Technical article

Which Asian Countries Have a US Tax Treaty, and How Pension Money Is Treated

The IRS has a table of the US tax rate on income paid to a person who lives in a treaty country.

By Neil Solomon · 6 min read

Picture a couple named Dale and Priya. Both are 63. They have a US pension and Social Security, and they are looking at Malaysia, Thailand and Japan. Dale asks a simple question over breakfast. "Does a treaty mean we pay less?" The answer has three parts: is there a treaty, what does it say about pensions, and what does the new country do with money that comes from abroad.

Step one: is there a treaty?

The IRS page "United States income tax treaties - A to Z" was last reviewed on 3 January 2026. It lists these countries from the group: Bangladesh, India, Indonesia, Japan, Kazakhstan, South Korea, Pakistan, the Philippines, Sri Lanka and Thailand. It also lists China. Malaysia "does not appear on the page."

Uzbekistan has no entry of its own. A footnote on the IRS treaty list says the old US-USSR treaty "applies to the countries of" the former Soviet republics. That is how Uzbekistan is covered.

Step two: what the treaty says about a pension

The IRS has a table of the US tax rate on income paid to a person who lives in a treaty country. It is dated May 2023. For pensions and annuities it shows:

Three notes from the table. For India, the footnote says the pension exemption "does not apply to lump-sum payments." For Pakistan, the footnote says the exemption is not available for payments from a plan whose contributions were deductible under US law. For Social Security, a footnote says the rate applies to 85% of the payment. The table itself says it is not a complete guide.

One more point matters for an American. The IRS says treaties, "with certain exceptions," do "not reduce the U.S. income taxes of U.S. citizens or residents," and that US citizens "are subject to U.S. income tax on their worldwide income." So the table shows what the treaty says about the pension. It does not tell a US citizen what the IRS will charge. An accountant or lawyer who works with Americans abroad could confirm how it applies.

Step three: what the new country does with money from abroad

This is where the countries differ most. I could confirm five.

Thailand. The Revenue Department says foreign income earned from 1 January 2024 is taxable if you stay "180 days or more in a tax (calendar) year" and it is "remitted to Thailand (wholly or partially), even if that remittance occurs in a later tax year." Income earned before 1 January 2024 and brought in later is "not subject to Thai Tax." Tax paid abroad "can be credited against Thai taxes if permitted under Double Tax Agreement." The page does not mention pensions by name.

Japan. The National Tax Agency says a person is a resident after living there "continuously for one year or more." A non-Japanese person who has lived there five years or less in the last ten is a "non-permanent resident." That person is taxed on income earned in Japan, on foreign income paid in Japan, and on foreign income paid abroad and brought into Japan. Other residents are taxed on "their whole income."

India. The Income-tax Act, section 5, says a resident is taxed on income that "accrues or arises to him outside India." A resident who is "not ordinarily resident" is not taxed on foreign income, unless it comes from a business controlled in India or a profession set up there. A non-resident is taxed only on income received or arising in India. The day-count tests that decide which group a person is in are not among the sources.

Sri Lanka. The guide I could read is for the 2020/2021 tax year, so it is old. It says a resident is taxed on income "wherever the source arises." It also exempts some foreign income "earned or derived in foreign currency and remitted through a bank to Sri Lanka." It does not say how a foreign pension is handled.

Malaysia (and Langkawi). The Ministry of Finance said on 30 December 2021 that foreign-source income for resident individuals is exempt from 1 January 2022 to 31 December 2026, with a carve-out for people in a Malaysian business partnership. This is a 2021 statement, passed along by a news agency on the ministry site. The Inland Revenue Board guideline that should give the detail would not load. Whether the exemption goes past 2026 is something we are waiting for the government to say. Nothing on the pages I read treats Langkawi differently from the rest of Malaysia.

What is left open

• The local rule for foreign pensions in Bangladesh, Indonesia, Kazakhstan, Pakistan, South Korea and Uzbekistan. These are left open.
• The Philippines. Two Bureau of Internal Revenue pages gave no statement on whether a resident alien is taxed on income from abroad.
• Malaysia after 2026.
• Any lump-sum rule except India's, which comes from the IRS table.