Thread: Thai Government Alters Overseas Income Tax Rules to Close Loopholes

In an effort to tackle loopholes in overseas income tax, the Thai government has pulled out new rules that it said would permanently close these gaps for good, while also addressing issues of income inequality within the country.


The Thai Ministry of Finance last week implemented a tighter rule on overseas income, which will take effect on January 1st, 2024, onward.

The new rule, aimed to tackle income equality and tax loopholes as stated by PM Srettha Thavisin, will empower authorities to collect taxes from the foreign income of individuals who have resided in Thailand for a minimum of 180 days in the respective assessment year.

According to the new order, residents, who earn taxable income offshore, will be subject to personal income tax, regardless of the tax year they bring such funds into Thailand or the year in which the money is earned, the Revenue Department declared on September 15th.


Previously, residents with foreign income were exempt from personal income tax if they brought the funds into Thailand in a different year from the year the income was earned.


The new rule now essentially close this gap by taxing offshore income whenever it is remitted into the country.


However, it has also caused concern amongst many foreign expats even though the intention of the rules seem mainly targeted at Thais, and dual tax agreements could avert some of the impact for some foreigners. Regardless of the intention, however, the rules could still complicate things for some foreign nationals who stay in Thailand over 180 days a year.

PM Srettha on Monday, September 18th, emphasized the importance of this move, saying “Some people may not be happy that I am digging in to this area, but inequality is a big issue. The principle of tax is that you must pay tax on income you earn no matter how you earn it and not take advantage of various loopholes to try to avoid it.”


Nevertheless, it is important to highlight that if the income from offshore sources is not subject to taxation or falls under categories exempted from Thai personal income tax as per the Revenue Code, residents will not be required to pay personal income tax when they bring that income into Thailand.


As for exactly what this means for foreigners, the new rules have driven intense debate on social media and concern. Many netizens have pointed out that most expats have dual tax agreements with their own home countries so if the income was already taxed in say the UK, it would in theory not be able to be double taxed in Thailand.

There has also been debate on if the term “resident” in the new rules applies to just staying over 180 days or being a Thai national, which most seem to believe that based on current interpretation of the rules this would be the former and not the latter.


There is also no sign of if foreign nationals could be officially exempted or if this means regardless of a dual tax status if a foreign expat would now legally need to do a Thai tax return each year. Foreign expats in some visa statuses, notably work visas, already do this or have their company handle it for them.


The Ministry of Finance has stated that they understand a lot of the growing concern around the new rules and plan to provide further clarification on them in the near future before they take effect.


TPN media has already had many reader messages and e-mails full of concern over the pending rules but many of the questions quite simply cannot be answered with a concrete response until the Thai government provides further clarifications.

We will, however, continue to cover these new rules as they are clarified and expanded upon and urge those interested in the future rules to keep a close eye on TPN Media.

Thai Government Alters Overseas Income Tax Rules to Close Loopholes - The Pattaya News

Thai government to tax all income from abroad for tax residents starting 2024

Originally Posted by Seekingasylum

I spoke to several retired chaps today whose countries do not have double taxation agreements.

Out of interest what countries were they?

Oops. The US and Thailand DO have a taxation agreement.

edit

Which countries does Thailand have double tax treaties with?

United States of America

I don’t know how accurate it is.

Originally Posted by taxexile

Out of interest what countries were they?

France and surprisingly Ireland.

There's a tax agreement between Germany and Thailand.

Originally Posted by Seekingasylum

I mean, just how the fuck are they going to interpret all the differing countries tax certificates showing tax has been paid at source. Will they insist it is translated and authenticated by an embassy? Countries operate different tax years, how will the process be reconciled and dovetailed with an immigration application - “ where your Thai tax certificate, you no hab, you no get extension “.

This could well be the last straw.

Easy, there will be an App and you'll upload docs and all will be checked by an AI designed by Chulakorn Uni. Chinkies will of course be exempt and judging by the latest tourism target noise so will the Wobblies.

Originally Posted by Seekingasylum

Retiring here for many will be a no-no and with it the purchase of condos and other properties. The administration of it alone, to be synchronised with immigration extension applications, is frankly an appalling prospect. UK sourced incomes subject to tax are covered by the double taxation agreement that exists with Thailand but if allowances are not equable then it could well be more tax is liable in Thailand.
I spoke to several retired chaps today whose countries do not have double taxation agreements and they say they are offski if it comes into force.
This is really quite a challenge.
I mean, just how the fuck are they going to interpret all the differing countries tax certificates showing tax has been paid at source. Will they insist it is translated and authenticated by an embassy? Countries operate different tax years, how will the process be reconciled and dovetailed with an immigration application - “ where your Thai tax certificate, you no hab, you no get extension “.

This could well be the last straw.

Another problem is that not every taxation agreement between various counties and Thailand is the same. Australia's treaty with thailand covers income tax and a resource tax.
"The existing taxes to which this Agreement applies are-(a) in the case of Thailand:
(i) the income tax; and
(ii) the petroleum income tax;
(b) in the case of Australia:
the income tax, and the resource rent tax"

We can assume most individuals need not worry about the latter. But if you have set up a company back home, perhaps to manage real estate, then company tax is not covered. Capital gains tax from trading shares or bitcoin also not covered. So what do you say to Thai revenue....Oh, the money i bring over is only from post income tax earnings, not capital gains from share trading.

It's another hare-brained Thai government scheme that will already have some of their patrons smacking them round their pathetic, stupid ears.

Moral panic takes over the expats and Thai taxation furor


The fear that retirees and other non-working expats are about to be taxed on their overseas pension income has created a field-day for internet warriors, click baiters and nervous long-term visa holders. But calmer reality suggests it may be premature to start packing your bags in utter disgust.


The Thai revenue department has recently stipulated that, from the next calendar year, “earned income from overseas” will be liable for personal income tax for those (Thais or foreigners) spending up to 180 days a year in the country. This is, in fact, an old revenue rule but has been updated to close the loophole in which those liable delayed transferring their income until a later year.

To pay personal income tax you need a TIN (tax identification number) issued by the revenue department. Without that there can be no income tax liability and, one assumes, most foreign retirees have never heard of a TIN and certainly haven’t got one. The latest move is clearly aimed at currency traders, those involved in stock market trading and anyone holding earned foreign income in an offshore account for over twelve months to avoid tax. They have always been the target.


The new ruling has nothing whatever to do with your visa which is irrelevant to tax status anyway. Let’s take a simple example. Those holding an Elite visa or an annual retirement extension might, or might not, spend more than six months a year in Thailand. There is evidence that many Chinese holders of Elite regularly come in and out of Thailand but do not clock up 180 days per annum. On the other hand, a tourist Brit or an American (amongst others) could easily reach 180 days by entering the country by air several times via the 30 days visa-exempt rule, extending at immigration and making an occasional visa run.

Thus the issue is whether or not the revenue department has now extended the residence rule (180 days in a year) to include permanent sun worshippers, expats married or with families to support, adult students learning Thais and a diverse assembly of pensioners in their 60s, 70s and beyond. Thai law and financial regulations are often kept deliberately vague and the 100 words of the Thai language devoted to the subject in question in the latest revenue announcement certainly don’t provide a definitive answer. Nor do the translations in English provided on social media.




Many active on social media are advising panicky expats to wait for a broader explanation from the revenue. Fine, except that there may never be one. If the sole purpose is to catch those TIN holders who have delayed sending their income to Thailand, there’s nothing more to say. But if there is a real attempt to punish financially all expats, as suggested, one can only imagine the bureaucratic chaos, daily huge queues at revenue offices (with too few staff to cope and knowing nothing of double taxation treaties) and the total collapse of international financial confidence. Within days, a Thai general would appear on the TV, accompanied by somber military music, to explain why tanks were in the streets of Bangkok. Apologies for the inconvenience.

Moral panic takes over the expats and Thai taxation furor - Pattaya Mail

Australia and Thailand have a tax treaty . Infact we have one with just about everyone except Laos , perhaps I should sell bld mansion.while the goings good

Gotta feel sorry for the retirees in Thailand who's money has steadily been declining, wouldn't like to be a retired soap dodger in Thailand now.

Originally Posted by BLD

Australia and Thailand have a tax treaty . Infact we have one with just about everyone except Laos , perhaps I should sell bld mansion.while the goings good

I see a lot of Aussies are actually more concerned about rumours of the Aus govt planning to take away a chunk of their pension, rather the Thai one.

Originally Posted by Norton

Interesting video Norts. Thanks for posting.

Sound like Thai Revenue is using a typically vague language to encourage people to transfer lump sums early, and avoid tax liability?

The problem for those of us who are well acquainted with the stupidity of Thai governance is just how do we comply with a nebulous law, vaguely expressed and interpreted by officials many of whom are intellectually challenged.

The Thai fuck up everything in the end.

If they exclude retirees then it’s a start but expecting clarity? From the Thai?

Mauritius beckons.

And of course they've made no mention of anything to do with it with a mere three days to go.

Originally Posted by Seekingasylum

The problem for those of us who are well acquainted with the stupidity of Thai governance is just how do we comply with a nebulous law, vaguely expressed and interpreted by officials many of whom are intellectually challenged.

The Thai fuck up everything in the end.

If they exclude retirees then it’s a start but expecting clarity? From the Thai?

Mauritius beckons.

If your UK pension is not taxed by the UK, you are liable to pay tax on it in Thailand. Doesn’t affect you, as owner of a Thai condo that you can’t sell anyway.

Originally Posted by Norton

They threw this out and have got a huge amount of pushback so will have a rethink.

I haven't seen any further rule change published. Have you?

On Friday, 15 September 2023, the Revenue Department of Thailand issued Revenue Departmental Order No. Por.161/2566 (2023) regarding the new tax implications on personal income tax under Section 41, Paragraph 2 (the “Order”) of the Thai Revenue Code (the “TRC”).

Originally Posted by harrybarracuda

I haven't seen any further rule change published. Have you?

No. Nothing new.

In November 2023 the Thai tax authorities issued a clarification of the Revenue Departmental Order No. Por 161/2566 (2023).

I could only now find KPMG's take on the announcement, but I am sure I read something from either Tileke & Gibbins or Baker McKenzie in early December.
My recollection was that their opinion was similar to that of KPMG.

Here is KMPG's version

December 5, 2023
The Thai Revenue Department on 20 November 2023 issued further guidance—Departmental Instruction No. Por 162/2566—regarding the individual (personal) income tax implications for foreign-sourced income brought into Thailand by Thai tax residents.
Previous guidance was issued providing an interpretation of Section 41 Paragraph 2 that any foreign-sourced income brought into Thailand from 1 January 2024 onwards will be subject to Thai individual income tax, regardless of the tax year in which the income was derived. Read TaxNewsFlash
The new guidance clarifies that the interpretation provided in Clause 1 of DI No. 161/2566 does not apply to foreign-sourced income derived before 1 January 2024.
KPMG observation
The foreign-sourced income derived by a Thai tax resident before 1 January 2024 may be subject to the previous interpretation (i.e., said income would not be subject to Thai individual income tax unless it is brought into Thailand in the same year in which the income is derived). This could ease the burden on taxpayers planning the remittance into Thailand of foreign-sourced income that had already been derived prior to the issuance of Departmental Instruction No. Por 162/2566.

Thailand: Further guidance on foreign-sourced income - KPMG United States

Thai Revenue Department issues further guidelines - KPMG Thailand

Originally Posted by Happy As Larry

The new guidance clarifies that the interpretation provided in Clause 1 of DI No. 161/2566 does not apply to foreign-sourced income derived before 1 January 2024.

I'm surprised that alone was considered worthy of clarification.

Especially when there are probably another 1,001 questions that they haven't clarified.