Thailand Considers Tax Measures To Deter Currency Speculation

by Mary Swire, Tax-News.com, Hong Kong

15 October 2003

The government of Thailand is considering imposing tax measures on capital inflows to curb short term currency speculation, Finance Minister Suchart Jaovisidha revealed on Tuesday, according to the Bangkok Post.

Suchart explained that the tax would attempt to target inflows of money into the country that have no basis in long-term investment. "This would be a measure aimed directly at short-term speculators, those who bring funds in today and out next week. A tax would help reduce such speculation and pressure on the currency," the Finance Minister observed.

"We're not saying that measures will be taken now, as this is not the time. But I am in discussions with M.R. Pridiyathorn Devakula, governor of the Bank of Thailand," Mr Suchart added.

According to the Bangkok Post, the country's central bank has noticed a sharp increase in the amount of money flowing through non-resident local accounts which could be construed as the heightened activity of currency speculators.

The baht has risen steadily against the US dollar in recent months and now trades below 40 baht to the dollar, compared with a range of 41 to 42 in the first half of the year. However, economists consider this at least in part to be due to Thailand's positive economic outlook and the anticipation of future current account surpluses.

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