Tax residency in Thailand and taxing overseas income

[Green Nomad]

As Hahuahin states this is to target the Thai Elite, a similar thing happened in Spain some years ago, as I have Spanish residencia and property/mortgage etc I was in a bit of a panic back then, until I found out it was to target high earning Spanish expats with assets outside of Spain, I have as yet not received my huge 30% tax bill

[ahandpatsy]

Guys I am a registered financial adviser in the UK. When you request an income from your pension be it a SIPP Personal Pension or company pension the pension company or administrators will go look at your tax code on a database. This will be applied to your pension income even though often it is incorrect or out of date.

I have seen this many times.

The pension company admin staff do not check as they have no reason to.

If you want tax code changing then you must contact tax office and get them to change the database.

Then contact pension provider and they start rebate process and ensure future income is calculated on correct basis.

Again I have seen the correction and rebate happen many times. Obviously paperwork needed to back up non residential status or/and previous years income

Ps. The fund manager does not do any of the admin The holding company (eg Aviva, Aegon, true potential, Standard life etc,) does it so you need to contact main customer service switchboard.

[buksida]

Looks like they're going ahead with it ...

Amendment to see overseas income taxed
The Revenue Department recently amended its notification regarding taxation on specified foreign-sourced income by stipulating that local residents who earn overseas income will be subject to personal income tax (PIT), according to Paragraph 2 of Section 41 of the Revenue Code.

From now on, people who have earned overseas income either from their occupation or doing business abroad or from wealth that is located abroad but has been exempted from PIT for nearly 40 years, must factor this into their PIT for the year.

Why is the government opting to collect tax on foreign-sourced income as it has been exempted for a long time?

Department deputy director-general and spokesperson Vinit Visessuvanapoom said the tax collection is to comply with international standards on the exchange of financial information to promote tax transparency and fairness. In other words, whether income is earned within the country or abroad, one must pay tax.

It is noteworthy that Section 41 stipulates:

"An individual Thai citizen or foreigner who lives in Thailand for one or more periods totalling at least 180 days in any tax [calendar] year is, for tax purposes, deemed a resident of Thailand and subject to tax on all assessable income [according to Section 40 which indicates types of income subject to tax] derived from sources within the country, whether paid within or outside Thailand, and on assessable income derived from foreign sources to the extent that it is brought into Thailand in a year in which income is received."

The programme will begin on Jan 1, 2024 and apply only to tax residents in Thailand meaning tourists and short-term workers will be exempt. Also exempt will be those who have been taxed in a foreign country that has a standing double tax agreement with Thailand.

https://www.bangkokpost.com/business/ge ... come-taxed

[malcolminthemiddle]

Looks like they're going ahead with it ...

In contrast

https://insightplus.bakermckenzie.com/b ... NxOEhw0LQc

[buksida]

Although the New Order will empower the Revenue Department to tax offshore-sourced income received by Thai tax resident individuals that is brought into Thailand in any year, it may encourage them to keep their offshore-sourced income outside of Thailand indefinitely so as not to be subject to Thai personal income tax.

Net result could be less money coming into Thailand (especially if they're getting 5% overseas and 0.5% in Thailand).

[HHTel]

Not sure if this is a stupid question. How would the Thai authorities identify that money transferred into Thailand is 'income' as opposed to savings for example.

[buksida]

Its a good question, and I don't know the answer as its all a big can of worms. They're going to have to set up some serious banking surveillance if they want to fully implement and enforce this.

[Dannie Boy]

it will prove to be too difficult and put in the bottom drawer where it will remain gathering dust!!

[Benroon]

Its a good question, and I don't know the answer as its all a big can of worms. They're going to have to set up some serious banking surveillance if they want to fully implement and enforce this.

and that is exactly how they will do it imo. All UK banks report to the BofE (and must if ordered by a court release those details to the tax office) so I'm guessing it will be no different here. I can understand the howls of protest but this setup has been in place for decades, 42 years to be exact, but no government has ever run with it, no doubt due to the enormity of running with it but the new PM is no mug when it comes to finance. but people should always have been aware of it. What's the saying there is no such thing as a free lunch?

A bit like they should also be aware that using agents to get your retirement visa, or specifically agents money to get it, is blatently illegal and would result in your visa being cancelled should and when the day comes the spotlight shines on that little chestnut. They say it will never happen, probably won't, but then they said the same about this taxation announcement.

Anyone selling property (not taxed) in the UK and living here off it, well I imagine you'll be up front and central in the firing line.

I'm intrigued how it's going to happen, but I'll have a wager on them running it through the banks OR through immigration, ie when you go to get your 90 day report, you must submit some accounts documentation, again through the banks to show what you're living off with immigration then reporting back to the tax office I guess.

[Benroon]

Not sure if this is a stupid question. How would the Thai authorities identify that money transferred into Thailand is 'income' as opposed to savings for example.

Whoever you have your savings with will usually provide a tax certificate at the end of each financial year to show how much they've taken off your interest.

The can of worms I think will be just what and how much the thai tax authorities understand about overseas procedures etc and what they will be prepared to accept

[Benroon]

I am sure there was a thread already open for this but can't find it? (also apologies if the below has been mooted before)

However the new taxation arrangement for foreigners from Jan 1st 2024 has now been published in the Royal Gazette so IS definitely coming.

It's mooted the banks will be doing all the footwork, but they'll only be too happy to as the documents required will be charged for. It's been suggested proof of tax paid on all monies coming into Thailand will be a part of the annual extension, so whether thats your 800k (or 65k a month) for retirement visa or 400k (or 40k a month) for the marriage visa - you will need to provide evidence it's been taxed or no extension. A similar vein is that the banks withhold the tax automatically to funds coming in and the onus is then on you to claim it back if applicable and you then simply take a tax statement from your bank to immigration.

What is still unclear (to me anyway) is whether proof it's been taxed already calls the dogs off. Too many comments elsewhere suggesting they don't give a shit, if it's coming in, it's getting taxed?

and before anyone mentions it, yes the filipino girls are better looking with real chests but the food is crap !

[Motyduke]

A real nightmare to come if Benroon is right

[malcolminthemiddle]

However the new taxation arrangement for foreigners from Jan 1st 2024 has now been published in the Royal Gazette so IS definitely coming.

Link to Royal Gazette please?

[Dannie Boy]

Sounds like the IO’s must be low on funds, because this looks like a great opportunity for them to top up their tea chests!!

[HHTel]

However the new taxation arrangement for foreigners from Jan 1st 2024 has now been published in the Royal Gazette so IS definitely coming.

Link to Royal Gazette please?

As far as I can tell it doesn't need to be published in the Gazette. The rule has always been there. It's just a matter of interpretation and enforcement.

On 15 September 2023, the Thai Revenue Department issued Departmental Instruction No. Por 161/2566 (“DI No. 161/2566”) as a guideline to assist tax officers in determining the personal income tax implications for foreign-sourced income brought into Thailand by Thai tax residents.

DI No. 161/2566 provides a new interpretation of Section 41 Paragraph 2 of the Thai Revenue Code: the assessable income under Section 40 of the Revenue Code derived by a resident of Thailand in the previous tax year — from employment, a business carried on overseas, or property situated overseas — that is brought into Thailand should be subject to personal income tax in the tax year that the said assessable income is brought into Thailand. This rule should apply to assessable income that would be brought into Thailand from 1 January 2024 onwards.

A resident of Thailand is defined as an individual who stays in Thailand for a period or periods aggregating 180 days or more in any tax year.

Any rules, regulations, instructions, rulings, or practices which contradict DI. No. 161/2566 shall be repealed.

If the assessable income is subject to tax in the source country, the tax paid in the source country can be credited against the personal income tax liabilities in Thailand per rules prescribed in the applicable double tax treaties.