Innovations in income tax, Thailand

From 1 January 2024, income earned abroad will be taxed in Thailand, for both Thais and foreigners. Image: Panithan/Adobe Stock

BANGKOK: The Swiss Embassy held a virtual meeting on this topic at the end of February and asked a representative of the Inland Revenue Department about innovations in the income tax law.

The points raised cover the topic to a large extent, but questions remain regarding practical implementation, which will probably only be clarified during the year. The entire event is available on YouTube at #AskTheEmbassy (tinyurl.com/447u743t). Here are the most important things in brief. Note: The following points are for informational purposes only and do not constitute legal advice.

The basics in a nutshell

• From the government's point of view, the new regulation was necessary in order to equalize income earned abroad with domestic income. The new regulation affects Thai citizens and foreigners equally.

• The new rules take effect on January 1, 2024. Income earned before January 1, 2024 will not be affected.

• This affects the income remitted to Thailand.

• The new regulation affects foreigners resident in Thailand within the meaning of the Tax Code. A resident in this sense is usually someone who spends more than 180 days per year in Thailand.

• Retirement benefits and income from assets are subject to the new regulation and will be taxable in Thailand from 1 January 2024 if the above conditions are met.

• Double taxation agreements apply.

• Spouses can jointly evaluate their property.

• Tax deduction options should be examined on a case-by-case basis. Tax breaks are also provided for dividend payments abroad, as well as allowances for payments to children or spouses. Evidence must be provided by the taxpayer on a case-by-case basis. There are also special discount options for seniors on general or health insurance. The amount of discount options or allowances must be inquired about on a case-by-case basis.

• Taxpayers who, for example, have elite visas or long-term visas are not necessarily affected by the new regulations. Regulations for individual visas are special regulations that take precedence over general regulations. As a result, the relevant visa regulations must be applied in individual cases.

• It would be useful in the future to be able to provide proof of the source of funds transferred to Thailand if necessary. It is advisable to keep relevant documents in a safe place.

• Currently, tax returns in Thailand can only be filed online in Thai.

• 2024 tax returns must be filed between January 1, 2025 and March 31, 2025. The deadline can only be extended by 8 days upon request. Thereafter, additional late payment fees, interest, and penalties, if any, will be charged.

• Information and assistance are available from local branches of the Department of Revenue. There, each taxpayer also receives a tax ID.

As a result, it is now clear that income from 2024 that will not be remitted to Thailand until 2025 or all types of retirement benefits are now subject to tax in Thailand. In the future, it is recommended to be able to prove the source of funds when making transfers to Thailand if necessary.

In practice, another challenge for foreigners from German-speaking countries is that Thailand only has Thai as an official language and only occasionally accepts English documents. German documents are not accepted, so necessary translations can quickly become expensive.

If anything is unclear, we recommend seeking advice from one of the many tax offices in Thailand.