14. Exchange Control General Importing and Repatriating Personal Funds

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1 14. Exchange Control 14.1 General The BOT administers Thailand s system of exchange control on behalf of the Ministry of Finance. The BOT has delegated authority to agents, including all commercial banks located in Thailand, to approve many commercial transactions. However, some transactions still require the direct approval of the BOT. While permission is discretionary, approvals are normally granted if reasonable grounds are given for remittance and the proper procedures are followed. In all matters involving foreign currency, currency inflows must be properly recorded, and contracts and other legal papers adequately documented. The government implemented three rounds of foreign exchange deregulation, which took effect on 22 May 1990, 1 April 1991, and 1 May The deregulations were intended to make funds for international business transactions freely available and remove the requirement for prior BOT approval. In general, most foreign currency exchange transactions may be processed through commercial banks Importing and Repatriating Personal Funds Foreigners in Transit There is no limit on the amount of foreign currency a foreigner (i.e. a non-thai resident) in transit may bring into or take out of Thailand. However, remittance of baht out of Thailand is not permitted, except for certain cases. For example, remittance of up to Baht 500,000 to neighboring countries, including Vietnam and Malaysia. Baker & McKenzie 105

2 Residents Residents may bring an unlimited amount of foreign currency into Thailand, but must sell it to a commercial bank and convert it into baht or deposit it in a foreign currency deposit (FCD) account opened with a commercial bank, within 360 days from the date of arrival. Commercial banks are able to sell foreign currency, subject to certain limitations and under certain conditions. In doing so, the bank must inquire as to the reason for any foreign currency purchase. Transactions involving the purchase of immovable property or securities abroad require the permission of the BOT, except for purchases of immovable property in an amount not exceeding US$5,000,000 per year or foreign direct investment (i.e. purchasing at least 10% of shares in an offshore company) in an amount not exceeding US$100,000,000 per year, subject to certain conditions. Certain types of institutional investors are also permitted to make offshore investment in securities issued and offered offshore by offshore issuers of up to US$50,000,000 or any other offshore investment quota granted by their supervising authority Exchange Controls on Trading Imports Most payments for imports can be approved by commercial banks. The banks require that documents such as invoices, bills of collection, and, where appropriate, import permits, be submitted to ensure that the transaction is bona fide before approving the payments. Importers may make payments by either withdrawing the foreign currency from their own FCD accounts at commercial banks or by purchasing foreign currency from commercial banks, in an amount not exceeding the value of the goods imported. 106 Baker & McKenzie

3 Exports Exports are free from exchange restrictions. However, export proceeds above a certain value must be obtained within 360 days from the date of export. Once they are obtained, the Thai resident is required to immediately repatriate the export proceeds and then convert them into baht with a commercial bank in Thailand, or deposit them into an FCD account opened with a commercial bank in Thailand, within 360 days from the date of repatriation Foreign Currency Deposit Accounts FCD accounts may be opened by residents and non-residents at commercial banks. Non-residents include branches or agents abroad of companies incorporated in/individuals residing in Thailand, but not branches or agents in Thailand of companies incorporated/individuals residing abroad. The foreign currency deposited in an FCD account must be funds received from offshore or funds bought, converted, or borrowed by the resident from a commercial bank in Thailand. In the case of funds received onshore, at the end of any day, the total amount of funds deposited in the FCD account must not exceed US$1,000,000 for an individual depositor or US$100,000,000 for a juristic person depositor Non-resident Baht Accounts and Non-resident Baht Accounts for Securities A non-resident may open a non-resident baht account, of which there are two primary types: Non-resident Baht Accounts and Non-resident Baht Accounts for Securities. In general, commercial banks can receive baht into Non-resident Baht Accounts (NRBAs) if, among others, such funds (i) represent the exchange value of remitted foreign currency; (ii) are transferred from another NRBA; (iii) are received as payment for goods; or (iv) represent baht converted from foreign Baker & McKenzie 107

4 currency withdrawn from the FCD account of a non-resident. Withdrawals of baht from an NRBA can be made for various purposes, subject to certain exemptions, e.g. investment in securities or derivatives. In addition to NRBAs, non-residents may also open Non-resident Baht Accounts for Securities (NRBS). The deposit and withdrawal of baht into/from this kind of account is limited to certain purposes only. Commercial banks can receive baht into an NRBS if, among others, the funds (i) represent the exchange value of remitted foreign currency or baht converted from foreign currency withdrawn from the FCD account of a non-resident; (ii) are transferred from another NRBS; or (iii) are received as a return on investment in securities and derivatives. The withdrawals must be made, among others, for investing in securities or derivatives. Please note that the transfer of funds from an NRBA to an NRBS, and vice versa, is not permissible Importing and Exporting Investment Funds Importing Investment Funds Remittance of funds into Thailand for investment and foreign loans is freely permitted. However, if the amount of foreign exchange inflows is US$20,000 or equivalent, a Foreign Exchange Transaction Form must be submitted to the commercial bank. Thai residents are required to either convert the foreign currency inflows into baht or deposit such foreign currency inflows into an FCD account opened with a commercial bank in Thailand, within 360 days of the date of inward remittance Exporting Investment Funds Repatriation of investment funds, dividends, and profits may be freely made by submitting the relevant documentation to a commercial bank. If the amount to be remitted is US$20,000 or more, a Foreign 108 Baker & McKenzie

5 Exchange Transaction Form must be submitted to the commercial bank receiving such amount for and on behalf of the Thai resident. The remittance of offshore loans into Thailand is not subject to any restrictions, and principal and interest repayments can be made simply by purchasing foreign currency at any commercial bank. Commercial banks are authorized to approve such requests if the onshore borrower can present evidence of repatriation of the loan proceeds when presenting the Foreign Exchange Transaction Form. Certain cases require prior approval from the BOT, which can be sought by submitting a letter requesting approval, along with relevant documents, through a commercial bank. Commercial banks may also grant approval for remittances for payments under sale and purchase agreements, hire of work or service agreements, and franchise and license agreements. However, if the amount to be remitted is US$20,000 or more, a Foreign Exchange Transaction form must be submitted to the commercial bank. Securities, promissory notes, and bills of exchange may be sent abroad without restriction. Dividend payments to foreign shareholders may be processed and authorized by commercial banks without limit, provided that the required supporting documents are submitted to the satisfaction of the remittance bank. In addition, commercial banks may also authorize the outward remittance of branch office profits to an offshore head office and the return of capital upon terminating a business, provided that supporting documentation is provided Exchange Control and Promoted Businesses Under the Investment Promotion Act, foreign investments in promoted industries are accorded incentives and privileges, including guarantees on the repatriation of profits, dividends, interest, and imported capital. A promoted individual or an investor in a promoted activity can be granted permission to remit or take out foreign currency relating to the return of capital and payments under loans and other contracts. Baker & McKenzie 109