Thai authorities are considering imposing taxes on physical gold transactions amid concerns over the strengthening baht's impact on exports and tourism, as well as an unusual surge in gold exports to neighboring Cambodia that has prompted calls for investigation.

According to sources familiar with the matter, the Bank of Thailand and the Ministry of Finance are discussing ways to tax gold purchases and sales conducted through various online channels and settled in baht. Any such taxation would likely exempt gold transactions denominated in US dollars, futures trading, or gold purchased from physical gold shops.

Officials hope that implementing such taxes will reduce gold exports and increase the cost for Thais to hold gold. Sources added that dollar inflows linked to gold exports are among the factors driving baht appreciation.

Central bank officials plan to meet with representatives from gold trading companies on Monday to discuss gold's impact on the baht and how to strengthen transaction reporting. The Ministry of Finance will continue consultations with the central bank, with a final decision to be made after the new cabinet takes office. The tax could be introduced as a special business tax.

Sources indicated that transactions might also be taxed if gold sellers convert their dollar earnings into baht, though specific tax rates have not yet been determined.

Thailand's gold exports surged 69% year-on-year in the first seven months of this year, reaching 254 billion baht ($8 billion), with the unusual growth in exports to Cambodia sparking calls for investigation.

In the first seven months of 2025, Thailand's gold exports to Cambodia increased 19% year-on-year to 71.3 billion baht (approximately $2.25 billion), potentially surpassing last year's record of 106 billion baht. According to customs data, this trend positions Cambodia alongside Switzerland, a global gold refining center, and Singapore, a regional trading hub, as major destinations for Thai gold.

Federation of Thai Industries Chairman Kriengkrai Thiennukul stated in an interview last Friday that Thailand's gold and jewelry exports to Cambodia have surged dramatically since last year, with volumes severely disproportionate to the country's size and demand.

"This looks suspicious," Kriengkrai said, adding that the Bank of Thailand, customs department, and Ministry of Commerce should investigate. "This could come from gray industries, such as fraud syndicates and casinos. They might be using gold as a money laundering tool."

Global gold prices have risen nearly 40% this year. Revenues from gold exports helped push the baht to its highest level since 2021 last week, with a 7% gain this year, prompting calls for stronger central bank intervention to protect exports and tourism. When Thais sell gold, they typically convert dollar earnings into local currency, boosting the baht. Compared to other Asian emerging market currencies, the baht has stronger ties to gold.

The central bank attributes baht strength primarily to dollar weakness and external factors, while promising to intervene when markets experience excessive volatility. Kriengkrai noted that another factor potentially weighing on the baht is remittance outflows from approximately 4 million registered foreign workers, with actual numbers potentially higher when including undocumented laborers.

These remittances, whether through legal or informal channels, flow to neighboring countries including Myanmar and Cambodia, potentially draining Thailand's internal baht liquidity and adding exchange rate pressure.

Baht strength is hurting exports and tourism, two sectors that together account for 70% of gross domestic product. Exporters are already under pressure from 19% US tariffs imposed on Thai products last month, while foreign tourist arrivals are declining, partly due to baht appreciation and personal safety concerns.

"If the baht rises in sync with other countries' currencies due to dollar weakness, we have no objection," Kriengkrai said. "But when the baht rises more aggressively than other currencies like this, it's unacceptable. This puts us at a disadvantage during the most critical time for our economy. Policymakers should make this a priority."

Gold holds deep cultural and historical significance in Thailand, often offered at Buddhist temples and serving as a traditional means of saving and wealth inheritance. YLG Bullion International, citing World Gold Council data, reported that Thailand's gold demand grew 13% last year, making it the only country to experience four consecutive years of demand growth since the COVID-19 pandemic began.

According to MTS Gold Group, one of Thailand's major gold dealers, approximately 70% of Thai gold purchases are made through various online platforms. Thailand's gold demand relies heavily on imports, with 2025 demand expected to grow for the fifth consecutive year, reaching 53.7 tons.