Thailand new change - world wide income at Thai tax levels to be taxed

[wellington]

Too much to read, still recovering.

1) Offshore Company BVI
2) BVI charges EUROPEANS
3) Dividends Paid ANNUALLY Onshore (Thai) - Taxed, Offshore (Wherever) Not Taxed

BVI company isn't brought onshore as it isn't servicing Thai markets, and the BVI isn't 'operating' from Thailand as you have someone in BVI doing your accounts and someone in BVI signing paperwork, the work you carry out although technically illegally isn't enforced, BVI isn't brought on-shore.

Over 4m expats in Thailand, those in the hospitality 30,0000 of which 10,0000 sector use this (consulting via offshore company servicing Thailand)

Others use for other purposes (offshore operations/companies/services/products) not targeted in Thailand.

They will go for the low hanging fruit (onshore hospitality sector staffing using offshore consulting ops) before going after joe blogs selling into the EU

Either-way as it stands CRF rules don't apply to Thailand

 

[wellington]

Just FYI don't deposit the funds into a country you have citizenship off (Thats where Tate went wrong) as they argued that he wasn't paying taxes in Romania so should pay them in the UK as he deposited funds in to the UK.

 

[JackieTsan]

Hundreds of thanks @wellington .
No onshore remittances at all (not pay / getting dividends inside Thailand at all). Offshore isn’t BVI I assume that doesn’t matter where it is
In these cases why everyone )at least everyone I’ve asked - accountants) suggesting HK structure?
Company A -> company b HK
Instead of using just company a and get the dividends offshore?

Yes having someone doing the signing of paperwork there but no accounting required, do I have to have it there somehow??

Hundreds of thanks once again !!

I was thinking (still thinking) to move to Malaysia or Cyprus (5 months Th, 5 m Philippines and 2 months Cy as my citizenship needs proof of tax regency annually).

Many thanks once again

 

[wellington]

needs proof of tax regency annually

Thats where they get a lot of people.

HK is fine... its used extensively by any foreigners living and working in hospitality within Thailand

 

[yngmind]

I was thinking (still thinking) to move to Malaysia or Cyprus (5 months Th, 5 m Philippines and 2 months Cy as my citizenship needs proof of tax regency annually).

Would you sign a long term lease and just break it, or would you rent airbnb?

 

[JackieTsan]

Would you sign a long term lease and just break it, or would you rent airbnb?

Where? You mean Cyprus? Need really long term lease to comply. I’m by the book so if I decide to go there I’d do it by the book.

 

[wellington]

Couple days ago - Christmas Eve, was involved in an accident (drove into a concrete pylon).

On the surface of it, door wouldn't open and front right side of the car was 'destroyed' -> other than that all was ok, wheel out of alignment and car functional.

It was immediately picked up and transported to the garage (brand) who started pricing the parts (import).

Now don't get me wrong, i have funds, so will pay but even on the call with the garage, we agreed, see if the insurance covers it, if not perhaps i buy OEM from the UK and ship in and they rebuild, otherwise 816,309.10 THB for part(s) including tax, and pre-tax for importing the capital to repair it (35%) = 1,102,017.285 THB, and that's before their cost(s) rebuilding it (another couple of hundred K THB). (i got all the red/green part(s) down to 4,500$, knocking the parts cost down by 50%) with zero tax, just import tax if they stop it at customs.

The Thai Government really have gotten clued up yet on the damage to the economy they've made since introducing these new so called remittance taxes.

I said to the wife, oh there's a Russian selling a year old new one for 10m THB payable overseas, perhaps thats the best approach, and selling it for parts seeing the cost of important part(s), but the garage openly said, best you buy OEM part(s).

The knock on affects from this current Government are still bubbling to the surface, one example.

 

[yngmind]

Where? You mean Cyprus? Need really long term lease to comply. I’m by the book so if I decide to go there I’d do it by the book.

I mean TH, Malaysia, PH

 

[daniels27]

I mean TH, Malaysia, PH

He wants a Cyprus tax residency confirmation as he is from France/Spain/etc. that wants to see it.

 

[JackieTsan]

Yes, I was also spending a fortune in Thailand and since 1/24 I just live in a shoestring.
I was about to buy a house (on company etc that means lawyers and others would become rich from me) and canceled all as now I’m in different mode. Definitely there are thousands like me - Thailand is losing significant income. I own a cheap car and I’ll stay with it or just sell it. My car (if I sell it) doesn’t get more than 300k thb (I’m anyway in way lower bugdets and incomes than what I under you are ).
also, I know a few UHWIs (I am not UHW or HWI) that just left in June when the first announcement was made (BKK post).
So, even if they implement it or not, I believe that the damage has been done.. , for me is a no-go and I’m already looking for alternatives.
Philippines is great, no tax at all for noncitizens but my citizenship needs a tax residency to get out of my citizenships tax. So Philippines is not for me full time.
I’ll fly to Malaysia in Jan to see if I like it and the options.
Otherwise Georgia is great option together with Philippines and done.. as I feel Cyprus has risks and is not future proof..

 

[JackieTsan]

He wants a Cyprus tax residency confirmation as he is from France/Spain/etc. that wants to see it.

Yes, need long term if you want to avoid denials

 

[JackieTsan]

Thats where they get a lot of people.

HK is fine... its used extensively by any foreigners living and working in hospitality within Thailand

Can you get tax residency in HK without been there for 183 days????????

 

[wellington]

Can you get tax residency in HK without been there for 183 days????????

Not sure i follow, you operate a company from there, you don't need to be tax resident there personally.

 

[yngmind]

Philippines is great, no tax at all for noncitizens

Wait, what?
Could you provide more information?


If you are a non-resident alien not engaged in trade or business in the Philippines, you are generally not subject to Philippine tax on offshore income. You are only taxed on income derived from Philippine sources.

If you are a resident alien (a foreigner who has established residency in the Philippines), you are subject to Philippine income tax on income earned within the Philippines. Offshore income not remitted to the Philippines is generally not taxed.

 

[wellington]

Thailand’s Controlled Foreign Company (CFC) rules interact uniquely with the territorial tax system, especially for resident non-citizens who own technology service companies overseas. Here’s how the rules apply in such a scenario, particularly when the foreign company operates with active treasury management and assets, and why it is often not "brought onshore":

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Key Concepts​

1. Thailand’s Territorial Tax System​

• Thailand taxes only income sourced within Thailand or foreign income remitted into Thailand during the same calendar year it is earned.
• Income that remains offshore and is not remitted to Thailand in the same year escapes Thai taxation entirely, creating a significant tax advantage for residents with foreign income streams.

2. Controlled Foreign Company (CFC) Rules​

• The CFC rules aim to tax passive income earned by foreign companies controlled by Thai residents. Passive income includes dividends, interest, royalties, and capital gains.
• Active income derived from legitimate business operations is not subject to CFC rules, provided the company meets the necessary criteria.

3. Resident Non-Citizens​

• Non-citizens who are tax residents in Thailand (i.e., they spend 180+ days in Thailand per year) are subject to the same tax rules as Thai citizens.
• Foreign income earned by their controlled companies is only taxable if:
  • It qualifies as passive income under CFC rules.
  • It is remitted into Thailand in the same year.

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Application to the Technology Service Company with Active Treasury​

Scenario Overview​

• A resident non-citizen in Thailand owns a technology service company overseas.
• The company earns active income from technology services (e.g., SaaS, software development, or IT consultancy).
• It also has a treasury division that manages surplus cash flow by investing in financial assets, generating interest, dividends, or capital gains.

CFC Implications​

1. Active Business Income
   
   • The income from technology services is classified as active income under CFC rules and is not taxable in Thailand. This is because CFC rules target only passive income streams.
2. Treasury Operations and Passive Income
   
   • Income from treasury operations, such as interest or dividends, may qualify as passive income under CFC rules.
   • However, the CFC rules require the foreign company to be in a low-tax jurisdiction (tax rate less than 10%) for passive income to be taxed in Thailand.
   • If the company operates in a jurisdiction with a tax rate above 10%, the passive income is exempt under CFC rules.
3. No Automatic Onshoring
   
   • Thailand's territorial tax system ensures that only income remitted into Thailand during the same year it is earned is taxable. As long as:
     • The foreign company's profits remain offshore, and
     • Passive income is reinvested or deferred outside of Thailand,
     • It is not considered taxable in Thailand, even if subject to CFC rules.
4. Foreign Tax Credits
   
   • Even if the CFC rules apply (e.g., for passive income in low-tax jurisdictions), Thailand allows a foreign tax credit for any taxes paid in the foreign jurisdiction, minimizing the Thai tax burden.

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Why the Technology Company Isn't "Brought Onshore"​

1. Income Classification
   
   • The company’s primary income from technology services is active and thus excluded from CFC taxation.
   • Treasury income, if classified as passive, is taxable only if earned in a low-tax jurisdiction and remitted to Thailand within the same year.
2. Territorial Tax Shield
   
   • The territorial tax system ensures that offshore income retained abroad is not taxed in Thailand, even for CFCs.
   • Resident non-citizens can legally defer or avoid Thai taxes by:
     • Retaining foreign profits offshore.
     • Strategically managing remittances to Thailand (e.g., remitting in a later year).
3. CFC Rules Trigger Only for Low-Tax Jurisdictions
   
   • If the technology company operates in a jurisdiction with a tax rate of 10% or higher, CFC rules do not apply, regardless of treasury operations.

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Practical Optimization​

1. Jurisdiction Choice
   
   • The technology company should be based in a mid-tax jurisdiction with a corporate tax rate above 10% to avoid triggering Thailand's CFC rules.
2. Treasury Strategy
   
   • Passive income from treasury assets can be:
     • Reinvested into active business operations.
     • Deferred to avoid remittance into Thailand during the same year.
3. Income Management
   
   • Active income from technology services remains offshore and is not taxable unless brought into Thailand within the same year.
4. Leverage Double Tax Agreements
   
   • Establish the company in a jurisdiction with a tax treaty with Thailand to minimize withholding taxes and ensure effective tax credit utilization.

---

Conclusion​

Thailand's territorial tax system, combined with its CFC rules, creates a favorable environment for resident non-citizens with foreign-controlled businesses. In this scenario, as long as the technology service company retains its active income offshore and strategically manages its treasury operations, it avoids being “brought onshore” or subject to Thai taxation. These rules allow significant flexibility for tax optimization while staying compliant with Thai laws.

 

[wellington]

Number 1 is out-of-date (for personal).

 

[JackieTsan]

Not sure i follow, you operate a company from there, you don't need to be tax resident there personally.

So I need to go to HK / based there? If I’m in Thailand what’s the difference if the company is in HK or BVI / Seychelles etc?

 

[JackieTsan]

• It also has a treasury division that manages surplus cash flow by investing in financial assets, generating interest, dividends, or capital gains.

​

Has not.. just sends often the earnings as dividends to the owner/sharehokder (out of Thailand everything).

However, the CFC rules require the foreign company to be in a low-tax jurisdiction (tax rate less than 10%) for passive income to be taxed in Thailand

BVI (and the rest) are 0% tax so there might be issues here????

• However, the CFC rules require the foreign company to be in a low-tax jurisdiction (tax rate less than 10%) for passive income to be taxed in Thailand.
• If the company operates in a jurisdiction with a tax rate above 10%, the passive income is exempt under CFC rules.

It’s not!!! So?

Even if the CFC rules apply (e.g., for passive income in low-tax jurisdictions), Thailand allows a foreign tax credit for any taxes paid in the foreign jurisdiction, minimizing the Thai tax burden.

No taxes paid in 0% bvi etc

So?? Risk?? What would you suggest?

No remittance now or in the future is required at all.

Thank you!

 

[wellington]

Bro, join some of the groups devoted to hospitality and speak to the people....

They can give you up-to-date processes they follow.

 

[JackieTsan]

Thank you so much!!