Turmoil among expats: Thailand wants to tax immigrants too from 2024

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Thailand is not only an expat paradise because of its beautiful beaches and good food. Foreigners residing in Thailand do not yet fully legally pay taxes on pensions, capital gains and passive income from their home country. This is one of the reasons why approximately 10,000 Swiss people live in Thailand.

But the tax benefits may soon end. Thailand’s Ministry of Finance announced that it plans to tax the foreign income of all natural persons, whether Thais or foreigners who are in the country for more than six months a year, from January 2024. Prime Minister Srettha Thavisin makes this clear in the “Pattaya Post”: Everyone, without exception, must pay taxes on their income “no matter how they earn it.” He speaks openly about the loophole under current law through which anyone can avoid income tax by deferring the transfer of income to a later tax year.

The turmoil among foreigners (at least those who don’t work in Thailand) is huge. Some moved to Thailand openly because of the so-called tax exemption on retirement money and other income. Until recently, the Thai government even used this argument to attract immigrants to the country.

It shouldn’t happen this quickly

But they probably don’t need to pack their bags immediately: The new income tax is unlikely to be implemented so quickly.

The system is initially based on personal registration. Taxable foreigners who stay in Thailand for more than 180 days per year must request a tax identification number (TIN) from the tax office. Since many expats do not have such a card, there can be serious delays or even rejections. Meanwhile, “Bangkok One” newspaper assumes that the authorities’ primary target is not foreigners, but rather foreign exchange traders and stockbrokers who deposit money acquired abroad into offshore accounts for at least a year to take advantage of the aforementioned tax loophole.

But Thavisin has already acknowledged that Thailand needs to increase tax revenue to keep its promise: From February 1, 2024, every Thai over the age of 16 will receive 10,000 baht (about 250 francs) in digital credit from the government.

It will then need to be clarified whether the new practice violates double taxation agreements. Thailand has had these features with 61 countries, including Switzerland, since 1996.

Is a management monster emerging?

So far Thai officials have been unable to provide further detailed information. There is still a great deal of uncertainty in the foreign community, as Thai laws are sometimes at the discretion of the relevant representatives of the state or even private providers. There are fears that the Thai government will create another “monster” with a flimsy “Covid-19 Situation Management Centre” (CSSA) as it was during the pandemic. Expats want a clear statement from the government that there will be no tax on retirement income from abroad.

Other expat destinations, such as Brazil, which imposes a moderate and transparent financial transaction tax, may also benefit from the uncertainty.

Source :Blick