Last year, the Thai Revenue Department (“TRD”) issued Departmental Instructions No. Paw 161/2023 and Paw 162/2023 concerning foreign-sourced income. According to these instructions, any Thai tax resident with foreign-sourced income will be taxed in Thailand when such income is remitted into the country, regardless of when you remit it (please see the links below for more details):
Grant Thornton Tax Alert 1
Grant Thornton Tax Alert 2
It still isn’t clear, though, how the recipient will be able to receive credit for foreign taxes paid on such income under applicable Double Tax Treaties or otherwise.
Recently, the TRD announced in a newspaper[1] that they are preparing to amend the law to adopt a new rule to impose personal income tax on all worldwide income accrued by Thai taxpayers. This new rule would allow the TRD to collect tax from any Thai tax resident who derives foreign-sourced income, even if they do not bring such income into Thailand. However, this proposed new rule is still under discussion. We will keep you updated as more information becomes available.
Who Will Be Affected by This New Rule?
The proposed new rule will affect both foreigners working in Thailand for more than 180 days and Thai citizens who are Thai tax residents working abroad. A key question is whether this new rule will affect Long-Term Resident (LTR) Visa holders. The answer is: “It Depends”.
Currently, the interpretation is issued as a guideline. The LTR rules will prevail based on the hierarchy of laws and the principle of lex specialis. However, if the TRD chooses to amend the Thai Revenue Code, the new rule will likely take precedence. Nonetheless, the government is unlikely to do this, as the LTR is designed to benefit LTR holders.
As mentioned, the TRD is still reviewing and studying the potential impact of this new rule. We will monitor the situation closely and keep you informed of any developments.
[1] https://www.bangkokpost.com/business/general/2805305/new-overseas-income-rules-proposed
