The new Thailand tax laws

[Thai_Law]

I will post this here for now. I will move it to a new section that will be coming soon once it's added. Any questions, feel free to DM me or contact me through our website : www.thailegalprotection.com

 

          New Tax Law

 

Thailand’s New Tax Rules: Reporting Foreign Income for Residents

September 20, 2023

 

The Revenue Department of Thailand has issued Order No. 16/2023, which means a significant shift in tax obligations for residents earning income abroad or possessing overseas assets. This directive, signed by the Director-General of the Revenue Department, mandates that specific criteria must be met by individuals living in Thailand who must now report and pay income tax on their foreign earnings.

The primary focus of Revenue Department Order No. 16/2023 is the taxation of assessable income earned abroad by individuals residing in Thailand. This directive pertains to Section 41, paragraph 2, of the revenue code, which stipulates that individuals must declare income acquired abroad if their work duties, business activities, or assets are based outside of Thailand, and this income was brought into the country in a given tax year.

 

Clause 1: The order applies to individuals falling under Section 41, paragraph 3, of the Revenue Code, who have assessable income due to work duties, business activities, or assets located abroad, as defined in Section 41, paragraph 2, in the tax year and bring this assessable income into Thailand in any tax year. These individuals are required to report this assessable income and include it in their income tax calculations under Section 48 of the Revenue Code. The tax assessment should coincide with the tax year in which the income was brought into Thailand.

Article 2: In line with the issuance of this order, all existing rules, regulations, orders, responses to inquiries, or any practices that contradict or oppose the provisions laid out in Order No. 16/2023 shall be void.

Article 3: The order will be effective for assessable income imported into Thailand from January 1, 2024, onwards.

 

Conclusion

This directive represents a significant change in the tax obligations of residents in Thailand who earn income abroad or possess overseas assets. Affected individuals are now required to ensure that their foreign earnings are accurately reported and appropriately taxed in accordance with Thai tax laws. The order aims to enhance transparency and compliance with tax regulations among residents in Thailand who engage in international economic activities.

 

 

Q&A Statement Issued by Revenue Department Clarifying Taxation Applied on Foreign-Sourced Income

 

The Revenue Department recently issued an Order no. Por.161/2566 on September 15, 2023, with an official announcement published in the Royal Gazette on October 6, 2023 (“Order”). This Order provides important clarifications regarding the taxation of foreign- sourced income, specifically in relation to Section 41 paragraph 2 of the Revenue Code.

To make these clarifications more accessible, the Revenue Department has also released a Q&A infographic statements, accompanied by practical examples addressing various scenarios that taxpayers may encounter, where the key points are summarized as follows for your reference:

 

(1) Resident Status Rule: The Order interprets Section 41 paragraph 2 of the Revenue Code, which mandates that a resident of Thailand who earns assessable income from sources outside Thailand or from properties located outside the Thailand must pay personal income tax upon bringing such income into Thailand. A resident of Thailand, in this context, is defined as an individual who spends a total of 180 days or more in Thailand within a given year, regardless of whether such individual resides in Thailand continuously throughout the year, if they accumulate a total of 180 days or more in Thailand, they are still considered a resident for tax purposes. For instance, if Mr. A resides in Thailand only during odd-numbered months, totalling 184 days in Thailand, he is still considered a resident.

 

 

(2) Non-Resident Income: The Order explains that if a person is not a resident of Thailand during the year in which they earn income, they do not need to include that income in their tax calculations, even if they bring that income into Thailand in a subsequent year when they are a resident. For example, Mr. B earns income from a rental property abroad in a year when he is not considered a resident of Thailand. Then He brings this income into Thailand in a following year when he is a resident, he is not required to calculate such income as assessable income and shall not be subjected to taxation in the year that those money brought into Thailand. Interest on Bonds and Debentures: The Order also addresses the taxation of income from buying bonds and debentures from outside Thailand. For example, if Miss C purchases bonds from foreign sources in a year when she is a resident of Thailand and subsequently brings the income into Thailand, she is only required to calculate assessable income from the interest on these bonds, not the principal.

Both conditions must be met for the foreign-sourced income to be taxed in Thailand. However, if such income has already been taxed in the source country and the person later brought the said income into Thailand. Thailand and the source country’s double taxation treaties (if any) will govern and determine whether such paid tax in the source country will be used as tax credits or tax exemptions.

 

It is important to note that this order applies to all taxpayers living in Thailand or planning to reside in the country. Non-compliance with the Revenue Code may lead to criminal penalties, including fines and imprisonment.

 

This summary provides an overview of the key points covered in the Q&A infographic issued by the Revenue Department regarding the taxation of foreign-sourced income. As these criteria will become enforced on the 1st July 2024, it is essential for the resident taxpayers to understand and adhere to these regulations to avoid penalty consequences.

 

It is unclear now on how the Revenue Dept will enforce this. Whether or not they will make compliance with this law a condition to extend a retirement visa or not is yet to be seen. As we are all aware , most countries have a double tax agreement with Thailand (DTA). This ensures that tax payers will not be double taxed, but it does not exclude them from filing their personal income tax in Thailand.

 

 

 

[WilliamG]

I recently went to my local tax office in Bang Rakam. I explained that I transfer Bht 40k per month via Wise to satisfy the Immigration Officer, plus having Bht 400k in a bank account, adding up to Bht 480k. accepted as the Combination Method by my IO in Phitsanulok.

The Taxman, who spoke very good English told me that an over 65 year old is allowed Bht 190k in expenses, 60k baht for something else, and the first 150k is at 0% anyway, adding up to 400k at 0%. I shall then have to pay 5% on the excess 80k = Bht 4000.

For last year I had to pay Bht 200...yes Bht 200!

[Thai_Law]

That's great. Get a good accountant to prepare and file your Thailand personal income tax and make sure you take into account the DTA if your country has one with Thailand, so you won't play double tax. However, don't forget you will still have to file. 

[WilliamG]

51 minutes ago, WilliamG said:

I recently went to my local tax office in Bang Rakam. I explained that I transfer Bht 40k per month via Wise to satisfy the Immigration Officer, plus having Bht 400k in a bank account, adding up to Bht 480k. accepted as the Combination Method by my IO in Phitsanulok.

The Taxman, who spoke very good English told me that an over 65 year old is allowed Bht 190k in expenses, 60k baht for something else, and the first 150k is at 0% anyway, adding up to 400k at 0%. I shall then have to pay 5% on the excess 80k = Bht 4000.

For last year I had to pay Bht 200...yes Bht 200!

Sorry, I should have said.....adding up to Bht 880k

[Non-Immigrant]

5 hours ago, TLP said:

That's great. Get a good accountant to prepare and file your Thailand personal income tax and make sure you take into account the DTA if your country has one with Thailand, so you won't play double tax. However, don't forget you will still have to file. 

But what if DTA's were deemed by the RD to "contradict or oppose the provisions laid out in Order No. 16/2023", and, hence, void, as stated in Article 2? Strikes me that there would then be nothing standing in the way of double taxation.

[Thai_Law]

5 hours ago, Non-Immigrant said:

But what if DTA's were deemed by the RD to "contradict or oppose the provisions laid out in Order No. 16/2023", and, hence, void, as stated in Article 2? Strikes me that there would then be nothing standing in the way of double taxation.

You are thinking too much and over analyzing this too much. The key to all of this new tax law stuff is that everyone needs to understand that this new law is geared towards Thais who are earning money abroad. Therefore, before anyone starts to panic, we need to consider one thing only. That's enforcement. How will the Revenue Dept enforce this law onto foreigners. There is only one way. That is on the renewal of a visa application or work permit application. Therefore, until we hear anything further on this from immigration, there is no need for anyone to panic. Why? Because if immigration has to enforce this law, especially on retirees, it will be absolute chaos. 

[samiam123]

On 11/16/2023 at 10:18 AM, TLP said:

You are thinking too much and over analyzing this too much. The key to all of this new tax law stuff is that everyone needs to understand that this new law is geared towards Thais who are earning money abroad. Therefore, before anyone starts to panic, we need to consider one thing only. That's enforcement. How will the Revenue Dept enforce this law onto foreigners. There is only one way. That is on the renewal of a visa application or work permit application. Therefore, until we hear anything further on this from immigration, there is no need for anyone to panic. Why? Because if immigration has to enforce this law, especially on retirees, it will be absolute chaos. 

The only people who should be worried are the people who are evading taxes by living in Thailand more than 6 months of the year while collecting unreported income.  I can almost guarantee you those people already know who they are. If you already pay some sort of withholding tax to your home country, or live off some sort of retirement income that has previously been reported to your home country in some way, you have nothing to be concerned about.  That would include most retirees living off of pensions and investments.

As you said, trying make all the people on retirement visas file Thai tax returns would create chaos.  It would be an unworkable bureaucratic nightmare so I just don't see that happening.  They might just make them sign some form and giving their Social Security/Insurance number saying that their income has already been reported.  Like what the US does with their W-8BEN form.

https://www.irs.gov/pub/irs-pdf/fw8ben.pdf

Edited November 18, 2023 by samiam123

[Pinetree]

2 hours ago, samiam123 said:

The only people who should be worried are the people who are evading taxes by living in Thailand more than 6 months of the year while collecting unreported income.  I can almost guarantee you those people already know who they are. If you already pay some sort of withholding tax to your home country, or live off some sort of retirement income that has previously been reported to your home country in some way, you have nothing to be concerned about.  That would include most retirees living off of pensions and investments.

As you said, trying make all the people on retirement visas file Thai tax returns would create chaos.  It would be an unworkable bureaucratic nightmare so I just don't see that happening.  They might just make them sign some form and giving their Social Security/Insurance number saying that their income has already been reported.  Like what the US does with their W-8BEN form.

https://www.irs.gov/pub/irs-pdf/fw8ben.pdf

Exactly right.

[Marc26]

4 hours ago, samiam123 said:

The only people who should be worried are the people who are evading taxes by living in Thailand more than 6 months of the year while collecting unreported income.  I can almost guarantee you those people already know who they are. If you already pay some sort of withholding tax to your home country, or live off some sort of retirement income that has previously been reported to your home country in some way, you have nothing to be concerned about.  That would include most retirees living off of pensions and investments.

As you said, trying make all the people on retirement visas file Thai tax returns would create chaos.  It would be an unworkable bureaucratic nightmare so I just don't see that happening.  They might just make them sign some form and giving their Social Security/Insurance number saying that their income has already been reported.  Like what the US does with their W-8BEN form.

https://www.irs.gov/pub/irs-pdf/fw8ben.pdf

There are a fair # of US people that have a concern with the $125k Earned Income Exemption 

 

So if they are living in Thailand they don't have to pay taxes to the US on their 1st 125k usd

 

Which they would possibly  be taxed then in Thailand for that 

 

Although I guess they are evading taxes in Thailand by doing that now

 

So they aren't entirely legal 

[Pinetree]

4 hours ago, Marc26 said:

There are a fair # of US people that have a concern with the $125k Earned Income Exemption 

So if they are living in Thailand they don't have to pay taxes to the US on their 1st 125k usd

Which they would possibly  be taxed then in Thailand for that 

Although I guess they are evading taxes in Thailand by doing that now

So they aren't entirely legal 

I may be talking out of turn here, but in the US, to get that exemption, are you not registered with the US tax authorities and submit a return and the exemption comes directly from the US tax laws?   You do get an exception from tax in the UK, but it still comes from submitting a tax return. If so, the Thai rules would not apply. 

[Marc26]

9 minutes ago, Pinetree said:

I may be talking out of turn here, but in the US, to get that exemption, are you not registered with the US tax authorities and submit a return and the exemption comes directly from the US tax laws?   You do get an exception from tax in the UK, but it still comes from submitting a tax return. If so, the Thai rules would not apply. 

Yes of course you need to file your taxes with the US

 

Now being an expat myself in Canada I unfortunately don't get the advantage of that exception because I pay slightly more taxes in Canada 

So I don't have any taxes owed to US

 

But my thinking is if you make 200k usd and have a tax obligation in US you have only paid taxes on about 60k after the personal allowance 

 

I don't know if paying your tax in US at the 60k taxable income wipes out all obligations to Thailand which might be looking to tax you on the whole 200k?

 

But you would also run into the fact you are illegally working in Thailand 

 

 

But as people and myself even mentioned 

I don't think it's going to be a concern 

 

 

Just a hypothetical 

[oldcpu]

On 11/18/2023 at 8:23 AM, samiam123 said:

The only people who should be worried are the people who are evading taxes by living in Thailand more than 6 months of the year while collecting unreported income. 

Well - a good point, but I don't think the word "evading" 100% accurate for everyone. Some countries, do not tax pensions.  For example, Austria.  One could be a full time resident in Thailand, and nominally receiving a pension from Austria (where there is no Austrian on the pension),, and then potentially because of this change in taxation of money brought into Thailand,  have to pay tax on one's Austrian pension.

A double tax agreement may not help one in that case, as typically with double tax agreements, one needs to pay the higher of the two taxations rates - where in this case, it could mean pay Thai taxes on one's Austrian pension.

I suspect there are other countries similar to Austria in this regard.

Again, we await more information - but I think for some there could be cause for concern while waiting to see how this all plays out.

...

Another aspect is the new Long Term Resident (LTR) visa, as a selling point for categories such as the LTR-Wealthy Pensioner, advertised no tax in Thailand on money brought into Thailand (for that visa).  I've read that some on the LTR visa have contacted the Thailand Board of Investment (BoI) asking for confirmation that will be still the case (ie no tax on LTR-WP visa holders for money brought into Thailand), and BoI replied they intend to work with the Thailand revenue service to ensure that remains the same.

But again, I think we may need to wait an see how this all plays out.

Edited November 20, 2023 by oldcpu

[Marc26]

16 hours ago, oldcpu said:

Well - a good point, but I don't think the word "evading" 100% accurate for everyone. Some countries, do not tax pensions.  For example, Austria.  One could be a full time resident in Thailand, and nominally receiving a pension from Austria (where there is no Austrian on the pension),, and then potentially because of this change in taxation of money brought into Thailand,  have to pay tax on one's Austrian pension.

A double tax agreement may not help one in that case, as typically with double tax agreements, one needs to pay the higher of the two taxations rates - where in this case, it could mean pay Thai taxes on one's Austrian pension.

I suspect there are other countries similar to Austria in this regard.

Again, we await more information - but I think for some there could be cause for concern while waiting to see how this all plays out.

...

Another aspect is the new Long Term Resident (LTR) visa, as a selling point for categories such as the LTR-Wealthy Pensioner, advertised no tax in Thailand on money brought into Thailand (for that visa).  I've read that some on the LTR visa have contacted the Thailand Board of Investment (BoI) asking for confirmation that will be still the case (ie no tax on LTR-WP visa holders for money brought into Thailand), and BoI replied they intend to work with the Thailand revenue service to ensure that remains the same.

But again, I think we may need to wait an see how this all plays out.

I think, simply put, you can't expect to live in a country full time and not pay taxes 

 

You are using all the services that tax pay for 

 

And no, bragging about adding your 60k baht/mo doesn't count (I don't mean you)

 

I'm not saying I'd willingly pay taxes if I didn't have to or I could avoid them easy

 

But if I ended having to pay taxes I wouldn't whine either 

[oldcpu]

11 hours ago, Marc26 said:

I think, simply put, you can't expect to live in a country full time and not pay taxes 

 

When it comes to pensions, where people on a pension are nominally older than than younger working force, where pensions are typically MUCH smaller than a regular salary, ..  when it comes to annual income tax for those older people, clearly the Austrians think differently than yourself.

Retirees do thou, pay the nominal sales tax ... but when it comes to pension, they don't share that view that you expounded.

So if I was from Austria, I would think twice about moving to a country where my Austrian pension was about to be taxed.

 

 

 

Edited November 21, 2023 by oldcpu

[Marc26]

1 hour ago, oldcpu said:

When it comes to pensions, where people on a pension are nominally older than than younger working force, where pensions are typically MUCH smaller than a regular salary, ..  when it comes to annual income tax for those older people, clearly the Austrians think differently than yourself.

Retirees do thou, pay the nominal sales tax ... but when it comes to pension, they don't share that view that you expounded.

So if I was from Austria, I would think twice about moving to a country where my Austrian pension was about to be taxed.

I wasn't talking about that

 

I was talking about people who work and device income online/outside of Thailand but live full time in Thailand 

 

But yes if Thailand was going to make you pay taxes on a pension your homes country doesn't, unless you don't need the money it would be foolish to live there

 

 

I have it on the flip side

If I sell my apartment here in Canada I don't have to pay capital gains but may need to in the US, as a citizen 

Which is crazy 

 

But it's a choice I made and will have to deal with it 

[Thai_Law]

Great discussion guys. As I said before, all this depends on enforcement. Let's see how that will be handled. Again, this new law was actually put in place for Thais who live abroad part of the time. Don't think this law was created just to piss off all the foreigners. 

[Thaidup]

As it stands now from what I understand, all untax"d income from overseas that is remitted to Thailand is subject to Thai Tax, on the scale as in Thai law

 But anyway, I have 50 million baht I want to try avoid taxes, can you help me?

Is your commission less than 7%?