Foreign Exchange Transaction Form
Bringing foreign currency into Thailand
The Foreign Exchange Transaction form (previously and for some still known as Thor Tor 3) is the official document prepared under BOT regulations to report foreign currency exchange transactions in Thailand and the document also proofs the remittance of foreign currency into Thailand and the exchange of foreign currency into Thai baht inside Thailand. The FET form is issued by the authorized financial institution (bank) inside Thailand that handled the exchange of foreign currency and contains at least the following information:
- the transferred amount in foreign currency,
- the transferred amount in Thai Baht,
- the name of money sender,
- the name of money receiver,
- the purpose of transferring the money
For any foreign exchange transactions (buying, selling, depositing, withdrawing foreign currencies) between financial institutions and their non-interbank customers the recipient bank inside Thailand must prepare a FET form for each remittance and exchange of foreign currency with an equivalent of USD 50,000 or more (amount increased in 2010) and report this to the Bank of Thailand.
Currency exchange and the purchase of a condominium by foreigners
One of the requirements for foreign ownership under the Thailand Condominium Act (section 19) is that a foreigner has remitted into Thailand the full purchase price of the condo in foreign currency. The handling bank in Thailand must upon request issue an official copy of the FET-form (Foreign Exchange Transaction Form) or a prepare credit note and bank letter of guarantee containing the same information as the foreign currency exchange transaction reporting form as proof of the remittance and exchange of foreign currency into Thai baht by the foreigner. These documents MUST be handed over to the land office in order to register the transfer of ownership of a condo apartment unit in the name of the foreigner. The foreign exchange transaction documents must show the foreign purchaser's name either as the sender or receiver of the money from the overseas bank. If the remittance from abroad is in Thai baht the bank will not issue a FET-form and the foreigner will not qualify for registration of foreign ownership at the land office, unless he qualifies on one of the other grounds for foreign ownership under section 19 of the Condominium Act.
Changes in Reporting Requirements of Foreign Exchange Transactions (2004)
In order to reduce the paperwork required for foreign exchange transactions (buying, selling, depositing, withdrawing foreign currencies) between financial institutions and their non-interbank customers, the Bank of Thailand has consolidated and simplified all relevant Notices into a new Notice of the Competent Officer effective from April 1, 2004 Changes are summarized as follows:
Source: Bank of Thailand
Relaxation of Regulations on Foreign Exchange Transactions (2010)
The Bank of Thailand has issued the Notice of the Competent Officer to further relax foreign exchange regulations in order to increase the flexibility of Thai businesses in managing their foreign exchange risks. The main issues are summarized as follows:
This relaxation aims at reducing administrative costs for firms and commercial banks, thus enhancing flexibility for companies in conducting foreign exchange transactions.
In addition, the Bank of Thailand issues rules and practices regarding the five measures announced in the Notifications of the Ministry of Finance dated 16 September 2010. For instance, Thai companies wishing to undertake direct investment or lending abroad in an amount of USD 10 million or more per year shall notify the Bank of Thailand in the form specified under the guideline.
Source: Bank of Thailand
Repatriating Funds to a Foreign Country
The banks in Thailand have to follow strict regulations. As a result, it can be quite difficult to repatriate funds if you do not have the correct paperwork. To repatriate the sale proceeds of the sale of a condo the bank will ask for a copy of the official land office sale agreement (with Garuda symbol) and land office tax receipt, a copy of the title deed of the condominium unit, passport copy and a copy of the FET-form (or the previously used Thor Tor 3 form) which the foreigner obtained when they remitted money into Thailand to buy the condominium. If these documents are supplied the bank will allow transfer of the money out of Thailand without additional deductions. When selling the condominium personal income withholding tax is taken as part of the transfer taxes. The land office will issue a tax receipt for payment. Withholding tax is calculated based on the years of ownership - read more condominium transfer tax and fees...
In case of transferring money out of the country, the tax-free amount is determined by the initial amount transferred into Thailand.
- Sample FET-form
- Currency exchange regulation (information for the general public)
- Bank of Thailand (external)
Condominium transfer tax calculation
Sample tax calculation transfer of ownership of a condominium registered under the Condominium Act:
Transfer of ownership of a condominium unit in Thailand is subject to the following government fees and taxes (charged by the Land Department upon transfer):
- transfer fee at the rate of 2% on the government assessed value
- stamp duty at 0.5% over the appraised or actual sale price whichever is higher, except in cases where the seller is subject to a specific business tax
- specific business tax at a rate of 3,3 % over the government appraised value of the condominium or actual sale price, whichever is higher
- income withholding tax with a different calculation depending if the seller is a company or natural person
Basically 3 different situations exist for the buyer (and seller) of a condo in Thailand:
- the purchase of a condo in a new condominium development project registered and licensed under the Thailand Condominium Act, or
- the purchase of a resale apartment unit from another individual or
- the purchase resale condominium owned by a juristic person.
1- When buying from a developer the amount of transfer fees and taxes is limited for the buyer as the developer is by consumer protection laws and Ministerial Regulations issued under the Condominium Act responsible for all transfer costs, fees and taxes, except he may ask the buyer of a unit (the freehold purchaser of the condo unit), to pay up to half of the 2% transfer fees only. Say the appraised value of the condo is 3 million baht the developer may not charge the buyer more than 30,000 baht as part of the transfer fees for the transfer of ownership registration.
2- When buying a resale condo from another individual the situation is more complex as there is no fixed rule under Thai law on how the transfer costs, taxes and fees are to be divided between the buyer and the seller. Basically in a private resale of a condo in Thailand this can vary from buyer pays all to seller pays all and how these costs are to be divided is simply part of the overall price negotiation. It is recommended to clearly include this in the sale and purchase agreement between the buyer and the seller of the condo unit.
The sample is based on a resale condo with a value of 3,000,000 baht with an ownership of 2 years and 6 months. Note, in the sample calculation we assume an equal sale price and government appraised value. In practice the appraised value is often pretty much lower than the sale value and therefore this calculation must only be seen as a sample.
For the calculation of personal income withholding tax there is a deduction based on the years of ownership as follows: 1 years = 92% of the appraised value, 2 years = 84%, 3 years = 77%, 4 years = 71%, 5 years = 65 %, 6 years = 60%, 7 years = 55%, 8 years or more = 50%. In this sample calculation the deduction is based on 3 years (2 years and 6 months is 3 tax years) of ownership which comes to a deduction of = 77% x 3,000,000 baht = 2,310,000 baht.
Personal income withholding tax will be calculated over 230,000 baht in each year of ownership (i.e. 3,000,000 baht less the deduction divided by 3 (the number of years of ownership).
Income tax rates in Thailand are for income less than 100,000 baht are set at a 5% rate, between 100,000 and 500,000 baht the rate is 10%, between 500,000 and 1,000,000 baht the rate is 20%, between 1,000,000 and 4,000,000 baht the rate is 30%, and over more than 4,000,000 it is 37%. In this cases there is a yearly income tax of 18,000 baht (5% over 100,000 baht and 10% over 130,000 baht). The income withholding tax in the sample situation, to be paid for the transfer of ownership at the time of transfer, is 54,000 baht (based on 3 (tax-) years ownership).
As the condo is owned by the current owner for less than 5 years specific business tax is charged at a rate of 3% plus a municipal tax of 10% over the amount of the specific business tax making this a total tax of 99,000 baht (3.3% x 3,000,000). Note that specific business tax is applied if the condo is held by the current owner less than 5 years and calculated over the selling price or government appraised value of the condo unit, whichever is higher.
The government transfer fee is 2% over 3,000,000 baht making it another 60,000 baht.
The total amount to be paid at the land office upon transfer of the condo is approx 213,000 baht.
3- When buying a resale condominium owned by a juristic person the withholding tax is fixed at 1% over the appraised or registered value, whichever is higher, as opposed to personal income tax shall which calculated at progressive rate with a deduction depending on the number of years of possession based on the appraised value of the unit.