Capital Inflow Tax

[monty]

I think the banks will have a bit leeway in implementing this rule.

Thais are pretty good at a lateral thinking when regulations come into place (unfortunatley pretty much the only time they get creative)!

I'd reckon if you specify that the money of your incoming transfer is destined for aquiring a condo (as required to obtain the TT3, or proof of foreign remmitance as it's currently called) Then the bank would waive the 30% rule.

It would be quite impossible to sell a 10 million Baht condo if one has to bring in 14.3 million!!!

And who is to check you actually spent the money on a condo after you got it out of the banks claws..

[stoneman]

I do not think the Thai govt is concerned about my retirement checks that are sent to my BKK Bank acct every month...The way I read it is that in November, there was an average of $300 million(US) coming into the country every week...a lot of it for short time use in currency speculation...This concerned the exporters and drove the baht to 35.10 at one point. The first week in Dec saw $950 mill(US) come into Thailand...This shows that the speculators are attacking the currency and they implemented the new regulations...

10,000 baht to your wife/GF has no effect on the currency nor does the Thai govt have an interest in stopping that..

[johnh101]

I just wish someone could clarify exactly what this means!

[cclub75]

Is it a mistake ? !

The SET drops 10 % on opening !

www.settrade.com

Ah ah ah, the guys at the BOT are going to have a very spicy lunch today...

What a bunch of jerks.

My bet : this afternoon, they will issue a statement : "oops sorry, mai pen rai, we have decided to remove the 30 % reserve on capital inflow that was announced yesterday. We promise we won't do it again".

And then tomorrow : back to basic : the THB will be up.

[Meerkat]

Is it a mistake ? !

The SET drops 10 % on opening !

www.settrade.com

Ah ah ah, the guys at the BOT are going to have a very spicy lunch today...

What a bunch of jerks.

My bet : this afternoon, they will issue a statement : "oops sorry, mai pen rai, we have decided to remove the 30 % reserve on capital inflow that was announced yesterday. We promise we won't do it again".

And then tomorrow : back to basic : the THB will be up.

Indeed, and as a mate who trades THB has pointed out, the currency is only off a couple of percent - hardly enough to prompt a sudden huge competitive leap for Thai exporters. The problem with knee-jerk policy like this, however, is that face precludes an early reversal.

[pnustedt]

the currency is only off a couple of percent - hardly enough to prompt a sudden huge competitive leap for Thai exporters. The problem with knee-jerk policy like this, however, is that face precludes an early reversal.

The efffect on the Baht is likely to be felt longer term. Investers with money already here are unlikely to withdraw immediately as they would face punitive measures if they tried to get it back into Thailand.

The problem is going to be one of credibility. If the BOT can do this to international investors what else can they do? What other countries may wish to take similar action, e.g. S Korea? This action could have repurcussions for the entire region.

'97 here we go again!

[taxexile]

dollar still falling against the baht today.

[cclub75]

dollar still falling against the baht today.

This is tasty.

So to sum' up' the brillant move of BOT :

-speculators are laughing

-and all other foreign investors, especially on the stock market, are : (1) angry or (2) scared !

Brillant.

Add some visas circus, Foreign Business Law circus, land ownership circus... A zest of political instability (not to say a great uncertainty). And you get the perfect Thai Cake : very difficult to eat. And to digest.

[monty]

Not going very good. Started the day at 10% down, recuperated a bit (probably people short cashing in and laughing all the way to the bank), recuperated again and is now steady going down...

Looks like the biggest comapnies getting hit the hardest as well since the loss at the set50 is even bigger...

Oops, just noticed, no change the last few minutes so even looks like they halted trading. What a certified mess...

[Asia4ever]

I had intended to bring in the dollar equivalent of 800,000 Bt for retirement purposes, but maybe now better to do a wire transfer from USA bank in THB instead of dollars.

Does anyone know if you take a beating converting USD to THB in USA, before transferring funds to Thailand?

[Meerkat]

Not going very good. Started the day at 10% down, recuperated a bit (probably people short cashing in and laughing all the way to the bank), recuperated again and is now steady going down...

Looks like the biggest comapnies getting hit the hardest as well since the loss at the set50 is even bigger...

Oops, just noticed, no change the last few minutes so even looks like they halted trading. What a certified mess...

Yup - there are circuit-breaker rules on the SET, as in many markets globally. 30mins for 10% and an hour for 20% IIRC.

[Meerkat]

I had intended to bring in the dollar equivalent of 800,000 Bt for retirement purposes, but maybe now better to do a wire transfer from USA bank in THB instead of dollars.

Does anyone know if you take a beating converting USD to THB in USA, before transferring funds to Thailand?

Send it in two lumps - transactions under USD 20k are exempt from the new rule. If the BOT gets this right, your FX gains from the weakening THB should offset your extra transaction charge.

[Jai Dee]

See also this topic.

The SET did indeed stop trading.

[danone]

please no ranting and possibly no speculation in this topic.

but why such a low limit of 20'000 $ for the witholding tax?

speculators are transferring millions - whom the BOT has in target?

meaning: you even have to show up with 30 percent more cash to buy property?

[dyertribe]

Don't believe everything you read in a newspaper. Don't worry, they're not taking anything out of your money transfers. Do you guys worry about the world spinning slower too?

So you mean that BOT just posted this on their website just for fun?

http://www.bot.or.th/bothomepage/General/P.../Eng/n5149e.htm

I think a wise idea is to get a definition of Captial Inflow

http://www-personal.umich.edu/~alandear/glossary/c.html

Seems to me that this is directly relating to the purchase of Thai Assets and or currency.

The US$20,000 sounds as if it covers most situations for most people, if it doesn't cover you, ask someone from a financial institution what does apply?

Cheers Guys

[MatPayne]

so what implications is there to me sending 10000 baht for my girlfriend to pay for her room and living.

Good question!

[363885]

Looks like I'm hitting some bad luck here!!!!

I'm not in Thailand now, but will arrive this coming Friday. On Monday (yesterday), I wired $45,000 into my Bangkok bank account (it generally takes 1-2 business days for the wire transfer to come through) in order to decorate and furnish my new condo. The news of the new regulation was announce late yesterday.

Can anyone clarify the following?

1. Will the fund I transferred be subject to withholding, or would utilizing the fund to decorate my condo (buying goods & services) enough for a waiver since the money will never go out of Thailand?

2. If not subject to withholding, does anyone know what I need to do to prove it to the bank?

3. If subject to withholding, does anyone know whether the 30% withholding rule applies to the entire $45K, or to the amount that is above $20K (i.e. the $25K)?

Thanks for any clarification.

[h90]

Phew, the BOT website was more clear than the nation article.

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.

http://www.bot.or.th/bothomepage/General/P.../Eng/n5149e.htm

Of course, that raises the question: if you withdraw THB with a foreign Visa/MC/Amex, will the ATM only spit out 70% of the amount withdrawn?

the 30 %: come again next year than you get it

[alexth]

I can't belive what's happening. This is a robbery in progress case and if not the most stupid things I've ever seen a govt. doing. I'm starting to miss Taksin already...

[AsiaCheese]

I had intended to bring in the dollar equivalent of 800,000 Bt for retirement purposes, but maybe now better to do a wire transfer from USA bank in THB instead of dollars.

Does anyone know if you take a beating converting USD to THB in USA, before transferring funds to Thailand?

Check with the bank at the [respective] transfer country; in my country [switzerland], there exists no "normal" exchange rate against THB -- there are two levels of exchange rates: those with a "convention" exchange rate (like: CHF-USD) and those with "exotic" countries, i.e. little trade/daily fund movements. Trying to exchange CHF-THB leaves the Swiss bank with an ever fatter wallet and you with a 10% or so loss against exchange rates as quoted in Thailand...!

[cclub75]

I can't belive what's happening. This is a robbery in progress case and if not the most stupid things I've ever seen a govt. doing. I'm starting to miss Taksin already...

I doubt it's robbery. It's just the acts of people who :

-are incompetent

-have not a clue of how things are working

-and beyond, people who are disconnected from reality, because they were raised within thai high society.

It's the old guard, for whom Thailand is really the center of universe. They have missed the copernic revolution that occured a few hundred years ago !

At home, you are served like a king. People obey, not because you are brillant, or wealthy (it helps however), but just because you... are.

Now, take such a mind, and put it among modern world affairs, where economics matters are truely interconnected... What could be the result ?

They wanted to beat the "currency speculators" in 1997. They were blasted.

Today, they want to do it again...

At that point, it's easy to guess the outcome...

Anyway, the trading session is not over... Europe is awakening. We could have a kind of technical recovery at the end of the day. But tomorrow will be dangerous, when asian, european and US investors will be fully aware, and will be amazed by future statements that BOT and finance minister are going to deliver... And when they will understand that no one within thai government know what to do...

[alexth]

Are we witnessing here the creation of a new North Korea or Burma? This is what I'm thinking when I see those measures

[cathyy]

I had intended to bring in the dollar equivalent of 800,000 Bt for retirement purposes, but maybe now better to do a wire transfer from USA bank in THB instead of dollars.

Does anyone know if you take a beating converting USD to THB in USA, before transferring funds to Thailand?

It will depend on the bank. ABN Amro hit us for about 3.5 baht per dollar, exchanging at 35.5 back when the rate was 39. And that even though I specified I wanted dollars transferred, not baht.

[deminister]

Great news! Especially a good punishment for all those friendly rich bangkokians who supported the power grap of the Junta. Junta's are good in shooting, they are bad news for the well being of a country. To be continued!

in the meantime, people and businesses will move on to Vietnam and Malaysia.

[astral]

It sounds arse about face to me.

Why stop money coming in? That makes no sense at all.

Currency controls to stop money leaving, is quite another matter.

[bander]

Are we witnessing here the creation of a new North Korea or Burma? This is what I'm thinking when I see those measures

No, we are witnessing the making of a new banana republic!

[bendix]

This entire thread is riddled with over-reaction, crass generalisations and ill-informed panic.

[deminister]

Hold on, I'm a little bit slow here... does this mean that every time I transfer funds for living expenses into my Bangkok Bank account from overseas, they will withhold 30%? If so, this could easily be the straw that breaks the camel's back for all of us living here on income earned abroad.

NO it means everytime when you send more than the equivalent of 20,000 Dollars they wil withold 30% for one year. But I do not think that you are aaffected as it is investment money, destined for the SET and the bond market. However it shows the lack of knowledge of the working of capital markets. I love it! It hurts the rich who supported the junta the most. You should simply stay under 20,000 dollar at the time.

[Kaojai]

I doubt it's robbery. It's just the acts of people who :

-are incompetent

-have not a clue of how things are working

-and beyond, people who are disconnected from reality, because they were raised within thai high society.

It's the old guard, for whom Thailand is really the center of universe. They have missed the copernic revolution that occured a few hundred years ago !

At home, you are served like a king. People obey, not because you are brillant, or wealthy (it helps however), but just because you... are.

Interesting how the message writers on this board are "running around" like a bunch of decapitated chickens, while at the same time implying that it's the Thais who are irrational.

Now, take such a mind, and put it among modern world affairs, where economics matters are truely (sic)interconnected... What could be the result ?

Or put an old expat in a world he no longer understands, holding dearly to his cherished beliefs in racial superiority, and watch him babble on and on about how incompetent everyone is.

[ThomasHOL]

Don’t you just love it when generals are in power? No need for logic or understanding of the market just “protect” own interests regardless of what the cost will be to the market.

Lets hope that the market crashes before January 20 so my money will be much more worth when I visit Thailand. (I don’t really hope for this as it would properly hurt the general economy and also my wife’s family)