Get Ready for CRS: What It Means for Your Finances in Thailand ?
In Q3 2023, Thailand gears up to implement the Common Reporting Standard (CRS)—a game-changer in the battle against global tax evasion. This move involves the Revenue Department of Thailand initiating an automatic annual exchange of financial account information with foreign authorities starting from September 2023.
The exchange is a two-way process with foreign tax bodies reciprocating the data sharing.
The introduction of the CRS is notable as it automates the exchange of tax information, eliminating the need for individual requests. The annual exchange of data is expected to stir action amongst high-net-worth individuals, as they will need to refine their financial and family estate planning strategies.
The CRS, as stipulated by the Agreement for Exchange of Information with respect to Taxes B.E. (2023), outlines the conditions for reporting. The entities required to report are:
1. Financial institutions under the law governing financial institutions businesses.
2. Securities companies under the Securities and Exchange Act.
3. State financial institutions established under specific laws.
4. Life insurance businesses licensed under the Life Insurance Act.
5. Forward contract businesses under the Forward Contracts Act.
6. Contract administrators under the Contract Administrator Act.
7. Credit card businesses under the Revolutionary Council Announcement.
8. Trustees under the Trust for Transactions in the Capital Market Act.
These entities are responsible for reporting on the following types of accounts:
1. Deposit accounts.
2. Custodial accounts.
3. Investment accounts.
4. Life insurance policies.
The implementation of the Common Reporting Standard (CRS) will have significant impacts on various stakeholders:
1. Financial Institutions and Companies: These entities are obliged to comply with the CRS regulations by collecting and reporting data on their clients’ financial activities to the Thai Revenue Department. This could mean additional administrative tasks, increased operational costs, and the need to update IT systems to handle the data collection and reporting process effectively. Non-compliance could result in penalties and repetitional damage.
2. High-net-worth Individuals and Investors: The automatic exchange of financial information under the CRS increases transparency, making it harder to evade taxes by hiding assets or income in offshore accounts. As a result, individuals with high-value assets, as well as investors with offshore interests, may need to reconsider their financial and tax planning strategies to ensure compliance with the new regulations.
3. International Businesses: For businesses operating internationally, the CRS can affect how they manage their global operations, particularly if they have operations or assets in different jurisdictions that have differing tax laws. The CRS can influence where they decide to invest or hold assets, and they may need to review their corporate structures and tax strategies to ensure they’re compliant.
4. Government and Regulatory Bodies: The CRS will give the Thai government more insight into the financial activities of their residents, both at home and abroad, which can improve tax compliance and potentially increase tax revenues. However, the government and regulatory bodies will also need to manage the new processes and systems required to handle the automatic exchange of information.
5. General Public: In the long run, the CRS can help to create a fairer tax system, as it makes it more difficult for individuals and companies to evade taxes. This could lead to greater public trust in the tax system and improved social equity. However, there may also be concerns about data privacy and the security of the exchanged information.
Everyone affected should prepare for the CRS implementation to ensure smooth transitions and compliance.
As Thailand embraces CRS, MBMG is your trusted guide, helping ensure you navigate this change with confidence.
Disclaimer: The above information has not been independently verified. This investment brief is given for information only and does not represent an investment proposal, recommendation or advice to invest in the shares or business of the subject company. Additional information shall be made available to interested parties subject to the execution of the requisite confidentiality undertakings. The financial information, actual and/or forecast, provide herein is based on management representation.