“They’re not coming after you,” says expert on taxing foreign cash

[reader]

From Pattaya Mail

By Barry Kenyon

Speaking to a packed meeting of Pattaya City Expat Club, Thomas Carden advised worried expats living here on cash already taxed in the home country not to panic. The managing director of the Bangkok-based AITaxAdvisers said the Thai authorities had no intention to punish typical retirees or foreigners married to Thais or bringing up families. Moreover, the double-taxation agreements between Thailand and 61 countries – which included all those represented at the club meeting including the US and the UK – were an added safeguard.

However, Mr Carden did stress that the Thai revenue authority would need to ascertain who had taxable income in Thailand and who didn’t. Therefore, it was likely at some future date that all foreign tax residents – those living in Thailand for more than 180 days in any one year – would need a Thai revenue TIN (tax identification number) and be required to fill in an annual tax return. He speculated that the tax number might become part of the immigration application process for one-year extensions of stay. This was the obvious way to separate the foreign sheep (who had no taxable income here) from the foreign goats (who did).

The managing director explained that the idea of taxing foreign income in Thailand was nothing new. The only difference with the latest Thai revenue rule was that income transferred in any future tax year from January 1 2024 would be liable for tax, whereas the old clause restricted any due tax to cash brought in specifically during the same tax year it was earned. Thus the main idea will be to capture untaxed cash in future which might have been lying for ages in banks abroad or in offshore havens. Mr Carden pointed out that the scheme could even be delayed until January 2025 because no new law had been passed. Rather, the revenue authority had updated its own regulation.

Mr Carden doubted that anything significant would happen before or during January 2024. He suggested that the new Thai government loved the idea of raising mega-cash by proactive taxation, but had significantly underestimated the problems inherent in complex financial data. Thus clarification about details would likely be delayed several months, of course assuming there is a revenue intention to issue any sort of fact sheet. His advice to worried expats is to do absolutely nothing until told clearly to take some action. “Even if tax is due on some income in 2024, the tax form to collect it won’t be due for completion until 2025.” Following the presentation, Robert Chadwick from Business Class Asia gave a secondary talk about buying property abroad, mainly mortgages for American purchases.

 

[PeterRS]

52 minutes ago, reader said:

From Pattaya Mail

By Barry Kenyon

He suggested that the new Thai government loved the idea of raising mega-cash by proactive taxation, but had significantly underestimated the problems inherent in complex financial data. 

So yet again an idea is floated long before the relevant department/s have even considered even the short-term implications of the plan. This is soooo Thai! 

[reader]

From Pattaya Mail

proposal to tax foreign income next year could end up in court

By Barry Kenyon

A former chairman of Baker McKenzie, the influential legal services firm based in Bangkok, has suggested that the controversial Thai Revenue announcement could be contested in court. Kitipong Urapeepattanapong, as reported in Thai Examiner, said that the Revenue was reinterpreting an existing code which has been in operation for 38 years. It is neither a law nor an administrative or ministerial regulation and could well be challenged in court with a good chance of success. He argued that a new law or a royal decree was necessary in these circumstances.

The Revenue last September issued a decree that, starting in January 2024, tax must be paid on income brought in from abroad from another jurisdiction no matter when the cash was generated. This changed the 1985 regulation that arriving income was only taxable if transferred in the same year it was earned. Many expats, probably most, are worried that the Revenue will start taxing them on income already taxed in the home country, mainly pensions and social security payments. If they live in Thailand for more than 180 days in a year, they are regarded as residents liable for taxation.

Kitipong said that his standpoint was shared by other notables, including a former supreme court judge, although the Revenue would presumably argue that its recent statement is simply an enforcement decree which does not require parliamentary intervention. The whole issue joins many other doubts and ambiguities which continue to plague the whole subject. There is no doubt that the Revenue means to target principally Thais or foreigners who enjoy business profits abroad, are currency speculators or have funds in offshore accounts including Hong Kong. But the Revenue has remained silent for the past two months and claims to be collecting information from stakeholders.

Law firm commentators in Bangkok divide into two groups. Some believe that typical expats have nothing to fear if living here on cash already taxed in the home country. They often quote double-taxation treaties which Thailand has made with around 60 countries. Others, however, point out that double-taxation treaties are all different and don’t necessarily reassure on points of concern currently spotlighted in Thailand. Not to mention the potential paperwork which expats might have to fill in annually to convince the Revenue of their exempted status. Some are suggesting that large sums should be transmitted to Thailand before the end of 2023. Meanwhile the waiting game for clear information drags on and on. The real answer, of course, is for Thailand to follow the example of Singapore and Hong Kong where the only income tax levied is on cash specifically earned in their own specific territories.

[reader]

From Pattaya Mail

Myths about Thai expats and those income tax changes starting very soon

By Barry Kenyon

Most expats in Thailand live on income or capital, or both, built up over many years with tax already paid in the country of passport. They are understandably worried by the imminent change in Thai Revenue practice – it is not a new law passed by parliament – which will potentially tax new and assessable foreign-sourced income beginning in January 2024. Pattaya Mail has received more concerned reader feedback about this issue than any other during 2023. With inauguration day fast approaching, here is our summary for the typical expat who does not indulge in major currency speculation, huge profit-taking from overseas businesses nor off-shore bank accounts hiding their cash.

Has the Thai Revenue clarified the position of typical expats? No. It is commonly assumed that the Revenue is mainly interested in rich Thais and foreigners who have manipulated Thai tax rules in the past to avoid payments from overseas. Typical expats with home-country pensions or social security allowances are not part of this agenda, though in theory they could be caught in the crossfire. Talks are continuing between senior accountancy firms, lobby groups and the Revenue about this and other issues. Don’t expect answers any time soon.

Will my international cash transfers to Thailand from January 1 2024 be reduced on arrival by a Bank of Thailand tax levy? No. There will not be any changes from current practice. You pay tax in arrears in Thailand by registering at the Revenue for a tax identification number and paying tax due, if any, in the next fiscal year. There is no PAYE procedure in Thailand. The misunderstanding that Thailand will tax international transfers as the cash arrives is a widespread misconception

hould I apply for a tax identification number? Not unless you receive an instruction from a government source or the immigration, both very unlikely scenarios. It is almost certain that, at any rate in the early years, tax registration will be voluntary. If you believe you have been taxed already on your cash sent to Thailand, it’s best to do nothing now. There is no need to employ the services of tax accountants if you are a typical expat (unless working here on a work permit which is a separate subject). The tax situation as regards cash sent to Thailand to purchase property is a separate source of ambiguity.

Most countries with expats here have a double taxation treaty with Thailand, so is that relevant? That depends on the exact wording of complex documents which differ substantially one from another. Double taxation treaties are designed to be used only in cases where Thailand and the first country cannot agree on who has the right to tax. If Thai Revenue were to clarify unambiguously that previously taxed income would not be retaxed, the issue would largely die.

If I need to later, how will I prove that my cash transfers to Thailand have already been taxed? This will vary on an individual basis. An expat’s tax return or the response by the internal revenue service of the first country might suffice, or a simple statement on a tax form might be acceptable. Few experts, if any, believe that the Thai Revenue has the staffing or the expertise to deal with more than 300,000 expats who are tax residents because they spend more than 180 days here in a fiscal year. It bears repeating that the registration process will likely be voluntary. The Thai government is looking for the big fish, Thai or foreign, and not the small fry.

What is the Thai government really up to? The new post-coup government simply wants to raise cash, in part to help pay for its populist policies such as the 10,000 baht give away scheme. One can assume that nobody in authority has yet thought seriously about the effects of the change on the expat market here and the potential unpopularity amongst long-term visa holders including one year retirement extensions, Elite and the 10 year Long Term Residence. If you are an expat living in Thailand for at least half the year, without any major financial secrets to keep from Thai Revenue, then it’s best to do nothing until the situation is clearer. That’ll take several months yet. But no point in packing your bags in disgust and leaving for Cambodia. They are a CRS country too.