Death and taxes

**TheEqualizer** · 23-01-2008, 09:55 PM

It's coming up to that time of year when 'hard' working farangs are expected to settle outstanding tax bills.

I am a teacher working in Thailand for 2 years for a standard 30K wage and I've been stuck with a bill for 36,000 THB (I opted to pay all at the end of the year). I had prepared myself for 18K costs as I was told it would be at a rate of 5% but now the school tells me it will be 10%. I have the money and I am able to pay it; before anyone starts saying 'serves you right foolish boy', but that's not my reason for posting.

A teacher friend of mine claims that Thai law states foreigners do not pay tax on income for the first two years. He has checked up the Thai laws and is now currently employing a lawyer to enforce this as the local taxation office are pleading ignorant.

Is it his lawyer fleecing him or is it the Government employees who don't know their arses from their elbows?

Has anyone else heard of this law or is this teacher wasting his time and money on a useless lawyer?

Please be quick with your replies as the tax man is knocking at my door and I don't want to hand over money that I could be using to buy a new plasma screen. Thanks.

**dirtydog** · 23-01-2008, 10:01 PM

Originally Posted by TheEqualizer

Thai law states foreigners do not pay tax on income for the first two years.

That maybe for BOI companys, can't imagine that they would let ordinary hard working foreigners off of 2 years tax though.

**Thetyim** · 23-01-2008, 10:05 PM

I only know a few teachers but they all paid tax from their first year.

36K sounds to high though

**Gerbil** · 23-01-2008, 10:23 PM

Something strange here.

a) There is no 'tax free' period for foreigners.
b) There's no option to pay all your tax at the end of a year, it should be deducted and paid monthly.
c) There are also social security deductions that should be taken each month (750 baht a month maximum, but I forget the % it's based on of salary).

So a rough calculation: 360K income - 100K (first 100K earnings are tax free) - 30K personal allowance = 230K. 10% = 23K + (750 baht * 12 = 9K) = 32K tax.

So the figure is close to 36K... Maybe the employer is trying to pull a fast one and making you pay the employers social fund contribution as well?

Whatever the case you should get a form 90 (or 91) which you have to sign which will have the details laid out (all in Thai of course, but the figures should be obvious). Without it, they cannot renew your work permit.

(I'm a bit rusty on the percentages and allowances as it's been 5 years since I paid tax and then it was all prepared by the company accountant and I just signed the form).

**forreachingme** · 23-01-2008, 10:23 PM

Normally employer has to pay 5 % and you pay 5 % ... ( may be this is social insurance? )

Then there is the rule of minimum salary for different country you may come from, like Europe is 50 K and i think US is 60 K ?...

If you got kids, you can be entitled of tax returns...

**Gerbil** · 23-01-2008, 10:50 PM

Originally Posted by forreachingme

Then there is the rule of minimum salary for different country you may come from, like Europe is 50 K and i think US is 60 K ?...

I believe teachers dont count in that one as they're expected to earn less than proper expats.....

I think that's unfair. Pay 'em at 30K, tax 'em at 60K I say.

**Thetyim** · 23-01-2008, 10:54 PM

Tax rates and allowances are explained here

::Personal Income Tax::

**TheEqualizer** · 23-01-2008, 11:43 PM

Thanks guys, Very helpful.

I know about the tax deductions but forgot to include them in my OP.

32K could still have bought a nice TV though.

Looks like my teacher friend is being fleeced by an unscrupulous lawyer.

**Thormaturge** · 24-01-2008, 12:33 AM

Originally Posted by Gerbil

Something strange here.
a) There is no 'tax free' period for foreigners.

Actually there is, but only for teachers. It is not just in Thailand, but most countries.

For Brits in Thailand it is Article 21 of the 1981 double Taxation Convention. This also applies to Americans, Australians and most Europeans.

It may be that I am the "lawyer" (I'm actually a qualified tax advisor) the OP's friend has hired since I am handling a large number of claims and, last year, secured around ThB 4,million in refunds.
The Revenue Department have got themselves into an awful muddle over this since the Convention clearly states:

A) that the exemption applies for a visit not exceeding two years for the purpose of teaching;
B) that the exemption applies for the first teaching visit only.

Where there is a problem is that SOME (not all) Revenue districts consider that if a teacher renews his contract at the end of two years then his first visit is longer than two years. I am arguing against this and frankly the Revenue Department are on a losing wicket.

A) At the end of the first two year period virtually all of the teachers leave Thailand for a holiday and to renew their visa. This departure is the end of their first visit. If the Revenue Department wish to argue that the teachers have not left Thailand at that point then clearly those teachers who leave and do not return have also not left. So turning the argument around, have those who do not return actually left? Of course they have, and therefore so have those who return. Fine, then the exemption applies to teachers who take up a second contract.

B) These agreements are reciprocal. Thailand has such agreements with more than a dozen countries, but Thailand is the only country that seeks to join two separate teaching periods together. Is it likely that the rest of the world is wrong and Thailand is right?

C) Reciprocity means precisely that, and if the Revenue Department wish to continue with this argument in the courts then ultimately Thais who stay on in the UK and the US will have to be treated the same way. In pursuing this line of argument the Revenue Department are condemning tens of thousands of Thais oveseas to paying back taxes they have previously reclaimed. In the UK this goes back to 1981.

Those are the primary arguments.

I have a case with very substantial sums of tax involved where I have now appealed to the Revenue Department under Article 25 of the Convention, stating unfair treatment and I am waiting to see whether we end up in court or they give in. As I say, some offices do not accept this position and refund taxes even though teachers have signed a second contract.

Watch this space.

**TheEqualizer** · 24-01-2008, 06:42 PM

Wow the implications of that last post are huge.

Why isn't this well known to everyone?

How many teachers have paid tax wrongly?

I left and re-entered Thailand less than two years ago to take up my first and current teaching post, my contract was renewed and ran concurrently. This is my first visit teaching and I'm within the two years. What's more, I paid tax last year!

It seems that not only should I NOT pay tax, but that they owe ME money!

How can I be sure of this? If I go into my local taxation office and start telling them I'm not paying tax, they're going to want to know the facts.

How do I approach this? What laws/articles do I need to quote in order for them understand? Where can I get this info first hand?

Presuming you are who you say you are, and not some troll with a malicious sense of humour, who can help me with this?

**TheEqualizer** · 24-01-2008, 06:57 PM

An after thought...

Can you post a copy of that law in Thai so that I can show them something in writing so they understand it's official? I'll see if they crack and take the easy option.

Thanks for the help.

**Thormaturge** · 24-01-2008, 07:23 PM

...erm you want me to work for free?

The reason why this is not so widely known is because the entire thing is a typical Thai mess. Even with my experience I have had claims refused, initially, and have been told:

A) Teachers should pay tax like everyone else, so go away;
B) If you claim and deposit the money in a bank account you will be guilty of money laundering;
C) Teachers must have left the country for one day, one week, one month, six months, whatever period of time comes to the officer's mind;
D) Consecutive visits constitute one single visit.

Then there is the interminable never ending list of documents which the Revenue Department require. Every office requires something different.

This all largely stems from an incorrect ruling by the Revenue Department in April, 2003, roughly a month after I arrived in Thailand. Had the people concerned known I was a genuine tax consultant then this matter wouldn't have got so out of hand. Regrettably I was obliged to tolerate Marko the Ajarn administrator making all manner of false claims about me (including that I had never represented a former England soccer captain).
The reason for this was simply that I had won a poll to decide who would be Ajarn moderator, and he didn't. Christ he got bent out of shape. While I was moderator he spent a year trying to screw up the forum with trolls and virus ridden links. This terminated with a barrage of the foulest nonsense I have read on the internet. I gave up as it was all wasting too much time, and Williams made him Administrator.

My best estimate of money lost to teachers as a result of this? ThB 500,million.

Sorry but if I advise one person for free then everyone will want free advice and I'll be spending all day sorting out problems for nothing.

This may be a legal entitlement but this is Thailand and Thais don't like handing hundreds of thousands of Baht to Farangs, so they make it as awkward as possible. Your friend, for one, who may well be paying for my services, would want his/her money back.

**TheEqualizer** · 24-01-2008, 07:50 PM

I appreciate you're running a business and can't give out advice or take on every case for free, but could you at least post a link to a site that covers this law (written in Thai)?

Many people who could not afford your services would be thankful for the slight nudge in the right direction. People who have already procured your help could not begrudge you telling someone the addy of a site where the law is written in Thai.

Hope you can help with this at least. Thanks.

**NickA** · 24-01-2008, 09:16 PM

36k baht is way too much on 30k a month.

**dirtydog** · 24-01-2008, 09:33 PM

Sounds quite reasonable to me, think how much it would be if he was in a proper country

infact it maybe a nice idea if TEFLers donated half their salaries each month to Thai charities, I mean they don't need all that money to go out drinking and whoring do they

**TheEqualizer** · 24-01-2008, 09:55 PM

Please don't belittle my 30k salary. I don't poke fun at your Macdonalds name badge.

**Thetyim** · 24-01-2008, 11:09 PM

Originally Posted by TheEqualizer

People who have already procured your help could not begrudge you telling someone the addy of a site where the law is written in Thai.

::uk and northern ireland : article 21-25::

Has English & Thai versions

**Thormaturge** · 25-01-2008, 03:36 AM

^

Sadly just the beginning of a long trail of hassle, but I wish the OP luck.

**Kidneystone** · 25-01-2008, 07:01 AM

Oh well looks like Thorma turge had already covered what I was going to say!

**TheEqualizer** · 25-01-2008, 09:22 AM

Wow great link. Thanks.

Looks straight forward. The info comes from the Thai Revenue Dept and says teachers dont pay tax for the first two years of their first visit. Thats me covered nicely. How can they dispute this?

I'll explain it to my HOD and get her to go there with me. Maybe if I smile nicely, nobody will challenge it.

I'll let you know how I get on. Thanks again.

**Thormaturge** · 25-01-2008, 09:32 AM

Originally Posted by TheEqualizer

How can they dispute this?

The dispute comes from a RD ruling in 2003, as I said, that if you remain in Thailand for a further period beyond two years then the purpose of your visit was to teach for more than two years. Read the beginning of Article 21, not just the end.

If the purpose of your visit was to teach for longer than two years then your claim is void.

Most offices were refusing claims up to around a year ago but I have been able to turn some around in that time.

**TheEqualizer** · 25-01-2008, 11:32 AM

If you do not know how long you will be staying, does that mean you should pay tax for the first year or are you exempt? I've been here for almost two years and cannot say for sure that I will stay.

This is my interpretation, if I take away the legal wordings and submit the lamen..

A teacher who visits Thailand for a period not exceeding two years for the purpose of teaching, shall be exempted from tax for a period not exceeding two years from the date of his first visit to teach.

so it applies to me:-

I AM a teacher visiting Thailand for a period (thus far) not exceeding two years. I still am and was a UK resident. Whether I will contine to stay or leave has yet to be determined. I can see that they would want me to backdate taxes and make me pay retrospectively for those years IF I continued to stay. But as you said earlier, it takes only a hop accross the border to have your passport stamped as saying 'DEPARTED THAILAND'. If my passport shows I have left, then I am covered. There is nothing mentioned in the article about having to have left the country for any period of time.

You are right. They cannot win this. The law clearly exempts those who fall under the guide lines.

The only real question for me is do I want the hassle of this case and also the hassle of doing another border run and work permits etc?

My tax looks like it will only be around 23K (thanks to everyone for posting that). Last year for reasons unknown for me I only paid around 2K tax. I'm talking about 25K money in total. When I consider the pricey border run and work permits and visas etc, I doubt I'd save much more than 10K anyway. Seems a lot of hassle for such small money.

Sod it, I'll buy a plasma screen another time!

I wish you the very best of luck with this Mr Lawyer type guy. You are sure to win if the law is enforced by the appropriate countries. I will keep an eye out for any news on your progress.

Thanks everyone.

**Thormaturge** · 27-01-2008, 03:36 AM

Any further information on the Double Taxation Convention can be found in my posts on the Times Educational Supplement (TES) website. I have recently posted important information on this subject on TES.

**Thormaturge** · 16-03-2008, 12:20 AM

Originally Posted by Thormaturge

I have a case with very substantial sums of tax involved where I have now appealed to the Revenue Department under Article 25 of the Convention, stating unfair treatment and I am waiting to see whether we end up in court or they give in. As I say, some offices do not accept this position and refund taxes even though teachers have signed a second contract.

Watch this space.

No court appearance necessary. The Revenue Department have given in.

This particular client gets his money.

... as do many others.

**Happyman** · 16-03-2008, 01:58 AM

I do the occasional jobs for International/Thai companies and they always deduct tax before they pay me and I have a tax number as well

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