Expats in Thailand yawn at latest income tax concessions
Many expats blame the Thai government for creating much ado about nothing.
The director general of the Thai Revenue Department has again shone his torch on the proposed tax changes to overseas income transferred to Thailand. In comments to Bangkok Post, Pinsai Suraswadi confirmed that forthcoming transfers in the calendar year 2025 would be tax free if transmitted here before the end of 2026 – that is in the current calendar year or the next one. But the general reaction of expats has been indifferent with 85 percent of comments in the newspaper article saying the whole business is a shambles, or words to that effect.
The changes, when formally announced, will apply to all native Thai tax residents and also to foreign expats who are physically in Thailand 180 days or more in the current calendar year. Clearly, the intention of the government is to stimulate the return of foreign capital to Thailand by allowing a tax-free window and to create a more flexible and investor-friendly approach to residency-based taxation. As regards foreigners, digital nomads, retirees and business owners earning income outside Thailand and remitting it here can rest easy.
Confusion earlier this year caused some expats to volunteer tax payments.
Pinsai stressed that the change in regulations had not yet occurred. There will be a ministerial order – not a royal decree or new parliamentary law as some had speculated – which will be announced only after consideration by the Council of State and the Cabinet. Specifically, the order will not be retrospective and will take effect only following publication. For example, anyone who has already paid income tax on income transmitted here in the calendar year 2024 will not be able to claim a refund.
The director general was at pains to stress that Thailand has not abolished income tax on foreign-derived income sent here. Only foreign income remitted in the same year, or the following year, is tax-free. Income brought in after the two-year window will be taxed under the current system. Hypothetically then, income transferred anytime in 2026 will be tax-free in 2026 and 2027, but becomes taxable if transferred at any date in 2028 or beyond. Thai tax rates are progressive ranging from 5% to 35%.
Pending publication of the order, some matters are clearer. Pinsai’s wording is clearly meant to extend to tax-resident foreigners, as already confirmed by professional firms such as Hawryluk Legal and Siam Legal International. But the new regulations have not yet come into force, so it’s best to delay transmitting overseas income, especially large sums, until formal promulgation. The change is clearly meant very largely to encourage Thai investors to repatriate capital without a tax liability, but retirees will certainly breathe less heavily once the order becomes active within weeks. None the less, all tax residents here should keep their financial records available and in good order. This Is Thailand.
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