Since 1987, Thai residents (i.e. individuals residing in Thailand for 180 days or more in any tax year) receiving foreign earnings have been able to rely on the ruling of Revenue Department No. Gor Kor. 0802/696 ("Old Ruling"), which provided a favourable interpretation of section 41, paragraph 2 of the Revenue Code. Under the Old Ruling, assessable income earned abroad from work duties, business activities, or assets located outside of Thailand ("Foreign Income") was not subject to taxation if such Foreign Income was brought into Thailand after the tax year in which the Thai resident acquired such Foreign Income. In other words, the Old Ruling provided a widely used tax strategy among Thai residents to bring the Foreign Income into Thailand tax-free after keeping it offshore until the next tax year.
However, recently, the Revenue Department ("RD") issued Order No. Por. 161/2566 Re: Payment of Income Tax Pursuant to Section 41, Paragraph 2 of the Revenue Code ("New Order"), which aims to improve tax collection from Thai residents with overseas investments or income. The New Order repealed the Old Ruling and sets out a new interpretation regarding the transfer of a Foreign Income into Thailand. Under the New Order, Thai residents who bring their Foreign Income into Thailand in any tax year must include it as their assessable income in such tax year regardless of when they earned it. However, RD further elaborated that if the Foreign Income has been taxed by a country with which Thailand has a Double Tax Agreement, Thai residents can use the taxes paid in foreign countries as tax credits in Thailand.
Currently, RD has not issued any further guideline specifying the details for tax imposed on Foreign Income, but has stated in its press release that it will further discuss this issue with the public. As such, investors should continue to monitor developments in this area.
