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Double Tax Treaties in Thailand

Transcript of the above video:

In this video today, we are going to be discussing very briefly, just providing an overview with respect to double tax treaties here in Thailand.

The following is taken from the Department of Revenue, the Revenue Department in Thailand’s website. I am just going to quote a few things from that site. “Scope of double tax agreements generally.  Persons covered. The DTA, Double Tax Agreement, applies to persons who are residents of the contracting states.”  Double tax treaties are essentially, in a sense, they are kind of like business contracts between two governments with respect to the taxation of the citizenry and the incorporated entities existing therein. And basically what they are designed to do is in a way, mitigate tax liability for entities or individuals who are doing, who are undertaking business or earning income in both jurisdictions or one jurisdiction but actually that individual or entity  originated in the other jurisdiction. It’s there to both mitigate certain tax liabilities and in a way I think it incentivizes business activity, investment activity, employment activity, income generation, revenue generation, in both jurisdictions oftentimes because the, again it incentivizes an individual; if they are going to be taxed 2 times on their endeavours in a foreign country, it can basically lead that individual to being apathetic as to wanting to generate any revenue because, “what’s the point? I can’t earn enough, or generate enough, that it’s worthwhile!” Again, this is very broad and general as far as the video on this topic goes. Persons covered – the DTA applies to persons who are residents of the contracting states. In order to be classified as a Thai resident and be entitled to treaty benefits, a person must be one of the following. First an individual who stays in Thailand for a period or periods exceeding in the aggregate, 180 days in a tax year or a juristic person who is incorporated under the civil and commercial code of Thailand. Types of taxes covered. Taxes covered - Part 2 – the DTA applies to only income taxes namely personal income tax, corporate income tax and petroleum income tax. Other indirect tax such as value added tax and specific business tax are not covered by the DTA. In general, the DTA does not stipulate any specific item of income and tax rate. This is important.

Different countries have different tax rates. For example the United States and Thailand are going to have a qualitative different agreement than say the agreement between Hong Kong and Thailand, or the agreement between Korea and Thailand or the agreement between Belgium and Thailand. It is just going to differ country wise. Quoting further, “the focus of a DTA is the elimination of double taxation. Each DTA may prescribe different methods of elimination of a double taxation of a person by the resident country. I want to go through that again. Just to reiterate. EACH Double Tax Agreement, each double tax treaty, may prescribe different methods of elimination of double taxation of a person by the resident country. Again, things are going to be highly circumstantially different. The analysis, how you  are going to progress, the practical aspects of one’s operations when looking or trying to make one’s efforts comport with the provisions of a Double tax agreement are going to be very different depending on the jurisdictions involved. It should further be noted, tax accrued is not absolute. It can only be used against taxes which would be owing in the home country from the specific income which was earned by the person involved, by that entity. So its for taxes in the home country. For example Americans are subject to tax on our world wide income but pursuant to certain provisions of the double tax treaty with Thailand but that taxing authority, that tax liability may be somewhat mitigated on the provisions of the treaty itself. I just kind of wanted to go through the list, and this is all from the Revenue Department’s website, but I wanted to go ahead and list, and by the way, the Thai Revenue Department’s website can be found at rd.go.th, but the countries that are on that have double tax treaties with Thailand or double tax agreements are Armenia, Australia, Austria, Bahrain, Bangladesh, Belarus, Belgium, Bulgaria, Canada, Chile, People’s Republic of China, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Great Britain and Northern Ireland, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Kuwait, Laos, Luxembourg, Malaysia, Mauritius, Myanmar, Nepal, Netherlands, New Zealand, Norway, Oman, Pakistan, Philippines, Poland, Romania, Russia, Seychelles, Singapore, Slovenia, South Africa,  Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Tajikistan, Turkey, Ukraine, United Arab Emirates, United States of America, Uzbekistan and  Vietnam; so quite a long list of countries that are covered by double tax agreements here in the Kingdom. As I have noted previously, the provisions of each of those agreements, substantially similar  in certain cases, are going to have specific legal changes, legal differences, formulaic differences, provisional differences between the agreements, between those specific countries and Thailand regarding double taxation matters so it’s very, very prudent to retain the advice  and assistance of confident and professional council with respect to tax matters on these issues as it’s going to be, again, circumstantially different based on the specific circumstances in the given case