Chang to tax rule has left many bewildered
By: Atul Sethi
An update to the income tax regime has left many investors confused and concerned about investing abroad from Thailand. Following the change, Thai taxpayers are required to include any capital gains earned abroad in their income tax filing when funds are repatriated.
The update was made to an existing tax ruling that previously allowed investors a healthy degree of latitude in avoiding paying any taxes. The Thai Revenue Department announced the change last September, and it is now effective beginning 2024.
Many investors are unsure how to navigate the new regime. The impact will vary by individual depending on what income tax bracket the capital gains are added to, as Thailand applies progressive tax rates on income.
Some wonder whether investing abroad is worth it given this new hurdle. Investment profits earned from domestic assets are not subject to capital gains tax, and in theory are simpler to navigate. The easier option is not always the best option.
Do Not Close the Door
Limiting your investment pool to domestic assets in Thailand is foolish, and investment returns will most suffer as a result. There is enough literature and public commentary disparaging Thai investments, particularly the local stock exchange. Instead of repeating the same arguments, I will highlight the facts.
The Thailand Stock Exchange has returned 1.9 percent in the past decade. In total, not per annum. If you have capital gains by investing abroad, at least you have made profit. Many investors that have restricted themselves to Thailand have received no – or negative – returns.
Options to Invest Globally are Aplenty
There are many ways to access offshore investing from Thailand, and investors can use this to their benefit. This can be directly offshore or onshore via local financial institutions. Retail investors can transfer money into investment accounts and/or assets offshore with a license issued by the Bank of Thailand. The application process is electronic and provides an annual limit of USD 5 million for outbound transfers. Many are not aware of this.
Investing in global assets domestically is also an option. Foreign asset managers are not allowed to operate domestically, and offer foreign investment products to Thai investors. Retail investors are unable to purchase a Vanguard ETF, for example.
Foreign funds are available only via mutual funds that are ‘wrapped’ by Thai banks. You can only invest in an S&P 500 index fund by investing in a Thai bank mutual fund where the underlying holdings are invested in said index fund. These are referred to as Foreign Investment Funds (FIF).
This is not very efficient, and often investors are penalised. Often, Thai banks charge a management fee on top of what the underlying index fund charges. Investors have caught on to this, and I’ve seen more cases where Thai banks waive or charge nominal fees for these structures.
An alternative to the FIF structure is to purchase offshore assets via a Thai broker. Many offer ‘Global’ trading accounts that are tied to a foreign low-cost broker such as Interactive Brokers. Commissions are not as low as if you trade though the low- cost broker directly. The Thai broker needs to make their cut. This is a great option for investors that want to bypass the FIF products to access global investments.
The Additional Work is Worth It
Taking the extra effort to set up accounts and/or spend more time doing taxes is worth it if it means not restricting yourself to domestic investments. Decades ago, most investors did not have the luxury of accessing global investments. There was no infrastructure that supported this and as a result, home-country bias is rampant. Today, this is no longer the case.
A longer form of this article was published as a blog post on Farnam Tree’s website (www.farnamtree.com/blog). You can read the full form on the website.
Atul Sethi is the founder and CEO of, a licensed boutique investment firm based in Bangkok. Atul has over twelve years’ experience working in investment banking and as a research analyst, prior to starting Farnam Tree.
