Thailand to amend tax on foreign income remittance

[whatspat]

maybe your interpretation of the law is different to the thousends of digital nomads and entrepreneur working from their condo in thailand and not paying any tax in thailand.

There is no interpretation here, the law is unambiguous and nearly identical in effect to many other countries. What happens in practice due to ignorance, lack of enforcement or other reasons is as you say, but it’s not correct legally.

Thailand TRD knows almost all farangs on DTV are working in thailand online and is not letting open them banks accounts or get TaxIds so they have 0 interest in them paying any tax in thailand of they active earned money while working in thailand.

TRD isn’t preventing people from getting bank accounts, that’s mostly down to the banks lack of interest, incompetence, or concern about the new AML regulations which expose them to liability and penalties. Saying “no” is the easy option for them.

TID is a different matter; the system is old fashioned and designed with an assumption that taxpayers would be working for a local entity (same assumption underpins labor law regarding work permits). In the past, wanting to claim back tax withheld from bank account interest payments was sufficient to obtain a TID, not sure if it’s still the case.

The law states that all tax residents (visa type has no bearing on this factual matter) are obliged to obtain one and file an annual return; this doesn’t mean the bureaucracy makes it easy to comply.

 

[xhomer2020]

Read it again very carefully and you’ll discover it applies to foreign source income, which is a very well defined term in tax law. Active income (which includes accruing income by exerting personal effort) is not foreign source income with respect to the territory in which it is performed.

• Active income, such as salaries or freelance earnings from a foreign employer or clients, is considered foreign-sourced if the employer or client is located outside Thailand and the income is paid to an overseas account. As long as this income is not brought into Thailand (e.g., transferred to a Thai bank account), it remains exempt from Thai income tax, even if you are a tax resident.
• However, if you are working remotely in Thailand for a Thai employer or client, the income is considered Thai-sourced and is taxable in Thailand, regardless of whether you are a tax resident or where the income is paid.

What you describe is worldwide income taxation and is not implemented in thailand, is remittance basis.

 

[Davis123]

• Active income, such as salaries or freelance earnings from a foreign employer or clients, is considered foreign-sourced if the employer or client is located outside Thailand and the income is paid to an overseas account. As long as this income is not brought into Thailand (e.g., transferred to a Thai bank account), it remains exempt from Thai income tax, even if you are a tax resident.
• However, if you are working remotely in Thailand for a Thai employer or client, the income is considered Thai-sourced and is taxable in Thailand, regardless of whether you are a tax resident or where the income is paid.

What you describe is worldwide income taxation and is not implemented in thailand, is remittance basis.

So CRS is not going to report your account held overseas to Thailand ? This is confusing.

 

[Davis123]

Try it in Mauritius .

Very expensive island for sure.

 

[Davis123]

• Active income, such as salaries or freelance earnings from a foreign employer or clients, is considered foreign-sourced if the employer or client is located outside Thailand and the income is paid to an overseas account. As long as this income is not brought into Thailand (e.g., transferred to a Thai bank account), it remains exempt from Thai income tax, even if you are a tax resident.
• However, if you are working remotely in Thailand for a Thai employer or client, the income is considered Thai-sourced and is taxable in Thailand, regardless of whether you are a tax resident or where the income is paid.

What you describe is worldwide income taxation and is not implemented in thailand, is remittance basis.

We understand remittance based taxation but we simply don't know how CRS will not report to Thailand

 

[xhomer2020]

We understand remittance based taxation but we simply don't know how CRS will not report to Thailand

You have to understand CRS:

1) USA dont use CRS use FACTA so no bank account in USA will report to thailand what you have there. So any bank account you have there will not report into CRS.
2) Most people with banks accounts overseas in europe have their bank account with their original home address so they will not report to thailand neither but to their home country.

 

[xhomer2020]

3) even the case you have bank account overseas in CRS country with your thailand residence address i never heard anyone reporting thailand is claiming taxes for their not remitted income. Even the remitted income they dont check you put the right amount , you just put what you want but you dont have to justify the amount and i dont know anyone who has been audited on this and fined or asked for more taxes. If anyone know a single case please send link to it.

I think law is so old that by that time they couldnt imagine internet and online remote work would be possible some day and many people would be working from their room online for remote companies.

 

[whatspat]

• Active income, such as salaries or freelance earnings from a foreign employer or clients, is considered foreign-sourced if the employer or client is located outside Thailand and the income is paid to an overseas account. As long as this income is not brought into Thailand (e.g., transferred to a Thai bank account), it remains exempt from Thai income tax, even if you are a tax resident.
• However, if you are working remotely in Thailand for a Thai employer or client, the income is considered Thai-sourced and is taxable in Thailand, regardless of whether you are a tax resident or where the income is paid.

What you describe is worldwide income taxation and is not implemented in thailand, is remittance basis.

I don’t know what you’re quoting, but it’s wrong. See the definitions here https://rd.go.th/english/6045.html under 2.1, or here https://taxsummaries.pwc.com/thailand/individual/income-determination which states it more directly. Assessable income such as from an employer or business doesn’t mention where that employer or business is located, nor where the money is received (and PwC makes the latter point explicit). I’m done trying to educate you; the source of active income is yourself, and you can’t be foreign with respect to your location when you earn it. If you perform those services outside of Thailand, the income would be considered foreign source.

You’re trying to apply rules relating to foreign source income to income which is not foreign source. In general, foreign source income is passive income.

 

[Davis123]

You have to understand CRS:

1) USA dont use CRS use FACTA so no bank account in USA will report to thailand what you have there. So any bank account you have there will not report into CRS.
2) Most people with banks accounts overseas in europe have their bank account with their original home address so they will not report to thailand neither but to their home country.

Most expats opened up companies in Dubai or other gulf countries. Got their residencies and lived in Thailand most of the times. Just made a 1 or 2 day back every six months to Dubai or gulf countries to keep visa valid.