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Archives for American Business in Thailand

Minimum Capital Requirement for Foreign Companies in Thailand

Foreign companies operating in Thailand as a Branch Office or Representative Office of a company incorporated under the laws of a foreign country, or as a Thai limited company incorporated under Thai laws (but with majority shares owned by foreigners), need to have the minimum capital required by Thailand Foreign Business Law. This article only talks about non-American companies. For American companies, please read Minimum Capital Requirement for Treaty of Amity Companies in Thailand.

Minimum Capital

If the foreign companies operate businesses that are not in the schedules annexed to the Foreign Business Act B.E. 2542 (thus it is not required to obtain a Foreign Business License), the minimum capital is Baht 2 M.

If the foreign companies operate businesses that are in the schedules annexed to the Foreign Business Act B.E. 2542 (thus it is required to obtain a Foreign Business License before it can operate the businesses), the minimum capital must be no less than 25% of one-year average of the three-year expenditure forecast (that was submitted when applying for the foreign business license) and no less than Baht 3 M per business.

Time frame

A. For foreign companies that are not incorporated in Thailand (thus operate as a Branch Office of a Representative Office) must bring in the minimum capital from the day they have been approved of the Foreign Business License within the following time frame:

(1) If the approval to operate the business is for less than 3 years, the minimum capital must all be brought into Thailand within 6 months.

(2) If the approval to operate the business is for 3 years or more, the minimum capital must be brought into Thailand as follows:

– Within the first 3 months, at least 25% of the minimum capital

– Within the first year, a total of 50% of the minimum capital

– In the 2nd and 3rd year, at least 25% of the minimum capital within each year

100% of the minimum capital must be brought in within the three-year period.

The way to comply with this regulation is to bring in the capital by sending the money in a foreign currency within the above time frame and inform the Director of Good Governance Office of the Department of Business Development within 15 days from remittance.

B. For foreign companies that are Thai limited companies incorporated in Thailand, they must have their registered capital equal to the minimum capital required by the foreign business law before they will be approved of the Foreign Business License.

Contact MSNA for Foreign Business Law.

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Minimum Capital Requirement for Treaty of Amity Companies in Thailand

Treaty of Amity companies operating in Thailand, whether as a branch office of a company incorporated under USA laws or as a Thai limited company with American majority shareholders, incorporated under Thai laws, have to comply with the Ministerial Regulations regarding minimum capital and timeframe to bring the minimum capital into Thailand issued on 30 August 2009 under the Foreign Business Act B.E. 2542.

Minimum Capital Amount

If the Treaty of Amity company operates businesses that are not in the schedules annexed to the Foreign Business Act B.E. 2542 (thus it is not required to obtain a Foreign Business Certificate), the minimum capital is Baht 2 M.

If the Treaty of Amity company operates businesses that are in the schedules annexed to the Foreign Business Act B.E. 2542 (thus it is required to obtain a Foreign Business Certificate before it can operate the businesses), the minimum capital must be no less than 25% of one-year average of the three-year operating expense forecast (that was submitted when applying for the foreign business certificate) and no less than Baht 3 M per business.

Time frame

For the Treaty of Amity companies that started their business operation or received their Foreign Business Certificate before 30 August 2009, they must bring in the required minimum capital in foreign currency to Thailand within 29 August 2019.

For the Treaty of Amity companies that started their business operation or received their Foreign Business Certificate on or after 30 August 2009, they must bring in the required minimum capital in foreign currency to Thailand within 29 August 2024.

Method of Compliance

For the Treaty of Amity companies that operate in Thailand as a branch office of a US company, the way to comply with this regulation is to bring in the capital by sending the money in a foreign currency within the above time frame and inform the Director of Good Governance Office of the Department of Business Development within 15 days from remittance.

For the Treaty of Amity companies that are Thai limited companies incorporated under Thai laws, when they apply for the Foreign Business Certificate, they will get it without reference to the level of their registered capital. The way to comply with this regulation is whenever they wire an amount of money in a foreign currency, intended to be part of the minimum capital per this regulation, they need to increase their registered capital, but they do not have to inform the Director of Good Governance Office of the Department of Business Development. The remittance of the required minimum capital (and thus, increase of the registered capital) must be completed within the above time frame.

Contact MSNA for information about Treaty of Amity companies.

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Thailand Foreign Business License – what to be aware of after getting it

If you are a foreigner who has been approved a foreign business license or foreign business certificate according to Thailand Foreign Business Act B.E. 2542, you need to pay attention to the following issues which are your duties/responsibilities:

1. Foreign Business License / Certificate

1.1 The license / certificate must be on display at the place of business operation.

1.2 If the license / certificate is damaged or lost, an application for a replacement must be filed with the Registrar within 15 days.

2. Conditions accompanying the approval of foreign business operation

2.1 The total loan utilized in the permitted business operation must not exceed seven times of the total amount imported for use in the permitted business.

2.2 At least one of the persons responsible for the business operation in Thailand must have a residence in the Kingdom of Thailand.

3. Bringing the minimum capital into Thailand to start the business operation

3.1 Time frame: The licensee who is a natural person or a juristic person who is not registered in Thailand must bring in the minimum capital from the day he has been approved or starts the business operation within the following time frame:

(1) If the approval to operate the business is for less than 3 years, the minimum capital must all be brought into Thailand within 6 months.

(2) If the approval to operate the business is for 3 years or more, the minimum capital must be brought into Thailand as follows:

– Within the first 3 months, at least 25% of the minimum capital

– Within the first year, a total of 50% of the minimum capital

– In the 2nd and 3rd year, at least 25% of the minimum capital within each year

100% of the minimum capital must be brought in within the three-year period.

The minimum capital must be converted into Thai Baht using the exchange rate on the date it is brought into Thailand.

Note that the above time frame does not apply to a Treaty of Amity company.

3.2 The evidence showing the amount of minimum capital brought into Thailand must be presented within 15 days from the date of transfer.

4. Changes in the registered information

4.1 If the company discontinues its operation, it must inform the Registrar within 15 days.

4.2 If the company moves its address or place of operation, it must inform the Registrar within 15 days.

4.3 It is advised that the company inform the Registrar in case it changes the person responsible for its operation in Thailand.

4.4 It is advised that the company inform the Registrar in case it changes its name.

4.5 It is advised that the company inform the Registrar in case it has a branch office.

5. Compliance when the competent officials send letters to ask questions or summon documents or evidence

The licensee has the duty to report the result of business operation and report the result of the technological transfer when the competent officials send letters to question or summon documents or evidence necessary for audit .

6. Preparing of accounts and filing of financial statements

Juristic persons set up under the laws of foreign countries have to file their audited financial statements within 5 months from the accounting year-end. Thai companies have to file them within 1 month from the date they were approved by the general shareholders’ meeting.

Penalties

  1. Failure to comply with 1, 4.1, 4.2 and 5 may result in a fine of not more than Baht 5,000 (Sections 39 and 40)
  2. Failure to comply with 3 may result in a fine of Baht 100,000 to Baht 1,000,000 and Baht 10,000 to Baht 50,000 daily until compliance (Section 38)
  3. Failure to comply with 6 may result in a fine of not more than Baht 50,000
  4. The foreigner who has been punished according to the Foreign Business Law will lack the qualification per section 16, which may result in the revocation of the license / certificate.

Contact MSNA for any questions about foreign business law in Thailand.

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Different types of Thailand visas for U.S. citizens

American citizens can be permitted to enter Thailand through different types of visas as follows:

1. Visa Exempt Entry

U.S. citizens carrying a tourist passport and having a return airline ticket do not require a visa to enter Thailand. The passport must still be valid for at least six months to be allowed entry. Upon entry, Thai immigration officials will place an immigration stamp in the passport giving a 30-day permit of stay in Thailand if arriving by air or a 15-day stay if arriving by land. This permit of stay may be subsequently extended for an additional 7 days by paying a Baht 1,900 fee to the Thai Immigration Bureau office.

For those Americans who are carrying a diplomatic or official passport, it is advisable to obtain a visa before arriving in Thailand. In some situations, it is possible for diplomatic or official passport holders to enter without a visa, but it is up to the precautions of the airline and/or immigration personnel whether or not you will be granted an entry.

2. Tourist Visas

If an American wants to stay in Thailand for more than 30 days, he or she may consider obtaining a tourist visa at the Royal Thai Embassy or Consulate in theUnited States, before arriving in Thailand. This tourist visa will allow an initial stay of 60 days and must be used within 90 days from the date of issue. After arrival in Thailand, a tourist visa may be extended twice, each time for an additional 15 days. There is a fee of Baht 1,900 for each extension.

Americans who wants to stay in Thailand for more than 90 days during any six-month period will be required to obtain a valid Thai visa from a Thai Embassy or Consulate that is authorized to issue visas. The U.S. Embassy advises all Americans who wish to obtain a Thai visa to contact the Thai Immigration Bureau for complete visa requirements and regulations. Individuals who do not comply with Thai visa regulations may be possibly denied entry to Thailand at the border.

3. Work Visa

All foreigners (regardless their nationalities) who are interested in working in Thailand must obtain a valid Thai work visa and Thai work permit. In order to be granted a work permit, an application must be filed by a company, foreign government, or other organization in Thailand on behalf of the work visa applicant. Once granted, the work visa can be extended to one year.

4. Retirement Visa

Thai retirement visas are available to foreigners aged 50 years and above. These visas are valid for only one year and any kind of employment is strictly prohibited. According to Thai Immigration, applicants must have the following qualifications in order to be eligible for retirement visa:

– Applicant must be able to provide evidence of a pension or other regular income from a source outside ofThailand;

– Applicant’s pension or other regular income must be no less than the equivalent of Baht 65,000 per month;

– Alternatively, the applicant may meet the financial requirement by maintaining a Thai bank account with a minimum balance of Baht 800,000. Thus, applicants will need to show that they have Baht 800,000 in savings each year when they renew their visa.

– Any applicant married to a Thai citizen may be able to receive a visa on that basis rather than retirement.

5. Visa Overstays

If a person does not leave Thailand upon the expiration of his or her permit of stay or visa, this person is already considered staying in Thailand illegally. And, in order for him or her to leave the country after his visa or permit expires, it will be necessary to pay a fine for overstaying of Baht 500 per day up to a maximum of Baht 20,000. The fine is payable to the Immigration Bureau, at the Suvarnabhumi Airport Immigration office or other departure points.

Thailand visa rules regulations are subject to change without prior notice. For further assistance, contact MSNA lawyers for visa and work permit services.

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Treaty of Amity companies in Thailand – Steps and fees

What are the steps and fees to form a Treaty of Amity Company in Thailand?

  1. As an American, you can set up a new company in Thailand, with all 3 American shareholders (or 2 American and one Thai) with a registered capital of THB 3 M (USD 10,000). This is because the foreign business law dictates the minimum capital to be THB 3 M for a company with majority foreign shareholders. One of the authorized directors will have to be in Thailand at the time of signing the registration application papers. Once the papers are signed, the company will be born the next day. In case you cannot be in Thailand at the time, you will need to have your signatures notarized in the country where you are and have the Thai embassy certify the notarization. – The government fee to register a Thai limited company with Baht 3 Million is about USD 660.
  2. You will apply with the US Commercial Service for a letter certifying that the shareholders of the company are American and so the company is entitled to the right and protection of Thailand – USA Treaty of Amity and can operate the business in Thailand. It can take 1 – 3 weeks. – The fee to pay the US Commercial Service to issue the certification letter is within USD 100.
  3. Apply for the Foreign Business Certificate with the Foreign Business Committee, Ministry of Commerce. this usually takes 3-4 weeks for the certificate to be issued. Please note that the director who will be responsible for Thailand operation has to have a non-immigrant business visa to enter Thailand and we will need the copy of his visa. – The government fee for this step is around USD 750.
  4. Register the new company into the Thai VAT system. This may need only one day or more if you cannot get the papers from your landlord easily. – There is no government fee for this.
  5. Register the company and its employees into the social security system. It takes one day for the registration and a few days to gather the employees’ information. There is no government fee.
  6. Get a work permit for an authorized American director so that he can be authorized signatory for the bank accounts and he can sign any papers to bind the company. – This usually takes 10 days. – The government fee for a work permit for one year is about USD 100.

Things you should know:

You do not need to set up a new company to do business in Thailand if you own an American company. (That means its majority shareholders and directors are American.) You will skip step 1 mentioned above and save on the related fees. Just start from Step 2 with your US company’s documents.

Contact MSNA for setting up your Treaty of Amity company in Thailand.

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US Personal Income Tax Filing – Dual Citizenship in Thailand

Today, our U.S. CPA answers a question from one of our payroll and tax clients regarding his U.S.personal income tax.

Question:

I’m a dual citizen (Thai & US) working for a multi-national company in Thailand. I was born and raised in Thailand and have always reported and filed my Thai tax returns. I’m currently working under my Thai citizenship and making below US income standards. Do I need to file my U.S .tax returns now?

Answer:

With respect to filing your U.S. Income Tax Returns, every citizen is required to file a return based on their world-wide income. That would, of course, include your Thai Income. Your income would be excluded under the foreign earned income exclusion, and accordingly, no tax would be due in theU.S. Hence, it simply becomes an administrative requirement. However, if your income exceeded $100,000, then it would be possible that taxes would be due but it doesn’t sound like this is your situation having a dual citizenship.

Questions on U.S.tax returns filing? Contact MSNA for professional assistance.

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Setting up a branch office of a US company

Setting up a branch office of a US company is possible in Thailand. Today, Thai Business Expert summarizes the steps and timeline for MSNA to set up a branch office of a US company to operate in Thailand as follows:

1. We would like to see your US Company’s documents like Articles of Association, By Laws, Operating Agreement, Certificate of Registration or Certificate of Incorporation (Different US states call corporate documents different names). Basically, we need the official documents that show the company name, registration number, address, registered capital (if any), names of shareholders (if possible) and names of authorized directors. Also we need a passport copy of the president/CEO who is going to sign all the papers and the name of the American (or Thai) person who will be the Thailand branch manager. After we see those documents, we may ask for more papers.

2. We will use the information from step 1 to prepare an Affidavit and a Power of Attorney for the Branch Manager for the president or the CEO of the US company to sign, and we will also prepare a General Power of Attorney for one of MSNA’s staff to be able to sign and file all the papers on your company’s behalf. The affidavit and the POA’s will be emailed to you to print out and sign and have them notarized. We need at least 2 business days to draft the 3 documents for you.

3. Once we get all the papers from step 2 from you, we will apply with the US Commercial Service inBangkokfor a letter certifying that the majority of shareholders and directors of the company are American and so the company is entitled to the right perThailand- USA Treaty of Amity to operate the business inThailand. – This step usually takes 1 week for the US Commercial Service to issue the certification letter.

4. We will submit all the papers to the Foreign Business Committee, Ministry of Commerce, to get the Certificate of Business Operations per Foreign Business Law. – It usually takes 3-4 weeks for the certificate to be issued. Please note that this step also requires a passport copy of the Branch Office Manager showing entry intoThailand a few days before we submit the papers.

5. We will register the Branch Office into the Thai tax system (including VAT). – We need only one day.

6. We will get a work permit for the American Branch Manager so that he can sign any papers on behalf of the Branch Office, including bank accounts. – This takes about 10 days.

7. If you would like, we will prepare the papers and meet with your Thailand Branch Manager at a bank to open a saving account and/or a checking account for the Branch Office. – This takes one day.

Setting up your US company’s branch office inThailand can be relatively easy with MSNA. Contact us for more questions and information on company registration and setting up a branch office inThailand.

 

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MSNA Can Help You to Set up a US Company in Thailand

Today, Thai Business Expert summarizes the steps on how we can set up an American owned company in Thailand taking advantage of the Treaty of Amity between USA and Thailand.

Step 1. We will set up a new company in Thailand for you, with all 3 American shareholders (or two Americans and one Thai) with a registered capital of THB 3 M. This is because the foreign business law dictates the minimum capital to be THB 3 M for a company with majority foreign shareholders. Please note that all 3 shareholders will have to be in Thailand at the time of signing the registration papers. Once the papers are signed, the company will be registered the next day, only if the registered address is in Bangkok.

Step 2. We will apply with the US Commercial Service for a letter certifying that the shareholders of the company are American and so the company is entitled to the right (per Thailand – USA Treaty of Amity) to operate the business in Thailand. This step usually takes 1-2 weeks for the US Commercial Service to issue the certification letter.

Step 3. We will submit all the papers to the Office of Foreign Business Committee, Ministry of Commerce, to get the Foreign Business Certificate. It usually takes 3-4 weeks for the certificate to be issued. Please not that the director who will be responsible for Thailand operation has to have a non-immigrant business visa to enter Thailand and we will need the copy of this visa.

Step 4. We will register the new company into the Thai tax system (including VAT). We need only one day to do this step.

Step 5. We will assist in getting a work permit for an authorized American director so that he can be authorized signatory for the bank accounts and he can sign any papers to bind the company. This takes 10 days to process.

IMPORTANT POINTS:

You can use your US company (if its majority shareholders and directors are American) to do business in Thailand without setting up a new company in Thailand and that means we can skip step 1 and save on the related professional fee and government fees. If you choose to go that route, we will need to draft an affidavit for your US Company and you will need to have the US Company’s documents and affidavit notarized before we can start step 2.

Also if you choose to register a new company (which means we need step 1), but want your US company to be the major shareholder, we will need to draft an affidavit for your US company and you will need to have the US company’s documents and affidavit notarized. Then we can continue on to step 2.

Contact MSNA for your business needs and questions on Treaty of Amity and Thailand company registration.

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Filing US Tax Returns from Thailand

If you are an American citizen or a permanent resident (green card holder), living
or doing business in Thailand and you need help with your US tax returns, MSNA
has a solution for you.

MSNA, Thailand accounting company that handles the accounts of the American Chamber of Commerce in Thailand and many of its members, has been helping many American expatriates to prepare their US income tax returns.

We at MSNA together with our American CPA partners can help you ease the burden of filing your US tax returns. You don’t have to fly back to U.S.A. or spend a long time on your computer to study how to file your tax returns with the U.S. Federal tax authorities. No matter which state you came from, our team of US tax professionals will help take care of your US tax returns while you enjoy your comfortable life here in Thailand, the Land of Smiles.

For individual U.S. citizens and/or expatriates tax payers, the rules for filing
income, estate, and gift tax returns and paying estimated tax are generally the
same whether you are in the U.S.A. or Thailand because you are still required
to file your U.S. income tax returns and report your worldwide income with the
U.S. federal and state tax authorities, regardless of where you reside.

U.S. Tax Returns

In the U.S.A., tax returns are the reports filed with the Internal Revenue Service (IRS), with the state or local tax collection agency. These returns are generally prepared using forms prescribed by the IRS or other applicable taxing authorities.

Under the Internal Revenue Code, returns can be either classified as tax returns
or information returns, although the term “tax return” is used often. Tax
returns are reports of tax liabilities and payments, often including financial
information used to compute the income tax or other taxes. This report refers
to the documents filed with the IRS such as Form 1040 which is the standard US
individual tax return form although there are several variations of this form
such as 1040EZ, 1040A and other supplemental forms.

On the other hand, information returns are reports used to file information about
income, receipts or other matters that may affect tax liabilities. For example,
to report the amount of income of an employer, independent contractor, broker,
or other payer pays to a tax payer, they can use Form W-2 and Form 1099. Meanwhile, a company, employer, or party who has paid income to a taxpayer is required to file the applicable information return directly with the IRS. A copy of the
information return is also sent directly to the payee. These procedures enable
the IRS to make sure that taxpayers report their income correctly.

The following are the sample common US Federal tax returns and information returns:

Transfer taxes

Form 706,U.S. Estate Tax Return;

Form 709, U.S. Gift (and Generation-Skipping Transfer) Tax Return;

Statutory excise taxes

Form 720, Quarterly Federal Excise Tax Return;

Form 2290, Heavy Vehicle Use Tax Return;

Form 5330, Return of Excise Taxes Related to Employee Benefit Plans;

Employment (payroll) taxes

Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return;

Form 941, Employer’s Quarterly Federal Tax Return;

Income taxes

Form 1040,U.S. Individual Income Tax Return;

Form 1040A,U.S. Individual Income Tax Return;

Form 1040EZ, Income Tax Return for Single and Joint Filers with No Dependents;

Form 1041, U.S. Income Tax Return for Estates and Trusts (for 1993 and prior years, this was known as “U.S. Fiduciary Income Tax Return”);

Form 1065, U.S. Return of Partnership Income (for 1999 and prior years, this was known as “U.S. Partnership Return of Income”) (information return);

Form 1099 series (various titles) (information return);

Form W-2 (information return);

Form 1120, U.S. Corporation Income Tax Return;

Form 1120S, U.S. Income Tax Return for an S Corporation;

In the event of any misinformation, taxpayers may file an amended return with the
Internal Revenue Service (IRS) to correct errors on a previous income tax
return. For the numerical errors, a taxpayer does not need to file an amended
return as the IRS will make the necessary corrections. Thus for individual taxpayers, amended returns are filed using Form 1040X, Amended U.S. Individual Income Tax Return.

When to file US tax returns?

Any tax return must be paid on or before April 15 of any year. However, if you are
living in Thailand or any other country outside U.S.A on that deadline, you are allowed for an automatic 2-month extension to file your return until June 15 to file your previous income tax returns for the previous calendar year. In case you are not
able to file your returns within June 15, you can file for an additional
extension request which extends the due date until October 15. In the event
that you are liable to submit income taxes and you were not able to pay the
estimated tax liability on April 15, you are responsible to pay additional interest
charges and related penalties for any underpayment.

If you file your income tax return each year while residing in Thailand, the
statute of limitations for IRS audits will expire three years after those tax
returns were filed. That means the IRS cannot check back any fraud or
substantial understatement of your income and try to audit or change those
returns at a later date. Thus, U.S. citizens and expatriates should always file their tax return even if they don’t have taxable income and/or any tax liabilities.

If you do not file your U.S. income tax return of a particular year, whether a return
is required or not, the statute of limitations on tax assessments for that year
never ceases. For example, if you reside overseas like Thailand for 10 years and then you return to U.S.A., the IRS may question why you did not file income tax returns for those years. In case it is proven that you intentionally avoided paying U.S.
taxes as a U.S. citizen for 10 years, the IRS has the authority to require you to pay your taxes for additional 10 years. As long as you are a U.S. citizen or expatriate,
you are always responsible to pay your U.S. taxes.

Contact MSNA when you need your prepare US tax returns.

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