The proposed or New Tax Ruling Beginning January of next Year
Lawyers for Expats Thailand have received many enquiries regarding this topic.
On 15 September 2023, the Revenue Departmental instruction number Paw. 161/2566 (“DI. Paw.
161”) was issued, which provides a new interpretation of the personal income tax treatment of foreign sourced income derived by a Thai individual tax resident under the Revenue Code (the "Code").
This infers, that any income from a foreign source derived by a Thai individual tax resident
is subject to Thai personal income tax upon bringing it into Thailand, regardless of the tax
year the income is received. The interpretation change will apply to taxable income brought into
Thailand from 1 January 2024 onwards.
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DI. Paw. 161 was issued as new guidance for Revenue Department officers in interpreting Section 41
of the Code and overrules the previous interpretation. Section 41 of the Code rules that an individual
shall pay personal income tax in Thailand under the following two rules:
I. Source rule: A taxpayer who derives income from employment, a business carried out in Thailand, a
business of an employer residing in Thailand, or from a property situated in Thailand shall pay Thai
personal income tax on such income.
II. Resident rule: A Thai tax resident who derives income from employment or business carried out
abroad or from a property situated abroad shall pay tax in Thailand upon bringing such assessable
income into Thailand.
Any person staying in Thailand for a period or periods aggregating 180 days or more in any tax year
shall be deemed a resident of Thailand.
Please note the 180-day Tax Resident Law has been in existence for a number of years but this has not been enforced or policed up to now
The Code broadly states that a Thai tax resident must pay tax on foreign-sourced income derived in
the previous tax year upon bringing it into Thailand. The Revenue Department, in 1987 (BE2530),
issued a tax ruling to extend a condition for Thailand to impose tax on income from a foreign source,
that the assessable income must be brought into Thailand in the same calendar year that the income
is received (the Revenue Department's tax ruling no. Gor. Kor. 0802/696 dated 1 May 1987). Since
then, the Revenue Department and Thai resident taxpayers have relied on this interpretation that
foreign-sourced income is exempt from Thai personal income tax if the income is brought into
Thailand in a calendar year following the year in which the income is received. This long-standing
interpretation has also significantly influenced tax planning for individuals with offshore businesses
and assets.
The new interpretation provided in DI. Paw. 161 is likely to significantly impact Thai resident
individuals who derive income from employment, business and assets abroad. For example, Mr. A, a
Thai tax resident, had income from selling shares in a Singapore company in 2020 and kept the share
consideration, including the capital gain in a bank account in Singapore. If Mr. A brings the proceeds
from the capital gain into Thailand in 2024, he must include the capital gain from selling Singapore
shares as his assessable income and pay personal income tax for the calendar year 2024.
Alternatively, if Mr. A transfer the capital gain proceeds to his bank account in Thailand within 2023,
the capital gain is still exempt from Thai personal income tax under the current interpretation.
The new rule raised concerns from multiple stakeholders, for example:
• There are concerns from small to medium individual investors investing in overseas stocks.
One point raised is that it appears unfair for investors who invest in overseas stocks if the
capital gain will be subject to Thai personal income tax at progressive rates, while capital gain
from trading Thai stocks via the Stock Exchange of Thailand is tax-exempt.
• Expatriates living in Thailand also raised concerns about unclear tax conditions on taxable
foreign-sourced income. One point raised is whether the pension fund they receive from their
home country’s government and or Private Pension will also be taxed when remitting into Thailand. Under the new
interpretation, the pension fund is likely to be considered income from a foreign source that is
taxable if it is related to the employment or business of the taxpayer overseas. Therefore, if
an expat receives a pension in 2024 from their work or business in the past, the pension will
be taxable in the year that the expat remits income into Thailand.
This point really needs to be clarified as this will have a huge impact on foreigners living in the kingdom.
• Another issue that needs clarifying is whether spending in Thailand from earnings kept in a bank
account overseas via e-banking or debit cards will be considered remitting income into
Thailand and, as a result, taxable in Thailand. If this point of deemed remitting of income is
still unclear, it will eventually impact Thailand’s economy since foreigners will be cautious
about bringing money to spend in Thailand.
In addition to that if this is to go ahead it could have a huge impact on the property market as foreign ownership of condos depends on money being transferred from a foreign bank to pay for the condo using the FET form.
• It is also important to mention the taxpayer’s burden in providing proof of foreign tax credit.
Where Thai domestic law is still silent about a foreign tax credit available for individual
taxpayers under this circumstance, a provision under double tax treaties could provide relief
from any double tax arising. However, the conditions, methodologies, and documents
supporting the claim are still unclear.
According to the Revenue Department, it will seek opinions from the stakeholders affected by the new
rule and issue guidelines to provide more clarity. The plan includes an amendment of the personal
income tax return form to facilitate the foreign tax credit claim.
During the period of unclarity, we recommend that Thai resident taxpayers review their income from a
foreign source that has been kept in an offshore bank account and consider bringing such income into
Thailand within December 2023.
Interestedly the benefits of the LTR visa have been updated by the BOI Board of Investment to include tax free foreign transfers.
It would be good to see that extended towards Non-O Retirement and Married Visa holders too to put peoples mind at ease regarding this.
Please feel free to reach out to Lawyers for Expats Thailand if you have any questions or require further
Information re this or any matter.
Contact Brian Ramsden our General Manager of Foreign Affairs to arrange a Free Consultation +66956583038 WhatsApp ad Line or email info@lawyersforexpatsthailand.com
We will share any updates as they become available to us.
Disclaimer
The information contained, and views expressed, herein are for general guidance only, and are not to be construed as representing a professional opinion of Lawyers for Expats Thailand. No
responsibility is accepted for any errors or omissions, howsoever caused, that this publication may contain, or for any losses sustained by any person as a result of reliance on
any information contained herein.