Thailand to Begin Taxing Foreign Income Remitted into the Country by Australian Expats – Recent changes by the Thai Revenue Department mean Australian Expats could be subject to Personal Income Tax (PIT) on foreign-sourced income brought into Thailand from 1 January 2024.
This includes income such as rental income on Australian properties or investment income from shares.
Why Are Thailand Now Taxing Expats?
On 15 September 2023, the Revenue Department issued Instruction number 161/2566, which provides a new interpretation of Section 41 Paragraph 2 of the Thai Revenue Code.
The new interpretation stipulates that a tax resident of Thailand who is deriving income from assets located abroad and subsequently brings that income into Thailand in any tax year, has a duty to include that income in calculating income tax under Section 48 of the Revenue Code in the tax year in which the assessable income is brought into Thailand.
Residents are defined as persons residing in Thailand at one or more times for an aggregate period of 180 days or more in any tax (calendar) year.
Previously, Section 41 Paragraph 2 of the Thai Revenue Code was interpreted differently. The assessable income derived by a Thai tax resident from assets located overseas would be subject to Thai personal income tax only if the taxable income was brought into Thailand in the same tax year.
However, the new interpretation means that foreign-sourced income brought into Thailand from 1 January 2024 will be subject to Thai Personal Income Tax, regardless of the tax year in which the income was derived.
Implications for Australian Expats in Thailand
Australian expats living in Thailand now may need to begin reporting and paying tax on foreign income that is brought into Thailand from 1 January 2024.
It’s possible that income generated before the year 2023 may not be subject to taxes in accordance with previous tax rulings if it is brought into Thailand before the end of 2023.
Thailand has recently adopted the implementation of the Common Reporting Standard (CRS), an internationally agreed standard with 150 country members for the automatic exchange of financial account information between jurisdictions for tax purposes, to better combat tax evasion and ensure tax compliance.
Thailand has committed to implementing the CRS, with the first exchange of financial account information relating to the calendar year 2022.
This will allow information sharing among financial institutions and make it easier for Thai tax authorities to enforce the new changes from 1 January 2024.
Concluding comments
While the changes will be unfavorable to those who regularly remit income from their foreign investment activity into Thailand, Australian expats who do not intend to remain in Thailand long-term should limit, where possible, their remittances into the Country.
Carefully managing cash flow locally may assist in reducing the need to remit foreign income into Thailand and ensure the income is reinvested outside of Thailand.
If you would like to explore other strategies to ensure you are making the most of your Australian expat journey, please don’t hesitate to contact us and one of our specialist Expat financial advisers would be happy to assist you.