What is double taxation? How to avoid its effects to individuals and business entities?

Answer:

Double taxation is a case where tax is being levied twice from the same amount of income in two or more states, e.g. Thailand and other countries.

In order to avoid or eliminate double taxation, Thailand has entered into Double Taxation Agreement with other countries. Currently, Thailand has agreement with 55 countries whereas both residents of Thailand and the contracting states will benefit from the agreement.

In a double taxation agreement, there are credit and exemption methods. It also covers taxes on income and capital of individuals and juristic entities as well as the petroleum income tax. The petroleum income tax and the local development tax (i.e. Property tax) are covered under some treaties but Value Added Tax, Specific Business Tax and Municipal Tax are not covered under any tax treaties.

Thai double taxation treaties generally place a resident of the Contracting State in a more favorable position for Thai tax purposes than under the domestic law, i.e. the Thai Revenue Code. Thus, in the event that the rate of tax stipulated in the Revenue Code is different from that of a double taxation agreement, the rate which is more beneficial to the taxpayer will be applied.

Thai double taxation treaties in general provide income tax exemption on business profits (industrial and commercial profits) earned in Thailand by a resident of a Contracting State if it does not have a permanent establishment in Thailand. Moreover, the withholding taxes on payments of income to foreign juristic entities not carrying on business in Thailand may be reduced or exempted under the double taxation treaties.

Contact MSNA for your Thai accounting and tax questions and other business needs.

Thailand’s gems and jewelry industry has emerged as a major international player in production, processing and trading. Even while undergoing rapid growth, the industry in Thailand still has plenty of room for development.

The fine jewelry industry in Thailand is labor-intensive and relies on skilled craftsmanship, beautiful designs and modern technology to produce jewelry competitive in international markets. Multinational corporations can leverage Thailand’s unique advantages, including high-quality Thai artisanship in the areas of cutting and polishing colored stones and diamonds, sufficient supply of skilled workers at low cost, natural resources and government promotion.

Thailand has established itself as a competitive production base. Many world-class firms have relocated their operations to Thailand to reduce production costs and benefit from the well-known delicate craftsmanship of Thais. Polished diamonds from Thailand are admired around the world for their high quality. Diamond polishing requires skilled craftsmanship and the operation of sophisticated machines.

Moreover, there is an opportunity for foreign firms to utilize Thailand’s expertise by investing in facilities and equipment with the excellent support of Thailand’s Board of Investment. The Thai BOI offers many attractive non-tax and tax incentives to investors. Other organizations supporting the continued development of the gems and jewelry industry in Thailand include:

– Gems and Jewelry Industries Center, under the Department of Industrial Promotion of the Ministry of Industry

– Department of Export Promotion, under the Ministry of Commerce

– Gem & Jewelry Institute of Thailand

– Thai Gem & Jewelry Traders Association

– Thai Diamond Manufacturers Association

– Thai Gem & Jewelry Manufacturers Association

– Chantaburi Gem & Jewelry Association

– Indian-Thai Diamond and Colorstone Association

– Thai Diamond Manufacturers Association

– Gold Traders Association

– Thai Jewelers Association

– Jewel Fest Club

– Thai Silver Exporter Club

– Gemopolis Industrial Estate

– Gemological Institute of America Research Thailand (GRT)

– Asian Institure of Gemological Sciences

– IGI Bangkok, Thailand International Gemological Institute

– Gem and Jewelry Institute of Thailand

Contact MSNA for Thai company registration and obtaining the BOI promotion for your gems and jewelry business in Thailand.

The Thai government has urged the public and private sectors to adjust themselves and seek new opportunities brought by the upcoming ASEAN integration. ASEAN Community, which will take effect in 2015, is expected to bring challenges and greater opportunities as well. If all sectors of society are well-prepared for changes, they will benefit from new opportunities.

The government had announced the ASEAN issue in its policy so that both public and private sectors would be able to prepare themselves. At the same time, they should work together in setting long-term goals to achieve when the ASEAN Community is in place.

In preparation for the ASEAN Community, the government has also worked out four major strategies as follows:-

(1) In the first strategy, the government will focus on enhancing Thailand’s competitiveness and developing it into a higher-income nation. In this regard, land zoning will be introduced to reduce production costs in agricultural production. The government will invest in transport infrastructure and develop further small and medium-sized enterprises and the “One Tambon, One Product” program.

(2) The second strategy aims to promote social equality by developing the quality of Thai people, reducing disparities between low-income and high-income earners in the country, providing greater opportunities for the people, and introducing education reform.

(3) The third strategy emphasizes “green growth” by promoting a way of life that is environmentally friendly, such as the use of solar energy and the reduction of green-house effects.

(4) In the fourth strategy, the government will create a balance in national development and improve public sector management to order to enhance the efficiency of national administration. For the private sector, the government will seek business partnerships to create regional production networks, while upgrading the standards and quality of products in response to the demands of consumers in ASEAN and beyond.

The government also urged the members of the public to improve their language skills and prepare for the free flow of products, services and labor. The people must still preserve their culture within the diversity of ASEAN and that they should also learn new things and new alternatives brought about by ASEAN integration.

Implementation of these strategies and adjustment for new opportunities brought by AEC has yet to be announced. Contact MSNA for company registration, work permit & visa, Thai labor law and further information about doing business in Thailand.

Conditions for Trade and Investment Support Offices

1. Projects must be approved by relevant government agencies.

2. Annual operating expenses must not be less than Baht 10 million.

3. Must have a business plan and scope of business as approved by the Board as follows:

3.1 Monitoring and/or servicing affiliates including providing or letting office or factory building to company’s subsidiary

3.2 Advisory services on business operations except those engaged in buying and selling securities and foreign currency exchange. As for accounting, legal, advertising, architectural and civil engineering businesses, business licenses must be obtained from the Department of Business Development or related governmental agencies prior to submitting an investment promotion application

3.3 Information services on goods sourcing

3.4 Engineering and technical services, except those related to architecture and civil engineering

3.5 Testing and certifying standards of products, production and services that do not qualify for investment promotion under activity 7.21

3.6 Export trading

3.7 Business activities related to machinery, engines, tools and equipment such as:

(1) Importing for wholesaling

(2) Training services

(3) Installation, maintenance and repairs

(4) Calibration that does not qualify for investment promotion under activity 7.22 of the list of promotional activities attached to this Announcement

3.8 Software design and development that does not qualify for investment promotion under software activity

3.9 Wholesaling of products manufactured in Thailand

Rights and benefits

Only non-tax incentives shall be granted, which are as follows:

• Permit for foreign nationals to enter the Kingdom for the purpose of studying investment opportunities.
• Permit to bring into the Kingdom skilled workers and experts to work in investment promoted activities.
• Permit to own land.
• Permit to take out or remit money abroad in foreign currency.

Interested to register a TISO in Thailand, contact MSNA for consultation.

One-Stop Service Center provides one-stop services for temporary stay in the Kingdom of Thailand to any qualified foreigner in accordance with the Regulations of the Office of the Prime Minister Concerning the Establishment of the Visa and Work Permit Center B.E. 2540, as amended.

Not all foreign applicants can be qualified to use the One-Stop Service Center. The following applicants are eligible to submit an application and may receive services at the Visa and Work Permit Center:

1. An applicant who is an investor, manager or expert and his/her parents, spouse or children who are his/her dependants and part of the family.
2. An applicant who entered into Thailand to work at the representative office of a foreign juristic person for any international; trading business or overseas regional office, and his/her parents, spouse or children who are his/her dependants and part of the family.
3. An applicant who is a manager, expert or professional obtaining special rights under the laws governing petroleum, investment promotion and the Industrial Estate Authority and his/her spouse or children as dependants.
4. An applicant who entered into the Kingdom of Thailand to perform duties in mass media as authorized by the government and his/her parents, spouse or children as dependants and part of the family.
5. An applicant who is a researcher and developer in science and technology and his/her parents, spouse or children as dependants and part of the family.
6. An applicant who is the officer of a foreign bank, international banking facilities of a foreign bank or a representative office of a foreign bank certified from the Bank of Thailand and his/her parents or children as dependants and part of the family.
7. An applicant who is an expert in information technology and his/her parents, spouse or children as dependants and part of the family.
8. An applicant who performs duties at a regional operating headquarters and his/her parents, spouse or children as dependants and part of the family.
9. An applicant who entered into the Kingdom of Thailand due to certain obligations made between the Thai government and a foreign government.
10. An applicant with requirements as specified by the Minister in the Government Gazette.

It is important to note that an applicant who is a manager or expert must work in a juristic person having a paid-up registered capital or working capital of no less than 30 million Thai Baht in order to receive services at the One-Stop Service Center.

Interested in doing business in Thailand and obtaining Thai work permit & visa, contact MSNA for further assistance.

The Thailand Board of Investment may grant promotion to the investment project which incorporates appropriate measures for the prevention and control of harmful effects to the quality of the environment in the interest of the common good of the society and for the protection of mankind and nature. The BOI may also grant promotion to the investment project which is economically and technologically sound. Consideration will be given to:

(1) The existing number of producers and production capacity in the Kingdom and the size of production capacity to be created under promotion compared with demand estimates;

(2) The prospect for which such activity will expand the market for the products or commodities produced or assembled in the Kingdom and will encourage the production or assembly in the Kingdom;

(3) The quantity and proportion of the resources available in the Kingdom including the capital. Raw or essential materials and labor or other services utilized;

(4) The amount of foreign currency which may be saved or earned for the Kingdom;

(5) The suitability of the production or assembly processes;

(6) Other requirements which the Board deems necessary and appropriate.

Interested in Thailand BOI company registration, contact us for expert advice today.