Thailand has been attracting more and more foreign individuals and foreign businesses since the middle of the last century. Nowadays with the new launched and already effective Long Term Residence Visas (LTR), Thai Elite Programs, and other visas, foreign individuals who receive income from different countries or jurisdictions might consider whether they must pay taxes for such incomes in Thailand or overseas.
This legal scenario is not limited to high-net-worth individuals, because when it comes to companies or corporates legally established in Thailand but with other enterprises, branches, subsidiaries or mother companies in other countries, the legal issue is extremely similar, and it should be addressed in the tax planning.
During 2022, H&P has prepared a considerable large number of legal opinions on International Tax Exposure for foreign clients and companies coming from many jurisdictions such as United States, Hong Kong, United Kingdom or Spain among many other nationalities.
Unfortunately, there are many misconceptions and misunderstandings on the exposure of tax obligations in Thailand and even some lawyers and accountants fall in substantial mistakes when they provide legal advice on Tax.
The first rule to take in consideration is the definition of a Tax resident in Thailand, as a person, an individual who is present and resides one or multiple times in Thailand for a period totaling 180 days or more during a calendar year.
Therefore, an individual who is in Thailand for less than 180 days or short–term residence is not defined as a resident under Thai tax regulations.
The Thai Revenue Code stipulates as a general rule, that the tax liability and obligation on the income derived from sources outside Thailand such as an office or its subsidiaries held abroad, a business carried on abroad, or from property situated abroad if such income is brought into Thailand in the same year.
Although many foreigners with residence in Thailand strongly believe that they are exempted to pay taxes if they do not bring that income within the same tax year to Thailand, the reality can be completely opposite to this.
The legal answer of international tax exposure in Thailand can be different case by case and we recommend engaging professional tax advisers such as H&P in Bangkok to provide a comprehensive legal opinion on your case that can be used in the foreign country upon tax investigations (therefore notarized and legalized at your Embassy).
The general rule of the Thai Revenue Code must be considered along with the recent Tax jurisprudence and the key definitions in the first articles and sections of the Double Taxation Agreements (DTA) signed between Thailand and more than 61 countries around the world.
The Double Taxation Agreements (DTA) stipulates the concept of fiscal domicile and relevant definitions such as place of management, center of vital interests, permanent establishment and its own rules for the elimination of double taxation.
From H&P Tax Lawyers opinion, the definition of “permanent establishment” should be observed and taken into consideration by the Thai Tax residents, when it comes to assess the tax obligations and liabilities of companies and individuals in Thailand. It is essential to analyze if the taxpayer falls in these categories and advice on how to structure the taxation in Thailand and abroad.
If you need to engage a Bangkok Tax Lawyer in preparing a legal opinion on your specific case, please contact H&P in Thailand at [email protected]
