On 15 September 2023, the Director General of the Revenue Department issued the Revenue Departmental Order No. Por. 161/2566 (“Order”) under Section 41, paragraph 2 of the Revenue Code.1 This recent directive has introduced a new twist for Thai tax residents and their offshore investments or portfolio with its new tax guidelines on foreign sourced income.
The outlined Order essentially introduces a new tax collection policy which requires individuals with derived assessable income from work or business conducted from outside of Thailand (e.g. employment, dividends, capital gains, interest, or assets brought into Thailand) to declare and pay taxes on such income, irrespective of whether such income is brought into Thailand in the calendar year of receipt of such foreign sourced income, or in any subsequent calendar years.
In other words, income earned abroad or offshore and brought into Thailand in the subsequent year will no longer be exempt from Thai personal income tax, as was the previous interpretation for the past 30+ years. This new directive applies irrespective of the tax year in which the income is earned and will take effect from 1st of January 2024 onwards.
The Order, serving as a new guiding framework for tax officials, supersedes the previous interpretation that a Thai tax resident is subject to income tax on foreign sourced income if it is remitted to Thailand in the same calendar year in which it was earned.
Under the previous interpretation of Section 41, paragraph 2 of the Revenue Code, the taxation of foreign sourced income was subject to certain conditions. The law stipulated that foreign sourced income be factored into the calculation of personal income tax if both below criteria were met:
It is important to note that the Order functions as a guiding framework for tax officials at the Revenue Department to interpret and put in place procedures to monitor and collect taxes. Moreover, the same Order states that any regulation, ruling, or Departmental practice conflicting with or inconsistent with this Order shall be repealed.
The introduction of this fresh directive presents the potential for additional regulations to be issued in the future, which could potentially affect Thai tax residents and their offshore portfolio and
income and may have implications on the timing of their ability to repatriate their foreign sourced income.
As this could potentially affect existing offshore investments and related structures, we encourage our clients to take the time to consider and review existing offshore portfolio to see if there are any potential gaps, or if any additional tax planning could be done.
Order from the Revenue Department Order No. Por.161/2566 re: Income Taxation under section 41, paragraph 2 of the Revenue Code.
© PDLegal Asia (Thailand) Ltd., (including PDLegal LLC Advocates & Solicitors and its affiliates). Disclaimer: The information provided in this letter does not, and is not intended to, constitute legal advice; instead, all information in this letter is provided for general information purposes only. It is not intended to replace consulting the detailed provisions of applicable laws, rules, regulations, or forms and should not be relied upon as such. It is strongly recommended to seek legal advice before making any decisions based on the information available in this letter.
PDLegal LLC is pleased to announce that Managing Partner, Peter Doraisamy, has been recognised and ranked by Chambers & Partners (Asia Pacific 2023 for Shipping: Domestic: Litigation). The following quotes appear with Peter’s ranking: –
“Peter Doraisamy of PDLegal in Singapore is a noted shipping lawyer in the market. He handles a wide range of disputes, including ship grounding, cargo and fraud-related cases” – Chambers & Partners – Asia Pacific 2023
“He is excellent in litigation. He has very good control of the case, collecting the right evidence and putting this into a very successful trial.” – Shipping Litigation Client
Chambers and Partners is the leading independent professional legal research company operating across 200 jurisdictions. Chambers and Partners delivers detailed rankings and insights into the world’s leading lawyers and law firms.
This ranking is a testimony to the expertise and experience of the Firm’s shipping practice and would not be possible without the support of our clients and friends.View All Awards
We know what’s at stake, and our lawyers ready for you – if you would like to speak to us for more information, please contact our client services team who will be happy to assist.