New tax rules for foreign-sourced income

[reader]

From Patttaya Mail

In response to the growing concerns among expatriates, the Thai Revenue Department has issued Orders No. P. 161 and 162/2566, effective from January 2024, to provide clear guidelines on the taxation of foreign-sourced income. Here’s a detailed look at what these new regulations entail and how they impact residents and expatriates in Thailand.

Key Provisions of Order No. P. 161/2566,

1. Foreign Income Reporting Starting January 1, 2024, all residents in Thailand must report income from abroad when it is brought into the country. This includes income from work, investments, and assets located outside Thailand. However, any income earned before this date can be transferred to Thailand tax-free if done by December 31, 2024.
2. Residency Condition Under Section 41, Paragraph 3, anyone staying in Thailand for one or more periods totaling at least 180 days in any tax year is considered a resident and must comply with these tax regulations.
3. Repeal of Conflicting Regulations Any previous regulations that contradict the new order are officially repealed. This move aims to eliminate inconsistencies and ensure a unified approach to foreign income taxation.
4. Exemption for Pre-2024 Income The amendment explicitly states that income earned before January 1, 2024, is exempt from these new provisions if transferred to Thailand by the end of 2024. This provides a grace period for taxpayers to adjust to the new rules.
5. Alignment with Prior Guidelines The new orders align with existing guidelines to ensure a smooth transition for both taxpayers and revenue officers. This helps in maintaining consistency and clarity in the application of tax laws.

 

Impact on Expatriates and Residents
The new tax rules significantly impact expatriates and long-term residents in Thailand, particularly those with foreign-sourced income. Here’s how,

– Expatriates with Taxed Income For expatriates receiving income already taxed in another country, such as pensions, these amounts will not be subject to additional Thai taxes. This is particularly relevant for retirees living in Thailand who receive pensions from their home countries.

 

– Income from Foreign Work or AssetsIncome generated from work or assets located abroad must be reported if transferred into Thailand from January 1, 2024, onwards. This includes dividends, interest, rental income, and capital gains from foreign investments.

– Professional Tax Advice Given the complexity of the new regulations, retirees and those with foreign income are strongly advised to seek professional tax advice to ensure compliance and optimize their tax liabilities.

1. Action Points for Taxpayers
   To comply with the new regulations, taxpayers should take the following steps:

2. File Form 90 Taxpayers must prepare and file the Income Tax Declaration (Form 90) by March 31, 2025. This form will include all relevant income and deductions for the tax year.
3. Maintain Documentation It is crucial to keep comprehensive records of all income sources, taxes paid abroad, and any transfers into Thailand. Proper documentation will help in accurately reporting income and claiming any applicable deductions or exemptions.
    

4. Example: A German Retired Citizen Living in Thailand
   Consider a German retiree, Mr. Müller, who has been living in Thailand for several years with a non-immigrant annual visa. He receives a monthly pension from Germany, which is already taxed there. Here’s how the new orders affect him,

5. Pension Income Mr. Müller’s pension, taxed in Germany, will not be subject to additional Thai taxes due to the Double Tax Agreement (DTA) between Thailand and Germany. He should keep records of his pension statements and tax payments in Germany.
6. Other Foreign Income If Mr. Müller has other sources of income from investments or assets abroad, he must report this income if brought into Thailand from January 1, 2024. For instance, if he receives interest from a foreign bank account or rental income from a property in Germany, this must be included in his Thai tax declaration.
7. Pre-2024 Income Any income Mr. Müller earned before January 1, 2024, can be transferred to Thailand without incurring Thai taxes if done by December 31, 2024. He should document these transfers clearly to avoid any future tax issues.
8. Residency Condition Since Mr. Müller stays in Thailand for more than 180 days a year, he is considered a resident and must comply with these tax regulations.
9. Filing Requirements Despite his pension being exempt from additional Thai taxes, Mr. Müller must still file Form 90 by March 31, 2025, to report his income and any applicable deductions. Maintaining detailed records of all income sources and transfers will facilitate this process.

10. Victor Wong
    (Peerasan Wongsri)
    Financial Analyst and Tax Expert
    Tel: 062 879 5414 Email: victorlawpattaya@gmail.com

    For additional insights and the original article discussing expat legal concerns in Pattaya, click here: Pattaya lawyer homes in on expat concerns
    
    https://www.pattayamail.com/latestnews/news/new-tax-rules-for-foreign-sourced-income-464735

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The emerging scenarios: Thai expats and income tax

By Barry Kenyon

Countless foreign tax residents of Thailand daily search the internet for answers, but ignorance is not bliss. How does the Department of Thai Revenue (DTR) rule to tax remitted income from overseas from the start of 2024 affect me? Do I need to fill in a Thai tax form in the new year 2025 even if I think I do not have assessable income in 2024? How can I obey the tax laws if I can’t find out what they are? Will I be arrested? Meanwhile, the DTR remains inscrutable as the relentless calendar year passes the half-way mark.

To address the void, various scenarios are springing up on the internet and at webinars or meetings of various kinds. Mike Lister, a widely-respected and “advanced member” of the Asean Now popular forum on the subject, has suggested in a personal capacity that the remitted tax rule will be introduced softly at first. Overstretched DTR officials will concentrate on the big fish with large and untaxed remitted income and will leave largely unscathed the little fish such as run-of-the-mill pensioners (unless they are spotlighted for some reason).

If true, it could take several years of semi-implementation before every foreign tax resident is the glum recipient of a tax identification number and the provider of a multi-page, completed PND 90 tax form. The downside of this view is that typical expats may spend the next few years still muddled and fearful about their personal futures. Incidentally, the PND 90 tax form is available in English contrary to some social media warriors, although reports say it will anyway be altered soon. Another reason for waiting.

To address the void, various scenarios are springing up on the internet and at webinars or meetings of various kinds. Mike Lister, a widely-respected and “advanced member” of the Asean Now popular forum on the subject, has suggested in a personal capacity that the remitted tax rule will be introduced softly at first. Overstretched DTR officials will concentrate on the big fish with large and untaxed remitted income and will leave largely unscathed the little fish such as run-of-the-mill pensioners (unless they are spotlighted for some reason).

If true, it could take several years of semi-implementation before every foreign tax resident is the glum recipient of a tax identification number and the provider of a multi-page, completed PND 90 tax form. The downside of this view is that typical expats may spend the next few years still muddled and fearful about their personal futures. Incidentally, the PND 90 tax form is available in English contrary to some social media warriors, although reports say it will anyway be altered soon. Another reason for waiting.

To address the void, various scenarios are springing up on the internet and at webinars or meetings of various kinds. Mike Lister, a widely-respected and “advanced member” of the Asean Now popular forum on the subject, has suggested in a personal capacity that the remitted tax rule will be introduced softly at first. Overstretched DTR officials will concentrate on the big fish with large and untaxed remitted income and will leave largely unscathed the little fish such as run-of-the-mill pensioners (unless they are spotlighted for some reason).

If true, it could take several years of semi-implementation before every foreign tax resident is the glum recipient of a tax identification number and the provider of a multi-page, completed PND 90 tax form. The downside of this view is that typical expats may spend the next few years still muddled and fearful about their personal futures. Incidentally, the PND 90 tax form is available in English contrary to some social media warriors, although reports say it will anyway be altered soon. Another reason for waiting.

1. Another softish approach to DTR was provided in a recent Pattaya Mail article by financial analyst and tax expert Victor Wong. He gave a lot of common-sense advice, such as keeping all your financial documentation in good order and – very importantly – emphasizing that submitting tax forms does not necessarily mean you have anything extra to pay. He also committed himself to the view that, because of double taxation treaties, elderly foreign residents here would not pay more cash in Thailand on previously taxed pensions.

   Hopefully, this broad interpretation of double taxation treaties will stand the test of time. It should, however, be noted that the 61 international agreements with Thailand are far from unanimous in scope. For example, the US one insists that social security payments may only be paid in America, whereas the British equivalent covers only “government” pensions and also excludes the state or old-age pension. Moreover, some analysists maintain that double taxation treaties may only give limited cover because exempt income allowances may be more generous abroad than in The Land of Smiles. Thus the international agreement may only give a tax credit for Thailand rather than total immunity here.

2. All commentators agree that there are so many unanswered questions. Even an obvious matter such as whether use of a foreign (non-Thai) credit card is remitted income, in whole or in part, is the subject of blistering debate on social media. There is also much nonsense out there such as the claim expats will be taxed by Thai banks a uniform 35 percent on foreign remittances or that annual extensions of stay in some immigration offices already require proof of a Thai tax identification number. Like the tale that Adolf Hitler escaped Berlin and retired to a relaxing hill resort in Paraguay, such tales are best regarded as click bait.

[vinapu]

18 minutes ago, reader said:

tale that Adolf Hitler escaped Berlin and retired to a relaxing hill resort in Paraguay,

I was told he retired to a seaside beach resort in Laos

[10tazione]

Good times for mediocre tax advisors! Save some tax, pay it to the tax advisor instead.

I love the clarity of Thai tax rules! If the implementation takes as long as issuing citizenship to Myanmar refugees, i.e. estimated 44 years, then there is nothing to fear!

[Keithambrose]

On 10/31/2024 at 11:19 AM, vinapu said:

I was told he retired to a seaside beach resort in Laos

I though it was a seaside resort  in Uzbekistan?

[vinapu]

45 minutes ago, Keithambrose said:

I though it was a seaside resort  in Uzbekistan?

When we went to school Aral lake was actually called Aral Sea and was 5 times bigger than now. Then Soviets started to change river courses and sea become pond

[Keithambrose]

7 hours ago, vinapu said:

When we went to school Aral lake was actually called Aral Sea and was 5 times bigger than now. Then Soviets started to change river courses and sea become pond

Also using the water from the rivers to grow cotton, I believe. 

[vinapu]

5 hours ago, Keithambrose said:

Also using the water from the rivers to grow cotton, I believe. 

Indeed. That was reason for whole exercise and turned disaster. 

[thaiophilus]

21 hours ago, Keithambrose said:

I though it was a seaside resort  in Uzbekistan?

... or one in Liechtenstein? 🌴🏖️🌴

[Keithambrose]

3 hours ago, thaiophilus said:

... or one in Liechtenstein? 🌴🏖️🌴

Bolivia?  San Marino, etc....

[10tazione]

52 minutes ago, Keithambrose said:

San Marino, etc....

not seaside, but at least it has sea view!

[Keithambrose]

7 hours ago, 10tazione said:

not seaside, but at least it has sea view!

There's always the Vatican, if of a religious persuasion! May be sea view there from top of St Peters.

[kokopelli3]

No sea view from the top of St.Peters. But  lots of views to see.

[thaiophilus]

15 hours ago, Keithambrose said:

Bolivia?  San Marino, etc....

No.

It has to be Uzbekistan or Liechtenstein because they are the world's only doubly-landlocked countries 🌴🏖️🌴

[thaiophilus]

6 hours ago, Keithambrose said:

There's always the Vatican, if of a religious persuasion! May be sea view there from top of St Peters.

and even if there's no view it holds the record for papal density with 5.2 popes per square mile (2.0 popes per square km).

[vinapu]

10 hours ago, thaiophilus said:

and even if there's no view it holds the record for papal density with 5.2 popes per square mile (2.0 popes per square km).

It's only one. Benedict died already 

[Keithambrose]

17 hours ago, thaiophilus said:

No.

It has to be Uzbekistan or Liechtenstein because they are the world's only doubly-landlocked countries 🌴🏖️🌴

Shame Austria  lost its coastline  after 1918!

[vinapu]

On 11/4/2024 at 10:16 AM, Keithambrose said:

Shame Austria  lost its coastline  after 1918!

That is what usually happens when you are at losing end of war. You lose territory and  plenty of nice views.