In general, some companies that receive Thailand BOI promotion get only non-tax incentives. Among those companies which can get both tax and non-tax incentives is ROH or Regional Operating Headquarters.
A Regional Operating Headquarters (ROH) can be incorporated in Thailand provided that it will provide the following services as well as other supporting services to ROH’s foreign branches or associated enterprises:
- General administration, business planning and coordination
- Procurement of raw materials and components
- Research and development of products
- Technical support
- Marketing and sales promotion planning
- Personnel management and regional training
- Financial advisory services
- Economic or investment research and analysis
- Credit control and administration
- Any other activities stipulated by the Director-General of the Revenue Department
A ROH can apply for BOI promotion. The criteria for ROH in order to qualify for tax privileges under the old scheme are as follows:
- Minimum paid-up capital must not be less than 10 Million Baht at the end of each accounting period;
- Provide services to its branches or associated enterprises in at least 3 countries;
- Half of its total income is derived from administrative, technical and other supporting services provided to its branches or associated enterprises in other countries and royalties received from outside of Thailand for the use of ROH’s Research and Development (R&D). The criteria can be mitigated to one-third of the total revenue in the first three accounting periods of its operation as ROH. In the case of force majeure, the Director-General of the Revenue Department may lower the income threshold for one accounting period; and
- Notify the Revenue Department of its incorporation as ROH. The benefits will be given starting from the notified accounting period onwards
ROH incorporated in Thailand can receive the following tax privileges under the old scheme:
- Corporate income tax at the rate of 10 % of net profits for income derived from services provided to ROH’s foreign branches or associated enterprises;
- Corporate income tax at the rate of 10 percent of net profits for royalties derived from ROH’s foreign branches or associated enterprises for the use of R&D done by ROH in Thailand. This benefit is also extended to royalties received from a third party providing services to ROH’s branches or associated enterprises using ROH’s R&D.
- Corporate income tax at the rate of 10% of net profits on interest received from ROH’s foreign branches or associated enterprises for loans granted, provided that such loans are made from other sources and extended to ROH’s branches or associated enterprises;
- Tax exemption for dividends received by ROHs from associated enterprises;
- Tax exemptions for dividends paid out of ROH’s concessionary profits to its shareholders not carrying on business in Thailand;
- Accelerated depreciation for buildings at the rate of 25% on the date of acquisition. The residual value can be depreciated within 20 years.
Privileges for foreigners working for ROH under the old scheme:
- Foreigners may opt to be taxed at 15% of gross income. By doing so, the income received must not be calculated together with other income and cannot claim for refunds. This privilege is available only to foreigners employed by ROH and are limited to their first four years of employment in Thailand. It does not matter how extensively the beneficiaries have to travel abroad during the employment period. To be entitled for the benefits once again, foreigners have to discontinue employment with any ROH in Thailand for more than 365 days.
- Foreigners who are sent to work in another country by ROH will receive a tax exemption in Thailand on their income paid by the foreign company for services rendered abroad, provided that such income is not directly or indirectly deducted as ROH’s nor its associated enterprise’s expenses in Thailand.
Interested in setting up a Regional Operating Headquarters in Thailand, contact for Thailawyers further consultation.