Tax Treaties Between the U.S. and Thailand

Tax Treaties Between the U.S. and Thailand

The United States has income tax treaties with many foreign countries. Under these treaties, residents (not necessarily citizens) of foreign countries are taxed at a reduced rate or are exempt from U.S. income taxes on certain items of income they receive from sources within the United States. These reduced rates and exemptions vary among countries and spe­cific items of income.

If there is no treaty between your country and the United States, you must pay tax on the income in the same way and at the same rates shown in the instructions for Form 1040NR.  Also, see Publication 519.

Many of the individual states in the United States have a tax in addition to the federal taxes. There­fore, you should consult the tax authorities of the state in which you live to find out if that state taxes the income of individuals.  Once you have determined the state’s general taxation, you should decide if the tax applies to any of your income.

Tax treaties reduce the U.S. taxes of resi­dents of foreign countries. With certain excep­tions, they do not reduce the U.S. taxes of U.S. citizens or residents. U.S. citizens and residents are subject to U.S. income tax on their world­wide income.

Treaty provisions generally are reciprocal (apply to both treaty countries); therefore, a U.S. citizen or resident who receives income from a treaty country may refer to the tables in this publication to see if a tax treaty might affect the tax to be paid to that foreign country. For­eign taxing authorities sometimes require certifi­cation from the U.S. Government that an appli­cant filed an income tax return as a U.S. citizen or resident as part of the proof of entitlement to the treaty benefits. See Form 8802, Application for United States Residency Certification, to re­quest a certification.

Disclosure of a treaty-based position that reduces your tax. If you take the position that any U.S. tax is overruled or otherwise reduced by a U.S. treaty (a treaty­ based position), you generally must disclose that position on Form 8833 and attach it to your return. If you are not required to file a return because of your
treaty-­based position, you must file a return anyway to report your status. The filing of Form 8833 does not apply to a reduced rate of withholding tax on non-effectively connected in­come, such as dividends, interest, rents or roy­alties, or to a reduced rate of tax on pay re­ceived for services performed as an employee, including pensions, annuities, and social secur­ity. For more information, see Publication 519 and the Form 8833 instructions.

If you fail to file Form 8833, you may have to pay a $1,000 penalty. Corporations are subject to a $10,000 fine for each failure.

Tax Exemptions Provided by Treaties

This publication contains discussions of the ex­emptions from tax and specific other effects of the tax treaties on the following types of in­come.

• Pay for certain personal services per­ formed in the United States.
• Pay a professor, teacher, or researcher who teaches or performs research in the United States for a limited time.
• Amounts received for maintenance and studies by an international student or apprentice here for study or experience.
• A foreign government pays Wages, salaries, and pensions.
  
  

Personal Services Income

Pay for certain personal services performed in the United States is exempt from U.S. income tax if you are a resident of one of the countries discussed below if you are in the United States for a limited number of days and meet certain other conditions. For this purpose, the word “day” means a day during any part of which you are physically present in the United States.

Terms defined. Several terms appear in many of the discussions that follow. The particu­lar tax treaty determines the exact mean­ings of the terms under discussion; thus, the mean­ings vary among treaties. Therefore, the following definitions are general definitions that may not give the precise meaning intended by a particular treaty.

The terms fixed base and permanent estab­lishment generally means a fixed place of busi­ness, such as a place of management, a branch, an office, a factory, a warehouse, or a mining site, through which an enterprise carries on its business.

The term borne generally means having ultimate financial accounting responsibility for, or providing the monetary resources for, an ex­penditure or payment, even if another entity in another location made the expenditure or payment.

Professors, Teachers, and Researchers

Pay of professors and teachers who are resi­dents of the following countries is generally ex­empt from U.S. income tax for 2 or 3 years if they temporarily visit the United States to teach or do research. The exemption applies to pay earned by the visiting professor or teacher dur­ing the applicable period. For most of the following countries, the relevant period begins on the date of arrival in the United States to teach or engage in research.  Furthermore, this applies to the exemption for most countries even if they stay in the United States extends beyond the applicable period.

The exemption generally applies to pay re­ceived during a second teaching assignment if both are completed within the specified time, even if the second assignment was not arranged until after arrival in the United States on the first assignment. Below, the conditions are stated under which the payment of a professor or teacher from that country is exempt from U.S. income tax.

If you do not meet the requirements for ex­emption as a teacher or if you are a resident of a treaty country that does not have a special provision for teachers, you may qualify under a personal services income provision discussed earlier.

Students and Apprentices

Residents of specific countries who are in the United States to study or acquire technical experience are exempt from U.S. income tax, under certain conditions, on amounts received from abroad for their maintenance and studies.

This exemption does not apply to the salary paid by a foreign corporation to one of its exec­utives, a citizen and resident of a foreign coun­try who is temporarily in the United States to study a particular industry for an employer. That amount is a continuation of salary and is not re­ceived to learn or acquire experience.

There is a statement of the conditions under which the exemption applies to students and apprentices from that country for each country listed.

Amounts received from the National Insti­tutes of Health (N.I.H.) under provisions of the Visiting Fellows Program are generally treated as a grant, allowance, or award for purposes of whether the treaty provides an exemption.  Amounts received from N.I.H. under the Visiting Associate Program and Visiting Scientist Pro­gram are not exempt from U.S. tax as a grant, allowance, or award.

Wages and Pensions Paid by a Foreign Government

Wages, salaries, pensions, and annuities paid by the governments of the following countries to their residents who are present in the United States as nonresident aliens generally are ex­empt from U.S. income tax. The conditions un­der which the income is exempt are stated for each of the countries listed.

Exemption under U.S. tax law. Employees of foreign countries who do not qualify under a tax treaty provision and employees of international organizations should see if they can qualify for exemption under U.S. tax law.

Suppose you work for a foreign government in the United States. In that case, your foreign government salary is exempt from U.S. tax if you perform services similar to those performed by U.S. government employees in that foreign country and that for­eign government grants an equivalent exemp­tion. If you work for an international organization in the United States, your salary from that source is exempt from U.S. tax. See Chapter 10 of Publication 519 for more information.

Overview of the Treaties Between the U.S. and Thailand

Income that residents of Thailand receive for performing personal services as independent contractors or as self-­employed individuals (in­dependent personal services) in the United States during the tax year is exempt from U.S. income tax if the residents:

• Are in the United States for no more than 89 days during the tax year, and
• They do not have a fixed base regularly availa­ble to them in the United States for performing their services.
  
  

If they have a fixed base available in the United States, they are taxed only on the income attrib­utable to the fixed base.

This exemption does not apply if a resident of Thailand earns more than $10,000 for inde­pendent personal services and that income is paid by a U.S. resident or borne by a perma­nent establishment or fixed base in the United States.

Income that residents of Thailand receive for services performed in the United States as em­ployees (dependent personal services) is exempt from U.S. income tax if the following re­quirements are met.

• The resident is in the United States for no more than 183 days in any 12­-month period beginning or ending in the tax year.
• The income is paid by, or on behalf of, an employer who is not a U.S. resident.
• The income is not borne by a permanent establishment or a fixed base that the employer has in the United States.
  
  

These exemptions do not apply to directors’ fees and similar payments received by a resi­dent of Thailand for services performed outside of Thailand as a member of the board of direc­tors of a company that is a resident of the Uni­ted States.

These exemptions do not apply to income residents of Thailand receive for performing services in the United States as entertainers (such as theater, motion picture, radio, or television artists, or musicians) and athletes if the in­come is more than $100 a day or $3,000 for the tax year. Regardless of these limits, the income of Thai entertainers is exempt from U.S. tax if their visit to the United States is substantially suppor­ted by public funds of Thailand or its political subdivisions or local authorities.

The exemption does not apply to pay re­ceived by employees who are members of the regular complement of a ship or aircraft oper­ated in international traffic by a U.S. enterprise.

Professors, Teachers, and Researchers

An individual who is a resident of Thailand on the date of arrival in the United States and who is in the United States for no longer than two years primarily to teach or engage in research at a university, college, school, or other recog­nized educational institution is exempt from U.S. income tax on income for the teaching or research. The exemption from tax applies only if the visit does not exceed two years from the date the individual first visits the United States to engage in teaching or re­search.

This exemption does not apply to income from research carried on mainly for the private benefit of any person rather than in the public interest. This exemption does not apply if, dur­ing the immediately preceding period, the bene­fits described in treaty Article 22(1), pertaining to students, were claimed.

Students and Apprentices

An individual who is a resident of Thailand at the beginning of his or her visit to the United States and who is temporarily present in the United States is exempt from U.S. income tax on certain amounts for a period of up to 5 years.
To be entitled to the exemption, the individual must be in the United States for the primary pur­pose of:

• Studying at a university or other recog­nized educational institution in the United States,
• Obtaining training required to qualify him or her to practice a profession or professional specialty, or
• Studying or doing research as a recipient of a grant, allowance, or award from a gov­ernmental, religious, charitable, scientific, literary, or educational organization.
  
  

If the individual meets any of these require­ments, the following amounts are exempt from U.S. tax.

• Gifts from abroad for the purpose of main­tenance, education, study, research, or training.
• The grant, allowance, or award.
• Income from personal services performed in the United States of up to $3,000 for the tax year.

An individual who is a resident of Thailand at the beginning of the visit to the United States and who is temporarily present in the United States as an employee of, or under contract with, a resident of Thailand is exempt from U.S. income tax for a period of 12 consecutive months on up to $7,500 received from personal services if the individual is in the United States primarily to:

• Acquire technical, professional, or busi­ness experience from a person other than the Thai resident, or
• Study at a university or other recognized educational institution in the United States.
  
  

An individual who is a resident of Thailand at the time they become temporarily present in the United States and who is temporarily present in the United States for a period not lon­ger than one year as a participant in a program sponsored by the U.S. government for the pri­mary purpose of training, research, or study is exempt from U.S. income tax on up to $10,000 of income from personal services for that train­ing, research, or study.

Wages and Pensions Paid by a Foreign Government

Income, other than a pension, paid by Thailand or its political subdivisions or local authorities to an individual for services performed for the pay­ing governmental body is exempt from U.S. in­come tax. However, the exemption does not apply to payments for services performed in the United States by a resident of the United States who either:

• Is a U.S. citizen, or
• Did not become a U.S. resident only to perform the services.
  
  

Pensions paid by Thailand for services per­formed for Thailand are exempt from U.S. in­come tax unless the recipient is both a resident and citizen of the United States.