Thailand’s tax information exchange legislation
The pretty secret Thai bank account
With respect to banking secrecy and privacy of tax information, Thailand has always and is still a highly attractive jurisdiction. Although Thailand signed agreements to join CRS and FATCA, the grade of implementation is weak or none. Therefore, a Thai bank account has characteristics that can hardly be found in other jurisdictions, even in offshore locations.
Information exchange can be provided either by automatic exchanges of information (AEOI) and by an additional exchange of information on request (EIOR). The standard for AEOI (AEOI Standard), as well as the standard for EIOR (EIOR Standard) is different under the regulatory frameworks and the applicability under the individual jurisdictions.
CRS: Under the OECD’s Common Reporting Standard (CRS) the participating jurisdictions are required to obtain certain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. The CRS framework sets out
- the financial account information to be exchanged,
- the financial institutions required to report,
- the different types of accounts and taxpayers covered, as well as
- common due diligence procedures to be followed by financial institutions.
On June 3, 2020, Thailand joined the #OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Would you like to know more on the implications regarding the new reporting policy of the Revenue Department and other Thai authorities? https://t.co/S0sj92rl9L
— Bangkok Lawyer (@bangkoklawyer) June 16, 2020
Reporting requirements can be avoided if the natural person does not qualify as the ultimate beneficial owner (UBO) who ultimately owns or controls the asset or on whose behalf a transaction is being conducted. This refers to situations in which ownership/control is exercised through a chain of ownership or by means of control other than direct control. Apart from doubtful tools and modules as the use of offshore tax havens, shell firms, investments in cash-intensive sectors like bullion and real estate, trusts with no specific purpose, layers of shareholding, etc., there are legitimate investment structures in compliance with Thailand’s regulatory framework
FATCA: Under the U.S. Foreign Account Tax Compliance Act (FATCA), all non-U.S. financial institutions are required to report the assets and identities of U.S. persons to the U.S. Department of the Treasury. FATCA also requires U.S. persons to self-report their non-U.S. financial assets annually to the Internal Revenue Service (IRS).
Depending on the particular jurisdiction, information which is accessible to the Revenue Department and other authorities in the future can be reviewed to determine whether there are any historical non-compliance issues — particularly, compliance with tax laws and foreign exchange control rules.
Each local Thai bank is obliged under the Inter-Governmental Agreement between the Government of Thailand and the Government of the United State of America to collect certain information about each account holder’s tax residency status and to verify the status of the account holder for FATCA purposes.
The FATCA Self-Certification as required for bank customers includes the Tax ID/TIN number (Thailand), the TIN number (United States), third-country TINs and the list of countries where the entity/individual is resident that does not issue TINs. The Self-Certification Form for Corporate Customer asks for various other details as well.
BOT: Under Bank of Thailand regulations, certain Nonresident Ultimate Beneficial Owner (NR UBO) reporting requirements exist. Effective July 22, 2019, the limit on the outstanding balance of NRBA and NRBS had been reduced from THB 300 million per non-resident to THB 200 million per non-resident. Local custodians had to submit extended information, including name and ID card information, till November 11, 2019.
A brief history of Thailand’s anti-tax evasion and tax information exchange legislation
18/03/10: The U.S. implemented the Foreign Account Tax Compliance Act (FATCA) without the participation of Thailand.
15/07/14: OECD implemented the Common Reporting Standard (CRS) framework without the participation of Thailand
14/03/16: U.S.-Thai Model I Intergovernmental Agreement to implement FATCA rules in Thailand (text). The agreement is not implemented into Thai legislation and, therefore, has no direct effect on the reporting obligations. Thai banks typically act in compliance with the FATCA rules for U.S. account holders.
26/01/17: Thailand has joined the Global Forum on Transparency and Exchange of Information for Tax Purposes as its 139th member. Its membership reinforces its commitment to implement both the international standard of exchange of information on request and the standard of automatic exchange of financial account information. This has no direct impact on the reporting requirements.
01/04/17: Amendment of the Thailand Revenue Code to include a certain scope of tax evasion as a predicate offense under the Anti-Money Laundering legislation. Threshold amounts of THB 10 million (tax evasion) and THB 2 million (fraudulent refund).
24/07/18: Proposed amendment of the Thailand Revenue Code to provide and receive tax information and certain confidentiality provisions. This is just one more draft.
2023: As at May 2020, the year 2023 had been the expected legislation to annually and automatically report financial information under the CRS standards.
03/06/2020: Thailand joined the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
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