Expats seek income tax clarification from the prime minister

[khaolakguy]

Somehow not reassured by this information, although thank you for providing it. 

 

I wonder if the Thai Revenue Department have been taking on significant numbers of extra stall to deal with the additional workload.........

[Moses]

On 7/5/2024 at 11:18 AM, bkkmfj2648 said:

I am also seriously thinking of implementing a 4-4-4 tax minimalization plan where I would live in 3 different countries to avoid the 180 day threshold stated above to be considered a tax resident within a year in Thailand.

The idea is to live in 3 different countries in future tax years as follows:

• 4 months in Thailand,
• 4 months in Vietnam,
• 4 months in (to be determined - could be Malaysia or the Philippines).

It will cost you much more than tax optimization. And may cost you more than just to pay tax. The easiest way is just have bank card in foreign bank and use it for all your need.

[khaolakguy]

3 hours ago, khaolakguy said:

Somehow not reassured by this information, although thank you for providing it. 

 

I wonder if the Thai Revenue Department have been taking on significant numbers of extra stall to deal with the additional workload.........

Extra staff somehow became extra stalls. Although they might need those too.........

[reader]

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[Keithambrose]

Thanks!

[reader]

From Pattaya Mail

Navigating Foreign Pension Income Tax for Expatriates

After receiving numerous inquiries about personal tax management from foreigners residing across Thailand, I am revisiting this topic to explain the implications of foreign pension income in light of new regulations.

This report provides an in-depth look at how P.O. 161-162/2567 affects foreign pension income in Thailand, equipping expatriates with the knowledge to navigate this new regulatory environment effectively.

As Thailand continues to refine its taxation policies to accommodate its growing expatriate population, the recent introduction of regulations P.O. 161-162/2567 by the Thai Revenue Department is pivotal for those receiving foreign pension income. This change aims to streamline the financial transitions for foreigners living in Thailand, particularly those who rely on pensions sourced from abroad.

Decoding P.O. 161-162/2567
Effective as of early 2023, these regulations provide crucial clarifications for foreign nationals regarding the taxation of their pension incomes. Notably, P.O. 162 explicitly states that foreign-sourced pension income received before January 1, 2024, can be brought into Thailand without incurring local taxes, at any future point. This provision marks a significant shift in Thailand’s approach to the fiscal management of foreign pensions, potentially affecting thousands of retirees across the kingdom.

Role of Double Taxation Agreements (DTAs)
Thailand’s network of Double Taxation Agreements (DTAs) plays a crucial role in the implementation of these regulations. These agreements, designed to prevent the same income from being taxed by two countries, ensure that pensions are taxed only in the country of origin. Under the new rules, DTAs will continue to protect expatriates by preventing Thailand from taxing pension incomes that have already been taxed abroad or are set to be taxed by retirees’ home countries. However, should there be any discrepancy in tax rates, additional taxes may still be collected in Thailand, although such measures are not yet officially declared and enforced.

Financial Planning Considerations
Understanding and leveraging P.O. 161-162/2567 involves more than just knowing the law it’s about strategic financial planning.
Tax Planning: Expatriates should consider how and when they remit their pensions to Thailand, taking advantage of the tax exemptions for income earned before 2024.
My Advice: Given the complexities of DTAs and Thai tax law, consulting with a financial advisor or tax professional is advisable. I can provide tailored advice on how to optimize pension remittances and minimize tax liabilities.

Conclusion
The Thai Revenue Department’s update via P.O. 161-162/2567 offers a more favorable and clear tax landscape for expatriates with foreign-sourced pensions. As Thailand becomes an increasingly popular retirement destination, these changes are welcomed by many in the expatriate community, providing clarity and confidence in managing their retirement finances.

Call to Action
Expatriates benefiting from foreign pensions are encouraged to review their financial strategies and consult with tax professionals to fully understand the implications of these new regulations on their personal financial situations.

Victor Wong
(Peerasan Wongsri)
Financial Analyst and Tax Expert

[vinapu]

On 7/13/2024 at 11:39 PM, reader said:

 

Role of Double Taxation Agreements (DTAs)
Thailand’s network of Double Taxation Agreements (DTAs) plays a crucial role in the implementation of these regulations. These agreements, designed to prevent the same income from being taxed by two countries, ensure that pensions are taxed only in the country of origin. Under the new rules, DTAs will continue to protect expatriates by preventing Thailand from taxing pension incomes that have already been taxed abroad or are set to be taxed by retirees’ home countries. However, should there be any discrepancy in tax rates, additional taxes may still be collected in Thailand, although such measures are not yet officially declared and enforced.

 

my underscore

that's nice clarification and explanation of how double taxation works in vast majority of tax agreements between countries.

If one's pension or whatever income is taxed at source country at say, 15% and Thai tax rate is 20%, he will be asked to an additional 5% of tax to be paid in Thailand.

If situation is in reverse i.e. source country taxes at 20% and Thai tax rate is 15% , than Thailand is entirely satisfied and one should check tax laws of source country if may receive refund of that %5 overpayment there. Tax treaties often stipulate tax rate of pension paid to a resident of  "other contracting state" 

[bkkmfj2648]

@vinapu - thanks for the knowledge sharing.

One more question, in order to calculate the DTA (Double Taxation Agreement) differentials it assumes:

• Income tax returns are already completed in both countries

Thailand has set the first tax filing deadline for the application of these new tax rules on our year 2024 income, as 31 March 2025.

However, if in your home country, your tax deadline is 15 April 2025 --> does this imply that you need to accelerate your home country filing in order to be able to meet the tight Thailand tax deadline?

Otherwise, it would not be possible to calculate the DTA differentials and know who to pay what to and to avoid a late filing penalty ??

Below are the Thailand PIT (Personal Income Tax) rates:

Thailand PIT source = https://taxsummaries.pwc.com/thailand/individual/taxes-on-personal-income

 

[10tazione]

3 hours ago, bkkmfj2648 said:

However, if in your home country, your tax deadline is 15 April 2025 --> does this imply that you need to accelerate your home country filing in order to be able to meet the tight Thailand tax deadline?

In many countries accelerating tax declaration lies outside of our control.

In some countries you have the following options:

Apply for deadline extension

or

Do the tax declaration within regular deadline with the figures at the time of declaration and file an update later in case final figures are different .

I suppose will be something similar in Thailand.

Paying taxes in two countries can be complicated ...

 

[vinapu]

7 hours ago, bkkmfj2648 said:

 

One more question, in order to calculate the DTA (Double Taxation Agreement) differentials it assumes:

• Income tax returns are already completed in both countries

Thailand has set the first tax filing deadline for the application of these new tax rules on our year 2024 income, as 31 March 2025.

However, if in your home country, your tax deadline is 15 April 2025 --> does this imply that you need to accelerate your home country filing in order to be able to meet the tight Thailand tax deadline?

 

 

3 hours ago, 10tazione said:

Do the tax declaration within regular deadline with the figures at the time of declaration and file an update later in case final figures are different .

Paying taxes in two countries can be complicated ...

 

this is what I would do.

Trying to file everything earlier to catch both deadlines   is still more preferable options as corrections quite often are more scrutinized than original filing At least that is the case where I live .

paying taxes  is easy , filing tax declarations is complicated in many countries as politicians like to mess with rules every election cycle to come up with election sausage.

In some federal countries people actually need to file two sets of declarations - federal and state / provincial. I was told in New York they even have city levied income tax but not sure it's correct. Trump would know better I guess

[bkkmfj2648]

 

https://www.pattayamail.com/latestnews/news/dont-panic-because-thai-revenue-has-written-to-100000-tax-residents-urging-registration-465598

Don’t panic because Thai Revenue has written to 100,000 tax residents urging registration

Contrary to fake news, no expats have received Thai Revenue letters urging them to register.

Panicky expats in Thailand have been advised that none of the 100,000 tax residents in receipt of advisory letters from the Thai Revenue Department (TRD) are foreigners. Nor does the letter have anything to do specifically with transmitting overseas income to Thailand. According to mainstream media, TRD Director General Kulaya Tantitemit stated that the letters had been posted to Thai nationals with financial assets, urging them to register. About half that number had done so and staff were following up on the rest.

Director General Kulaya stated that her department was widening the tax base and looking to increase revenue which had been negatively affected by the reduction in the number of condominium units sold over the past year. She anticipated that the main growth areas in taxation would be in energy businesses, financial services and tourism. She made no specific reference to overseas income although, of course, that is potentially taxable.

Expats are currently concerned about the closing of a tax loophole which means that their “assessable” overseas income to Thailand becomes taxable from the start of 2024 provided they are tax residents remaining in Thailand for at least 180 days during the calendar year. The actual parameters and liabilities remain unclear to say the least with some tax lawyers saying they expect TRD to make further announcements before the year’s end.

The TRD does not have access to foreigners’ Thai addresses unless, of course, they choose to register with the government department. It has been rumored that such registration could become part of the process of renewing annual extensions of stay based on retirement or marriage, but the immigration bureau knows nothing of such a plan. In any case, there is no automatic connection between the type of visa granted and eligibility for tax residency. For example, some tourists could clock up 180 days in a year by exploiting the recently revised exempt visa regulations. There’s a huge amount of water still to pass under this particular bridge. 

[vinapu]

3 hours ago, bkkmfj2648 said:

For example, some tourists could clock up 180 days in a year by exploiting the recently revised exempt visa regulations. 

if such tourist is from so called 'treaty country" i.e. country which has tax treaty with Thailand it should not create any problems as treaties usually contain provision that  you are considered resident of country where you have permanent home available. Long term rent counts as such , not just an ownership.