Thailand: Revenue Department Issues Game Changing Personal Income Tax Instruction

DFDL Thailand

3rd October 2023

On September 15, 2023, the Thailand Revenue Department issued a bomb-shell Departmental Instruction that fundamentally changes a long-standing and well recognized rule of personal income tax regarding Thai taxation of offshore income.

On September 15, 2023, the Thai Revenue Department issued a bomb-shell Departmental Instruction (No.161/2566) that fundamentally changes a long-standing and well recognized rule of personal income tax regarding Thai taxation of offshore income.

Previously, offshore (i.e., non-Thai) income earned by a Thai resident taxpayer was not taxable unless remitted into Thailand in the same calendar year it was earned. This rule has been relied upon for many years and is considered a standard rule of practice for both Thai nationals and foreigners, who happen to be residents of Thailand for tax purposes (i.e., individuals residing in Thailand for 180 days or more in any calendar year).

This new instruction significantly alters the previous approach and will have significant implications for not just newly earned foreign source income but previously earned income maintained offshore. The new position is that any foreign (i.e., non-Thai) source income earned outside Thailand will be subject to Thai personal income tax regardless of when it is remitted into Thailand. This changes what was a permanent exemption from taxation on such income into a mere deferred tax liability, to be paid in ANY year the income is eventually repatriated.

In addition to surprising everyone with this change, the Revenue Department has also taken an aggressive position by making the effective date January 1, 2024. As it stands now, any and all offshore income earned this year or hereafter will be subject to taxation upon repatriation, however, it appears that any income earned prior to January 1, 2023, but repatriated before the current year end should not be subject to this new rule and not subject to taxation.

Individuals having accumulated offshore income earned prior to January 1, 2023 should give considerable thought as to whether repatriation prior to December 31, 2023 may be warranted.

Written by Jack Sheehan, Jonathan Blaine and Jidapa Tiamsuttikarn

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.

Jack Sheehan, Partner and Head of Regional Tax, Thailand

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DFDL Thailand

Thailand
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In 2005 DFDL established a permanent presence in Bangkok to better serve the needs of our growing client base in Thailand, especially those businesses and stakeholders investing across the region. Since then, we have expanded and solidified a wide variety of practice groups. These include: corporate and commercial; mergers and acquisitions; energy, mining and infrastructure; banking, finance and technology; real estate; employment; and tax.

Our Thai team works closely with our integrated network of offices across the region to provide international standard legal and tax services, with in-depth and comprehensive knowledge of the local environment. Our legal advisers have practical experience in a wide range of legal areas, from the feasibility phase through to the operation stages of an investment project, and can provide legal and tax advice on all aspects of Thai law.

The Bangkok office is also where a number of DFDL’s regional advisers are based, all with extensive and longstanding experience is complex multi-jurisdictional matters.

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