Recently Thai Business Expert was asked how to close a Thai limited company.
In line with the growing trend of competition, profitability and economic stability, some business owners choose to wind down their Thai registered company either for the purpose of opening a new company or permanently cease doing business in Thailand. Whatever reasons you have for closing your Thailand business, legal, accounting and auditing assistance are required to ensure that the company will be closed in good faith. However, in closing down a registered company in Thailand, one must consider the following procedures:
1. Sending out invitation letters to all shareholders for an extra-ordinary Shareholders’ Meeting and publishing the letter in a local newspaper.
As prescribed by the Thai law, the company should hold a Shareholders’ Meeting to discuss the agenda of the company dissolution. An invitation letter for the meeting must be sent to all company shareholders by a registered post with an Advice of Delivery Service to ensure that the shareholders acknowledge the receipt of the letter. The same letter must be published in a local newspaper as well. This step must be done at least 14 days before the date of the shareholders’ meeting.
2. Registering the company dissolution at the Department of Business Development, Ministry of Commerce
Within 14 days from the closing date that the Shareholders’ Meeting has approved of, the
application form along with any required documents must be submitted to DBD to
register for company dissolution. The liquidator (either an outsider or one of
the company directors, whoever is appointed in the shareholders’ meeting) must
file the application at the Department of Business Development (DBD), Ministry
of Commerce, with a copy of his / her Thai I.D. card or passport. Once
everything is completed and accepted by the DBD, the officer will issue a
document which is a certification of the company’s dissolution showing the
closing date of the company.
3. Publishing the company dissolution and sending letters to inform creditors
Within 14 days from the date of dissolution, the liquidator must publish in a local newspaper the company dissolution at least once and send letters by registered mail to the
company’s creditors to inform them about the company dissolution.
4. Returning the VAT Registration Certificate (Por Por 20) to the Revenue Department (RD) in case the company is registered in the VAT system.
Within 15 days of the closing date, the company shall file Form Por Por 09 to return its VAT Registration Certificate to RD. In the event that the company fails to file it within the
specified time, there is a penalty of Baht 2,000.
Although the VAT certificate will be returned, the company is still responsible to submit its
monthly VAT return (Por Por 30) every month until the RD officer release their confirmation letter for deregistration of VAT.
5. Completing and auditing of the accounts and the Financial Statements until the closing date.
The company must prepare and complete its accounts and financial statements of the current accounting period until the date of dissolution registration and must have them
audited by a Thai auditor. The liquidator of the company must sign on the financial statements as well as the Corporate Income Tax Return Form (Por Ngor Dor. 50) for submission to the Thai Revenue Department within 150 days after the company closing date.
6. Returning the company’s Tax I.D. card to the Revenue Department
The tax I.D. card of the company must be returned to RD as well. The officer in this unit
will accept the application to return the Tax ID card only if a copy of the filed corporate income tax return and the receipt issued by the Revenue Department is attached to it.
7. Liquidating company’s assets, clearing company’s debts and returning the remaining cash to the shareholders
After step no.2 has been done, the liquidator of the company has to liquidate all assets of the company (converting them to cash), pay off the companies’ creditors and
divide the remaining cash and return it to the company’s shareholders according to the shareholding ratio.
8. Filing liquidation reports and registering the completion of liquidation process with the Department of Business Development
The liquidator has to file a liquidation report to the DBD every three months until the liquidation process is finished and the Revenue Department has issued a letter to the DBD certifying that the company owes no taxes, which will happen after step no.5. When this happens, the liquidator has to register the completion of the liquidation process with the DBD as well as submit the last liquidation report. The DBD will issue a document to certify that the company’s liquidation has been completed.
The above summary of Thai company closure procedures is intended for information purpose only. However, one must seek professional consultation before proceeding to dissolution because there are still a lot of details in the process such as closing of all bank accounts, submission of VAT on the book value of company’s fixed assets as of the closing
date within the 7th of the following month and what to do if the company’s assets’ value is not enough to cover its debts. Careful planning of the whole process until the completion of liquidation of the company is strongly advised.
Basically, the dissolution process should take about a month to complete. However, if the company has VAT registration, it takes around 6 months to obtain the acceptance letter for
deregistration from the Revenue Department. Thus, for bigger companies, the whole process may be completed within a year or two, depending on how long the company had been in operation and whether its books of accounts were properly maintained and all tax returns were filed as required by the Thai law. The tax authorities may also invite the liquidator (or his representative) to discuss the tax matters of the company upon its liquidation.
Being highly knowledgeable and well-experienced in Thailand Business Set Up Process, we at MSNA can also assist you in the process of Thailand Company
Dissolution. We can also represent you in negotiation with the tax authority (Revenue Department).