The Deputy Director-General of Thailand’s Revenue Department, acting as the spokesperson for the department, has shed light on the reasons behind the drive to improve tax collection on foreign investments. This move aligns with international principles and responds to the evolving landscape of global trade and investment, heavily influenced by technological advancements. Thailand’s commitment to international tax cooperation is exemplified by its participation in the Global Forum on Transparency and Exchange of Information for Tax Purposes, as well as its adherence to multilateral agreements such as the Multilateral Agreement on Assistance in Tax Administration (MAC) and the Multilateral Agreement between Competent Authorities on the Automated Exchange of Financial Data (MCAA CRS).
The primary motivation behind enhancing tax collection is to foster fairness among individuals earning income from both domestic and foreign sources. Specifically, it seeks to address the issue of income derived from foreign sources and the duration within which such income is brought into Thailand. This adjustment marks a significant reduction in the constraints on tax collection from individuals with income originating abroad.
According to the Revenue Department’s Order No. P.161/2023, issued on September 15, 2023, which pertains to the payment of income tax under Section 41, paragraph two of the Revenue Code, the enhancement involves refining the method for collecting personal income tax from individuals earning income abroad due to work commitments, overseas business operations, or the presence of assets situated abroad. The objective is to provide clarity and ensure a fairer tax collection process. Under this framework, individuals must fulfill their tax obligations when repatriating assessable income to Thailand.
However, in cases where individuals have already paid taxes in the country of origin of the income, they can utilize the taxes paid in that foreign jurisdiction as a tax credit. This practice adheres to the stipulations outlined in double tax treaties between Thailand and countries with which it has established such agreements.
The advancement in methods for collecting personal income tax serves to support and harmonize with Thailand’s membership in international organizations and its commitment to binding agreements. These measures aim to enhance equity in tax collection among individuals earning income from both domestic and foreign sources while elevating the transparency of sound tax practices.
In light of these developments, the Revenue Department is set to engage in consultations with relevant stakeholders to further refine and implement these improved methods for collecting personal income tax, particularly in cases involving income sourced from abroad. This collaborative approach ensures that the tax landscape remains equitable and in adherence to international tax principles.