does this new 30 percent witholding tax for money transfers over 20'000 $ apply to funds transferred for property purchases?
the BOT's regulation says that transfers for "goods and services" are excluded ... is buying a property buying a "good" or "service"?
tks for some enlightment, because I have to transfer a rather large amount for a final property payment ...
New Baht Withold Tax - Does It Affect Property Sector?
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JimmyGreaves
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Poster must be referring to this: http://www.bangkokpost.net/Business/19Dec2006_biz01.php
As far as I can see it is only concerning investers looking to Thailand for short term gain (money laundering?) and should not affect long term investment. Could prove cumbersome when taking money out of Thailand though - 30% must stay in Thailand for 1 year subject to investigation? That could put a lot of people off.
As far as I can see it is only concerning investers looking to Thailand for short term gain (money laundering?) and should not affect long term investment. Could prove cumbersome when taking money out of Thailand though - 30% must stay in Thailand for 1 year subject to investigation? That could put a lot of people off.
Agree Jockey.
Seems to be trying to stop short term speculation against the Baht. But, I'd not seen anything about this before. Was there any advance notice?
The wording of the article expressly mentions "repatriation" of funds being exempt. So, I assume it won't affect money that's been legitimately brought into Thailand from abroad and invested, in say, property. As long as you can show the money came from overseas in the first place. Then again, I'd thought that any profit made from property was subject to tax anyway. I'm no expert.
Still, won't do an awful lot for overall investor confidence.
Seems to be trying to stop short term speculation against the Baht. But, I'd not seen anything about this before. Was there any advance notice?
The wording of the article expressly mentions "repatriation" of funds being exempt. So, I assume it won't affect money that's been legitimately brought into Thailand from abroad and invested, in say, property. As long as you can show the money came from overseas in the first place. Then again, I'd thought that any profit made from property was subject to tax anyway. I'm no expert.
Still, won't do an awful lot for overall investor confidence.
From Bloomberg:
Thai Stocks Slide on Baht Curbs; Asian Shares Drop (Update2)
By Margo Towie
Dec. 19 (Bloomberg) -- Thai stocks plunged the most in 16 years, triggering declines across Asia's emerging markets, after the central bank said international investors must pay a 10 percent penalty to take funds out of the country within a year.
The new rules, announced yesterday by central bank Governor Tarisa Watanagase, are aimed at stemming a 16 percent gain in the baht this year. The Thai currency had its biggest two-day decline since April 2005.
``It's fair to say Thailand has moved to be a riskier place for investments,'' said Frederic Neumann, chief economist for Thailand at HSBC Holdings Plc in Hong Kong. ``Steps like these scare investors, especially when they come out of the blue.''
Thailand's benchmark SET Index fell as much as 100.39, or 13.7 percent, to 630.16, led by PTT Pcl and Bangkok Bank, and was trading at 644.66 as of the 12:30 p.m. midday break in the Thai capital. The magnitude of the slump triggered a 30-minute trading halt at the Thai stock exchange.
Stocks also fell in India, Malaysia, Indonesia and the Philippines after the Thai central bank's currency controls heightened concern about emerging markets.
``Global investors have to recognize risk again,'' said Soichiro Monji, who helps oversee about $47 billion as senior strategist at Daiwa SB Investments Ltd. in Tokyo. ``Investors might shift from developing markets to other safer markets.''
The new regulations require investors to lock up 30 percent of foreign exchange deposits for a year to deter speculation, leaving 70 percent free to buy assets. Starting with funds transferred to Thailand today, overseas investors will be penalized 33 percent of that 30 percent portion to withdraw funds within one year. The can freely move investments between asset classes within the country.
Baht's Rally
The baht rose to a nine-year high before yesterday's announcement on speculation economic growth would accelerate after a Sept. 19 coup ended a political deadlock that had curbed spending and confidence. Thai Union Frozen Products Pcl, the world's second-largest tuna canner, was among exporters that last month asked the central bank to stem baht gains from undermining their competitiveness.
``It'll help exporters and the country's trade balance,'' said Visit Tantisunthorn, secretary-general of the Government Pension Fund, the nation's largest money manager, with more than $7.8 billion in assets.
The coup ousted Prime Minister Thaksin Shinawatra and ended seven months of political turmoil. Surayud Chulanont, installed to replace Thaksin by the military junta, is planning record spending on roads, subways and other infrastructure projects.
Bangkok Bank
The yield on the benchmark 10-year Thai government bond rose to its highest since Nov. 2. Bond yields move inversely to price. The baht tumbled as much as 1.5 percent to 36.08. It recently traded at 35.66.
``If you are speculating in the market, then the central bank's message is do it somewhere else,'' said Lee Boon Keng, a market strategist at DBS Group Holdings Ltd.
Shares of Bangkok Bank, the nation's largest lender, sank 14 percent to 106 baht, the biggest loss since March 2000. An index of bank stocks plunged 16 percent.
India's Sensitive Index declined 1.4 percent, the Kuala Lumpur Composite Index fell 2.4 percent and Indonesia's Jakarta Composite Index lost 1.7 percent. Elsewhere in Southeast Asia, Singapore's Straits Times Index dropped 1.7 percent and the Philippine Stock Exchange Index slid 1 percent.
Slowing Exports
``It's basically as if they're putting a tax on any trades less than a year,'' said Magnus Prim, a senior foreign-exchange strategist at Skandinaviska Enskilda Banken in Singapore. ``It's going to stop any buying pressure and with the stock market likely to be hit, we could see the baht falling some more.''
A stronger baht hands overseas investors greater capital returns when they convert proceeds from sales back to dollars or their own currencies. It also cuts exporters' competitiveness.
``Most exporters are very happy with the central bank's new measure,'' said Dusit Chongsutthamanee, corporate finance manager at Pranda Jewelry Pcl, Thailand's biggest publicly traded jewelry exporter. ``The baht has strengthened at a much faster pace than other currencies in the region. That affects most exporters because it has made their product prices less competitive with other producers.''
Thailand's export growth may slow to between 10 percent and 12 percent next year due to slower global economic expansion and the stronger baht, the Commerce Ministry said on Dec. 7. Export growth this year will exceed 16 percent, Commerce Minister Krirk-krai Jirapaet said.
`May Adjust'
A rising baht hurts exporters by cutting the value of their local currency-denominated profits and making their products more expensive compared with those of Asian rivals. China's yuan has added 3.2 percent against the dollar this year, Malaysia's ringgit has gained 5.5 percent and Singapore's dollar has climbed 7.4 percent.
The central bank may adjust the curbs ``if the baht doesn't continue to be strong,'' Nitaya Pibulratanagit, the central bank's assistant governor said today. ``We may have new measures, which may be more relaxed or more aggressive depending on the situation.'' The Bank of Thailand will meet with stock brokers and investors later today.
The Bank of Thailand on July 2 1997, bowed to market pressure and allowed the baht to float freely against the dollar. The subsequent slide in the currency sent the nation's economy into a tailspin and left much of Asia facing recession for the first time in decades.
Malaysia's Curbs
Malaysia fixed the ringgit at 3.8 to the dollar in September 1998, halting speculator bets that had helped it plunge 31 percent in 12 months against the U.S. currency. Malaysia also imposed controls to curb ringgit trading.
Still, if they're not adjusted, Thailand's latest measures could damp long-term investment, Cem Karacadag, a Singapore- based analyst at Credit Suisse, wrote in a note to investors today.
``The scale and scope of the unremunerated reserve requirement probably went beyond the markets' expectations.''
Thai Stocks Slide on Baht Curbs; Asian Shares Drop (Update2)
By Margo Towie
Dec. 19 (Bloomberg) -- Thai stocks plunged the most in 16 years, triggering declines across Asia's emerging markets, after the central bank said international investors must pay a 10 percent penalty to take funds out of the country within a year.
The new rules, announced yesterday by central bank Governor Tarisa Watanagase, are aimed at stemming a 16 percent gain in the baht this year. The Thai currency had its biggest two-day decline since April 2005.
``It's fair to say Thailand has moved to be a riskier place for investments,'' said Frederic Neumann, chief economist for Thailand at HSBC Holdings Plc in Hong Kong. ``Steps like these scare investors, especially when they come out of the blue.''
Thailand's benchmark SET Index fell as much as 100.39, or 13.7 percent, to 630.16, led by PTT Pcl and Bangkok Bank, and was trading at 644.66 as of the 12:30 p.m. midday break in the Thai capital. The magnitude of the slump triggered a 30-minute trading halt at the Thai stock exchange.
Stocks also fell in India, Malaysia, Indonesia and the Philippines after the Thai central bank's currency controls heightened concern about emerging markets.
``Global investors have to recognize risk again,'' said Soichiro Monji, who helps oversee about $47 billion as senior strategist at Daiwa SB Investments Ltd. in Tokyo. ``Investors might shift from developing markets to other safer markets.''
The new regulations require investors to lock up 30 percent of foreign exchange deposits for a year to deter speculation, leaving 70 percent free to buy assets. Starting with funds transferred to Thailand today, overseas investors will be penalized 33 percent of that 30 percent portion to withdraw funds within one year. The can freely move investments between asset classes within the country.
Baht's Rally
The baht rose to a nine-year high before yesterday's announcement on speculation economic growth would accelerate after a Sept. 19 coup ended a political deadlock that had curbed spending and confidence. Thai Union Frozen Products Pcl, the world's second-largest tuna canner, was among exporters that last month asked the central bank to stem baht gains from undermining their competitiveness.
``It'll help exporters and the country's trade balance,'' said Visit Tantisunthorn, secretary-general of the Government Pension Fund, the nation's largest money manager, with more than $7.8 billion in assets.
The coup ousted Prime Minister Thaksin Shinawatra and ended seven months of political turmoil. Surayud Chulanont, installed to replace Thaksin by the military junta, is planning record spending on roads, subways and other infrastructure projects.
Bangkok Bank
The yield on the benchmark 10-year Thai government bond rose to its highest since Nov. 2. Bond yields move inversely to price. The baht tumbled as much as 1.5 percent to 36.08. It recently traded at 35.66.
``If you are speculating in the market, then the central bank's message is do it somewhere else,'' said Lee Boon Keng, a market strategist at DBS Group Holdings Ltd.
Shares of Bangkok Bank, the nation's largest lender, sank 14 percent to 106 baht, the biggest loss since March 2000. An index of bank stocks plunged 16 percent.
India's Sensitive Index declined 1.4 percent, the Kuala Lumpur Composite Index fell 2.4 percent and Indonesia's Jakarta Composite Index lost 1.7 percent. Elsewhere in Southeast Asia, Singapore's Straits Times Index dropped 1.7 percent and the Philippine Stock Exchange Index slid 1 percent.
Slowing Exports
``It's basically as if they're putting a tax on any trades less than a year,'' said Magnus Prim, a senior foreign-exchange strategist at Skandinaviska Enskilda Banken in Singapore. ``It's going to stop any buying pressure and with the stock market likely to be hit, we could see the baht falling some more.''
A stronger baht hands overseas investors greater capital returns when they convert proceeds from sales back to dollars or their own currencies. It also cuts exporters' competitiveness.
``Most exporters are very happy with the central bank's new measure,'' said Dusit Chongsutthamanee, corporate finance manager at Pranda Jewelry Pcl, Thailand's biggest publicly traded jewelry exporter. ``The baht has strengthened at a much faster pace than other currencies in the region. That affects most exporters because it has made their product prices less competitive with other producers.''
Thailand's export growth may slow to between 10 percent and 12 percent next year due to slower global economic expansion and the stronger baht, the Commerce Ministry said on Dec. 7. Export growth this year will exceed 16 percent, Commerce Minister Krirk-krai Jirapaet said.
`May Adjust'
A rising baht hurts exporters by cutting the value of their local currency-denominated profits and making their products more expensive compared with those of Asian rivals. China's yuan has added 3.2 percent against the dollar this year, Malaysia's ringgit has gained 5.5 percent and Singapore's dollar has climbed 7.4 percent.
The central bank may adjust the curbs ``if the baht doesn't continue to be strong,'' Nitaya Pibulratanagit, the central bank's assistant governor said today. ``We may have new measures, which may be more relaxed or more aggressive depending on the situation.'' The Bank of Thailand will meet with stock brokers and investors later today.
The Bank of Thailand on July 2 1997, bowed to market pressure and allowed the baht to float freely against the dollar. The subsequent slide in the currency sent the nation's economy into a tailspin and left much of Asia facing recession for the first time in decades.
Malaysia's Curbs
Malaysia fixed the ringgit at 3.8 to the dollar in September 1998, halting speculator bets that had helped it plunge 31 percent in 12 months against the U.S. currency. Malaysia also imposed controls to curb ringgit trading.
Still, if they're not adjusted, Thailand's latest measures could damp long-term investment, Cem Karacadag, a Singapore- based analyst at Credit Suisse, wrote in a note to investors today.
``The scale and scope of the unremunerated reserve requirement probably went beyond the markets' expectations.''
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Just reading up about it. This measure has resulted in the most dramatic crash on the SET for at least 9 years. Trading was suspended for 30 mins.
I had seen before that people were getting worried about how strong the Baht was becoming against the Dollar. Exports were getting more expensive.
Plus, the Thai people are more heavily into debt than ever before - credit cards, HP etc etc.
Monetary control is necessary most of the time everywhere. The Bank of England influences interest rates and minimum lending reserve funds all the time.
Maybe this is what Thailand's trying to do. Certainly, the Baht has weakened significantly against the Dollar already. But whether that's a good thing, in the long-term, I'm not sure about. I forgot all my macro-economics years ago.
Maybe someone else can explain the potential repercussions? Certainly it seems like "sell, sell, sell". Only in the stock market at the moment though.
I had seen before that people were getting worried about how strong the Baht was becoming against the Dollar. Exports were getting more expensive.
Plus, the Thai people are more heavily into debt than ever before - credit cards, HP etc etc.
Monetary control is necessary most of the time everywhere. The Bank of England influences interest rates and minimum lending reserve funds all the time.
Maybe this is what Thailand's trying to do. Certainly, the Baht has weakened significantly against the Dollar already. But whether that's a good thing, in the long-term, I'm not sure about. I forgot all my macro-economics years ago.
Maybe someone else can explain the potential repercussions? Certainly it seems like "sell, sell, sell". Only in the stock market at the moment though.
BOT Statement
Service Manager : Weraphol +66 2283 5016
No. 51/2006
The Reserve Requirement on Short-Term Capital Inflows
Dr. Tarisa Watanagase, Governor of the Bank of Thailand (BOT), announced that despite recent measures aiming at discouraging short-term capital inflows and limiting Thai baht speculation, short-term speculative inflows of various forms continue to persist, as evidenced by the volatility of the Thai baht and its rapid pace of appreciation.
The BOT, therefore, decided to implement an unremunerated reserve requirement on short-term capital inflows. Financial institutions are required to withhold 30 percent of foreign currencies bought or exchanged against the Thai baht, except those related to trades in goods and services, or repatriation of investments abroad by residents. The details of the measure and related operational procedures are summarized as follows:
1. After one year, customers whose foreign currencies have been withheld can request for refunds by submitting related evidence to prove that the funds have been in Thailand for at least one year.
2. Once financial institutions have examined and certified the one-year minimum stay period, they shall inform the BOT to return the funds, through them, to their customers.
3. Should any customers wish to repatriate their funds earlier than one year, they would be refunded only two-thirds of the amount.
4. Foreign exchange transactions which have been traded prior to 19 December 2006 are exempt from this reserve requirement.
5. Foreign direct investments or unrequited transfers would initially be subject to the reserve requirement but shall be refunded upon submission of supporting evidence through financial institutions. Once financial institutions have examined and certified the legitimacy of such claims and the BOT deems it appropriate, the BOT shall promptly return the full amount.
6. Financial institutions shall remit the required reserves, in the form of foreign currencies, to the BOT on the 7th of the subsequent month.
7. The earnings received from this measure would be earmarked for public benefits.
In order to regulate foreign short-term capital inflows, several countries have imposed reserve requirements on such inflows during critical times. The BOT views that the present situation warrants the introduction of such measure to prevent speculative pressure on the Thai baht. The BOT will closely monitor and assess the impact of this measure.
Bank of Thailand
18 December 2006
For more details : Kleddao Sungnet E-mail : KleddaoS@bot.or.th Tel : +66 (0) 2356 7345
Service Manager : Weraphol +66 2283 5016
No. 51/2006
The Reserve Requirement on Short-Term Capital Inflows
Dr. Tarisa Watanagase, Governor of the Bank of Thailand (BOT), announced that despite recent measures aiming at discouraging short-term capital inflows and limiting Thai baht speculation, short-term speculative inflows of various forms continue to persist, as evidenced by the volatility of the Thai baht and its rapid pace of appreciation.
The BOT, therefore, decided to implement an unremunerated reserve requirement on short-term capital inflows. Financial institutions are required to withhold 30 percent of foreign currencies bought or exchanged against the Thai baht, except those related to trades in goods and services, or repatriation of investments abroad by residents. The details of the measure and related operational procedures are summarized as follows:
1. After one year, customers whose foreign currencies have been withheld can request for refunds by submitting related evidence to prove that the funds have been in Thailand for at least one year.
2. Once financial institutions have examined and certified the one-year minimum stay period, they shall inform the BOT to return the funds, through them, to their customers.
3. Should any customers wish to repatriate their funds earlier than one year, they would be refunded only two-thirds of the amount.
4. Foreign exchange transactions which have been traded prior to 19 December 2006 are exempt from this reserve requirement.
5. Foreign direct investments or unrequited transfers would initially be subject to the reserve requirement but shall be refunded upon submission of supporting evidence through financial institutions. Once financial institutions have examined and certified the legitimacy of such claims and the BOT deems it appropriate, the BOT shall promptly return the full amount.
6. Financial institutions shall remit the required reserves, in the form of foreign currencies, to the BOT on the 7th of the subsequent month.
7. The earnings received from this measure would be earmarked for public benefits.
In order to regulate foreign short-term capital inflows, several countries have imposed reserve requirements on such inflows during critical times. The BOT views that the present situation warrants the introduction of such measure to prevent speculative pressure on the Thai baht. The BOT will closely monitor and assess the impact of this measure.
Bank of Thailand
18 December 2006
For more details : Kleddao Sungnet E-mail : KleddaoS@bot.or.th Tel : +66 (0) 2356 7345
just called my bank lady, she laughed and said: no panic.
initially you get 70 percent in cash.
upon submitting passport-copy, contract-copy and a "to whom it may concern"-letter to the BOT they transfer the remaining 30 percent within 3 days.
so, after the initial panic, all should be fine, keep on buying these properties.
initially you get 70 percent in cash.
upon submitting passport-copy, contract-copy and a "to whom it may concern"-letter to the BOT they transfer the remaining 30 percent within 3 days.
so, after the initial panic, all should be fine, keep on buying these properties.
JW, in true Thai fashion everything is as clear as mud. It should though be worked out over time what can and cant be done, but for the moment the bank is going to keep 30% of whatever is remitted into Thailand and its then up to you to persuade them to give it to you back.
I need to get some money into the country by the end of Feb to pay for some things and I'm now waiting for as long as possible to see how it works out. It is for example not clear if the 30% withholding applies if you buy baht here in England and then send this over.
I'll go see BKK Bank in London in the New Year and see how things are.
Jim
I need to get some money into the country by the end of Feb to pay for some things and I'm now waiting for as long as possible to see how it works out. It is for example not clear if the 30% withholding applies if you buy baht here in England and then send this over.
I'll go see BKK Bank in London in the New Year and see how things are.
Jim
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Surprisingly, the Baht against the UK pound has remained more or less static throughout the year. The year started at 70 baht to the pound and is now 69 to the pound. The US dollar on the other hand has plummeted from 41 baht to the dollar to 35 baht to the dollar. As I see it, the baht isn't really that strong against world currencies, its just the US dollar is so weak. It also seems financial analysts in Thailand relate the baht only to the US dollar, thereby saying the baht is strong is technically not correct -indeed its really the US dollar that's weak.