The Revenue Department of Thailand has made a radical change to its longstanding principal as regards its treatment of foreign-souced income of an individual “Thai tax resident”. Whilst this change poses a number of questions than answers from several stakeholders during the past week or so, including leading commercial banks and private wealth management both in and outside Thailand, it is very important to monitor how income arising from gains and losses from investment of non-Thai shares and securities, profits from sale of properties offshore and etc. will be calculated and how relevant tax treaties will apply.

We set out below certain background and new guideline made by the Revenue Department.

Thai Tax Resident
A Thai tax resident is defined under Section 41 paragraph 3 of the Revenue Code as any person (both Thai and non-Thai) staying in Thailand for an aggregate period of 180 days or more in any calendar year, i.e. January and December of each year.

Current Guideline
According to the current guideline, Section 41 paragraph 2 of the Revenue Code has been interpreted by the Revenue Department to the effect that a Thai tax resident receiving assessable foreign-sourced income (i.e. income derived from an employment or from business abroad or from a property situated abroad) will be required to pay Thai personal income tax on such foreign-sourced income only if such income is brought into Thailand in the same calendar year that it is derived.

New Guideline
On 15 September 2023, the Revenue Department issued a new  order regarding its treatment of personal income tax under Section 41 paragraph 2 of the Revenue Code.

In brief, this ground breaking order sets a new guideline for treatment of foreign-sourced income by requiring a Thai tax resident having assessable and remitting foreign-sourced income into Thailand, notwithstanding the tax year in which the income is derived, be subject to Thai personal income tax.

This new order which will have an effect to assessable income remitted into Thailand from 1 January 2024 has also repealed any rules, regulations, orders, rulings, or practices which are contrary to this order.

This document is solely intended to provide an update on recent development in Thailand legislation and is not purported to provide a legal opinion, nor a legal advice to any person.