According to an anonymous source, a ‘Centre for Economic Situation Administration’ (“CESA”) meeting chaired by Prime Minister Gen. Prayut Chan-o-cha was held on Friday 4 June that approved (in-principle) a set of proposed stimulus measures aimed at encouraging wealthy expatriates to Thailand. The most notable incentives include a 17% corporate income tax rate on local earnings, an extended ten year long visa, eligible expatriates such as retirees potentially being allowed to hold property and greatly streamlined immigration, visa and work permit procedures. The incentives being considered form part of the government’s efforts to devise a strategy to rebuild and rejuvenate the Thai economy as the result of the COVID-19 pandemic. Thailand’s lucrative tourism economy has been especially hard hit during the pandemic as its beaches, islands resorts and tourism dependent hotspots became deserted and tourist arrival numbers to the kingdom plummeted. To put this into perspective, in 2019, tourism accounted for 18-20% of Thailand’s gross domestic product (“GDP”) with almost 40 million visiting foreign tourists, generating around THB 2 trillion (USD 64.1 billion) in local revenue, and providing the country with its most durable source of foreign currency reserves. Thailand’s GDP then shrank by 6.1% in 2020, only 6.7 million tourists arriving and a relatively meagre THB 330 billion flowing in before COVID-19 lockdowns, restrictions and travel bans became the norm from late March 2020 onward.
The government now has ambitious plans to draw in at least 1 million high spending tourists by luring high spending foreigners from European countries as well as Japan and South Korea to spend their retirement in Thailand, according to ML Chayotid Kridakon an advisor with the CESA. The relevant incentives will primarily be aimed at four target groups: high net-worth individuals, wealthy retirees, rich professionals who work from Thailand and highly skilled professionals. These groups are expected to be composed mainly of retirees and potential investors interested in the potential of Thai-based S-Curve industries (fourth industrial revolution, ‘internet of things’ etc.).
High net-worth individuals* – no age limit, must invest at least USD 500,000 in government bonds or property or foreign direct investment; at least USD 80,000 in income over the last two years, USD 1 million in assets and USD 100,000 in health insurance.
Wealthy retirees* – must be 50 or over, annual income of USD 40,000, USD 250,000 in government bonds or real estate, and USD 100,000 health insurance.
Rich/Highly skilled professionals – include people who work in digital media or employees of large companies who are close to retirement, must have income of USD 40,000 per year, and USD 100,000 in health insurance cover.
*High net-worth individuals and wealthy retirees will be eligible for a ten-year visa, allowed to buy property and land, work 20 hours a week without a work permit and pay 17% tax rate on local earnings.
Key to the success of this initiative will be the form and nature of the land/property rights that will be extended to qualifying expatriates. Foreigners cannot currently own land in Thailand absent establishment of a promoted business activity or receipt of difficult to obtain governmental approvals. So far though, the property and land rights that will be given to rich tourists and more relevantly to retirees with sufficient wherewithal (as above) have yet to be fully fleshed out.
Thai Ministry of Finance’s Concerns
To date, the Ministry of Finance has raised concerns over what it sees as the overly generous corporate income tax rate of 17% arguing that it will affect government revenue. An anonymous source told the Bangkok Post that the Finance Ministry intends to fight the proposed tax cut, asking for more agencies to be consulted and for the proposal to be resubmitted.
These tentative stimulus measures appear to be part of longer term efforts by the Thai government to attract high net worth individuals to relocate to and invest in Thailand post COVID-19. Whether such incentives will be sufficiently appealing to well-heeled and relatively low numbers of tourists and elderly expatriates to settle down in Thailand remains to be seen, especially in an increasingly competitive global market. Nonetheless, the Government’s approach is commendable for giving due consideration to re-formulating its tourism industry and thinking about the future as the pandemic begins to wane.
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