New approach to overseas income aims to spur inflows

The Revenue Department is moving towards granting tax exemptions for income sourced abroad that is promptly remitted to Thailand, writes Wichit Chantanusornsiri

- Wichit Chantanusornsiri

The Revenue Department is shifting its approach on how it taxes income sourced from abroad.

Rather than taxing every baht of income brought into the country, the department is moving towards granting tax exemptions for income promptly remitted to Thailand, hoping to create momentum for economic stimulation by encouraging capital inflow.

STIMULUS GOAL

According to Pinsai Suraswadi, director-general of the Revenue Department, the agency is preparing to draft legislation to amend the collection of income tax to allow income sourced from abroad to be brought back into Thailand without tax liability. The goal is to accelerate the repatriation of investment funds held by Thais abroad, estimated at 2 trillion baht, to help stimulate the domestic economy.

He said the 2 trillion baht is currently invested abroad in various forms such as land purchases, insurance, or foreign funds, generating annual income of hundreds of billions of baht.

Mr Pinsai said the proposed amendment is being prepared as a ministerial regulation by the Finance Ministry, exempting personal income tax for individuals who reside in Thailand for at least 180 days — whether continuously or not — within a calendar year.

If such individuals earn income, whether that income arises in Thailand or comes from a foreign source, they are generally subject to personal income tax payable to the Revenue Department.

However, the exemption of personal income tax on foreign-sourced income will apply for only two years: the year in which the income is earned and the following year. If the income earned abroad is brought into Thailand in the third year after it was earned, it will be subject to normal taxation.