A recent survey reveals that 55% of expats considered leaving Thailand in 2024 to avoid new tax liabilities. With Thailand’s new tax regime set for 2025, the majority indicate they may not file returns by the March 31 deadline, raising concerns for the government’s revenue targets.
A Thai Examiner survey of readers from among expats living in Thailand, in addition to those considering a move to Thailand, shows that a majority may not file tax returns as required by March 31, 2025. Furthermore, the poll revealed that 55% of respondents had considered travelling out of Thailand during 2024 to avoid a tax liability. The poll comes as the Thai government last week revealed that its tax collection target for 2024 had not been met. This shortfall was reportedly blamed on an exchange rate blip due to a strengthening baht.
The new tax reporting regime for expat foreigners comes into play on January 1st, 2025. Following key changes made by the Revenue Departments in September and November 2023, all foreign residents in Thailand for over 180 days must account for income remitted to the country in the course of 2024.
In brief, a tax return will be required from all foreigners resident for more than 180 days in the course of 2024 by March 31st, 2025.
The moves initiated by former Prime Minister Srettha Thavisin are seen as part of a major economic reform plan being introduced by the government. For instance, the kingdom intends to deepen its ties with the Organisation for Economic Co-operation and Development (OECD) while gradually bringing its large informal economy into the tax system.
Thailand aims for OECD membership and may introduce support for low-income workers through reverse tax
Certainly, Prime Minister Paetongtarn Shinawatra’s policy statement on Thursday, September 12th, called for such a direction. Afterwards, the kingdom has plans to introduce a reverse tax system where workers on low income may receive state support.
Thailand certainly hopes to become a full Organisation for Economic Co-operation and Development (OECD) member. Indeed, it is seen as a key requirement for the country to succeed in attracting large Western investment projects. In June this year, the kingdom was invited to begin accession discussions, thereby becoming a candidate country for the organisation.
In September, the Thai Examiner conducted an online survey among our readers seeking to understand attitudes towards the new tax measure. The survey drew massive interest with over 2,500 respondents. In short, 88% of those who responded were expats or foreigners already living in Thailand. The remaining 12% were contemplating moving to Thailand.
Survey shows high awareness among expats of the 2025 tax law change, with possible global taxation a concern
Almost all, or 92%, of respondents were aware of the tax law changes coming into play next year. Notably, there is also legislation being proposed to introduce an even more demanding global taxation regime.
At length, this will eventually make foreign residents in Thailand liable to account for all income, both earned in Thailand and abroad. Presently, only income remitted into the kingdom is subject to review, and then in accordance with bilateral taxation treaties.
Undoubtedly, this change is not well received by expats living in Thailand. Indeed, a full 90% of respondents consider the new taxation regime as unfair, while only 10% accept the new dispensation as right and proper.
Of those who consider the changes unfair, 70.83% tagged “taxation without representation” as a key concern. In other words, foreign residents in Thailand are being taxed but have no political rights in the kingdom.
Indeed, following a new citizenship initiative during the week, both the Ministry of the Interior and the Prime Minister’s Office robustly dismissed any suggestion of easing the path to citizenship for foreigners in Thailand.
Expats voice concerns over lack of benefits from taxes, added costs and challenges of new tax reporting regime
After that, an even larger 91.67% claimed the new taxation offers no quid pro quo in return. In other words, expats are being invited to pay taxes but are receiving nothing new in return.
At the same time, 79.17% simply see the new tax reporting requirements, and perhaps tax to be paid, as an additional cost for living in Thailand.
Similarly, 83.13% of respondents decried the extra red tape involved, particularly as, at the end of the day, expat foreigners in Thailand are focused on keeping within the law.
However, those polled in the Thai Examiner survey suggested an unitended consequence.
A majority of expats had considered or taken steps this year not to be in Thailand for 180 days.
In short, anyone under the 180-day threshold is not liable to file an income tax report. Certainly, 55% of respondents said they were actively considering this option or had taken steps.
At the same time, a full 95% of respondents originated from a country that already has a bilateral tax treaty with Thailand.
However, only 64% of those polled said they had studied their country’s tax treaty and how it might impact them.
Low engagement with tax advisers among expats, with many uncertain about meeting the 2025 filing deadline
Significantly also, only 16% of respondents said they were going to employ a third-party tax advisor to prepare their tax return in 2025.
In the meantime, our survey showed that presently only 42% were certain they would file a tax return. A full 58% at this time say they will not file a tax return at all before March 31st, 2025.
Meanwhile, the Ministry of Finance revealed this week that its tax collection goal to September 30th, 2024, was not reached. It was ฿4-5 billion off. However, an explanation was provided by permanent secretary Lavaron Sangsnit.
In brief, he attributed the shortfall to reduced VAT on imports. He explained that in effect this was caused by the rapid strengthening of the Thai baht in late September.
In particular, tax collected on oil imports. Mr. Lavaron insisted that without the exchange rate change, revenue would have been on target for the year.
Nonetheless, it does emphasise that the government cannot count on tax buoyancy and surplus returns as has been seen previously.
Thai government faces a growing budget deficit and aims to boost income despite structural economic challenges
Certainly, in the year to September 30th, the government’s expenditure budget was ฿3.48 trillion. In turn there was a projected income of ฿2.78 trillion. At length, the Revenue Department generated ฿2.37 trillion, while the Excise Department brought in ฿609 billion.
In 2025, the budget plans for disbursement of ฿3.75 trillion with income projected at ฿2.88 trillion.
In short, the kingdom will continue to run a budget deficit. However, the Ministry of Finance is hoping to grow the economy and reduce the country’s present public debt-to-GDP ratio, which stands at 66.6%.
In short, the problem is that economic growth is being stymied by chronic structural problems, not least a regional record when it comes to private sector debt. This is in addition to an acute ageing crisis.
Expanding tax base and OECD membership seen as paths to boost revenue and increase foreign investments
Therefore, the government’s policy is to expand the tax base and attract inward investment. However, it is not clear how much income can be generated from expats living in Thailand.
Some estimates have put the potential haul at between ฿6 billion and ฿10 billion.
End of the road proposed for Thailand’s ‘Happy go-Lucky’ Economy in Paetongtarn’s Policy Statement
Revenue Department preparing legislation as new Expat tax regime may link visas and tax returns
Certainly, this assumes full compliance and the acceptance of Thailand by wealthy expatriates as an attractive tax base.
Meanwhile, as a prospective full member of the Organisation for Economic Co-operation and Development (OECD), Thailand is working with other countries. In particular to exchange financial data and information while ensuring a fair taxation regime.
Furthermore, it is committed to a worldwide initiative to ensure that all firms pay a minimum corporate tax rate of not less than 15% of profits.
Join the Thai News forum, follow Thai Examiner on Facebook here
Receive all our stories as they come out on Telegram here
Follow Thai Examiner here
Further reading:
End of the road proposed for Thailand’s ‘Happy go-Lucky’ Economy in Paetongtarn’s Policy Statement
Revenue Department preparing legislation as new Expat tax regime may link visas and tax returns
New tax era in Thailand begins as Revenue now shares data with 138 countries within the OECD
Calls for clarification of new Tax regime which appears to target expat foreign income sources
10 year visa a magnet for global citizens setting up in Thailand with zero tax on offshore income
Wealthy foreigners to own small landholdings associated with homes here agreed in principle
New plan for the Thai economy could see an elite foreign visa scheme generate up to 6% of GDP
Economic plan to put the smile back in Thailand’s appeal to western foreigners to live and work
IMF urges government to loosen nation’s purse strings as finances tighten with the tax take down
Plan to allow high tech and skilled foreigners to live and work in Thailand for up to four years
