Today, a client whom we helped register a 100% Myanmar owned export company in Thailand asked us if it is necessary for them to be registered in the VAT system. Here is our response:

Normally, a company is required to register into the VAT system if the gross sale has reached 1.8 million Baht in a year or the company hires foreigners and needs to apply for a work permit because the VAT registration certificate is one of the documents requested by the Thai immigration bureau. Anyway, the company may choose to register into the VAT system before that. And once you are registered into the VAT system, you have to submit your monthly VAT returns (PP.30) with or without sale transactions. You can decide to apply for VAT refund from the Revenue Department later but keep in mind that the tax officer will request to see all supporting documents before giving you the refund.

Thai Lawyers can help you register the company into the VAT system. MSNA Group can handle bookkeeping, accounting, tax filing and consultation on Thai taxes. We will ensure that you’re your documents are properly kept in files for easier reference when tax authorities request to see them. We can also assist you in representing your company with the Revenue Department especially when you apply for VAT refund. However, we will not be responsible to speed up the process because it is up to the tax officials when they can finish checking your documents and consider your application to claim VAT. You may find helpful information on what to do once a company is registered in the VAT system, and how withholding taxes in Thailand work.

We have a client who asked the question “As a shareholder, how much are you liable for the company’s debts?” Here is the detail of the question and our answer:

Question:

I bought the company (with Baht 4 M registered and paid up capital) from someone years ago. Now the business is not going well and I do not have THB 4 M to pay the company’s creditors. Should I reduce the capital of the company to 1M, or should I do anything?

Answer:

Your company’s capital has been fully paid up. You bought the shares from the old shareholders who had already paid up their shares. Therefore, as a shareholder you will not have to pay anymore into the company.

Your company’s registered capital has nothing to do with how much you (as shareholder) have to be liable if the company does not have enough to pay the creditors. If all the company’s shares have been fully paid up, the shareholders are not liable any more to pay the creditors of the company.

Look at how much liabilities on the company’s balance sheet are. They are the amount the company has to pay to the creditors. Then you need to look at the assets of the company and see how much you think you can get from them. The money you will get from all your assets is the amount you will have available to pay off your liabilities. If you can get less money from your assets than the amounts you owe others, then you will not be able to pay all the creditors. However, your creditors will be the one to take the company to the bankruptcy court. This is because the bankruptcy procedures in Thailand can be started only by a creditor against a debtor who is regarded insolvent and owes more than 2 million Baht in the case of a company (or more than 1 million Baht in the case of an individual). Please read here for the translation of Thailand Bankruptcy Act.

Consult with MSNA Group for accounting and tax services.

Many foreign companies want to enter the Thai market to sell their software or platform. Some want to just hire an employee in The Kingdom and do the business. Others want to set up 100% foreign owned company to sell software in Thailand. Both violate the Foreign Business Law. If you want to retail or wholesale your software and do not want to have majority Thai partners in your company, you will need to obtain a Foreign Business License for your 100% foreign owned company to sell software in Thailand. Most likely you will not get approved because Thai majority companies can sell software too. You need to be able to prove why Thailand needs your foreign majority company to do the business that Thai people can do.

Now we want to point out the law; Numbers 14 and 15 from Schedule 3 annexed to Thailand Foreign Business Law, are about retail and wholesale of goods:

14. Retail of goods of all kinds having the total minimum capital less than Baht 100,000,000 or having the minimum capital of each shop less than Baht 20,000,000; and

15. Wholesale of goods of all kinds having the minimum capital of each shop less than Baht 100,000,000.

If you can have Baht 100M capital, then you can have 100% foreign owned company to sell software in Thailand. However, most likely, you do not want to set up a company with Baht 100M capital. That means you will not be able to own the majority of your company in Thailand for doing such business.

Now, if you want to develop software or platforms in Thailand, you may be eligible to apply for the Board of Investment promotion, which will allow you to sell the software you make. Read here for how we answered questions about Thailand BOI companies for software developers.

Talk to MSNA Group today to discuss many solutions that we have for you.

Some of our clients, companies from Indore, India, got BOI to operate as 100% foreign ownership companies, with MSNA Group’s assistance. One got the BOI promotion for software activity for the software development business. Another one got the Board of Investment approval to operate in Thailand with 100% foreign ownership in the Trade and Investment Support Office category for their telecommunication engineering business. Hear what our clients say about working with MSNA Group:

“We are entities based in Indore, India, in the businesses of Software, Digital translation and Telecom Network Infrastructure.  We have been using Thai Lawyers Ltd./MSNA Group to set up our Thailand BOI companies since 2017. It is always a wonderful experience with the many services offered by MSNA Group. – Mr. Manmohan Saxena, Financial Controller, Diaspark Infotech Private Limited

We thank you so much for your business. Our team enjoy working with you too. We strive to have our clients’ most satisfaction.

Foreigners looking to have 100% foreign ownership in their business in Thailand, please contact ThaiLawyers or MSNA Group. We have solutions for you. Whether you are in the service business, IT, manufacturing, engineering, etc., you may be able to get a BOI company, which will allow 100% foreign ownership and many work permits.

Accounting for BOI companies with various sources of incomes

Most people misunderstand and assume that with the BOI status, they can receive incomes from many different sources. We want to explain here that having a BOI promoted company does not always mean you can always do any businesses and earn incomes from different sources. But in case you can (explain down here), you want to read further about accounting for BOI companies with various sources of incomes.

Thailand Foreign Business Law allows foreigners to do certain business activities. For most business activities, if you do not want to have a Thai majority partner, you need to get a permission to operate the business. One way for foreigners to own their business 100% is to get a BOI promotion whose main purpose is to promote investment in the businesses that truly benefit Thailand. The companies with BOI promotion can operate only the business activities that the BOI approved on the BOI certificates.

Now assuming that your company’s major shareholders are Thai, you may still want to get the BOI promotion for the tax benefits; corporate income tax exemption, machinery import duties reduction, etc. The benefits granted by the BOI are only for the business activities approved by the BOI. However, as a Thai company, you will be able to do other business activities too. This is when you have to be careful in your bookkeeping. In doing accounting for BOI companies with various sources of incomes, you need to separate the incomes and expenses into BOI business and non-BOI business. For the expenses that are paid for the whole company (benefiting both BOI and non-BOI businesses), you will have to allocate them using the most reasonable method. If 40% of the office space is used for the BOI business and 60% is for the non-BOI business, then you will allocate rents accordingly. If specific employees only work for your BOI business, then their salaries will be allocated to the BOI business while the other employees’ salaries will go to non-BOI business.

Contact us today to find out if your business is eligible for BOI promotion or if you need help with accounting.

Providing Motion Picture Support Services in Thailand

Foreigners who want to do the business of providing support services to motion picture business in Thailand can apply for BOI promotion under activity ”7.21 – Motion picture support services” to get distinct benefits and be able to have 100% foreign owned company in Thailand.

What support services can get a BOI certificate

Here is the short overview of conditions you have to comply with in order to get a BOI certificate:

“Motion picture support services shall include documentaries, television programs, animation and commercials, which have a scope of business, as follows:

• Rental services of movie production equipment and/or movie production props must have main equipment machinery, such as camera, grip equipment, light set, etc.
• Film development and duplication services must have main equipment/ machinery, such as film development machine, film duplication machine, digital film duplication machine, etc.
• Sound recording services must have main equipment/machinery, such as digital sound recorder, digital sound editing machine, digital sound mixing machine, etc.
• Picture technical services must have machines and equipment capable of creating special pictures that are not possible with cameras. The service providers must have main equipment and machinery, such as standard definition/high definition digital recorders, editing suites, digital compositing and special effect creation, etc.
• Coordination services for foreign movie production in Thailand must include coordinating with related government agencies for permits, location scouting and sourcing of staff and movie equipment. “

What to do to get the BOI Certificate

On the BOI website, you can download an application form. There are a lot of numbers and details that you will have to spend a lot of time and energy on trying to understand them and making them the way the BOI want to see and will approve your project. We suggest you get expert help from Thai Lawyers Ltd. so you can focus on getting clients and opening up new markets and making lots of money quickly.

Register a company

While waiting for the approval for Thailand BOI, company registration process can be started.

You can take a look at fully explained process of company registration here.

What else

Once you registered a company and got your BOI certificate you can start to conduct your business activity. However, you still need to apply for a Foreign Business Certificate to comply with Thailand Foreign Business Law.

Contact us today for consultation and read a similar article on how to set up a film production company in Thailand.

Franchise Food Business in Thailand

Anyone wanting to become a franchisor must have been operating their business for at least 2 years.

As a franchisee, here are the two ways you can operate your franchised business in Thailand:

• Register a Thai company with 51% shares held by Thai shareholders.
• If you do not have Thai partners to hold the majority shares in your business, then as a foreigner majority company, you will have to get a Foreign Business License, which is not easy to get.

After registering a company, you should:

• Sign an agreement with the franchisor, who is the owner of the brand and know-how.
• Apply with the Ministry of Public Health for the license to operate the place for cooking. This is so that you can have a cooking place in your restaurant.
• Submit sign board tax at District Office where your restaurant is located within 15 days after putting your sign board up.
• Register into VAT system and Social Security system.

These steps above take a lot of time and effort. Consult with MSNA Group, who will give you the best advice so you can spend time and energy on things that are more important.

Manufacturing plastic products from recycled plastic

Thailand is strengthening its role as a leading global hub of plastics manufacturer, with makers placing greater emphasis on value-added and environment-friendly products. The Thai plastics industry is growing consistently, and demand in the vigorous domestic economy is the key driver.

To promote sustainable growth in the plastics industry together with protection of the environment, the BOI classifies projects in the manufacture of eco-friendly plastics as priority activities of special importance to the country. Therefore, these are given maximum investment incentives.

The only condition that a business needs to follow in order to become a manufacturer for plastic products from the recycled plastics is that it must have plastic forming process using domestic plastic raw materials only.

The incentives that can be given to this project are those under A4 category which includes:

• 3 years of corporate tax exemption
• Exemption of import duties on machinery
• Exemption of import duties on raw materials used in the production for exports
• 100% foreign business ownership
• Permit to own land
• Permit to bring skilled workers and expert to work into the Kingdom.

If you are planning to register your business in Thailand, please do not hesitate to contact MSNA for more information. We are experienced in BOI application, setting up a company, getting Foreign Business Certificate, visa and work permit application.

Opening a Business in Thailand

Do you want to open a company in Thailand but don’t really know how to proceed or the process might seem difficult? Do not worry, we at MSNA can give you the best solution.

The procedures depend on the type of company that you will set up. Let’s discuss it in details.

A. Registering a Thai company with 51% shares held by Thai shareholder

Pros:

• Your company can do business right after registration.
• The process is much easier because you don’t need to get special license.

Cons:

• If you want to hire foreigners to work, your company must have 2 million Baht capital and hire 4 Thai employees in order to apply for one work permit.

How to register:

• You need at least 3 shareholders (if you have 2 foreigners, then you need 1 Thai).
• The number of shares to be held by Thai must be at least 51%. This Thai shareholder must show proof of funds (at least 6 months update of bank statement showing enough money to buy the amount of shares they will hold).
• Please read the steps here

B. Other options:

If new Thai limited company will be doing only export activities from Thailand or manufacturing goods in Thailand, then it can be foreign majority owned without obtaining a Foreign Business License.

• If you are American, you can register a company under the Treaty of Amity

• Get BOI certificate (Board of Investment)

Pros:

• It would be fine if you don’t have a Thai partner as long as your business activity falls under any category of eligible activities for BOI promotion.
• Tax exemption such as corporate income tax, tariff exemption or reduction on import machinery and raw material (depending on the company’s activity).
• Non-Tax privileges such as permission to own land, permission to bring foreign expert to work on the promoted projects, exemption on foreign ownership of companies and exemption from work permit and visa rules.

Cons:

• Not all activities are eligible to obtain a BOI certificate. Please checkout Foreign Business law here 
• If your company’s activity is not in this list, you will need to get Foreign Business License.

How to register:

• The process to get BOI is summarized here

Registering a business in Thailand can be troublesome but we at MSNA can make it convenient for you. Contact us now for initial consultation.