Thailand Money Matters: An In-Depth Guide for Expats

I remember opening my first bank account in Thailand. A kind, middle-aged bank teller handled the application. My secretary was along to help translate. Halfway through the process, the teller turned to my secretary and asked, “Does he have a girlfriend?”

Maybe I was lucky that I didn’t, because that account setup seemed to go a lot smoother than anticipated; however, not all my dealings with Thai banks went that well. From being unable to cash foreign currency checks to getting rejected repeatedly by credit card companies, for me, financial matters in Thailand had quite the learning curve.

Now, some ten years since the initial bank teller encounter, I’ve decided to write down my own experience to help you skip that same learning curve. The result is this reference guide for Thailand-based expats to help you in exchanging, sending, receiving, saving and investing money. Please note that I’m no financial advisor or tax professional, so please treat this information accordingly and consult a professional if you seek advice specific to your individual situation.

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Currency Exchange: How to Get the Best Rate for Thai Baht

There are so many ways to exchange your local currencies to Thai Baht. Options range from cash exchange offices to Bitcoin operators. But who offers the most competitive rate? You can check out my article on how to get the best currency exchange rate in Thailand.

Transfers: Sending Money to (and from) Thailand

Transferring money in to Thailand is a whole topic of its own. I’ve put together a separate guide to sending money to Thailand to showcase the cheapest and fastest way of doing it. While most people think of bank transfers first, in many cases it’s not the cheapest option.

Transferring money out of Thailand works similar, so check out the guide above for some more details on that. There is however one thing to be aware of – transfer restrictions when remitting funds from Thailand abroad: Banks usually only permit people to transfer the equivalent of one year’s salary out of the country. You have to apply for permission to make a transfer abroad and state the reason (e.g. savings, paying for studies abroad, supporting your family), though I’ve never seen anyone ask for proof. Keep this in mind if you consider bringing large amounts of cash into (and out of) the country. The rules will also differ depending on the bank.

Banks: Opening a Thai Bank Account

Banks in Thailand work tend to operate a bit different from what you’re used to back home. Different branches (even of the same bank) tend to enforce their own approval procedures and document requirements.  You might need a long list of documents in order to pick up a credit card at one branch, while another may just hand it over after seeing your THB 200 Thai driver license.

I’ve put together a guide on opening a bank account in Thailand that’ll help in navigating things when it comes to financial matters. It also covers other banking basics in Thailand including debit cards.

Credit Cards: Loyalty Points and Applying as an Expat

You can get by in Thailand without a credit or a debit card. You might end up having to pay bills and tickets at the 7/11 or through online banking, but very few things require a credit card. That being said, cards are widely accepted – from supermarkets to restaurants – and using a local card can save you the foreign currency surcharge. In addition, cash back rewards can even give you on the spot discounts of up to 20%. Since those offers are usually dependent on having a card from a specific local bank, a lot of Thais carry a whole stack of cards with them in order to make sure they have one that qualifies for the best discount. I wrote a separate article purely focusing on Thai credit cards for foreigners. It covers the whole application process, required documents, best loyalty program, as well as potential alternatives.

Checks: How to Cash Domestic and International Checks

Checks are still pretty common in Thailand, though bank transfers are slowly replacing them. The most common transactions that use checks are salary and rent payments. One of the more beneficial uses of checks is to make international transfers: in the past I’ve cashed THB checks into bank accounts in Germany. The advantage of that method is that the German bank converts THB to EUR rather than the Thai bank (as is the case with a wire transfer). This results in a slightly better exchange rate in my experience. However, it can take several weeks for the checks to clear and unlike a wire transfer, you won’t know which exchange rate it’s going to be.

Foreign currency checks are a different animal. The first time I tried to cash a USD check with Bangkok Bank, they told me that this option is not available for accounts that were opened less than 6 months ago. I ended up cashing it at a Kasikorn Bank branch (‘Rachadaphisek-Huay Khwang‘). Like everywhere else, it still takes six weeks to get a foreign currency check credited, but at least you can do so immediately after opening an account.

My experience with checks is mostly based on business accounts. I never tried this with a personal account, so I’m not sure what the situation is there and how things have changed since I first tried this several years ago. If you have any experience with this recently, please leave a comment below.

One of the big pros of using checks is that the fees can be lower than for SWIFT transfers. In many cases, you can cash a check for as little as THB 300, making it significantly cheaper than wire transfers if you don’t mind the wait.

Stocks: How to Open a Brokerage Account

If you want to invest money in Thailand, there are some good reasons to go with a brokerage account: there are no capital gains tax on profits from buying and selling shares listed on the SET and dividends can be taxed at a flat rate of 10%. Brokerage fees tend to be very low; Siam Commercial Bank, for example, only charges a transaction fee of 0.25% (with a minimum of THB 100).

You can open a brokerage account without being a resident, but you’ll have to do it in person. In terms of paperwork, it’s one of the most arduous procedures in this article: the ‘standard’ contract by SCB to open an online brokerage account is thirteen pages long.

Similar to online banking in Thailand, the user interface is a bit clunky (see the above example from Siam Commercial Bank), but it gets the job done. Even though it’s SCB, it often seems to be a bit of a smaller scale operation, but in a good way: if you reply to their investor e-mail newsletter with a customer service issue, an actual person will reply to you within a few hours.

For a more detailed guide to dealing with brokers in Thailand, you can read up on Paul Renaud’s advice at thaistocks.com. If you invest significant amounts, it pays to read up on this, especially if you specifically bring funds into Thailand in order to do so.

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Taxes: Incentives for Savings and Investments

The Thai government offers a number of tax incentives for savings and investments that can be beneficial – especially so if you’re working in Thailand. Two of the most common investments that receive preferential tax treatment are LTFs and RMFs. Law Alliance, one of the most well-respected tax law firms in the country, did a very good write-up on the tax risks associated with LTFs and RMFs. I recommend you take a good look at that before putting your money into them.

At this point, I really want to repeat that I’m not an accountant or a tax professional. If you decide to get serious about investments, please do your own research or contact a professional for advice. While I’ve done my best to ensure the accuracy (including running it past my own accountant), I can’t guarantee that it’s accurate and you’ll have to use the information at your discretion and without any guarantees. There are some serious tax risks associated with this, so please research things with caution and if in doubt, consult a tax professional.

Long-Term Equity Funds (LTFs)

LTFs are the most popular tax incentivised savings option for the working population of Thailand. In essence, you can put up to 15% (up to a maximum of THB 500,000) of your yearly income into one of these funds and exclude that amount from your income when calculating taxes. The higher your marginal tax rate is, the more interesting this becomes.

There are a number of downsides to this though. You’ll need to keep it invested for at least five years before you can withdraw it without a penalty. If you withdraw before then, you can face severe tax penalties that consist of the originally owed amount plus 1.5% interest per month (that’s a yearly rate of 19.6%!) since the time you originally would have owed the taxes.

More importantly, the long-term equity funds that are eligible for tax savings tend to have a slightly higher management fee, which will eat up part of your tax savings. Since the tax savings only applies in the first year but the management fee applies in all years, I expect to see roughly 50% of my tax savings disappear in the pockets of the bank. Depending on the LTF, the additional fees of the bank can even surpass the tax savings, essentially resulting in additional costs rather than savings.

As a rule of thumb, I only buy an LTF if the management fee is below 1% and my marginal tax rate in that year is at least 20%. Anything worse than that and the tax savings go to the bank. In addition, I make sure to sell it after five years and invest in something with a lower management fee instead.

The LTF with the lowest management fee I have found so far, and the one I buy every year, is Krungsri’s KFLTF50. It’s the closest thing to an ETF for the SET50 I was able to find that was still eligible for tax savings. The overall expenses are at 0.71625% and thus a bit higher than if you went with a non-tax incentivised ETF (e.g. TDEX at 0.485%). Another very convenient reason to go with Krungsri is that if you apply via Krungsri Asset Management, you manage your investments online. Communicating with their English-proficient staff by e-mail is a breeze and they even send a messenger to pick up the application documents. Definitely one of my most hassle-free banking experiences in Thailand.

Retirement Mutual Funds (RMFs)

There are some similarities between RMFs and LTFs: each allows you to invest up to 15% (not more than THB 500,000) of your yearly income while still receiving tax incentives. The main difference is that with an RMF, you’ll have to keep paying in until you are at least 55 years old in order to keep the tax benefits. That makes it immensely inconvenient, especially for younger expats who might only be in the country for a limited number of years. In addition to that, the management costs are going to eat up not only your tax savings, but also your gains beyond that. Then there’s also a significant tax risk associated with it, due to the likelihood of making a mistake over the course of its duration.

Personally, I don’t bother with RMFs at all, but there are situations in which the tax savings could make up for the restrictions and the investment risk. If you are in the top tax bracket and either certain you’ll stay in Thailand permanently or are older than 45 years old, RMFs get really interesting: the potential tax savings are much more significant and keeping up payments in the future will be less of a hassle and risk.

The Stock Market

At the time of writing, one of the biggest Thai tax incentives for private individuals is the lack of a capital gains tax on profits made from buying and selling shares listed on the Stock Exchange of Thailand. This only applies to the difference between the purchasing and selling price. Dividends still get taxed at a rate of 10% or whatever your personal taxation rate is (talk to an accountant about what works out better for you).

As to how to go about opening a trading account, please see the brokerage account section above.

Disclaimer

I hope this article helps you with your own financial decisions. Please note that I’m no financial advisor and this only reflects my personal experience. I did my best to ensure all data is correct and up to date, but I can’t provide any guarantees. If you find any mistakes, please drop me a line. For advice applicable to your individual situation, please consult a professional. Unfortunately, I don’t know anyone in the industry I feel comfortable recommending, so this is really just me covering my own behind 🙂

Questions?

If you have any questions about anything related to money and Thailand, please leave a comment below and I’ll do my best to help you out or find someone who can.