Relations Between Inheritance Tax and the New Thai Tax Law

Receiving Inheritance from Overseas and Bringing it to Thailand

Any individual holding Thai citizenship or a Thai resident residing for 180 days or more who receives a foreign-source inheritance and brings them into Thailand is subject to taxation under the new tax law.

In contrast, an individual who is not a Thai resident (residing 180 days or less), who receives a foreign-source inheritance and brings them into Thailand, is not subject to taxation under the new tax law.

Social Fairness

Regarding taxation on inheritance, it intends to create fairness in the society by imposing inheritance tax on wealthy individuals rather than low-income households to reduce the inequality on disposable income. With that, the inheritance tax is distributed to improve public education and helps reduce financial burdens in the society.

Reducing Financial Burden in Social Classes

Due to a diverse financial status in the society, from poor to wealthy, tax is a source of government income for improving public utilities and infrastructure. With that, the government needs to collect taxes from people in the nation. Furthermore, the diversification of taxation helps reduce financial burdens on low-income households that they can pay tax at a low but affordable rate. 

Efficient Use Towards Public Domain

Some households may spend on inheritance lavishly, which does not help stimulate the economy. Other than that, it reduces taxation leakage by imposing retroactive tax collection on a lavish-to-opulent person who omits assets from taxation or possesses them more than a supposed proportion. Thus, this tax collection can contribute to the public domain for societal growth.

Disencouragement of Individual Savings

Although taxation contributes to societal growth, it creates financial burden and stress on households to save their incomes due to the difficulty in maintaining a fine balance between spending on their needs and paying tax. In return, this causes economic stagnation by discouraging consumer spending, and causes people to avoid taxation legally in reducing those burdens.

Complacency Over Diligence

A person who receives a large inheritance tends to live comfortably at home rather than seek employment. To clarify, such individuals presume that their inherited assets can support them financially until death without the need of working to earn substantial income, causing them to become lazy and contribute to workforce reduction.

Difficulty in Tax Collection

Artworks and sculptures could create a tax loophole as they are not subject to taxation due the difficulty in determining their market price. In addition, calculating the correct price for these works of art causes a change of trend in the art industry  due to price changes in their value throughout the years. Therefore, it results in an unfair tax rate and creates a loophole where taxpayers can bribe officials who will use this justification in opening the door for government officials to engage in corrupt practices.

Tax Law in Thailand can be complicated and may change often. It’s really important to keep up with these changes because they can greatly affect how you manage your money and what you owe in taxes. It’s a good idea to talk to a tax expert in Thailand who can give you advice that fits your situation and help you follow the most recent rules. Staying updated and getting advice from professionals are important for handling your money matters well, both in your country and in other countries.

If you have any more questions or need more help, feel free to reach out to us.

Category: Property, Thailand Revenue Code