Thailand will tighten loopholes in its tax rules on overseas income, as the new government seeks to lower income inequality as well as raise revenue to pay for measures to stimulate the Southeast Asian economy.
(Bloomberg) — Thailand will tighten loopholes in its tax rules on overseas income, as the new government seeks to lower income inequality as well as raise revenue to pay for measures to stimulate the Southeast Asian economy.
The finance ministry last week issued the stricter rule on overseas income, Prime Minister Srettha Thavisin told a business forum on Monday.
The new rule, which will take effect Jan. 1, 2024, will enable authorities to tax foreign income of individuals if they have been a resident of Thailand for at least 180 days in the particular assessment year, according to the Thai Revenue Department’s announcement.
“Some people may not be happy that I am digging in to this area, but inequality is a big issue,” Srettha said, referring to the growing wealth gap because of tax loopholes. “The principle of tax is that you must pay tax on income your earn no matter how you earn it.”
Thailand’s new coalition government led by the Pheu Thai Party needs revenue to pay for its stimulus plan that is central to Srettha’s economic agenda. One of the measures announced by his administration is a 560 billion baht ($16 billion) cash handout to 55 million Thai adults around the first quarter of next year to spur domestic demand.
The Revenue Department announced on Sept. 15 that local residents who earn income from abroad will be subject to personal income tax regardless of the tax year in which the money is earned, according to a report by Krungthep Turakij newspaper.
The previous rule allowed residents with foreign income to be taxed only if the money is remitted into Thailand in the same year in which it was earned. The tighter measure is meant to close the loophole of people deferring transfer of their overseas income to a different year.
–With assistance from Anuchit Nguyen.
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