Taxes & tax residency in Thailand
What is tax residency and why does it matter to you?
Tax residency is simply where you are liable to pay your taxes on a personal level. Let's say you live in Canada. You have a home there, your work, your family, your entire life. You are then liable to pay tax in Canada on your worldwide income.
Also, do not confuse tax residency with permanent residency, citizenship or being a resident in Thailand.
Why it matters to you when you have made Thailand your home base:
Thailand is a territorial tax country
Thailand, along with Hong Kong, Malaysia, Philippines and a few other countries, are what you call a territorial tax country. To explain this very easy: this means that Thailand does not tax your foreign sourced income, i.e. money made outside of Thailand. This can mean income sourced from an investment. However, this require you to do some planning. We at SiamInvest.com does not give any tax advice but we are happy to discuss ideas about how you can maximize your personal income whilst living (but not working) in Thailand.
Make a plan
Thailand does not tax your foreign sourced income but there are some more to it. In Thailand, you cannot bring in your foreign sourced income in the year that it was earned. Let's say you have income that you want to bring into the Kingdom while you live here and that income is sitting in a foreign company account. Income that is generated in 2020 can only be brought into Thailand 2021. Note that the law does not say one year later, it says "in the year that it was earned". So if you have income December 31th 2020, you can then have it brought into the Kingdom of Thailand January 1st 2021.
Become a tax resident in Thailand
To become a tax resident in Thailand, it requires you to spend a minimum of 180 days in the Kingdom before you can get a tax certificate. With this, it is your proof that you are liable to pay tax in Thailand (even if you do not owe any or much because of your foreign sourced income).
Let's say that you are an Thailand Elite member with a five year visa. You can stay in Thailand for 5 consecutive years (Don't forget your 30-day reporting and the 1900 THB fee to immigration per year).
Should you receive income in Thailand and/or actually chose to submit foreign earned income the same year that it was earned, you can declare such income in that calendar year during the tax filing period (1 Jan-31 March of the following year) and a tax identification number (TIN) can then be obtained.
To get a TIN, you need to have a residential address in the Kingdom of Thailand.
Close up your old life
This the hardest part! To take advantage of a great lifestyle, wonderful people and living in a tax friendly country, you need to be officially out of your high tax country. This means closing all your personal bank accounts, selling your car, selling your condo and so on. You need as few ties, or none, as possible with your high tax country where you come from, to being able to really enjoy great tax and lifestyle benefits when living in Thailand.
Tell your country where you are going
Usually, it is a good idea to tell your country, where you have been living all your life, where you are moving to or where you are going to spend the majority of your time. This way, they know what is going on and you are only now ready to start your new life. It is getting harder and harder to just say "I have been travelling for 3 years, working online and shouldn't owe anything to anyone". This makes sense to some people but for most governments, it does not!