Tax residency in Thailand and taxing overseas income

[Big Boy]

No idea, but I doubt the UK would know the Thai system when things are reversed. It has to be simple, which it is.

[STEVE G]

We are then talking the Thai tax system. They will look at your income in Thailand, deduct any allowances, and then present you with a number, which is how much tax is due in Thailand.

It is only then that your UK tax paid is brought into it. If the amount of tax paid in the UK exceeds what is due in Thailand, you have nothing to pay. If the amount of tax is less than what is due in Thailand, you pay the difference.

But is that what is stated in the DTA?

I've read it several times and I'm still struggling to understand it fully, it’s not in plain English:

https://www.gov.uk/government/publicati ... x-treaties

[caller]

Legal jargon never is!

I am reading it as stating that if you are taxed in the UK on your source of income from the UK, then the other country honours that by way of a credit against any tax that might othewise be due in Thailand. And vice versa.

The bit I struggle with is that the value of tax allowances, which I assume covers our tax free allowance, must stay in the UK, so as not to be taxed in Thailand. I think thats what it means? If so, I would imagine that would be a difficult one one to prove or disprove. I doubt either Countries tax services would want to look too closely into that.

[STEVE G]

^Yes, it’s an important issue for me because I'll potentially have retirement income from two countries which means you can benefit from two tax free allowances if you do it the right way.

[Dannie Boy]

The basic principle of the double taxation agreement is to ensure the same income isn’t taxed twice, so if you’ve paid tax on UK income, you can use that to offset any tax liability on income transferred to Thailand. Reading between the lines, it appears unlikely that any tax liability in Thailand will be greater than it is in the UK (this is what BB has found), so there shouldn’t be a Thai tax liability.


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[404cameljockey]

The matter we're discussed today is if your income is too low to attract tax in the UK, it seems it will be counted in full as inward remittance to Thailand, subject only to Thai tax allowances (which will come nowhere near the half milllion Baht equivalent basic tax-free UK allowance of over 12,000 GBP). But if you have enough income to attract tax in the UK the full amount of income in the UK is taxable in Thailand, with tax paid in the UK considered under the dual tax treaty under Thai tax laws. The tax allowance in the UK is disregarded. That's how it seems.

[caller]

I think it's worth remembering that the UK/Thai DTA was signed in 1981. It's mainly about business and people living & working in Thailand. I don't think at that time, the idea of people coming from the UK en masse to retire in Thailand, where money could be transferred in seconds between the two countries, was really considered. I'm sure if this was updated now, it would have a specific section for retirees. But there clearly hasn't been any need or desire to do so, as it has never been an issue. Maybe that will now change?

[magsandbilly]

Hi All

Could anyone tell me if I would be taxed on monies transferred from uk into my Thai bank account by my sister who is coming over on holiday?

[Dannie Boy]

You might struggle to get a definitive answer from a bunch of lay people on this forum, if you’ve been following the thread you’ll know how uncertain many individuals have been with their own money, so it sounds like an unnecessary complication that might be better to avoid if you can.

[Big Boy]

Most definitely. You provide a statement from your bank, and the tax office zoom in on all transactions from overseas. However, maybe if you could convince them the money was for somebody else, you may get away with it. However, it would be a huge loophole that everybody could use.

[magsandbilly]

Thanks Big Boy and Dannie Boy for the quick replies. I was leaning towards that thought.

[404cameljockey]

I guess a pre-emptive visit to the TRD office on Soi 88 asking for advice (if possible) as to what would be needed as proof that the funds are not for your use would be a useful suggestion?

If it's not illegal to record conversations with government officials in Thailand I'd do that.

[Dannie Boy]

Recording a conversation with the Thai Tax authorities doesn’t sound a very good idea to me? But the whole thing sounds somewhat strange - I’m just wondering why the visitor can’t bring travellers cheques, UK sterling or convert to Thai Baht before departure and/or using UK cards to withdraw funds in Thailand - none of this requires the tax authorities involvement?

[404cameljockey]

Recording a conversation with the Thai Tax authorities doesn’t sound a very good idea to me? But the whole thing sounds somewhat strange - I’m just wondering why the visitor can’t bring travellers cheques, UK sterling or convert to Thai Baht before departure and/or using UK cards to withdraw funds in Thailand - none of this requires the tax authorities involvement?

All of those have their operational and financial disadvantages, and anyway I can't think of any reason why the idea is strange.

Someone else here already said they recorded a conversation at the TRD, I presume they let the officer know they were recording and if so I don't see any problem, you can say you have a very bad memory and will need it to refer to!

[sateeb]

Is it a different TRD for those living in Cha Am?