Transcription
Today, Mr. Pao, we meet because many people are curious and keep asking questions. Regarding foreign income tax. It's about foreign investment tax. Right? That if we invest abroad now. Yes. The Revenue Department has a new criterion that if you bring money back into the country. You will have to pay tax. Actually, I think there might be many points that people misunderstand, like, "Oh, if I bring it back, I have to pay immediately." This is not correct. Or today we will discuss. Yes, because actually, Mr. Pao, for our duty as citizens, if we have income. Generally, various incomes will have already been specified. Mr. Pao, how to pay tax. For example, Thai people. The Revenue Department itself divides income into about 8 categories. Category 4 within that, Mr. Pao, is interest and dividends. Yes, it's mainly category 40(4), which is income from using money to make money. Right? Which includes interest, right? And dividends. And currently, there is capital gains from foreign investment. Actually, capital gains already exist. But it's for companies not listed on the stock exchange. For example, if we buy and sell companies outside the Stock Exchange of Thailand, we actually have to pay. Right? But regarding foreign investment tax, the criteria have just been changed. Because in the past, if you brought money back into the country within a year, you didn't have to pay. But recently, the criteria have changed. That whenever you bring money back into the country, the profit portion will have to be declared. Which will fall under category 40(4). What are the disadvantages of this? Mr. Or. Yes, what is it? This section was actually written a long time ago. Because they see that when you invest, you have no cost. It's not like other categories where you can deduct costs. For example, if it's category 1, Mr. Pao, which is income from wages. Yes. If we work and receive wages, we can deduct costs. Like labor costs or something for us, as a cost deduction. Yes. How much is that, Mr. Or? 40%, not exceeding 40%, not exceeding 100,000. That's a personal deduction. This is Oh, that's a deduction. This is a cost. This is the cost of working. Or if it's like category 40(7) or (8), which is like semi-professional or contractor, you can deduct maybe 60%. Like this. Because of this, in many categories, almost all categories. You can deduct costs. Category 4 has no deduction. If we invest in anything, this is talking about investment. There will be interest or dividends. Normally, there are already. Mr. Pao. However, some investments or some assets invested in have exceptions. Mr. Pao. For example, if you invest in Thai stocks, capital gains or income from investment in the profit portion. That will not be taxed if we buy stocks listed on the stock exchange. This is the law, the criteria that have been set. Similarly, when investing in mutual funds. This will not be taxed. This is an exemption. Actually, you have to pay, but you are exempted. The last part. Investing in foreign stocks or assets. Mr. Pao, the Revenue Department has new criteria that state that if you bring it back, regardless of the year, you will have to pay tax. So, it's a criterion that may require everyone to adjust their tax management methods for income from abroad. Mr. Pao. Regarding income from abroad, they will say, "Well, who meets the conditions of having income or interest, dividends, or whatever, that arises from abroad?" It will fall under two conditions. Mr. Pao. The first condition is that you must be in that country for more than 180 days. If you bring money in, you don't have to pay. The second condition is that if you have income. And bring it back to Thailand. Mr. Pao. Regardless of when this income arises, whether it was 2 years ago, 3 years ago. This is not calculated. It is calculated in the year it is brought back to Thailand. For example, this year, 2069. If you bring income back this year, you file personal income tax for this year. This will be the criterion. So, to answer the question, Mr. Pao, "Is there tax on income from foreign investment?" We have to say that now there is tax if there is income. Meaning there are criteria regarding income and tax payment. But whether to pay tax, how, there will be conditions. It's not like income that we have in the country. If you have income, you are deducted at source. You buy things, you pay VAT. The government collects it. But the conditions for foreign investment are, as Ms. Or said. If we have income, meaning the word "income" is not that you buy stocks and haven't sold them yet. That is not considered income. You must have realized gains, meaning you have sold them and made a profit. This is called income. The profit portion is income. Yes. And when you bring that income back. We will pay tax like that. Yes. If we have income and bring it back to Thailand. Mr. Pao. How to calculate the tax? Is it complicated? How to calculate it? Mr. Pao. Actually, it's not very complicated. In general, category 40(4) that I mentioned earlier. It has many special aspects in this section. That first, there's nothing to deduct because they see we have no cost, right? Second, many items in this category, such as interest and dividends, have a final tax. For example, interest is taxed at 15% and it's done. Or dividends are taxed at 10% and it's done. Or if you don't want to pay it off, for example, if you receive 100,000 baht in dividends, you are deducted 10% immediately. Leaving 10,000. Uh. So, 10,000 baht is paid, and it's done. You don't have to include that income with your other personal income. It's called a final tax. But for income from capital gains tax, currently, the Revenue Department does not have a final tax criterion for this. So, if you have income and bring it in, we have to say that it is income. There will be no cost, right? You cannot deduct any costs under this criterion. And you have to take all the income and combine it with your income to meet the progressive tax rate. Yes, Ms. Or. Yes. But what is considered income? Mr. Pao. This may need to be explained clearly. Yes. Where does income come from? Mr. Pao. It comes from what is called profit from investment, without counting the cost of transferring money abroad. Because we must say that currently we are talking about foreign income tax. So, for example, if we transfer 1 million baht abroad for investment. Yes. And there is a 20% profit, which is 1,200,000 baht. If we bring 1 million baht back. This is not considered taxable. There is no income. Even if we have sold something abroad and received 1 million baht in cash, and we transfer 1 million baht back. We consider it as cost. Yes. This portion does not have to be paid because it is considered cost. Yes. So, the first 1 million baht. This does not need to be taxed. You don't even need to file tax for it because it is considered that you have not brought income into the country yet. You have no tax liability. Whenever you transfer another 200,000 baht back. That 200,000 baht will be considered income. And you have to take that 200,000 baht to calculate with other income tax. Now, after explaining the first 1 million baht. If we bring it back gradually, it's okay, but it must be within our cost. Our capital is 1 million baht. We can bring it back gradually or in a lump sum. That 1 million baht is considered cost. But the excess of 200,000 baht, as we discussed earlier, Mr. Pao, must be sold first. Sell stocks first. Sell as cash from stocks into cash, and then transfer the cash back to Thailand. If the money we receive is in USD or other currencies, there will be an exchange. Yes. Convert it back to Thai baht and deposit it into our account. So, they will look at the value when it enters Thailand. Mr. Pao. Because there is also an exchange rate. Yes. It might not be exactly 200,000. If we have profit from the exchange rate, it might be a little over 200,000. From that profit, or it might be less than 200,000. If the currency was very strong at the time of conversion, it might be less. So, that figure is the final figure that we bring in. If we bring it back gradually, we count that portion. For example, 200,000 baht. Mr. Pao. Let's say, roughly, if you bring back 100,000 baht this year. That means you have to take that 100,000 baht to calculate personal income tax. Right? As for the remaining 100,000 baht, even if it's cash, Mr. Pao, in USD, but it's still abroad and hasn't been brought back. That portion still doesn't need to be included in the tax calculation. Only the money that has been transferred. Yes. This will make it clear. And this is the part where many people say, "If so, how to calculate it?" Because some people, Mr. Pao, when they transfer, don't transfer in a lump sum. They DCA every month. 10,000 baht per month for 4-5 years, or maybe even 10 years. Yes. How to calculate this? It's a sum. Add them up. For example, if we transfer 10,000 baht 10 times, it equals our principal. That was transferred abroad, which is 100,000 baht. Uh. The rest is, well, how much will we bring back? In cases where some people invest on their own, Ms. Or. They have transferred out and incurred a loss. For example, we transferred 1 million and the portfolio lost value, leaving 900,000. We sold everything and brought back 900,000. In this case, we don't pay. Because some people misunderstand that whenever they transfer back, the whole amount has to be declared and taxed. This is not true. Because if you invest and incur a loss. From your principal, you don't pay. So, if anyone transfers money for investment, whether it's buying stocks or through Jitta, for personal funds, to invest. Actually, if we need documents like this, to know our principal. I think we can contact the staff of the company where we invested or transferred money. They will have the information, and we can calculate the tax correctly. Yes. Yes. Because when we have to declare the income portion, Mr. Pao, for filing. It's only for the year we have income. That is, we have already calculated that this portion exceeds the principal. And we bring it back to Thailand. We have a duty to add it to our income tax. Right? Calculate income tax. It's included with our other income. But if it's not enough, Mr. Pao, it's still within the principal. The Revenue Department states that you don't have to file. Yes. Because we have to say that it's not yet. It's not income. Income may be foreign income, but that income is not yet taxable because you haven't brought the money back. So, you don't have to file. This part does not need to be filed. Yes. You don't have to do anything with category 4. Because, let me emphasize again, you may have income from selling anything abroad. But since you haven't brought that income in yet, you have no tax liability. In that year. It has to be in the year you bring the money in. If you bring back only the principal, this is considered that you have no taxable income for the year. You don't need to request documents or file. Yes. This may worry some people, Mr. Pao. They want to keep documents and file with the Revenue Department that they have no income yet. The Revenue Department says it's okay. Wait until you have income, then file. Yes. Actually, in terms of many tax criteria. If we think we are doing the right thing. There is no problem. If we. We haven't done anything, and the Revenue Department wants to follow up. They can ask for more documents. And we have information to provide details and send them. And allow investors to file with the Revenue Department. They can explain and clarify. Mr. Pao. Don't worry. Yes. The Revenue Department is kind. They say. Yes. Actually, the Revenue Department usually asks. They ask if you have information, evidence, or documents. So, if we have the information in hand, we don't need to worry. We can explain. Mr. Pao. Yes. Now, when we talk about investment, Mr. Pao, we understand what income and profit are that need to be declared as income. The second part is that we know how to file. Like what Mr. Pao mentioned about category 4, right? 40(4). That arises now. Some people say, "If so, how can we manage the tax in this part?" Mr. Pao. What can we do? Actually, as the criteria state. The overall picture has two parts that say we have to pay tax on foreign income. The first is bringing money back into the country. Yes. The second is staying in Thailand for more than 180 days. So, let's take the easy way first. Because not many people will do it. That is, if in any year you want to bring back a lot of money and you don't want to pay tax. Go abroad for more than 180 days. More than 180 days. This does not meet condition 1. It's not 2. It's either one or the other. Yes. So, if you have, say, 10 million, 100 million, a lot of money, and you have to bring it back. Go abroad. Fly. Live abroad. Actually, Ms. Or, I've checked. It's not the same duration. You count. You don't have to be at the same time. You count the entry and exit dates and add them up. For example, I have a friend whose child studies abroad. Sometimes they fly to stay abroad for a month, only a few days. But accumulated, it exceeds 180 days. 180 days. Because many countries have rules. For example, if we go to a country, say, a tourist visa, how long can we stay? In America, it's 6 months. So, if someone stays in America for 6 months, they have to stay in another country for a day or two before returning to Thailand. Like this. So, this point might be one way to legally manage tax. Yes. Yes. So, stay abroad for more than 180 days. But I think most people may find it difficult. Right? So, let's move to the second point. What is it? Bringing money back into the country. Right? They call it in foreign countries. This is called deferring tax payment. Because tax is paid only when it's transferred in. So, for anyone who intends to invest long-term in foreign assets. Ms. Or, you can invest abroad and let it compound until the day you need it. Then gradually bring it back. And when you bring it back gradually, let me emphasize again. The initial period will be the principal that you transferred out. You will not have to pay tax at all. To give a simple example, Ms. Or, to illustrate. What I like to tell investors is, a simple retirement plan is to invest DCA. For example, 10,000 baht per month. In the Jitta portfolio, like Global ETF. Yes. You get 8% per year, right? Invest 10,000 baht per month. After 30 years, it's about 3 million. The principal. Yes. But the portfolio will be 15 million. Uh. Right? So, let's say after 30 years, the portfolio is 15 million, the principal is 3 million. The first 3 million brought back is not taxed. The rest is taxed. Now, when we. 30 years, 15 million. We may not need to rush to bring it all back at once. We can bring it back gradually, right? According to the plan, we bring back 5% per year. Yes. Right? After we have no income. After we have no income. For example, if we want to pay the least tax, bring it back when we are over 65, Ms. Or. Because when we are over 65, there is an elderly deduction of 190,000, which further reduces the tax. Uh. For example, if we bring back 500,000 baht. Yes. Uh. At age 65, right? It will be deducted from the elderly deduction of 190,000. And a personal deduction of 60,000. 10,000 baht. So, it will be around 2,000. Right? And the first 150,000 baht is not taxed. Right? So, there will be another 100,000 left. You only pay at a rate of 5%. 5% is about 5,000. 5,000 baht. So, if you bring in 500,000, you pay about 5,000 per year. Or did you see another loophole just now, Ms. Or? If we bring in less than 150,000. The first 150,000 is not taxed anyway. If you bring in about 200,000. The first 400,000 is not taxed at all. If you are over 65. For example, let's say 400,000 first. 400,000 per year. This is not taxed at all. Because after deducting the elderly exemption. This will not be taxed. But if it exceeds 400,000, Mr. Pao. Actually, you can still deduct more. You might pay less than 5,000 or 5% that we just discussed. Mr. Pao. Because some people may have other deductions. Life insurance. Home loan. At age 65, home loans may not be common anymore. So, life insurance, health insurance, donations. Donations can also be deducted. Life insurance, health insurance, cashback interest. But at 65, you shouldn't have a home loan with cashback, right? But any deduction can be used. So, the 100,000 that we just brought back 500,000. And the 100,000 that needs to be declared. If you deduct further. It will be less and less. You might not pay 5%. You might not even reach 5,000. But as Mr. Pao said, if anyone says they don't want to pay at all, bring back 400,000 baht per year. Yes. Or if you want to bring back a lot in any year, what do you do? Ms. Or, go abroad. Go abroad for more than 180 days. Yes. But for the general public, I think we can manage this easily. As I said, when we invest, especially long-term investment, it's an investment for retirement, right? Because as I said earlier, we invest 10,000 baht per month. After 30 years, we have 15 million. We can withdraw about 700,000 per year, which is 60,000 per month. Some people may pay only a few thousand baht. It's comfortable. But actually, it's recommended to bring it back gradually. Mr. Pao. Because planning for retirement income. Mr. Pao, as we have always recommended, is to start now. Maybe DCA 5,000 or 10,000 baht per month, as Mr. Pao mentioned. But accumulate gradually until retirement to have 15 million, as Mr. Pao said. Now, with 15 million, you can gradually bring back 400,000-500,000 baht, right? But the rest, don't withdraw it. Both principal and profit. Don't touch it yet. Why? So that the money continues to work. Yes. Because normally, with Global ETF, the expected return is about 8% per year, right? If we withdraw 5% per year, it's like having the principal still growing by 3% every year. So, we can withdraw continuously, 5% each year, and the money will grow further. It will grow, but some people might hear this now and say, "Yes, but 15 million, withdrawing 5% is 700,000 per year, which is 60,000 per month. That's more than 500,000, right, Ms. Or?" So, we have to go back to the original condition. That in the initial period when you withdraw, the first 3.6 million is not taxed. That's the principal. Because it's the principal. So, if you withdraw 700,000 per year, it will take about 5 years to reach 3 million. At that time, we will be 70 years old, right? And after that, maybe withdraw 7-800,000. I think you can withdraw it. Pay some tax, maybe 5,000-10,000 baht. It's not a large amount. For example, if you bring back 1 million and pay 20,000 baht tax, it's actually 2%. Right? It's actually very low. Actually, if you pay tax, if it exceeds 400,000, it's still within the 5% tax rate. Mr. Pao. This 5% that we pay, for example, if we pay 5,000 or 10,000 baht. Actually, if you compare it to long-term investment, where the returns compound. Mr. Pao, from a principal of 3 million, you get 15 million and it keeps growing. So, it's much more worthwhile to pay tax compared to the long-term returns from direct investment. Yes. It's like comparing it to other work, Ms. Or. For example, if we compare it for everyone to see. We work elsewhere, and we are deducted immediately. Yes. Right? More or less, depending on the tax rate. And the minimum, you see, is about 5%, 10%. If you have more money, maybe the average is around 20-something percent. Right? But you see, with good tax management, the portion we invest abroad and withdraw upon retirement. We will pay only about 2-3%. We bring back 1 million, and we might pay tens of thousands, 20,000-30,000 baht. It's much less than other taxes. And the advantage is that at that time, you will have a portfolio that protects yourself and keeps growing. We withdraw every year, more or less, depending on how we manage the tax. That is, "Oh, this year I withdrew a lot, and I haven't used it all. Next year, I'll withdraw less." We can do all of that. This is about tax management, Mr. Pao, that Mr. Pao mentioned. Two points. The point about 180 days. If you want to manage this, go abroad. Take your children to study. Around the world, Mr. Pao. Travel around the world. Wait for your children to go to university. Because at that time, you are retired. The second point, Mr. Pao, is about gradually bringing money in. Use it after retirement when you have no income or low income, so that you have the most deductions. Tax can be managed. But finally, you might pay about 5%. Which, compared to our principal that we invested, and the returns compounded. Mr. Pao, it's always worth it. It's higher. And there's another part, Mr. Pao. If we, as you mentioned, retire at 65. By the time we can bring back the principal, it's almost 70 million. 70. Almost 70 million. At 70, start withdrawing, Mr. Pao. And let the money keep working. Withdraw gradually. Because this will be beneficial to us. Why? We don't die that quickly. Some people may live up to 100 years. So, the money will keep working until 100 years old. Or another part, Mr. Pao. This is planning for the future, even beyond 100 years. What is it? Mr. Pao. Transfer it. Transfer it as inheritance. To children and grandchildren. Yes. Actually, at that time, people also ask about inheritance tax, Mr. Pao. If it's inheritance tax, Mr. Pao, the asset must exceed 100 million. Yes. To file for tax. You will pay tax on the portion exceeding 100 million. If it's a direct heir, it's about 5%. So, you pay tax on the portion exceeding 100 million. For example, if we give an inheritance of 50 million, this is not taxed. But if it's 120 million, the first 100 million is not taxed. The remaining 20 million must be taxed at 5%. If given to children, parents, spouse. This is inheritance tax. But if it's to other individuals, it's 10% of the portion exceeding 100 million. But if it's not inheritance tax, people also ask. If we transfer, transfer to heirs. Mr. Pao, but we are not dead yet. This also has tax. It's called gift tax. Yes. Yes. This will be taxed on the portion exceeding 20 million. Yes. Yes. This is a tax that can arise. You may need to study it further if you are not yet dead and want to give it as a gift. Mr. Pao. But only the portion exceeding 20 million. Yes. So, there is another method. Mr. Pao. The strategy we just discussed. We discussed 2 points, right? If we want to be precise, it's the method we just did. Ms. Or, invest 10,000 baht per month. And after 30 years, with 15 million, gradually withdraw. 5% per year. We withdraw until the last day of our lives. Because our portfolio keeps growing. We withdraw until we die. What happens, Ms. Or? That money becomes an inheritance and falls under inheritance tax. Which, if it's less than 100 million. There is no tax. There will be no tax. And we bring the money back. Meaning the heirs bring the money back. They will not pay tax. Because the person with income has died. So, there is no need to pay tax. And it will fall under inheritance tax. So, there will be no tax if it's less than 100 million. Like that. So, this is why I say that actually, when talking about foreign investment tax, people are afraid. Yes. The perception that people are most afraid of is like being threatened. "Oh, foreign investment tax is up to over 30%." 35%. Because they think it's added to the ordinary personal income tax, which has a progressive rate up to about 35%. But in reality, if it's for ordinary people, our income is not yet at the maximum to be taxed at 35%. We still don't pay. Or if we manage it well, as we discussed. Actually, it's very low. It's about 5%. Or not more than 5% if we manage it well. Or maybe not at all. Because there are deductions. Yes. Or go abroad for more than 180 days. Or give it as inheritance tax. This will not be taxed. Inheritance tax. Yes. If it's over 100 million. And there's another question, Ms. Pao, about tax arising abroad. Because some people invest in the United States. Uh. Country. Uh. Because we buy a lot of stocks there. ETFs, etc., we buy in the American market. Mr. Pao. There will be another tax if the asset owner dies. Mr. Pao. Uh. When they die, you may have heard that if they die, they have to pay tax to the state, to the American government, called Estate Tax. Many people have asked about this. Is there if investing with Jitta? Uh. Yes. We have to say that this is reassuring. There is none. Because Estate Tax is paid by non-US persons who invest in their country and die. So, the account name must be an individual's name. But investing with Jitta, we invest as an institution. Meaning the investor opens a personal fund account with Jitta. Right? And Jitta opens a custodian account abroad. So, all portfolios are not in an individual's name. So, if the account owner dies in Thailand, that portion will not be subject to Estate Tax. This is reassuring. And going back to earlier, if they die, the personal tax portion is not paid. Right? Because when they die, it becomes inheritance tax. And the portion not exceeding 100 million is not taxed. Right? So, I think if we look at it this way, ordinary people who invest, I think 90% can manage their tax to pay almost nothing on foreign investment tax. If they have knowledge and listen to what we've said, they will understand how to manage it. Don't be afraid. And another part, Ms. Pao. Because the tax management we discussed might happen with very long-term investments, Mr. Pao, until retirement. But some people may think, "What if I can't wait until retirement? In the meantime, I need money. Maybe I need money in 3 or 5 years." Actually, Mr. Pao, if you invest with Jitta, there are other options. Mr. Pao, where you don't have to invest directly in stocks. For example, we have Omni Fund. Mr. Pao. I'd like Mr. Pao to explain a bit about how Omni Fund helps if you're worried about tax. It helps. Because the Omni Fund portfolio is also a core portfolio that Jitta recommends. It's an asset allocation investment. But what makes Omni Fund not troublesome with foreign investment tax is that when investing in Omni Fund, Jitta invests the money by diversifying into mutual funds. Yes. In Thailand. And mutual funds are currently exempt from income tax. So, whether you invest in mutual funds yourself or through Jitta, you don't have to pay income tax at all. So, you will have the opportunity to receive returns of 7-8% per year, but you don't have to worry about the end when you want to bring it in or out, or how to pay tax. Omni Fund has none of that. Actually, Omni Fund, Mr. Pao, the investment principle is similar to Global ETF. We use the same principle, but invest through assets that are mutual funds registered in Thailand. So, if anyone is worried, doesn't want to calculate in the long term, or plans to invest for about 3-5 years and wants to bring the money back before retirement. They can choose to invest in Omni Fund. Yes. Yes. Today we have discussed tax quite a lot, Mr. Pao. There are results. Death and taxes, right? Is that right? There's a question that's very popular. Mr. Pao, they say there are two things that people cannot escape. Yes. This is something I've heard and learned since childhood, from the beginning of life. Death and taxes. So, they say, well, regarding death, it's clear, no one knows when it will come. But tax is something we know and can manage. For example, I read the first books, like Rich Dad Poor Dad. It teaches that tax is something you have to pay, but you have to manage it well. In terms of foreign investment, this is also something that can be called long-term investment, similar to abroad. It has laws. I read that if you sell real estate, you normally have capital gains and have to pay tax. But the exception is if you sell and buy real estate that is larger than the previous one. Then you don't have to pay tax on the sale. Similarly, we can invest abroad without paying tax until the day we bring the money back. At that time, there are many ways to manage and pay less tax, or even no tax at all, if managed well. So, we have to say, don't be afraid of tax, but we must understand it and learn to manage it well. So, if anyone is still listening to this clip, but has questions about tax management. You can contact our team. On Line, add Jitta. Mr. Pao. But for in-depth details about deductions in tax calculation. I would recommend contacting the Revenue Department directly. Because we are a fund management company. We can only advise on tax management related to investment. Mr. Pao. Today, thank you very much, Mr. Pao, for discussing with us. We will meet again in the next episode. Goodbye. Goodbye. For retirement planning, you can watch the next clip. It's the clip "5% Formula: Retire with a Lifetime of Income." This one clip will make you understand how wealthy people create financial freedom with money that lasts a lifetime, never runs out.