Clarification on Income Tax Payment for Overseas Activities: Revenue Department Order No. P.162/2023

Introduction

In a move to provide comprehensive guidelines for the payment of income tax under Section 41, paragraph 2 of the Revenue Code, the Revenue Department of Thailand has issued Order No. P.162/2023. This order, dated 20 November 2023, seeks to elucidate specific provisions related to assessable income arising from work duties, business activities, or assets located abroad, as outlined in Section 41, paragraph 2. The purpose of this article is to examine the key components of the order, focusing on the newly added paragraph to item 1 of the previous Revenue Department Order No. P.161/2023, issued on 15 September 2023.

Understanding the Context

Revenue officials view Order No. P.162/2023 as a pivotal practice guideline aimed at inspecting and providing advice to individuals residing in Thailand with assessable income, as stipulated in Section 40 of the Revenue Code. The order specifically addresses situations where assessable income is generated due to work duties, business conducted abroad, or the presence of assets located outside Thailand, in accordance with Section 41, paragraph 2 of the Revenue Code.

Key Amendment: Paragraph 1 Exemption

The most noteworthy addition to Order No. P.162/2023 is the insertion of a second paragraph to item 1 of the previous Order No. P.161/2023. The added paragraph states: "The contents of paragraph 1 shall not be effective for assessable income arising before 1 January 2024." This clarification serves as a temporal limitation on the applicability of the guidelines outlined in paragraph 1 of the previous order.

Implications and Analysis

The introduction of this specific exemption period implies that the guidelines provided in paragraph 1 of Order No. P.161/2023, pertaining to the payment of income tax under Section 41, paragraph 2, will not be retroactively enforced for assessable income generated prior to 1 January 2024. This temporal constraint indicates a forward-looking approach by the Revenue Department, allowing for a transition period during which individuals can adapt to the updated regulations without being subject to retrospective taxation.

Conclusion

Order No. P.162/2023, issued by the Director General of the Revenue Department on 20 November 2023, stands as a significant step toward providing clarity and precision in the administration of income tax related to overseas activities. The addition of the second paragraph to item 1 of the previous order demonstrates a commitment to balance regulatory compliance with fairness, particularly by delineating the effective period of the guidelines. As Thailand continues to navigate the complexities of an evolving global economy, such directives contribute to a transparent and equitable tax environment for both residents and non-residents alike.