What the Tax Man Says: Official Revenue Department Announcements on Foreign-Sourced Income

Question 5: If you use the money to buy bonds abroad and receive interest from holding such bonds and you later bring the principal and interest back to Thailand, are you required to include both the principal and interest in calculating personal income tax?

Answer: No, the income tax will be paid only on the interest portion which is deemed assessable income according to Section 40 (4) (a) of the Revenue Code provided that the interest income is brought back into Thailand and such person stays in Thailand for more than 180 days.

Question 6: If it is assessable income received before 2024 but brought back into Thailand in 2024, will it be subjected to taxation?

Answer: Yes, it is if the assessable income occurs in a tax year in which the income earner is in Thailand for 180 days or more and he or she brings in that assessable income into Thailand from 1stJanuary 2024 onwards. The income earner must include the said assessable income in the calculation of personal income tax in the tax year 2024 and must submit the tax return by March 2025.

Question 7: If the assessable income is received in 2023 and brought into Thailand in 2023, will it be subjected to income tax?

Answer: The tax must be paid if the assessable income occurs in the tax year in which the income earner is in Thailand for 180 days or more and brings that assessable income into Thailand in 2023. The income earner must include the said assessable income in the calculation of personal income tax in the tax year 2023 and submit the tax return by March 2024.

Question 8: If you are not in Thailand for 180 days or more in a tax year but you have assessable income from a foreign source in the said tax year, must I pay personal income tax when I bring that assessable income back into Thailand?

Answer: No personal income tax is required even if the assessable income is brought back into Thailand. Example: In 2028, Mr. A is in Thailand for a total of 65 days and he has assessable income from renting out his property abroad. By crediting the rental money into his bank account located abroad in the same year and transferring the said income into his bank account in Thailand, Mr. A did not have to pay personal income tax on the said rental money because he was not a resident of Thailand when the money was generated.

Question 9: If a person lived and worked or conducts business in a foreign country for a long time but later returned and brought to Thailand his accumulated incomes earned overseas, will such a person have to pay taxes on these earnings?

Answer: No taxes need to be paid. 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 he brought back his 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.

Question 10: If assessable income brought into Thailand was already taxed abroad and you bring that income back to Thailand, do you have to pay taxes again on this assessable income and end up paying double taxation?

Answer: There is no double taxation in this case. 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.

Question 11: Since The Revenue Department’s Order Di. Por. No. 161/2023 is not a law, are taxpayers required to comply with this Order?

Answer: Although the Order itself is not the law but is an explanation of Section 41, Paragraph Two of the Revenue Code, taxpayers still have a duty to comply with the Order. The Revenue Department Order, Type P., is an order that the Director-General, in his capacity as a supervisor, orders the revenue officers to consider it as a practice guideline for advising taxpayers to comply with the law correctly.

Expat Tax Clarification: Revenue Department Order No. P.162/2023 – 20 November, 2023

The Thai Revenue Department has refined its approach to taxing foreign-sourced income through the introduction of Revenue Department Order No. P.162/2023. This directive builds on the foundational changes set by Order No. P.161/2023, which shifted the tax liability to the year in which foreign income is remitted to Thailand, rather than when it is earned. Here’s a detailed breakdown of the key aspects and implications of these orders:

Initial Changes and Their Implications

Order No. P.161/2023 established a new rule stating that from 1 January 2024, foreign-sourced income would be taxed in the year it is brought into Thailand. This marked a significant change, aiming to simplify the taxation process and ensure timely tax collection.

Clarifications Introduced by Order No. P.162/2023

The subsequent Order No. P.162/2023, issued to address concerns and ambiguities, states explicitly that income earned before 1 January 2024 will not fall under the new rule. This amendment ensures that the change in taxation approach is not retroactively applied, providing relief and clarity to taxpayers.

Detailed Guidance on Foreign-Sourced Income

Order No. P.162/2023 also offers comprehensive guidelines on how income from abroad is taxed, particularly addressing earnings from work duties, business activities, or assets located outside Thailand. This guidance is crucial for individuals and businesses to understand their tax liabilities and plan their finances accordingly.

Key Amendment and Its Effects

The notable amendment in Order No. P.162/2023 is the clarification added to the first item of Order No. P.161/2023, which stipulates that the new taxation rule does not affect income earned before 2024. This specific exemption provides a transitional period for taxpayers, allowing them to adapt to the new system without the worry of retrospective taxation.

Practical Impact and Tax Planning

For taxpayers, this clear distinction means that foreign-sourced income earned before 2024 can be planned for remittance to Thailand without the immediate tax implications of the new rule. It eases the transition into the new tax regime and aids in more effective tax planning and financial management.

Final Word

The issuance of Revenue Department Order No. P.162/2023 signifies a thoughtful approach by the Thai Revenue Department in updating the tax rules for foreign-sourced income. By providing clear guidelines and ensuring that changes are not applied retroactively, the department facilitates a smoother transition for taxpayers into the new tax regime. This update is an essential step in aligning Thailand’s tax policies with international standards, ensuring fairness and transparency in the tax system for both residents and non-residents dealing with foreign-sourced income.

Revenue Department Order No. P.162/2023

TRANSLATION  Revenue Department order No. P.162/2023 Subject: Payment of income tax under Section 41, paragraph two of the Revenue Code. In order for revenue officials to consider this as a practice guideline for inspecting and giving advice to those residing in Thailand which has assessable income according to Section 40 of the Revenue Code. In the past tax year Due to work duties or business conducted abroad or because of assets located abroad according to section 41, paragraph two of the Revenue Code The Revenue Department has ordered the following: Add the following as the second paragraph of Section 1 of the Revenue Department Order No. P.161/2023 regarding: Payment of income tax according to Section 41, paragraph two of the Revenue Code, dated 15 September 2023. “The provisions of paragraph one shall not apply to assessable income arising before 1 January 2024.” Ordered on 20 November 2023 Kunlaya Tantitemit (Miss Kulaya Tantitemit) Director General of the Comptroller General’s Department acting government official Director General of the Revenue Department

UPDATE: 29TH July, 2024

Revenue Department Issues Clarification of Tax Rules for Foreigners 

The Revenue Department has issued a new document titled, “How Do Foreigners Living in Thailand Pay Tax?” This document reconfirms the current rules on foreign-sourced income and underlines the intention to apply these rules for the current tax year.

You can download the document here.

Summary of the Information

Income Subject to Tax

• Thai-Sourced Income: Any income derived from sources within Thailand is subject to Thai income tax, regardless of where it is paid.
• Foreign-Sourced Income: Income earned from sources outside Thailand is subject to Thai tax if:
  • It is earned from 1st January 2024 onwards by a foreigner residing in Thailand for 180 days or more in a tax year.
  • It is remitted to Thailand in the same tax year or later.

Exemptions

• Income derived before 1st January 2024 and remitted to Thailand in a later tax year is not subject to Thai tax.
• Even if remitted later, foreign-sourced income of non-residents of Thailand is not subject to Thai tax.

Tax Return Filing

• Foreigners must report Thai-sourced and foreign-sourced income (remitted to Thailand) in their Personal Income Tax Return (PND 90/91).
• The taxable income will include both the Thai-sourced income earned and foreign-sourced income remitted during the tax year.

Foreign Tax Relief

• Under the Double Tax Agreement (DTA), income tax paid abroad can be credited against Thai taxes, preventing double taxation for Thai residents.
• Documentary evidence in Thai or English is required to claim foreign tax credits. A Tax Payment Certificate from the foreign tax authority is recommended. 

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