New overseas income rules proposed
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New overseas income rules proposed

Adoption of 'worldwide income' principle could have major implications for taxpayers

The Revenue Department is preparing to amend the law to collect taxes from individuals who have income from abroad, even if that income is not brought into the country.

The new system would be based on the widely recognised principle of worldwide income, said Kulaya Tantitemit, the director-general of the department.

It is still in the discussion stage and it is not known when it might take effect. If enacted, it would follow a major change that took effect this year in the way income from foreign sources is treated for tax purposes in Thailand.

Current tax law calls for individuals who reside in Thailand for more than 180 days per year to pay taxes to Thailand on income earned locally and also on any income earned abroad that is brought into the country.

Previously, if an individual met the 180-day tax resident requirement and had foreign income, they paid personal income tax on that income only if it was brought into the country within the year it was earned.

This rule was revised effective from Jan 1, 2024. Tax is now payable on foreign income regardless of when it is brought into the country. To give an example, Mr A sold shares in an overseas company in 2020, realised a capital gain and banked the money in an overseas account. If he brings the proceeds from that capital gain into Thailand in 2024, he must report it as assessable income when filing a tax return.

Expats in Thailand, meanwhile, have raised questions about tax treatment of pension income from past employment when that money is brought into Thailand. If this money is taxed in their home country and that country is one of the 61 that have agreements with Thailand to prevent double taxation, in theory there should be no problem. But debates about interpretation of the law are ongoing.

The adoption of the principle of worldwide income would bring Thailand in line with international practice, said Ms Kulaya. It would also make tax planning more challenging for individuals and businesses.

Worldwide income refers to all income earned by an individual from all sources worldwide. This can include income earned from employment, self-employment, investments, rental properties, royalties and any other sources. How it is assessed and taxed depends on the laws of the country where one is a tax resident.  

In a related development, Ms Kulaya reaffirmed the department’s plan to expand the tax base by requiring online platforms with annual revenue of 1 billion baht or more to report their sources of income.

The department will use this information to verify their tax compliance, she said.

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