Unjust tithes
Re "Tax plan is flawed", (PostBag, June 23) and "Easing expat fears", (PostBag, June 25).
Songdej Praditsmanont commented on my "lamented" letter about the intent of the Revenue Department to tax foreigners living more than 180 days per year in this country on their worldwide income. The only lament was to cry foul about a blatant injustice of taxation while not giving anything in return, except for a very expensive yearly tourist visa, as nothing else is provided to foreigners who do not have the right to vote or access to the 30-baht public health services, or access to an easy path to citizenship, or buy land, or work unless they possess a very difficult-to-obtain work permit, as I know because I have been through the process many times already. We all pay VAT and road tax when renewing our vehicle registrations yearly.
A few days later, he then declares: "The Thai tax system on individuals is based on self-declaration of income and relief. One simply fills in the self-declared income tax form. The declaration can be challenged subsequently by the Revenue Department, legally within ten years, but in practice far less than that and less frequently." If there is something that I have learned in my 35 years in Siam, it is that nothing is simple within Thai bureaucracies, and it would be a great surprise if the Revenue Department were the exception that confirmed the rule. A quick browse of Thai expat blogs confirms that most foreigners who have to do so experience quite some headaches dealing with the Siam Taxman.
As for his claim that double taxation avoidance treaties have been signed with many countries, including my home country (Canada), this is very true. What is excruciatingly difficult is to apply the letter of the treaty to our circumstances. A simple example: in Canada, non-residents for tax purposes making investments in Canada are subject to withholding tax on most of their dividends, interest or capital gains and such revenues are taxed at various levels (from 0 to 25%); there is no requirement to provide a yearly income tax filing as this process is performed directly by the institutions paying these revenues with the withholding tax forwarded directly to the Canada Revenue Agency. Although various kinds of reports are available from these institutions, there is minimal, if any, official paper trail, so how do you provide proof if audited? On faith?
There are three basic tax systems: tax residents on worldwide income, tax residents on territorial income and tax worldwide income based on citizenship. Only two countries use the latter, the US being one of them (Eritrea is the other). This means that a US citizen has an obligation to file an income tax report even if he is a non-resident of the US. Canada is taxing residents on worldwide income as most developed countries do. But many other countries tax residents only on territorial grounds, for example: Malaysia, Singapore, the Philippines, Georgia, Panama, Nicaragua, and Costa Rica, just to name a few. Thailand is still currently part of this group, but has now announced it wants to join the club of developed nations by taxing worldwide income.
And I won't start on the 17 completely tax-free countries ...
I really hope that Songdej is right that many members of the Thai elite would also be very upset and negatively affected by such a drastic change and may exert their influence to put this announcement to rest.
Michel Barre