DI. Por. 161 is aimed at guiding Revenue Department officers in interpreting Section 41 of the Code, which establishes that any income from a foreign source received by a Thai individual tax resident is now subject to Thai personal income tax when brought into Thailand. This reinterpretation will take effect for taxable income brought into Thailand starting 1 January 2024.
Previously, Thai tax residents relied on a different interpretation, established in 1987, which exempted foreign-sourced income from Thai personal income tax if it was brought into Thailand in a calendar year following the year in which it was received. This interpretation played a significant role in tax planning for individuals with offshore businesses and assets.
According to Mr. Jonathan Stuart-Smith, Tax Partner of Mazars in Thailand, the impact of DI. Paw. 161 is expected to be substantial, particularly for Thai resident individuals who generate income from foreign employment, business operations, and assets, especially those who invest in foreign stocks.
For example, a Thai individual tax resident who sells shares in a foreign company will be subjected to Thai personal income tax on the capital gain from the sale, starting from the calendar year 2024 onwards. However, if the proceeds were transferred to the person's bank account in Thailand by the end of 2023, the capital gain earned before 2023 would remain exempt from Thai personal income tax.
In this regard, Mazars in Thailand recommends that Thai resident individual taxpayers review their foreign-sourced income held in offshore bank accounts and consider bringing such income into Thailand before December 2023 to benefit from the current tax treatment.
However, Mr. Stuart-Smith of Mazars, said that the changes have prompted a surge in demand for expert guidance, and Mazars in Thailand is stepping up to provide expert guidance and support to clients facing the complexities of the evolving tax landscape.
"In our opinion, the new regulations are bringing about a host of questions and concerns, leaving taxpayers searching for clarity and guidance. As one of the world's leading consulting companies, we are well positioned to address these concerns and assist our clients in optimizing their tax strategies while ensuring full compliance with the law."
Mazars in Thailand has a dedicated team of tax experts to help provide clarity and solutions amidst uncertainty.
Mr. Stuart-Smith said "We are here to help our clients to navigate the evolving tax environment with confidence and ensure that they comply with the new laws. We are also advising our clients to discuss their specific circumstances and get advice on how to minimize their tax liability."
On 2 October 2023, the Revenue Department issued a Question and Answer (Q&A) document regarding instruction number Por. 161/2566. One of the key points was the utilization of taxes already paid in foreign countries as tax credits, subject to the conditions outlined in the Double Tax Agreement that Thailand has established with other tax jurisdictions. However, the Revenue Department did not provide clear guidance on the specific methods and conditions for using such tax credits. In this regard, Mazars views that the Revenue Department should consider adjusting the presentation of the tax return to facilitate the use of tax credits, as well as providing clear guidelines for their utilization.
For personalized advice and assistance in navigating these tax changes, please contact Mazars in Thailand's experienced team of tax experts at https://www.mazars.co.th/Home/Services/Tax
Mazars in Thailand offers a wide range of tax consulting services to Thai taxpayers, including tax planning and preparation, tax compliance, tax audit representation, and tax dispute resolution.
The company is committed to helping Thai taxpayers optimize their tax liability and comply with all applicable tax laws and regulations. Furthermore, the company takes pride in its dedicated team of experts boasting extensive knowledge in international taxation and compliance. This specialized team focuses on guiding clients in making informed decisions within the legal framework and provides solutions to meet the unique needs of clients impacted by the new tax regulations, ensuring they have access to the highest level of expertise and support.
Source: O.Openarms
