Retiring in Thailand

by Jose Marc Castro on August 6, 2009

thailandFLAG200A New Life in Thailand

For three years running, Thailand has managed to keep its position as the top tourist destination in the world. Despite the tsunami, despite the Muslim insurgency in the southern provinces, Thailand is still the destination of millions of tourists drawn to its tropical beauty, its hospitable people, and world-class services. Tourists not only go to Thailand; they keep coming back.  Some come back to live in Thailand and expats.

Thailand is now on the crest of rapid economic growth and has become a newly industrialized country, emphasizing on an export market and a burgeoning tourism industry.

Climate in ThailandThailand Government Medical Care in Thailand Tax in ThailandThailand Real EstateShopping in ThailandCost of Living in Thailand

Climate in Thailand

Thailand is very hot and humid from April till May. A respite comes with the monsoon rains, which arrive in June and last till September, sometimes flood the streets and make people wish they could have the hot but dry weather back again. Tourists generally visit the country from November to February, when it is less humid and breezier. A general rule of thumb is the higher the altitude and the farther north you are, the lower the temperature and humidity.  Take it from the locals, Thailand is especially blessed with tropical produce such as mango and papaya, sugar cane, and young coconuts that you can eat or drink as freshly made juice to help you cope with the weather. From March to June, it is sweltering hot. From July to October, it is the rainy season and flooding is common occurrence in the country.

Government in Thailand

In governmental estimates for 2009, Thailand’s population has reached 63 million. The per capita annual income is US$4, 116.  The country was considered as one of Asia’s economic tigers until the 1997 Asian financial crisis, which led to higher rates of unemployment, recession, steep drops in prices of stocks and properties, and bankruptcies.

Thailand has been a constitutional monarchy since 1932. In real life, however, Thailand was ruled by the “generals” for almost 50 years (1947-1992) and is currently governed by the Council for National Security, which is composed of military officers supported by the King. The CNS assumed power after launching a successful coup in 2006. Elections that is scheduled on December 2007, are supposed to pave the way towards a return to civilian rule and resumption of normal political processes. The latest crisis that rocked the government was the removal of the president after electoral fraud was found by the Thailand Constitutional Court. In 2008, a new government was installed led by Prime Minister Abhisit Vejjajiva.

Another nagging problem concerns the country’s Muslim population, which is concentrated in the southern provinces. A still ongoing Muslim separatist movement has already claimed the lives of about 1,500 people and shows no signs of immediate resolution.

Tax System in Thailand

Residents are taxed only on income earned in Thailand.  Income earned outside Thailand is taxed if it is brought by the resident to Thailand within that same year.  Expatriates in Thailand can resort to a self-assessment tax system in which s/he can estimate and pay income taxes.  Expatriates who possess work permits may choose to be taxed at 15% for two years instead of the usual tax rates. Thailand has no capital gains or gift tax. This fact was reflected in a post at the Thailand Expat Forum last July 27, 2009:

If you are resident overseas for an entire calendar year or establish a “physical presence” outside the US over a period of 12 consecutive months, you can make use of the overseas earned income exclusion when filing your US taxes. You MUST file in order to the claim the exclusion and it applies only to earned income (i.e. salary for the most part). You still have to declare all worldwide sources of income – and most “unearned” income (interest, dividends, rents, etc.) are likely to generate a US tax bill for you, though can usually be offset by credits for local taxes paid.

You may or may not have to pay social security and Medicare, depending on your precise status, no matter where your employer is based. Normally, you should only be paying social security and Medicare if you are on a limited term assignment overseas, with the intention of returning to the US at the end of the assignment.

As far as state tax is concerned, again it depends on your precise status. If you are considered resident in the state during your overseas stay, you may have to file as a state resident. If you have certain types of income coming from the state you used to live in, you may have to file as a non-resident. It varies quite a bit by state.

But if you are genuinely resident overseas, you don’t normally have to file state income taxes. I would guess the same applies to a Canadian in this situation, but check with the Canadian national tax authority to find out what they consider “bona fide overseas residence.”

Medical Care in Thailand

Thailand is one of the two top destinations of foreigners who opt for overseas medical treatment. (The other is India).  In the beginning Thailand catered primarily to expatriates from Western countries that live and work in Southeast Asia. However like other countries that offer “medical tourism,” Thailand has broadened its target countries and the kind of services that the country offers, such as dental treatment. Medical treatment is also usually combined with a short vacation during the patient’s recovery period.

As to costs, we can use one example. Medical services in a very modern and large hospital where half the doctors are U.S. trained can cost as little as 10-20 percent of what they would cost in the U.S. The hospital treats 250,000 foreign patients a year.  Charges can go as low as $50 per day for a private room with meals and go as high as  $150 for a luxurious suite complete with a living room, two bathrooms, a small kitchen, and bedroom. The rooms are so well furnished and the service so good that people say staying in the hospital is like staying in a hotel.

The country has also become one of the favored medical tourism locations in the world. Here, cosmetic surgery and other enhancements can be done in the many hospitals throughout the country.

Real Estate in Thailand

First, it should be clear that foreigners are prohibited by law from owning land in Thailand. There are ways of “adjusting” to this restriction but these can be difficult and subject to questions and objections from Thai authorities. Those who are set on owning land usually resort to establishing a limited liability company where foreign ownership can reach a maximum of 39 percent. The simplest legal alternative to ownership is to buy a condominium since foreigners in Thailand are allowed to buy up to 49 percent of total units of a condominium building, as long as the money used is remitted from abroad and verified as such by a Thai bank.  Real estate property prices have doubled in recent years but you can still get reasonably priced properties. For instance, a studio apartment can still be had for about $17,000 in the Pattaya resort area while a condominium can be bought for $136 per square foot.

After the many financial and political upheavals that the country had to face, the current property market is showing signs of recovery as selective investors have returned to purchase properties and real estate stocks in Thailand.

Shopping in Thailand

Thailand is a shoppers’ Mecca.  A shopping addict will be overwhelmed with the amount and variety of goods for sale, ranging from traditional, peasant made baskets used to store fragrant rice to Swiss-made diamond studded watches. Buyers are expected to haggle and sellers usually raise prices by 40 percent or more in expectation of the bargaining to come.  There are many fakes (good and bad) and buyers should beware.

Most often, the places to go to in Thailand are the night markets in Bangkok and the Night Bazaar in Chiang Mai, where everything from handicrafts to designer goods are sold to all. If you want to roam and shop during the day, there are a number of malls throughout the city.

Cost of Living in Thailand

Thailand still is a good bargain for expatriates although prices have been increasing for the past five years.  It will take some serious thinking on your priorities and the kind of lifestyle you are willing and ready to maintain.  You will find it hard to last anywhere, if you force yourself to go without any and all conveniences. You have to find a good compromise and balance. Living in Bangkok is generally as expensive as living in other Asian cities. However, in general, a US$1000-1200 budget will get you a sufficiently comfortable lifestyle. Transportation costs very little in Thailand and you can use buses, motorbike taxis, domestic plane service, trains and river buses. Thai food is very cheap and good, so eating local will mean big savings.

An expat detailed this matter in a post at the Thailand Expat Forum last July 24, 2009:

Hi, I really suggest you rent, at least at first – there are many reasons for this including the fact that as a foreigner you can’t legally own land anyway.

Rents can go from 6k skywards. For a nice 2 bed house (not condo) in my part of town (Chaing Mai) you coul easily get away with 8-10k these days. I have a 4 bed +maids room, 3 bathrooms, fully furnished with front and back gardens for 18k/month. I am not sure about K. Samui, bt it will be more expensive as there are more people per Km and its a tourist/holiday home area.

Electricity depends on how many aircons you have and how often you use them. I have 4, but only use 2 to 3 overnight – the other is in the spare room and unused most of the year. I also have several TVs and computers that seem to be on far too often. In all I pay around 1,300B/month.

For internet I pay for MaxNet premium (4Mb) and dedicated line and it costs me a cool 1,200/month.

Gas comes in a bottle and I have never had to refill it yet, so not sure of the price.

Food shopping I spend around 5k a month (4 of us).

Going out, treating the kids, petrol and sundries I probably spend another 5-10k/month give or take.

Car tax is about 1,200B/year.

Health insurance is about 35k/year (3 of us).

If you have kids then schooling will probably be the most expensive thing you pay for.

I have never paid a bean in local taxes (don’t know if my rent incluides this – or it doesn’t exists) – but my bin is emptied every night (except Sunday) and the streets are kept clean.

If you live on a mood Bahn (like a Spanish urbanisation or a gated community) you will have other costs like maintance fees, club membershp, security fees etc – I don’t.

Don’t forget import taxes on anything you ship (first shipment is somewhat tax free – after a fashion – depending on what is in it) if you have a non-tourist long stay visa. After that its extortionate. Animals are charged import tax regardless (if cargo shipped). Put your Xbox in your hand luggage and carry itover – I did

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