KeepItReal said:

I pay her a reasonable feel

aha

[reader]

From Pattaya Mail

Income tax fears replace insurance worries in latest Pattaya expat poll

By Barry Knyon

The new top concern of Pattaya expats, almost 60 percent, is the recent announcement of the Thai internal revenue service to tax all income brought into Thailand by both Thai nationals and farang residing here over 180 days in a calendar year. According to a straw poll of 150 expats (UK, US, EU, Australia), conducted in Jomtien soi five from 26-28 September, the subject has displaced visa and insurance concerns from their traditional first place in past polls.

“Touch my pension and I’m out of here, was the response of many expats. Some, mostly retirees, said they were reviewing their options such as moving to Cambodia or the Philippines where tax laws are believed to be softer or ignored for foreign residents. However, about a quarter of the respondents had never heard of the proposal or thought it did not apply to them. Five respondents thought it only referred to currency speculators, holders of off-shore accounts in Hong Kong or elsewhere or rich investors in overseas businesses.

Pattaya Mail contacted a Thai tax lawyer for his personal perspective. Here is his reply, “Thai revenue is simply updating an old law by saying that tax must be paid, from next year, on foreign income even if the incoming money’s arrival is delayed into a future tax year. But there is no intention to tax again income that has already been taxed abroad. For example, the pensions of most foreign retirees are taxed initially in their home country and there are, in any case, double taxation treaties with 61 countries. The issue is whether all resident expats will need to register with Thai revenue to obtain a tax identification number (TIN) to explain their individual circumstances. Nobody can answer detailed questions until the revenue issues more guidelines for the non-business community.”

Second subject choice for most respondents was concern that more long term visas would soon require compulsory hospital insurance. The prime worry was amongst the holders of non “O” retirement extensions or the annual extension granted to foreigners with a Thai spouse. There have been no official announcements, but remarks earlier in the year by a deputy national police chief, Surachate Hakparn, seem to be the main source of worry. Several respondents said they had now moved to Elite visas which guarantee multiple-entry to Thailand for 5-20 years depending on the initial cash sum paid, starting with 900,000 baht. The whole subject is controversial in Thai government circles as the evidence shows that most non-payment of hospital bills by foreigners arises from motorbike accidents involving short-term tourists under 40.

Other subjects of worry raised in the field study included the future of night life in the city which some see as short-term as the Pattaya tourist profile changes to Asia and away from Europe and the future of ganja leisure smoking in view of recent government announcements to restrict use to medical treatment. Brits are understandably upset by their “frozen” old age pensions here, although respondents seem resigned to the inevitability of discrimination. Four respondents primarily raised the issue of inflation in supermarket products, whilst three referred to traffic jams which they blamed on city hall or too many music festivals. A sole Australian expat said she was really worried about an influx of Americans if Donald Trump won the general election next year.