By now you've probably seen the panic online regarding the proposed changes to tax policy on foreign income remittance in Thailand. Many expats are scaring themselves and others with speculation over how the changes will impact life in Thailand.
In light of this, I thought it would be a good idea to separate the truth from the speculation and keep you all properly informed. I will make this a live post and update it as and when new information comes in.
If you want to be kept updated by email, see the last section of this post, as I have enlisted the help of tax professionals, both independent and inside the revenue department.
Understanding the Thai Tax Residency Rule
To understand whether or not this change will affect you, let's first define a resident, or rather, a tax resident in Thailand. In Thai law, a tax resident is defined as an individual who stays in Thailand for a period or periods aggregating 180 days or more in any tax year.
If you fall outside of this rule, you need not worry about this subject matter, as the change won't affect you. If you do fall into this bracket, please read on.
The Current Tax Rule
As it stands, the assessable income received by a Thai tax resident through employment, an overseas business or property located abroad would be subject to Thai personal income tax only if the earnings were repatriated to Thailand within the same tax year.
For example:
Sarah lives in Thailand for 180+ days per year, and works as a consultant for an international company based in the United States.
Under the previous tax regulations, if Sarah earned $50,000 from her overseas job in January 2022 but choose not to transfer the funds to Thailand until February 2023 , she was not required to pay Thai personal income tax on that income for the year 2022.
Under the new law, Sarah would now be required to pay personal income tax on that income.
The New Tax Rule as of 2024
Under the rule, which started January 1, 2024, foreign-sourced income over 120,000 THB (or 240,000 THB for married couples) repatriated to Thailand will be eligible for Thai income tax, regardless of the tax year in which the income was earned.
Here are some further examples provided by the revenue department:
- Mr. A is in Thailand every day from January to December 2024 for a total of 366 days. Mr. A is deemed a resident of Thailand in tax year 2024.
- Miss K is in Thailand during odd months in 2024 for a total of 184 days. Ms. K is deemed a resident of Thailand in tax year 2024.
- Mr. C was in Thailand from January to December 2024 for a total of 179 days. Mr. C is not deemed a resident of Thailand in tax year 2024.
- Mrs. D has been in Thailand continuously for a total of 250 days with the first 100 days being in 2024 and the last 150 days being in 2025. Therefore, Mrs. D is not deemed a resident of Thailand in both tax year 2024 and tax year 2025 because Mrs. D was in Thailand for less than 180 days in both tax years.
Income Received Before 2024
What about income received before 2024 but brought back into Thailand in 2024, will it be subjected to taxation?
The revenue department says:
Foreign-sourced income earned before January 1, 2024, won't need to be declared in Thai tax returns, irrespective of when it’s brought into the country.
Income Prior to Living/Retiring in Thailand
There has been much speculation on how accumulated income prior to living in Thailand will be assessed. For example, a person lives and works in a foreign country and later retires to Thailand with his/her overseas earned income. Will such a person have to pay taxes on these earnings?
The revenue department says:
No. This is because the said accumulated earnings came from assessable income that occurred in the tax year in which the person stayed in Thailand for less than 180 days. Example: Mrs. D. is of Thai nationality and has been living in China since 2007. But in 2024, Mrs. D. wants to travel back to live in Thailand permanently, so she brings back her accumulated earnings from working in China. As such, Mrs. D. is not obliged to pay any personal income tax on money brought into Thailand in 2024 because the said accumulated money comes from assessable income that occurred in the tax year in which Mrs. D. was not a resident of Thailand.
Why is Thailand Doing This to Expats?
It is all about raising money, not about targeting expats.
One assumes the legislative changes are aimed at wealthy Thai citizens with foreign income sources. Unfortunately, foreigners with residence permits or long-stay visas have been caught in the cross-fire, so to speak.
As Prime Minister Srettha Thavisin explained quite bluntly:
You should pay tax on income you earn, no matter how you earn it.
Tax Implications for Expatriates
Direct and indirect financial transfers, ATM withdrawals and credit card spending, if sourced from overseas, are considered remitted and therefore assessable income for tax purposes.
Cash or assets physically carried across the border, or through the airport are also classed as remittance and should be declared on the tax return.
Pension Taxation
Pensions paid by your government (state) will only be taxed in your home country, while other pensions (private) will be taxed in Thailand.
Eligible Deductions
Thailand offers personal and family allowances which can significantly reduce taxable income. These allowances are available for the taxpayer, spouse (if not filing jointly), and children (subject to specific conditions).
- Deductions can be claimed for medical expenses, including health insurance premiums. There are caps on the amount that can be claimed, and specific criteria must be met.
- Interest paid on a mortgage in your name for a Thai property can be claimed as a deduction.
- Expenses for your own or your dependents’ education in Thailand are deductible.
- Donations to approved charities and religious institutions in Thailand are tax-deductible.
- Contributions to approved retirement funds are eligible for tax deductions. There are annual limits on the amount that can be deducted.
What About Double Taxation?
A double tax treaty, also known as a tax treaty or a bilateral tax treaty, is an international agreement between two countries designed to address and mitigate the issue of double taxation for individuals and businesses with economic activities or income sources in both countries. The main purposes of double tax treaties are:
- Avoidance of Double Taxation: Double taxation occurs when a taxpayer is liable to pay taxes on the same income or capital in both their home country (where they are a resident) and in a foreign country (where the income or capital is generated). Double tax treaties provide mechanisms to prevent or reduce this double taxation.
- Prevention of Tax Evasion: These treaties also aim to prevent tax evasion by requiring the exchange of information between the two countries, which helps tax authorities in each country verify income and enforce tax laws.
Thailand has double-tax treaties with 61 countries.
The revenue department has stated:
If you are deemed a a tax resident of Thailand (staying in Thailand for 180 days or more), the tax paid abroad can be credited against the tax paid in Thailand in the tax year that assessable income was brought into Thailand according to the provisions of the Double Tax Treaty to which Thailand is a contracting party.
The double tax position depends on each country's DTA agreement with Thailand and how specific assets are treated. Each DTA is a separate International Treaty, with different provisions, so it is advisable to check the precise terms that apply in your situation.
Note: Regardless of the tax treaty, you may still have to declare the income in Thailand as part of your tax return, and, as stated by the revenue department, you will be credited for the tax already paid.
How Will The Filing System Work?
If you do remit foreign sourced income to Thailand, you will need to obtain a Tax Identification Number (TIN) to file a tax return.
An online portal for tax filing exists, but it is currently available only in Thai. Efforts to include English support are being considered. However, it is best to file through an accountant.
Essential Documents
A complete set of documents is needed for a hassle-free tax filing experience. This includes identification documents, income statements, and documentation of deductions and allowances claimed.
Specific Documents
Typically, you will need your passport, work permit (if applicable), annual income statements, receipts for allowable deductions, bank statements, and documents for any tax exemptions claimed.
Filing Deadlines
The deadlines for filing tax returns in Thailand are critical to meet to avoid penalties. The Thai tax year runs from 1 January to 31 December.
End of Year: PND90/91 personal tax returns need to be submitted within 3 months of the year-end date for paper filings and 3 months and 8 days of the year end for eFilings
Half year: PND94 personal tax return (within 3 months of the half year-end date): Individuals who have received income under section 40 (5) – (8) of the Revenue Code, with non-salary income like as income from rent, commissions, royalties, professional fees, dividends etc, have to report income earned from January to June and pay taxes with the a half-year personal income tax return (PND 94 form).
Ensure you know the exact filing deadline for the relevant tax year and mark it in your calendar.
Tax Enforcement
This all leaves me with one burning question: How will this be enforced?
I mean, for decades, expats have been bringing money into Thailand during the same year it was earned, and no one has ever battered an eyelid.
Why? Because the last thing you want to do is scare off expats, and potential expats, by scrutinizing where their money has come from and trying to get them to pay tax.
Retirees and others move to Thailand for an easy, cheaper life, one free of the tax man constantly breathing down your neck trying to squeeze every last cent out of you.
But this “hands off” approach has been at the tax office's discretion. If they wanted to, they could request that all remittences are declared, which it seems is now the plan – except it is now with the amendment that all income, regardless of the year it was earned, will be subject to tax.
The tax office certainly won't be going door to door, but there will be spot checks, much in the same way that “crackdowns” on illegal workers and overstayers take place. Expect there to be occasional enforcement. While some will get away with hiding their cash forever, others won't be so lucky.
If you're a resident, hire a tax advisor and file to avoid any trouble later down the road.
Want to Stay Informed?
If you want to remain updated on the new tax law and receive clarification on pertinent questions, you can click here to register for updates.
By doing so, you'll get regular updates directly from my IFA, who is heading up a new initiative called Expat Tax Thailand to help people navigate this new and fairly complex situation. He maintains strong ties with leading Thai tax advisors and is providing lots of useful information.
Additionally, the registration form allows you to pose any questions you might have.
I hope this has helped clarify the current situation for you. If you have any questions or comments, please feel free to drop them below.
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Join the Upcoming Webinar
I have arranged a webinar with Thailand-based tax professional and IFA, Carl Tuner. He's agreed to cover all the important information, and personally answer your questions.
Here's what will be covered:
- Taxable Income Overview
- State & Government Pensions Clarification
- Tax Number and Forms Requirements
- Double Taxation Agreements (DTA) Info
- Deductions and Credits
- Enforcement of Tax Law
- Next Steps (what to do)
- And your questions…
Add These Details to Your Calendar:
- Date & Time: Tuesday 7th May. 4pm Thai time, 10am UK time.
- Register & Submit Questions Here:https://www.expattaxthailand.com/thailand-life-webinar/
If you can't make it, we will make it available for you to watch at a later date, but do try to turn up and make it worth Carl's while.
Please do share the link above with any friends who might be interested, or on any social media channels you are active on, so we can help others benefit from this professional advice.