Portfolio investment abroad for retail investors
In recent years
The Bank of Thailand (BOT) has relaxed foreign exchange regulations, making it easier for retail investors to invest abroad. This aims to help Thai people allocate their investment risk more effectively. Nevertheless, many may still have questions about overseas investment in various aspects. Answers to these questions can be found in this article.
Available foreign investment channels for retail investors
Retail investors who wish to invest in foreign assets such as stocks, bonds, or other investment products have access to various channels. One of the more familiar options is investing through service providers in Thailand, which includes (1) mutual funds, (2) private funds, or (3) Thai securities companies.
Investment through service providers in Thailand
Investment through foreign service providers or foreign brokers
In B.E. 2563 (2020), the BOT introduced an additional channel enabling retail investors to invest directly in foreign markets through authorized foreign service providers or brokers, subject to an annual limit of USD 5 million. Investors may select specific securities themselves, making this option best suited for those with advanced investment experience. Selecting reputable service providers or brokers is essential with the same tax obligations as those for investments through Thai brokerages. If assets are sold and the profits are returned to Thailand within the same year, these must be considered for personal income tax. Eligible asset types include stocks, bonds, investment units, deposits, derivatives, and investment-linked life insurance. For this option, investors must submit an annual Acknowledgement Form of Intention to Invest in Foreign Securities and Derivatives (Acknowledgement Form) to the BOT prior to making investments.
Guidelines for investment abroad for retail investors using foreign service providers
For retail investors wishing to invest abroad on their own through foreign service providers, there are six steps involved (steps five and six are optional depending on investor preference) as outlined below.
1. Registration: Submission of Acknowledgement Form of Intention to Invest in Foreign Securities and Derivatives
1.1 For first-time users, investors are required to register for a username and password on the BOT website. These credentials enable them to log in to the system and submit the Acknowledgement Form as part of the process.
1.2 Once the username and password have been received, the investor submits the Acknowledgement Form, following the specified steps.
Video: First-time registration for Acknowledgement Form Video: How to submit the Acknowledgement Form Registration Link
2. FX Transaction: Conducting FX Transactions and Outward Transfers with Commercial Banks
Foreign exchange transactions and outward transfers may be conducted through commercial banks by submitting the Acknowledgment Form obtained from step 1 as part of the transaction documentation.
3. Investment: Portfolio Investment Abroad
Investors may proceed to invest in foreign securities with foreign service providers.
4. Report: Annual Report on Outstanding Balances of Foreign Securities Investment
Investors are required to submit an annual report detailing the outstanding balance of their foreign securities investments for the year in which funds were transferred abroad. This is done through the BOT website, similar to the submission of the Acknowledgement Form. The annual report must also be submitted by January of the year following the investment.
5. FX Hedging: Foreign Exchange Risk Management for Portfolio Investment Abroad
Retail investors may choose to enter into foreign exchange hedging contracts with commercial banks for their foreign securities investments, up to the total investment amount. The Acknowledgment Form obtained from step 1 must be used as part of the supporting documents for these transactions.
6. Repatriation: Bringing Investment Funds Back into the Country
Investors may repatriate their investment funds and convert them into Thai Baht or deposit them into a foreign currency account with a commercial bank. In cases where securities are sold and the investment funds are repatriated within the same calendar year; the proceeds must be included in personal income tax calculations.
Relevant regulations
.
Notice of the Competent Officer Rules and Practices regarding Currency Exchange
Under the subject: Authorized Juristic Persons
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