In a significant development on 15 September 2023, the Thai Revenue Department (“TRD”) issued the Departmental Instruction No. Paw 161/2023 re: income tax payment under Section 41 paragraph 2 of the Thai Revenue Code (“TRC”). Under this Departmental Instruction, a Thai tax resident with foreign sourced income will be taxed in Thailand when such foreign sourced income is remitted into Thailand irrespective of when such income is remitted into Thailand. This rule applies only to Thai tax residents and will be effective from 1 January 2024 onward. You can find more detail from our previous publication: https://www.grantthornton.co.th/insights/tax-alerts
On 20 November 2023, the TRD issued another Departmental Instruction (Departmental Instruction No. Paw 162/2023) clarifying that the instruction outlined in the preceding DI (No. Paw 161/2023) would not be applicable to foreign sourced income earned before 1 January 2024. This implies that for Thai tax residents receiving foreign sourced income prior to 2024 and remitting such earnings into Thailand on or after 1 January 2024, the remitted foreign sourced income will be considered “not taxable” in Thailand.
From our view, this recent DI aligns with the fundamental taxation principle that one income should not be subject to tax twice. While Thailand already offers tax credits to mitigate “juristic double taxation”, the credited amount is capped at the corresponding Thai tax portion. We posit that this updated instruction introduces an additional option for both foreigners who are Thai tax resident, and Thai individuals earning foreign sourced income. It provides a viable solution for those planning to remit such income into Thailand starting from the year 2024 onward.
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