Proposed changes to taxation

[Gaybutton]

My personal view is even if we expats on the retirement visa do get income taxed, how much could it be? I have seen no speculation about that yet.

I am not among those who would leave Thailand because of it unless it becomes prohibitively expensive. My whole life is Thailand now and I have no place to go. For sure I would never return to Florida.

I am no longer in Thailand for bar boys, bars, and beach. For me, I lost interest in those things long ago, right around the time Corner Bar changed hands when Crabby and Thomas left and Sunee Plaza began its rapid downward spiral. For whatever is still left of my life, all I want to do now is just live.

I am convinced I, along with most of us, won't be subject to this tax. But in case I am wrong, my choice would be to pay it. I certainly wouldn't like it, but it would be either that or leave Thailand - and I would like that even less. I'm getting a little old to have to uproot my life and start over again somewhere else. I have no intention of leaving Thailand unless financially forced to.

[Dodger]

Here's some better clarification from the Bangkok Post:

https://www.bangkokpost.com/business/general/2652846

The most important take-away from this article is the statement below:

"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 with a standing Double Tax Agreement.

[2lz2p]

Thanks Dodger for the link. Here are some excerpts from the article that appear to confirm that income taxed in any of the 61 countries that has a double tax agreement with Thailand will not be taxed again in Thailand:

However, Thailand currently has 61 double tax agreements which prevent individuals or companies operating in more than one country being taxed twice on the same income . . .

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.
However, the department will need to work out more details such as planning for the tax credit system in the case of a prior double tax agreement with the source country.

During the transition period before the enforcement of this new rule, the Revenue Department will invite all stakeholders to discuss in detail any problems encountered as the department needs to issue many subsequent regulations or laws to support such an initiative.

It appears my "conjecture" about having file some sort of documentation with the Revenue Department may wind up being the case: the department will need to work out more details such as planning for the tax credit system in the case of a prior double tax agreement with the source country.

But, unless they develop some way to identify Expat income coming into Thailand, it may not come about unless someone wants to voluntarily report to the Revenue Department to claim their double tax exemption.

Again, at this point, there are too many unanswered questions on what affect it will have and how the process will be implemented. Hopefully, this will be clarified in the near future. I am not going to lose any sleep over it.

[Jun]

My personal view is even if we expats on the retirement visa do get income taxed, how much could it be? I have seen no speculation about that yet.

I speculate that the taxes would be levied at the same rate as on the locals. Just like in numerous other countries:
https://www.mazars.co.th/Home/Insights/ ... Income-Tax

The tax free allowance is low.

[Gaybutton]

This makes it crystal clear to me. I highlighted in bold and enlarged the parts that convince me most expats living in Thailand on the retirement visa will be exempt.
____________________________________

Amendment to see overseas income taxed

Must be factored into personal income tax

by Wichit Chantanusornsiri

September 26, 2023

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.

Why was such tax exempted in the past?

In fact, the department has never exempted the collection of PIT for income accrued offshore. The previous rule, which was drafted 40 years ago, allowed residents with foreign income to be taxed only if it is brought into Thailand in the year in which the income is received. However, the income will be exempted from tax if it is brought into Thailand in the following year.

For example, in the case of overseas income earned on Dec 31 but remitted to Thailand on Jan 1 the following year, there is no need to pay PIT to the Revenue Department.

Why has the department issued such a rule on tax collection as it could create a loophole for tax evasion?

This is mainly due to limitations in the past, namely the double tax agreements used by only a few countries. Therefore, if the government collected tax on income from abroad, the taxpayer would be subject to double taxation as tax must be paid to Thailand as well as paid to the country in which the income is being earned.

However, Thailand currently has 61 double tax agreements which prevent individuals or companies operating in more than one country being taxed twice on the same income.

In addition, in the past there were limitations on tools and technology for checking the timing and amount of income remitted to the country while now there is technology to monitor the outward and inward movements of money as well as international data exchange agreements which enable tax authorities to effectively utilise information for efficient tax administration.

Furthermore, tax collection from overseas income was so trivial due to restricted environmental conditions in the past, namely low technological development, which impeded an individual's ability to invest or work abroad. Despite technological progress at present, people who are keen to invest or work abroad are limited to those who have a good economic status and good knowledge and expertise.

More importantly, in the past, one of the main incomes of Thailand was from labourers who worked abroad and sent money back to the country. Therefore, the government does not want to create a tax burden for such workers.

Therefore, the interpretation of Paragraph 2 of Section 41 of the Revenue Code is deemed to limit the power of the Revenue Department.

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 collection of PIT on overseas income will be primarily based on the principle of self-declaration in conjunction with the use of digital technology and international information exchange systems for verification.

When will the new rule take effect?

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.

However, the department will need to work out more details such as planning for the tax credit system in the case of a prior double tax agreement with the source country.

During the transition period before the enforcement of this new rule, the Revenue Department will invite all stakeholders to discuss in detail any problems encountered as the department needs to issue many subsequent regulations or laws to support such an initiative.

Mr Vinit added that the revision of PIT collection will help enhance Thailand's international standing as a member of many bilateral and multilateral agreements, promote fairness in tax collection both from domestic and foreign sources as well as ensure transparency in tax practices.

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

[Gaybutton]

[Gaybutton]

Here is what a Tax ID document looks like.

[Gaybutton]

[Gaybutton]

A board member consulted his USA tax accountant about this and received the following reply. He prefers to remain anonymous. The response applies to USA retirees for both Social Security and pensions. I agree with the response. I especially like the advice about consulting a Thai accountant in case of trouble. I hadn't thought of that.

I really doubt most of us will even be contacted by Thai authorities telling us we need to pay an income tax, whether we are from the USA or any other country with a double tax agreement. We'll see.

I'm happy to help!

The US and Thailand do have a tax treaty that should protect your US social security benefits. According to the treaty, when the payment is Social Security benefits or Public Pension, it is only taxable in the country making the payment - and not the country of residence.

If the Thai government does try to levy tax against your social security distributions, you'll just need to ask a local accountant to ensure that you can apply tax treaty benefits to any returns that are required of you.

I hope this helps!

Best,

[2lz2p]

For US nationals, you can get a copy of the Double Tax Treaty in pdf format here:
https://www.irs.gov/pub/irs-trty/thailand.pdf

For those receiving Social Security and/or US pensions (I receive both SS and US Gov't pension), the key provisions are as follows. During my 30 years working for Uncle Sam, in reading laws and rules, I learned the first thing to read is the "definitions" section as it will usually spell out the definition for certain terms included in the law, rule, regulation, or in this case Agreement. The provision dealing with SS and Gov't pensions uses the term "contracting states" - so, first up, the definition:

ARTICLE 3

General Definitions

1. For the purposes of this Convention, unless the context otherwise requires:

h) the terms "a Contracting State" and "the other Contracting State" mean the United
States or Thailand, as the context requires;

Article 20 and 21 provide the sections that notes SS and Gov't pensions will be taxed only in by the US, not by Thailand:

ARTICLE 20

Pensions and Social Security Payments

1. Subject to the provisions of paragraph 2 of Article 21 (Government Service), pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

2. Notwithstanding the provisions of paragraph 1, social security benefits and other similar public pensions paid by a Contracting State to a resident of the other Contracting State or a citizen of the United States shall be taxable only in the first-mentioned State.

ARTICLE 21

Government Service

2. a) Any pension paid by, or out of funds created by, a Contracting State or political
subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

b) However, such pension shall be taxable only in the other Contracting State if the
individual is a resident of, and a national of, that other State.