New tax rules for foreign-sourced income

[reader]

From Pattaya Mail

By Barry Kenyon 

Those contemplating a move to Cambodia because of fear of the Thai Revenue Department are on safe ground as matters stand. Foreign retirees in Cambodia are not being taxed on their international transfers: officials at ABA and Maybank, two leading banks with foreign customers, said the subject was not currently being discussed. The Cambodian government in its tax-related publications clearly avoids the specific issue of retirees.

The Ministry of Foreign Affairs and International Cooperation states that a foreigner spending more than 182 days in the kingdom during a year is deemed to be a “resident” of the kingdom. The text continues that “residents” are taxable on their worldwide income and there is no qualifier that the cash must be remitted to Cambodia to be liable. There is a separate government requirement that sums exceeding US$10,000 must be declared to the Bank of Cambodia before the transfer.

However, the context of the tax-liability discussion relates to “resident” foreigners who are working in Cambodia with a “salary”. The regulations state that their overseas income, if already taxed in the home country, can be credited against any further Cambodian Revenue demands. This ruling is not dependent on double taxation treaties. Cambodia has eleven DTAs but none with a country outside Asia. In other words, working expats are subject to taxation on their actual wages both in Cambodia and abroad.

Given that companies submit tax returns in Cambodia, individuals do not normally prepare their own returns. Technically, Cambodia does not have personal income tax but is concerned only with cash actually being earned. By extension, there is no requirement for retirees to get involved with Revenue matters and websites promoting Cambodia as a tropical paradise seldom even mention the subject of taxation.

The question is whether the tax-free haven for retirees could change. It would not be difficult for the government to do so, for example by divorcing worldwide income from the need to have a “salary”. However, there is no indication of that intention and the Cambodian revenue authorities are much less proactive and influential than their Thai counterparts. As a Phnom Penh bank official said, “It simply wouldn’t be worth the effort”.

The Cambodian retiree visa costs around US$300, annually renewable, but must be based on a an initial E-class (formerly business) 30 days visa when entering the country. The use of visa agents is widespread, almost compulsory in fact, and very little documentation is required. Proof of retiree status and of steady income is sometimes called for. There is also the requirement to download the Foreigners Present in Cambodia address registration app. In other words, the retiree bureaucracy in Cambodia is much easier than in Thailand. Of course, the pros and cons of living over there are a much bigger agenda.

============

From Pattaya News

Should Thai retirees escape to the Philippines to avoid income tax?

By Barry Kenyon

There’s currently much speculation about Thailand’s retirees considering a move to another regional country. They are hunting to escape the looming if still-muddy liability to pay Thai personal income tax on some foreign income transmitted to Thailand. They need to be watchful as Cambodian authorities, for example, can in fact tax foreign retirees on their worldwide income but choose, anyway for now, to ignore cash not earned in Cambodia.

The Philippines is unusual in that it publicizes the non-taxation of foreign income such as pensions, inheritances and capital gains. So it’s worth examining the retiree entry regulations of Thailand and the Philippines because they are by no means the same or even similar. The Philippines has introduced the Ease of Paying Taxes Act 2024 but, contrary to some reports, this did not affect the tax-free status of retirees living on overseas assets.

Although there are many retirement visa options in Thailand for those 50 years plus, the easiest without doubt is the non-immigrant “O” type. A visa-free entry stamp can be converted by local immigration to a three months non-immigrant “O” which then receives an extension of stay for 12 months (fifteen months in all the first time). Annually, the retiree returns to immigration for a further 12 months extension for 1,900 baht or US$55. Agents can facilitate the process for a service fee.

The basic requirement, as is well known, is at least 800,000 baht in a Thai bank or proof of monthly remittances from overseas of at least 65,000 baht. Evidence of local address is required and there is an ongoing rule to report it every three months. A re-entry permit is needed for those leaving the country, but a medical insurance policy is not currently mandatory. Given that third parties can help with the cash bond, if required, the non “O” route is far and away the most popular track for retirees. It’s also the cheapest by miles.

Retirees to the Philippines need to apply for the core Special Resident Retiree’s Visa (SRRV) which is multi-entry but requires an annual re-registration of the ID card. It requires a personal and not third-party bond of (usually) US$10,000 to US$20,000 in a Filipino bank which may have to be left there for the duration depending on whether investments are made. Family members can be included at a reasonable extra cost. Medical insurance is not required, but a medical report on the individual is needed prior to entry and must be authenticated by a Filipino embassy or consulate. Police clearance from the country of origin or recent residence is needed according to the government website.

Compared with Thai immigration practices with the “O” type, the Filipino version is much more of a hassle to process. Not to mention the interview with the Philippine Retirement Authority or PRA. However, the extra perks are considerable. No exit or re-entry clearance. The status of a permanent resident from day one and the publicized chance to apply for citizenship after 10 years. The chance to work for an employer provided the (not too difficult) Alien Employment Permit is applied for. The facility to bring in US$7,000-worth of household goods tax free. PRA assistance is applying for a driving licence, or when dealing with Filipino bureaucracies.

In summary, the longer term retirement visa bonuses in the Philippines are more bountiful than those in Thailand. But the Thailand “O” is certainly much cheaper to process and requires much less initial documentation. Perhaps Thailand’s resident expats should appreciate it more.
 

https://www.pattayamail.com/latestnews/news/should-thai-retirees-escape-to-the-philippines-to-avoid-income-tax-479718

 

[bkkmfj2648]

In addition to what @reader posted above about Cambodia and The Philippines - we can add Malaysia to this growing list.

Aaron from Offshore in Asia just posted a significant update to the Malaysian tax scheme - in that Malaysia will extend the tax exemption on foreign sourced income until year 2036 - another 12 years.

This is completely OPPOSITE to what the current Thai government just did effective 01-Jan-2024.

So, it sounds that Thailand's neighboring countries want to take advantage of Thailand's negative tax treatment to its existing expat retiree population.

Maybe the current Thai government may wake up ?  The silence is deafening.

 

[reader]

Pensioners worry about overseas transmitted income

From Pattaya Mail

Having talked to many retired expats over the past year or so, I know that their biggest worry is whether they need to obtain a tax identification number and complete a tax form about income remitted to Thailand from abroad in the calendar year 2024. The very prospect of having to deal with a second revenue department – after the first one in their home country – is decidedly not a welcome thought for those who spend 180 days or more here in a calendar year.

There are certainly retirees here who won’t need to pay any Thai personal income tax in 2025. Those who have not transmitted any cash to Thailand in 2024 are clearly free as are those who can prove they have sent only “old” money, that is savings which were in their home country bank accounts not later than December 31 2023. Some foreign inheritances paid in 2024 might be another exempt category as long as the estate has been assessed by the home country revenue department.

Many expats are confused by so-called double taxation treaties and understandably so. There are over 60 such agreements but they differ enormously in scope and detail. The fact of their existence does not automatically mean a person cannot be taxed in two different jurisdictions. I know that some expats have been to their local Thai Revenue Department (TRD) and apparently been told no need to register if they are living on pensions already taxed. But I would caution that many TRD officers don’t have fluency foreign languages which could lead to confusion or misunderstanding.

The main intention of the Thai government is to broaden the tax base with Thai or foreign “residents” but I am sure the main targets are “big fish” such as those dealing in cryptocurrency, untaxed offshore bank accounts and foreign businesses which have escaped tax hitherto. I doubt very much that TRD will target foreign retirees living on already-taxed foreign pensions. Now that Thailand is a member of the international Common Reporting Standard, it will be much easier to identify “big fish” in international banking procedures.

So should the typical retiree expat obtain a tax identification number and fill in a tax form relating to overseas income early next year? If you don’t, I doubt very much that there will be immediate consequences unless you are bringing in large, untaxed sums. On the other hand, you could be asked in later years to justify your self-exemption. There are many unknowns and it could take years for blurry issues to be resolved. For example, whether use of foreign credit cards in Thailand is remitted income or not is still much debated.
 

Continues at

https://www.pattayamail.com/latestnews/news/pattaya-tax-lawyer-pensioners-worries-and-overseas-transmitted-income-480825

[reader]

From Patttaya Mail

Thai lawyer argues most expats won’t be impacted by personal income tax

Bemjamin Hart, naturalized Thai citizen and managing director of Integrity Legal, claims in a new video that typical expats will not be impacted by the Thai Revenue Department’s recent announcements. His video,“Should I Get a Thai Tax ID Number (TIN)?”, states that the whole subject has been hyped unnecessarily on mainstream and social media.

Mr Hart stresses that Thai financial laws have not changed and states that “most” foreigners who are tax residents are ill-advised to request a TIN number from their local TRD.  Although the video does not elaborate on “most”, it appears to include those resident in Thailand for at least 180 days in 2024 who are dependent on pensions pre-taxed in their first country.  It is this large, mainly retiree group which has attracted the greatest attention.

The video attacks foreigners, claiming to be tax experts, who give advice when they are not qualified to do so.  Mr Hart emphasizes that financial advice is an occupation generally reserved for Thais.  He criticizes unnamed individuals attempting to persuade foreigners to register with TRD in order to boost their own client base and fee income.  He recommends that those foreigners with personal concerns should contact a Thai professional company for consultation.

Pattaya Mail notes that controlling, auditing and performing or providing accounting services is a profession reserved for Thais except for occasional internal audits or work under international agreements to which Thailand is bound.  A further section restricts legal services to Thais except in some aspects of arbitration.  The information is provided by the Ministry of Labour.  Pattaya Mail has no definitive view of the TRD announcements, but reports the views of agencies and spokespersons because the subject is of great importance to many of our readers.

Continues with video

https://www.pattayamail.com/latestnews/news/thai-lawyer-argues-most-expats-wont-be-impacted-by-personal-income-tax-482534

 

[bkkmfj2648]

Many of the English publications for us foreign consumption often leave out critical trends and important news tidbits about what is really going on behind the scenes in Thailand's plans for taxation, reforms, and new legislation, all shortly on the near horizon.

If you already live here full time - you really don't want any last minute surprises to rear their ugly head and you don't have time to react and to make an alternate plan.  Proper planning takes a lot of time and energy - ESPECIALLY - if it would mean to vacate Thailand - so better to start early than to wait until it is too late.

I found this Thai article, published by www.prachachat.net to be VERY comprehensive about the plans and goals of the current Thai Finance Minister about taxation:

https://www.prachachat.net/finance/news-1708405

Take the time to translate it and you will be very informed and it will allow you to see the clear direction that this new Thai government wishes to undertake.

A few important excerpts (already translated with Google Chrome right click feature):

 

 

[vinapu]

11 hours ago, bkkmfj2648 said:

slowly but surely we are being shackled by AI and are brave enough to even applaud it.

[reader]

From Pattaya Mail

Navigating Thailand’s New Tax Rules

The other day, I sat down for a chat with Barry. We were both sipping our coffees, talking about the growing worries among expats here in Thailand. The government’s new tax guidelines were the hot topic. It’s no surprise it’s got everyone asking questions: “What does this mean for me?” “How will it affect my finances?”

It was December, after all—the month of Christmas, a time of giving. So I thought, why not offer 15 minutes of free consultations as a little gift for the festive season? I figured it might help ease some concerns, even if just a little.

Well, what happened next was a bit of a surprise. My inbox, Facebook page, and phone just lit up. I ended up speaking with 32 people 31 living here in Pattaya and 1 all the way from overseas. I even handled one case entirely through email. It’s clear that these new regulations struck a nerve.

I started to notice some familiar themes as I answered their questions, so let me share a few with you maybe over your cup of coffee, you’ll see something that resonates.

How should I plan my finances as a foreigner in Thailand?

That’s the big one. With these new rules, planning is everything. From January 1, 2024, any foreign income you bring into Thailand might be taxable under the progressive personal income tax system, which runs between 0% and 35%.

How much tax will I need to pay?

It’s a fair question. Thailand’s tax system is tiered how much you pay depends on how much you earn. But what really matters is understanding what’s actually taxable and what isn’t especially if your income comes from multiple places.

Wait, I didn’t know I could get tax deductions!

This one comes up a lot. Many expats don’t realize they may qualify for deductions and allowances things like spouse or child deductions, or life insurance. Small steps like these can add up and save you a lot of money.

I have multiple bank accounts—how do I manage them?

It’s common to hear: “I’ve got one for daily expenses, another with my 800,000 THB savings, and another for receiving funds from abroad.” Here’s the thing: you need to be crystal clear about where the money comes from. Proper records will save you from any headaches later on.

I withdraw money from ATMs using my overseas cards.

Sounds simple enough, right? But under the new rules, withdrawing cash might raise flags if it’s seen as taxable income. It’s something to watch out for.

I transfer money into other people’s accounts. Is that a problem?

Transparency is key here. If you’re making transfers, be ready to explain them and have the documents to back it up.

Is this policy only targeting big fish?

I’ve heard this question a lot. While it may seem aimed at high-income individuals, the reality is that it applies to everyone. If you’re bringing foreign income into Thailand, it’s important to get ahead of the game with proper planning.

Capital Gains Tax: What You Need to Know

Now, if you’re earning capital gains maybe from selling real estate, stocks, or other investments—there’s another layer to consider. In Thailand, capital gains are treated as personal income and taxed accordingly. And starting next year, even overseas gains could come into play if they’re brought into the country.

Continues at

https://www.pattayamail.com/latestnews/news/navigating-thailands-new-tax-rules-lets-talk-over-coffee-484107

 

[bkkmfj2648]

21 hours ago, reader said:

Is this policy only targeting big fish?

21 hours ago, reader said:

With these new rules, planning is everything. From January 1, 2024, any foreign income you bring into Thailand might be taxable under the progressive personal income tax system, which runs between 0% and 35%.

I’ve heard this question a lot. While it may seem aimed at high-income individuals, the reality is that it applies to everyone. If you’re bringing foreign income into Thailand, it’s important to get ahead of the game with proper planning.

And this is the MOST nasty part of what the Thai government has allowed to transpire.

If you have passive income greater than the equivalent of $80,000 USD for the prior 2 tax years - you can qualify for the Thailand Board of Investment (BOI) LTR (Long Term Resident) visa, specifically the Wealthy Pensioner visa, which EXEMPTS you from having to pay tax in Thailand.

Unfortunately, and unfairly, if your income is less than the equivalent of $80,000 USD, then you are possibly subject to the progressive personal income tax on funds that you transfer into Thailand - as per the below:

So, we clearly have an example that these current Thai tax schemes are NOT targeting big fish.

It is us little fish that are being targeted.

What could be the rationale for this warped thinking ? 

Thoughts ?

[10tazione]

Isnt it everywhere in the world. that the big fish are spared?

In Italy for example, there is "Lex Ronaldo".

[Keithambrose]

6 hours ago, 10tazione said:

Isnt it everywhere in the world. that the big fish are spared?

In Italy for example, there is "Lex Ronaldo".

I thought he was earning an obscene amount of money  in liberal Saudi Arabia?

[10tazione]

2018/19 he played in Italy. I think the special tax law still exists though

[vinapu]

14 hours ago, bkkmfj2648 said:

 

Unfortunately, and unfairly, if your income is less than the equivalent of $80,000 USD, then you are possibly subject to the progressive personal income tax o

 

Thoughts ?

taxation is not about fairness , is about extracting money from general population to fund government expenses

[vinapu]

14 hours ago, bkkmfj2648 said:

 

It is us little fish that are being targeted.

 

because there's plenty of us so net yield always something substantial

[Keithambrose]

11 hours ago, vinapu said:

because there's plenty of us so net yield always something substantial

I'm sure the Owners of Red Bull are quaking in their boots!