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.

[bkkmfj2648]

Interesting opinion piece from Ben Hart - an American attorney who became a Thai citizen regarding the new proposed global taxation issue --> he calls it, "Kill the Golden Goose"

 

 

[reader]

From Pattaya Mail

Play ball or footsie with the Thai Revenue Department

By Barry Kenyon

The TRD rule revision – it’s not actually a change in the law – to tax assessable overseas income remitted to Thailand since January 1 2024 continues to baffle many elderly expats. A recent Pattaya poll of 100 retirees and Facebook blogger research suggest that the overwhelming majority have only a faint idea about the implications for them. The typical reaction stated was to carry on regardless with a threat to quit Thailand if the taxman comes knocking.

Of course, not everyone needs to worry. Those Thais or foreigners who spend less than a total of 180 days here in the calendar year 2024 are not deemed to be tax residents. Also exempt are those who are remitting income here which was actually earned in the year 2023, or earlier, as well as those who do not transfer any overseas cash at all in the current calendar year. Those who hold a 10-year Long Term Residence visa are also excused, although some accountants point to the small-print audit which will occur after the first five years completion.

Some expats have signed up with tax lawyers or accountants who offer to act on their behalf. The general advice given so far seems to emphasize that the company will take care, if necessary, when the form filling season is upon us – January to March 2025. One is kinda reminded of the requirement for expats leaving Thailand in the 1980s to get a civil servant to stamp an immigration-required form (the informal fee was 500 baht) which stated that there was no income tax due. Of course, tax affairs are much more sophisticated these days.

The experts are not unanimous. ASEAN Now runs a huge and popular forum about remitted income, but the top-notch contributors often disagree. Does use of a foreign credit card here count as assessable income? Are double taxation agreements the loophole hoped for? Is cash remitted to Thailand to buy a condominium taxable income? Is the TRD anyway interested in pensioned expats with a modest income? Will anything awful happen if you hide your head in the sand? Ask ten experts and you’ll get several contradictory interpretations.

Some commentators see the salvation army arriving in December. This is traditionally the season for TRD to print new forms, so maybe there will be a commentary (in English) making clear all that has hitherto been speculative. Others will say that detailed notes are not the TRD style. The Thai tax system is an honor exercise. That means it’s your responsibility to get a tax identification number and fill in a tax form if you believe you need to. It’s not required to provide supporting documentation unless later you are chosen for audit. The fact you submit a tax return does not necessarily mean you have anything to pay.

The real test for expats will be if the visa renewal process, for example for the annual retiree extensions at immigration, were to be linked to registration with TRD. But even that futuristic scenario is fraught with problems. It’s quite possible to clock up 180 days in a calendar year using visa exempt entries or tourist visas such as the new Destination Thailand Visa: simply extend at immigration or do a couple of border runs. Perhaps the best advice, at any rate for now, is to wait in the wings. Neighboring Vietnam specifically excludes overseas pension income from cash described as taxable. Such a welcome move here would turn the whole personal income tax debate upside down.

https://www.pattayamail.com/latestnews/news/foreign-retirees-ponder-whether-to-play-ball-or-footsie-with-the-thai-revenue-department-476178

[BjornAgain]

Being a slightly devious bloke, the idea of paying secondary tax goes against my principles. Next egg interest and private pensions, and pending UK State Pension will be paid into UK Bank accounts and luckily (manipulation) are and will be under threshold limits for paying basic rate tax.

Luckily my landlady is married to a Brit, and we've discussed paying my rent as GBP into his UK Bank Account as this will reduce my monies into Thailand, I currently pay into his Thai Bank Account, so assume there's no martial issues. Covers their holiday expenses.

Furthermore as others have said, using a Travel Moneycard for day-to-day expenses, so pre-load via mobile App to booster my Thai wallet.

To cover some of my tracks, then transfer the odd couple of hundred from the UK into my Thai Bank Account. Simple mechanism to draw cash for hand-to-hand expenses, i.e. Bolt, Bins etc.

Anyone see a flaw in my logic?

[bkkmfj2648]

2 hours ago, BjornAgain said:

Anyone see a flaw in my logic?

For now your logic should work as long as in the future that immigration will not count the number of calendar days that you stayed in Thailand in a given year as stamped in your passport -> if this count would exceed 180 days and then perhaps immigration might ask to see your Thai tax filing for that year.

So far, nothing has been said about this - fingers crossed that it stays this way as I dread the idea of going to the Thai Revenue Department office to obtain my new tax ID number.

Currently, my plan is to:

Stay in Thailand less than 180 days in year 2025 - so I won't be a tax resident in 2025,

Use year 2025 to top up my Thai bank account for years 2025 + 2026.

Live 12 months in Thailand in tax year 2026 but without any assessable income (no remittances into Thailand in the 2026 tax year).

Repeat this process until my age 70, when I should qualify for the BOI Wealthy Pensioner 10 year visa, which is currently exempt from any tax. But you must prove that you can bring $80,000 USD equivalent into Thailand in the previous 2 individual years, where this amount is ONLY sourced from passive income proven with 2 years of tax returns.

It is ironic that you need to pay tax if you cannot bring in $80,000 USD equivalent per each tax year. So, tax the poor and do not tax the wealthy.

 

TIT = This is Thailand

 

[khaolakguy]

2 hours ago, bkkmfj2648 said:

So, tax the poor and do not tax the wealthy.

 

TIT = This is Thailand

 

This is a world wide issue and not limited to Thailand. 

[reader]

Expats in Thailand should stop worrying about tax

By Barry Kenyon

On top of current personal income tax woes on funds remitted from overseas, Thailand’s longstay foreigners are now being panicked by premature scares about negative income tax (NIT). Some English-language Thai news sites and social media are warning that NIT is imminent and will require all Thais, as well as foreign residents, to fill in tax forms under penalty early next year and disclose all their worldwide financial resources.

NIT is certainly being considered by sections of the Thai government, but would require a change in the law. Deputy minister of finance Julapun Amornvivat, who is in favour, said recently such a move would require “a few years” to appear formally on the statute book. The reality is that NIT is a framework for taxation and benefits, so you would need to see the details to ascertain the specifics. Nobody has access to any specifics at the present time.

Broadly speaking, NIT targets financial assistance to those with an income below a threshold determined by the government. Those below that threshold receive a cash subsidy on a sliding scale. Advocates of NIT say it will help the elderly, the unemployed and those on marginal incomes. Payments could be made easily via digital platforms such as Paotong and digital wallets. But we have no idea what the cash boundaries might be.

Another name for NIT is “workfare”. All Thai citizens earning one baht or more in a year would be required to register with the Thai Revenue Department and fill in an annual tax form. So for the first time, low-income street vendors, massage workers etc would be required to be part of the tax system. NIT means that, once their income rises above the government-stipulated level, they will become taxpayers and not tax beneficiaries.

Thus the real purpose of NIT, over time, is to increase the number of tax payers in Thailand from less than 30 percent to a near 100 percent. For example, an unemployed person who then gets a job would sooner or later earn a salary big enough to make him or her a tax payer. The finance ministry believes that the demographic time bomb – not enough babies being born – will mean that social security payments to the elderly need to be offset by widening income tax participation. Thailand is on the verge of becoming a super-aged society.

But the introduction of NIT in Thailand is not a foregone conclusion. It would initially require an increased budget allocation and would move the country strongly towards state control of the population. Any adult Thai who did not fill in a tax form annually would not receive benefits (assuming they were eligible) and would be subject to criminal penalties. Many critics of NIT also say it’s more appropriate to advanced economies than to developing countries. The implications for expats in Thailand are entirely speculative. Crunch time is years ahead. If ever.
 

https://www.pattayamail.com/latestnews/news/expats-in-thailand-should-stop-worrying-about-negative-income-tax-476439

[reader]

From Pattaya News 

After the recent popularity of tax articles from our friends and sponsors at Anglo Siam Legal, they put together a video for our readers discussing the tax laws and how they may and may not affect expats.

https://thepattayanews.com/2024/10/23/video-a-deeper-look-at-2024-tax-laws-and-expats-in-thailand/