Tax on all resident farangs?

[hhfarang]

This was sent to me by a friend asking if I knew anything about a new tax law.

Anyone heard anything about this?

This article came out of the Hua Hin Today newspaper dated Dec. 2, 2010. Personal Income Tax in Thailand, under legal advice.

1. Taxable person - Taxpayers are classified into ' resident ' & ' non-resident.' Resident means any person residing in Thailand for a period or periods aggregating more then 180 days in any tax (calender) year. A resident of Thailand is liable to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand. A non-resident is, however subject to tax only from sources in Thailand.

[Takiap]

This was sent to me by a friend asking if I knew anything about a new tax law.

Anyone heard anything about this?

This article came out of the Hua Hin Today newspaper dated Dec. 2, 2010. Personal Income Tax in Thailand, under legal advice.

1. Taxable person - Taxpayers are classified into ' resident ' & ' non-resident.' Resident means any person residing in Thailand for a period or periods aggregating more then 180 days in any tax (calender) year. A resident of Thailand is liable to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand. A non-resident is, however subject to tax only from sources in Thailand.

As far as I know, this has always been the case.

Having said that, have you noticed how crystal clear the law is? any person here for 180 days or more pays tax, and then in the next breath it says everyone pays tax, whether you're here for one week or one year. Not much chance of them enforcing anything either considering they can't even get the majority of Thais to pay tax. Also, what happens if you're here on a one year multi entry visa, because you could in effect say you have zero income.

The way I see it, if they insist the benchmark for extensions is say, 65 K per month, then that should also be the benchmark for tax. After all, it's their reasoning that farang require more money than Thais in order to live, so then that should be factored in as far as tax is concerned as well, or will farang in this case be equal to Thais?

Don't get me wrong, I don't mind paying taxes, but then you sort of also want to be treated appropriately. I paid tax in the UK, and a lot of it, but I wasn't treated as a second class citizen there. No, no, I'm not complaining

[lindosfan1]

As far as ex UK people are concerned there is a double taxation agreement with Thailand. If you income is taxed in the UK it cannot be liable to tax in Thailand. It is a bit more complex if you have income from both places. usually you are then taxed where you are working, however if you have a UK pension and are working, seek the advise of the revenue or a good accountant as most pensions that are paid in the UK are taxed in the UK. You can sometimes elect where you pay tax.
The residency rules are complex, therefore accountants are advised in complex cases. but make sure they are experts on residency.
Most countries throughout the world are part of this agreement , it is worth checking if your own country has agreements.



Edited missed a bit out

[Johan]

Does that mean if you bring money you will be taxed no matter where it comes from ? If yes then i will probably find another country to live in and spend my money.

[pitsch]

Yes, I think you should go to Monaco, there you pay no tax at all.

[Super Joe]

This was sent to me by a friend asking if I knew anything about a new tax law.

Anyone heard anything about this?

It's nothing new or specific to foreigners at all, it probably just came across that way as was in the news. The extract is part of Thailand's general income tax laws for Thais working overseas as much as foreigners here, the US/UK has same policy. Think it's been like this for at least the 6 years I've been here .... http://www.rd.go.th/publish/6045.0.html


Lindosfan has mentioned the saving grace though, the double tax treaties, here's a list of countries Thailand has them with, but they all have their own individual agreement terms to read as a country may include private pensions but not governmental pensions!?:
Armenia, Australia, Austria, Bangladesh, Bahrain, Belgium, Bulgaria, Canada, China P.R., Cyprus, Czech Republic, Denmark, Finland, France, Germany, Hungary, India, Indonesia, Israel, Italy, Japan, Korea, Laos, Luxembourg, Malaysia, Mauritius, Nepal, the Netherlands, New Zealand, Norway, Oman, Pakistan, the Philippines, Poland, Romania, Singapore, Slovenia, South Africa, Spain, Srilanka, Sweden, Switzerland, Turkey, Ukraine, United Arab Emirates, United Kingdom of Great Britain and Northern Ireland, United States of America, Uzbekistan, and Vietnam
http://www.rd.go.th/publish/766.0.html


SJ

[margaretcarnes]

[quote="lindosfan1"]As far as ex UK people are concerned there is a double taxation agreement with Thailand. If you income is taxed in the UK it cannot be liable to tax in Thailand. It is a bit more complex if you have income from both places. usually you are then taxed where you are working, however if you have a UK pension and are working, seek the advise of the revenue or a good accountant as most pensions that are paid in the UK are taxed in the UK. You can sometimes elect where you pay tax.
The residency rules are complex, therefore accountants are advised in complex cases. but make sure they are experts on residency.
Most countries throughout the world are part of this agreement , it is worth checking if your own country has agreement

Yes this law has been in force for at least 11 years to my knowledge. Just to clarify - it means that if you have income from the UK which is below the UK threshold for tax, therefore not taxable there in itself, that income will be added to any earned income in Thailand for the purposes of Thai taxation.
If your UK income IS taxed there your Thai income will be taxed separately.

It really isn't any different to the UK situation where you have additional income over and above your pension - taxation kicks in and the pension then becomes included in the liability. But in Thailand any half way decent accountant or lawyer should be able to find a way around the problem. I.E by not declaring the UK income!

[Super Joe]

Just to clarify - it means that if you have income from the UK which is below the UK threshold for tax, therefore not taxable there in itself, that income will be added to any earned income in Thailand for the purposes of Thai taxation.

Is that right Mags that if your UK is below the threshold it gets added on over here? I don't know either way, but would just seem logical that the income has 'completed the tax process', so to speak, even if tax exempt!?!?

SJ

[Johan]

I don't know any thai who pay taxs... they all earn money and keep it all.

[lindosfan1]

There is the additional problem of residency, this can work to your advantage or disadvantage, depending on your circumstances.
This is where the big boys gain, the have a business in one country resident in another and avoid paying tax in the country with the higher tax rate, Rupert Murdoch is a good example of this.

I was never heavily involved in this side of taxation, it is a specialist field, with tax laws being so complex the are legal fiddles. This is where you need a good accountant, especially if you are a higher rate tax payer. In the UK this is 40%. A good accountant will be able to advise how to escape this.

As far as government pensions are concerned they remain taxable in the uk no matter where you live, most private pensions are the same now, again a complex field.

One point to be aware of for UK tax payers. if you are resident in the UK and you pay tax at 40%. have income from another country which is tax at 20% you will be taxed another 20% on that income. The reverse does not apply I E if you are taxed at 20% in the UK and 40% in another country you cannot get tax back in the UK on the income taxed at 40%.
However if the foriegn income pushes your total uk liability upto 40% you will be credited with that tax paid thus avoiding 40% on the uk income.
What I have said only applies to the UK, but if there is a double taxation agreement between the countries you work/live in the I would imagine the same applies.

[migrant]

One point to be aware of for UK tax payers. if you are resident in the UK and you pay tax at 40%. have income from another country which is tax at 20% you will be taxed another 20% on that income. The reverse does not apply I E if you are taxed at 20% in the UK and 40% in another country you cannot get tax back in the UK on the income taxed at 40%.
However if the foriegn income pushes your total uk liability upto 40% you will be credited with that tax paid thus avoiding 40% on the uk income.
What I have said only applies to the UK, but if there is a double taxation agreement between the countries you work/live in the I would imagine the same applies.

This is how the US, and most countries party to the international tax treaties work. The individual is generally a resident of one country, and is taxed on worldwide income in this country, but gets a credit from the income tax paid in other countries, therefore netting out to the highest tax rate in their residents country (or the higher rate in a source of income country).

It did get me to thinking that when we do move to Thailand, I'll claim the residency visa on my bank deposit, not earnings, no use throwing it in the Thai governments face and going through the exercise.

[margaretcarnes]

Just to clarify - it means that if you have income from the UK which is below the UK threshold for tax, therefore not taxable there in itself, that income will be added to any earned income in Thailand for the purposes of Thai taxation.

Is that right Mags that if your UK is below the threshold it gets added on over here? I don't know either way, but would just seem logical that the income has 'completed the tax process', so to speak, even if tax exempt!?!?

SJ

Yes that's what I was told by my Thai lawyer anyway. UK income should be declared - but only of course if a farang also has income in Thailand.

[hhfarang]

So, I'm still a bit confused by all this. I am here on a retirement (non-imm O) annual extension and I have no local income. I have no earned income in my home country either but live on a private pension from the company I used to work for. That is my sole income, which I use to extend my visa each year, and which I pay taxes on in the U.S. each year.

Do I owe Thai taxes on that pension as well?

[lindosfan1]

HHfarang
As there is a double taxation agreement with the U S you will not pay tax in Thailand on that income. Relax and have a G&T,

[hhfarang]

Relax and have a G&T,

... or three!