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Archives for June 2013

Foreign Business License Application in Thailand

As stated, foreigners seeking to engage in List 3 activities as per Thailand Foreign Business Law are required to apply for and obtain a Foreign Business License prior to commencing operations.

The Foreign Business Act sets forth the process by which the Foreign Business Committee (“Committee”) reviews the application. It states that the Committee is required to rule on the application within 60 days of submission. However, the application process in general has 2 district steps as follows:

(1) The process by which the presiding official at the Ministry of Commerce (MOC) accepts the application for review by the Committee

An application for a Foreign Business License is submitted to the MOC together with all required documents and information. The presiding MOC official, who is in charged with accepting the application will normally not do so until he is satisfied that all documents are in order. The official will perform the preliminary inspection upon presentation but usually he will require the person submitting the application to leave it for later inspection. The time frame for the official’s review of the application is not specified by statute.

In order to avoid these delays, make sure that the person designated to submit the application is familiar with the intended operations of the company to respond on the spot to the official’s questions regarding the application. In the case that the official requests additional documents and/or information, make sure the designated person supplies those documents in a timely fashion.

(2) The Committee’s actual review of the application.

Once the official accepts the application and issues a receipt, the sixty-day consideration period begins. The factors considered by the Committee when reviewing applications are:

– The advantages and disadvantages to the nation’s safety and security

– Public order, good morals, art, culture and traditions of the country

– Technology transfer and research and development

– Economic and social development

– Natural resources, conservation, energy and environment, consumer protection, size of the enterprises, employment

Technology transfer and research and development (R&D) are probably the most important. In 2004, the Ministry issued a document advising foreign investors on how they should describe technology transfer in the license application. Technology here is not just limited to R&D and use of sophisticated equipment, but also specifically includes “administration, management and marketing”. In addition, any planned programs the company has with Thai universities are taken under consideration by the committee.

In the event that the Foreign Business License application is rejected, the law requires that the MOC inform the applicant within 15 days of the decision. The notification of rejection must be in writing and expressly state the reasons why the application was rejected.

If the application is rejected, the applicant has the right to appeal the decision. The appeal must be submitted within 30 days of the date on which the applicant received the rejection notice. The Minister of Commerce is required to rule on the appeal within 30 days of receipt. The decision of the Minister shall be final.

Interested foreigners, who wish to operate a foreign business in Thailand, contact MSNA for further assistance in application for a Foreign Business License.

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New tax strategy to enhance efficiency of tax administration

The Thai Revenue Department has created the strategy of tax collection to handle a new challenge in order to enhance efficiency of tax administration.

The Thai Revenue Department has adopted a risk management principle, known as Compliance Risk Management or CRM, as a tool in the management of tax collection. The principle of CRM is to assess and classify taxpayers according to their credibility. If the taxpayers are classified in the “high-risk” group, tools will focus on law enforcement such as penalties and tax audits. And if the taxpayers are classified in “low-risk” group, the Revenue Department will focus on providing these taxpayers with services such as counseling and facilitating.

From this kind of management, both taxpayers and the Revenue Department are likely to benefit. As a result, this measure will reduce costs involved in tax collection and bring out good attitudes throughout all parties concerned. In fact, Revenue Departments in many countries have already adopted and implemented the CRM’s principles and they were satisfied with an increase of tax collected.

Implementation of the new strategy to enhance efficiency of tax administration is yet to be announced by the Thai Revenue Department. Contact MSNA for your Thai accounting and tax questions.

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Thailand Social Security Fund – unemployment benefits

In the event that an insured person became unemployed, he/she will be entitled to the unemployment benefits under the following circumstances:

– For unemployment resulted from termination of employment or laid-off, the insured person will receive 50% of wages for not more than 180 days within 1 year calculated on the basis of maximum contributions of Baht 15,000.

– For unemployment resulted from voluntary resignation, the insured person will receive 30% of wages up to 90 days within 1 year calculated on the basis of maximum amount of contributions but not more than Baht 15,000. If in the duration of 1 year there was more than 1 application for the unemployment benefits, the counting of the unemployment benefit receiving period in total shall not exceed 180 days; hence, the compensation benefit for loss of income shall be paid on monthly installment basis by crediting to the Bank Account as notified by the Insured.

Know more about Thailand Social Security and its benefits. Contact MSNA for consultation and for submission of your social security fund contribution.

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Obtaining a Residence Permit in Thailand

If you are a foreigner who wants to get residency in Thailand, you may be eligible to apply for a residence permit with the Immigration Bureau provided that you have the following qualifications:

  1. You must hold a passport that bears a Non-Immigrant Visa and has been permitted to stay in Thailand with one-year visa extensions for the total of at least 3 consecutive years up to the application submission date.
  2. If you are at least 14 years old up to the application submission date, you are subject to criminal records check.
  3. You must reveal your information on income, assets, knowledge, vocational ability and family status in terms of connection with Thai national conditions on national security or others as deem appropriate for the consideration.
  4. You must be able to understand and speak Thai language.

Application for a residence permit is divided into five categories:

  1. For investment
  2. For employment
  3. For humanitarian reasons – in this category, you must have relationship with a Thai citizen or a foreigner who already was granted with a residence permit as follows:

3.1 a legal husband or wife

3.2 a legal father or mother

3.3 a child who is under 20 years of age up to the application submission date and must be single

  1. For expert
  2. For extra circumstances on a case by case basis

The Ministry of Interior will announce the annual quota of foreigners to be granted with residence permit (by yearly quota per nationality) and such announcement will be published in the Government Gazette. You can then submit all documents required for each category, together with your passport until the last working day of the year at Chaengwattana Immigration Division or provincial Immigration offices. All documents must be submitted in person.

Once the application have been accepted, the Immigration officer will grant you a 180-day extension of stay on the date of application submission first and the next extension will be granted for 180 days until the results of the applications come out.

The Immigration officer may require a visit to your home and have a short interview with you together with those who are involved in the application. Within 120 days later, you will get an appointment card to come for a final interview with the Immigration officers. You will have to take the test for speaking, listening for understanding of the Thai language. Most questions are about your family, career, living, donation and your intention to apply for a residence permit.

Your application is also considered based on your income, assets, knowledge, vocational ability and family status in case of relationship with Thai nationals, conditions on national security or others as deemed appropriate for current economic and social condition in order to make certain that such consideration was made thoughtfully, transparently and fairly.

Please note that timeline for the consideration process varies each year, depending on the policy of the Immigration Commission and the Ministry of Interior.

Applicable fees:

  1. A non-refundable fee for each application is Baht 7,600 (whether permission is granted or not)
  2. If the application is approved, the fee for the residence permit is Baht 191,400. However, the residence permit fee for spouses and children (under 20 years of age) of the foreigners who already have a residence permit or Thai citizenship is Baht 95,700.

Obtaining a residence permit in Thailand is much easier if you have an English speaking partner to guide you in the process and prepare the application requirements. Contact MSNA for further assistance in obtaining a residence permit in Thailand.

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List of countries which concluded tax treaty agreement with Thailand

To avoid double taxation, Thailand has concluded tax treaty agreements with certain countries. As of March 2021, the countries which currently have tax treaties with the Kingdom are as follows:

  1. Armenia
  2. Australia
  3. Austria
  4. Bahrain
  5. Bangladesh
  6. Belarus
  7. Belgium
  8. Bulgaria
  9. Canada
  10. Cambodia
  11. Chile
  12. China P.R.
  13. Cyprus
  14. Czech Republic
  15. Denmark
  16. Estonia
  17. Finland
  18. France
  19. Germany
  20. Great Britain and Northern Ireland
  21. Hong Kong
  22. Hungary
  23. India
  24. Indonesia
  25. Ireland
  26. Israel
  27. Italy
  28. Japan
  29. Korea
  30. Kuwait
  31. Laos
  32. Luxembourg
  33. Malaysia
  34. Mauritius
  35. Myanmar
  36. Nepal
  37. The Netherlands
  38. New Zealand
  39. Norway
  40. Oman
  41. Pakistan
  42. Philippines
  43. Poland
  44. Romania
  45. Russia
  46. Seychelles
  47. Singapore
  48. Slovenia
  49. South Africa
  50. Spain
  51. Sri Lanka
  52. Sweden
  53. Switzerland
  54. Chinese Taipei
  55. Tajikistan
  56. Turkey
  57. Ukraine
  58. United Arab Emirates
  59. United States of America
  60. Uzbekistan
  61. Vietnam

Contact MSNA for your accounting, tax and other business needs.

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Importing personal vehicles into Thailand

Are foreigners allowed to bring branded cars into Thailand?

According to the Customs, foreigners are allowed to import cars to Thailand provided that applicable taxes are paid and proper clearances are obtained. For personal use, personal vehicles such as car, motorcycle, sports boat or yachts and fishing vessel, etc. can be imported into Thailand either temporarily or permanently.

In a temporary import of personal vehicles for a short visit into Thailand by owners, tax or duty allowance can be granted provided that they are to be re-exported within 1-2 months but not exceeding six months. Any persons intending to temporarily import personal vehicles have to closely observe the regulations and conditions of Customs.

For permanent import of vehicles, new vehicles of all types that are not yet registered abroad are allowed to be imported without applying for an import permit from the Ministry of Commerce. For used or secondhand vehicles, the importer needs to obtain an import permit from the Foreign Trade Department of the Ministry of Commerce before the arrival of the vehicles otherwise he/she will be liable to a fine equal to 10% of the price of vehicle but not less than Baht 1,000 or exceeding Baht 20,000. For new or used vehicles with the weight of less than 3500 kgs., the importer needs to obtain an import permit from the Industrial Standard Institute.

Know more about your tax obligations in Thailand. Contact MSNA for consultation.

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Tax registration and filing requirement for foreign companies in Thailand

Foreign companies carrying on business in Thailand, whether as a branch or an office must apply for tax identification number from the Revenue Department. An application form (Lor Por 10.3) together with other relevant documents such as a copy of the company’s registration license, house registration, etc., shall be submitted to the Area Revenue Office within 60 days from the date of registration or operation.

Moreover, all companies whether a Thai or foreign which carries on business in Thailand must submit the corporate income tax returns and payments twice a year:

  1. The half year tax return must be submitted (Corporate Income Tax PND 51 form) within two months after the end of the first six months. The amount of tax due shall be half of the entire year projection of the company’s annual net profit.
  2. The annual tax return (Corporate Income Tax PND 50 form) must be submitted within 150 days after the closing date of its accounting period.

Contact MSNA for further assistance in filing your half year corporate income tax return and annual corporate income tax return in Thailand.

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Thailand Work Permits – who are exempted?

Not all foreigners working in Thailand are required to obtain a work permit. Under Section 4 of Working of Alien Act B.E. 2551 (2008), exemptions from the work permit requirement are granted to foreign individuals performing certain duties and missions as follows:

  1. Members of consular missions
  2. Members of diplomatic corps
  3. Representatives of member countries and officials of the United Nations and its specialized agencies or institutions
  4. Personal servants coming from abroad to work exclusively for persons listed under items 1, 2 or 3
  5. Persons who perform duties on missions in the Kingdom under an agreement between the government of Thailand and a foreign government or international organization
  6. Persons who enter into the Kingdom for the performance of any duty or mission for the benefit of education, culture, arts or sports
  7. Persons who are specially permitted by the Thai Government to enter into and perform any duty or mission in the Kingdom.

Foreigner working in Thailand? Contact ThaiLawyers for your Thai visa and work permit needs.

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Thailand Corporate Income Tax – Exemptions

There are certain categories of taxpayers and income which are exempt from Corporate Income Tax in Thailand as follows:

  1. The categories of taxpayers which are exempt from Corporate Income Tax are as follows:

– Companies which were granted exemption from tax for a period of time by the Board of Investment under the Investment Promotion Act (1977);

– Foreign organizations under mutual agreements or diplomatic organizations.

– Specific foundations or organizations; and

  1. The categories of income which are exempt from Corporate Income Tax are as follows:

– A special purpose vehicle (“SPV”) for securitization is granted the tax exemption on income derived from a securitization project approved by the Office of the Securities and Exchange Commission (“SEC”). Nevertheless, the operation and allocation of cash inflow for the settlement of debts and expenses must follow the plan approved by the SEC. moreover, no dividends may be paid to the shareholders of an SPV until all remaining assets and benefits have been transferred by the SPV back to the originator of the securitization project and the SPV ceases to exist.

– Interest on foreign loans paid to financial institutions organized under a specific law and wholly-owned by a foreign government;

– Interest on government bonds paid to a foreign company not carrying on business in Thailand;

– Interest on foreign currency deposits received from a commercial bank used for lending to non-Thai nationals domiciled or residing abroad, foreign companies not carrying on business in Thailand and foreign banks including those with a branch or representative office in Thailand.

– Dividends received from foreign investments are exempt from tax provided that the Thai company receiving the dividends has held at least 25% of the shares with voting rights of the company paying the dividends for a period of not less than six months before the date on which the dividends were received and the dividends were derived from net profits in the foreign country taxed at a rate of not lower than 15%. In the event that a “special law” in a particular foreign country provides a reduced tax rate or exemption for the net profits, the limited company which receives the dividends is still eligible for the tax exemption;

– Dividends or share of profits paid by an unincorporated joint venture to a Thai company or foreign company carrying on business in Thailand;

– Dividends received from a Thai company by a company listed on the Stock Exchange of Thailand. Dividends received by a non-listed company from another Thai company are also exempt from tax, provided that the company receiving the dividends holds at least 25% of the total shares with voting rights without any direct or indirect cross-shareholding. In other cases where one Thai company receives a dividend from another Thai company, one-half of the dividend is exempt from tax. However, in all cases, the listed or non-listed company receiving a dividend must have held the shares in the company paying the dividend for at least three months before and three months after the dividend was received. In the case of an amalgamation (merger) or entire business transfer (EBT), the new or surviving company can include the period of ownership of any predecessor company that was part of the amalgamation or EBT when counting the three-month period;

Contact MSNA for your Thai accounting, taxation and other business needs.

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