THAILAND

Source: IMF, International Financial Statistics, June 2021.

• The Thai central bank is the Bank of Thailand (BOT - www.bot.or.th).

Bank supervision

• Thai banks are supervised by the BOT.

• Few lifting fees are applied because of the difficulties of making payments between resident and non-resident bank accounts.

• Credit transfers are used by companies to pay salaries and suppliers, and for treasury payments.
• High-value and urgent domestic THB-denominated credit transfers are settled in real time via BAHTNET.
• Low-value, non-urgent THB-denominated credit transfers are settled on a same-day/next day basis via the BPS.
• In 2020, 464,202 direct credit transactions were processed via the direct credit subsystem of the BPS (326,888 in 2019), with a value of THB 21,644 billion (THB 20,820 billion in 2019). In the same period 96,564 thousand transactions (60,484 in 2019) were processed via the SMART Credit service, with a value of THB 4,258 billion (THB 3,463 billion in 2019).
• High and low-value transfers can be processed via PromptPay (up to THB 2 million per transaction) in real time via BATHNET. PromptPay
  • enables payments to be made by individuals and companies online or via mobile using mobile or ID numbers. There are 29 bank participants in PromptPay.
• In the 12 months between February 2019 and February 2020, the volume of PromptPay transactions more than doubled from 308,343.43 thousand to 624,787.89 thousand. Value increased from THB 1,416.5 billion to THB 2,251 billion.
• Cross-border transfers can be made through BAHTNET via SWIFT. PromptPay is lined with PayNow in Singapore to enable cross-border transactions to be made.
• The BOT is currently implementing ISO 20022 international message standard in BAHTNET, to facilitate interoperability with important payment infrastructures and to support both domestic and cross-border payment transactions.

• Direct debits are used for regular payments, such as utility bills.
• High-value direct debits are settled via BAHTNET.
• Low-value direct debits are settled on a next-day basis via the BPS Debit Next Day service.
• In 2020, THB 7,429 billion of direct debits were processed via the BPS.

• The cheque is a common cashless payment instrument used by both consumers and small companies. Its use is in slow decline however, as electronic payment methods become more popular.
• In 2020, the total volume of interbank cleared cheques was 47.72 million, with the total value of THB 27.65 trillion, a 16.95% fall on 2019. Value fell 18.44%.
• All cheques are truncated into electronic items before being settled on a next-day basis via ICAS.

• Card payments are increasingly popular, especially for retail transactions.
• There were approximately 64,305,201 debit and 24,626,610 million credit cards in circulation in February 2021. There were also 10,656,842 million ATM cards.
• In 2020, 710,264 thousand credit card transactions were processed (648,801 thousand in 2019). Credit card payments totalled THB 1,309 billion in 2020 (THB 1,882 billion in 2019). In the same period, 2,135,853 thousand debit card transactions (166,821 thousand in 2019) were processed. Direct debit card transactions totalled THB 7,956 billion (THB 253 billion in 2019).
• Visa and Mastercard-branded payment cards are the most widely issued.
• American Express and Diners Club credit cards are also available.
• Visa and MasterCard card payments are cleared and settled by their respective international card schemes.
• Debit card payments are settled via the National ITMX switching system.
• The Thai Payment Network (TPN), in partnership with UnionPay International and Bangkok Bank, operates a local-card network for processing electronic payments.

• There are approximately 113 ATMs per 100,000 adults in Thailand.
• There were approximately 890,764 EFTPOS terminals in Thailand at the end of February 2021.
• Most ATM payments are settled via the National ITMX (14 bank participants),  which connects to the international ASEANPay network.
• Internationally branded cards can be settled via their individual schemes.

• The dominant electronic money schemes in Thailand are low-value, stored value cards.
• There were 111.2 million stored value e-money cards in Thailand at the end of February 2021.
• Payments are settled via individual schemes.
• Mobile wallet schemes have been widely adopted. Leading e-wallets include TrueMoney, Line Pay and AirPay.
• In 2019, MyPromptQR was launched. Thai QR is the country’s standardised QR code.
• E-money transactions totalled THB 29,042.79 million in 2020
  (THB 282 billion in 2019 ).

• BNP Paribas' Global Trade Solutions (GTS) team in Thailand offers dedicated trade finance support with two senior trade managers. The local GTS team provides corporate clients with high-quality services from sales process through to documentation and daily operations. It offers traditional trade finance and supply chain management solutions in line with the needs of corporations headquartered in, or operating in Thailand, in compliance with local regulations.

• Thailand has signed free trade agreements (FTAs) with Bahrain, Australia, Chile, China, Peru and South Korea and economic partnership agreements with Japan and New Zealand.
• Thailand has a preferential trading arrangement with Laos.
• Thailand has agreed in principle an FTA with Bangladesh.
• Thailand is a signatory of the Regional Comprehensive Economic Partnership (RECP). The country ratified the agreement in February 2021.
• ASEAN has signed FTAs with Australia, China, Hong Kong, Japan, India, New Zealand and South Korea.
• Thailand is in FTA negotiations with a number of states, including EFTA and the EU, India, Pakistan, Sri Lanka, Turkey and the USA.

Source: IMF, International Financial Statistics, June 2021.

• Licences are not required for most imports.
• The Ministry of Commerce issues licences for controlled or restricted goods.
• The Food and Drug Administration issues licenses for certain food and pharmaceutical products.

• Tariffs are generally set at an ad valorem rate.
• In some instances, non-ad valorem specific rates, duty free rates or alternate duty rates are placed on imports.

• None

• None.

• Prohibited imports are published on a negative list.
• Thailand prohibits the import of certain items in order to protect fauna and flora, for health and safety or moral reasons, and/or for national security.

• Licences are required when exporting rubber rice, sugar, tinned tuna, coal, charcoal and textile products.

• Tariffs are generally set at an ad valorem rate.
• In some instances, non-ad valorem specific rates, duty free rates or alternate duty rates are placed on exports.

• None

• Export-Import Bank of Thailand (EXIM Thailand), Thailand’s national export credit agency, provides state-supported export credit insurance and financing.
• Export credit insurance and financing are also available privately from domestic and commercial banks.

• Prohibited exports are published on a negative list.

• Exchange controls are administered by the BOT.
• The BOT is in the process of relaxing foreign exchange regulations under the Foreign Exchange regulation Reform.
• The threshold for proceeds from abroad that do not need to be repatriated has been raised to USD 1 million (previously USD 200,000). Any person receiving foreign currencies from abroad in an amount equivalent to USD 1 million or above is required to repatriate such funds immediately and sell to an authorized bank or deposit them in a foreign currency account with an authorized bank within 360 days of receipt.
• Liquidity provided by financial institutions to non-residents without an underlying trade or investment is limited to THB 200 million. Borrowing from non-residents is limited to THB 10 million.
• A Thai company is allowed to lend to non-affiliated business entities abroad without any limit.
• Non-residents require approval from the BOT, the Ministry of Finance and the Securities Exchange Commission to issue or sell securities and money market instruments in Thailand.
• The central banks of Thailand and Malaysia launched the operation of a local-currency settlement framework for the settlement of MYR (Malaysian ringgit) and THB in 2016. The bilateral framework makes the process of obtaining THB in Malaysia and MYR in Thailand to settle import/export trade accounts much more efficient. The framework also covers THB.

• Thailand has no specific rules for the taxation of financial instruments. The tax treatment is based on general principles as articulated in the Thai Revenue Code, which are clarified in private tax rulings and court decisions.

• Whilst there are no specific rules for the taxation of interest and financing costs (e.g. thin capitalisation), they should in principle be determined by reference to market values.

• The Revenue Code Amendment Act No. 50 B.E. 2562 provides additional exchange rates that may be used by a company.
• The exchange rates (effective on or after 1 January 2019) that may be used are:
• The average buying rate or average selling rate of commercial banks as calculated by the BOT.
• The average of the buying and selling rates of commercial banks as calculated by the BOT.

• Advance private rulings are available at the request of the taxpayer. The status of a private tax ruling in Thailand is not legally binding on the Thailand Revenue Department. There are several past tax rulings that are available for reference on the website of the Thai Revenue Department (www.rd.go.th).
• Advance pricing agreements (APAs) are available under the transfer pricing regime.

• Capital gains are subject to the normal corporate income tax rate, with no restrictions on the use of capital losses to offset net taxable profits.

1. Interest paid to a non-resident company is subject to a 15% withholding tax unless the rate is reduced under a tax treaty

A 1% advance withholding tax applies to interest payments made by a corporation to a corporation carrying on business in Thailand, or by a corporation to a financial institution for interest on debentures or bonds, except for interest on deposits or negotiable instruments paid between a bank or finance company.

2. Dividends paid to another Thai company are subject to a 10% withholding tax, or are exempt if certain conditions are satisfied. Dividends paid to a non-resident company are subject to a 10% withholding tax. The withholding tax rate on dividends paid to a non-resident may be reduced under a tax treaty.

3. Royalties paid to another Thai company are subject to a 3% advance withholding tax, which may be credited against the final corporate income tax due for the accounting period. Royalties paid to a non-resident are subject to a 15% final withholding tax, unless the rate is reduced under a tax treaty.

4. Technical service fees paid to another Thai company are subject to a 3% advance withholding tax, which is used as a credit against the final corporate income tax due for the accounting period. Technical service fees treated as royalties and paid to a non-resident are subject to a 15% final withholding tax, unless the rate is reduced under a tax treaty.

5. A 10% branch remittance tax is imposed on after-tax profits paid or deemed paid to a head office.

• Thailand has concluded 61 income tax treaties.

• There are no specific tax rules in relation to thin capitalisation.

• Under the transfer pricing regime, taxpayers must declare in their annual corporate tax return whether revenue and expense transactions are based on market prices, and the tax authorities may adjust income to reflect a market price.
• Advance pricing agreements may be obtained and, while transfer pricing documentation is not formally required to be maintained, there is an assumption (based on filing requirements and directives to revenue officers) that documentation should be available by the corporate income tax return filing date. A taxpayer may initiate an adjustment (up or down) if there is adequate documentation to substantiate the adjustment.

• Normally, the transfer of shares, debentures, bonds and certificates of indebtedness is subject to stamp duty at a rate of 0.1% on the greater of the value of the paid-up registered shares or the value as defined in the instrument, unless an exemption is applicable, and 0.05% (capped at THB 10,000) on loan agreements.

• There are no specific tax rules for cash pooling arrangements.

• Apart from VAT or SBT, no specific financial transactions and/or service taxes apply to services, loans, money transfers, and letters of credit.

All tax information supplied by Deloitte Touche Tohmatsu and Deloitte Highlight 2021 (www.deloitte.com).