If your company outside Thailand buys goods from a Thai supplier and you have someone in the country (your agent, employee or supplier) deliver it to your Thai customer, you are considered doing business in Thailand, which according to the Foreign Business Law, your company needs to apply for a Foreign Business License in order to operate as such legally. The business activity is considered retail or wholesale of goods in Thailand, which are in List three of the Foreign Business Law.

However, if you pay the Thai supplier from your country and have it delivered to your country before you send it back into Thailand to your Thai customer, then it is considered an international trade and you do not need to get a Foreign Business License before you can operate such business.

MSNA Group of companies helps international clients in the areas of foreign business registration, be it representative office, branch office, BOI company, and accounting and taxation. Our clients include the American Chamber of Commerce (AMCHAM) and international groups of companies having an affiliate in Thailand. Contact us for any questions regarding your doing business in the land of smiles.

Does the nature of your business involve industrial chemicals? Are you planning to take your operation to Asia or specifically to Thailand? Do you wonder if this is possible? The answer is YES and we can assist you to make it happen. Your industrial chemicals business can benefit from Thailand BOI company registration as long as your products are not paint, cleaning products, automobile lubricants, compound chemical fertilizers, insecticides, herbicides or cement based adhesives.

There are the advantages of enlisting your business under BOI (Board of Investment) in Thailand.

• Corporate tax amnesty for 3 years
• No import tax for machinery
• No import tax for raw materials for one (1) year (can be extended according to BOI rules & eligibility)
• Other non-tax incentives

Read Thailand BOI benefits here.

Don’t worry even if your industrial chemical products are similar to those mentioned above. You can still operate your factory here without Thailand BOI.

Sounds interesting and beneficial for your industrial chemicals business? Drop us an email info@MSNAgroup.com. Get an advice from the experts in Thailand BOI company registration. MSNA Group of companies are experts in providing consulting to foreigners wishing to set up their business operation is Thailand at very reasonable prices for world class services.

Thailand Board of Investment launched the Cluster-based Special Economics Development Zone Policy to enhance investment potentials and competitiveness. There are Super Cluster and other targeted clusters. Software is one of the activities granted highest incentives under Super Cluster policy.

Without the cluster policy, embedded software development business normally can get 8 years of corporate income tax exemption while enterprise software and digital content can get 5 year income tax exemption.

Under Super Cluster policy, all types of software development are granted 8 years corporate income tax exemption without cap plus 5 years 50% income tax reduction and import duty exemption on machinery if operating in either Chiangmai or Phuket.

Additionally, the international specialist may enjoy the personal income tax exemption, details of which will be announced soon by the Ministry of Finance.

Apart from the above tax related benefits, other incentives include consideration of granting Permanent Residence to the leading specialist and permission for foreigners to own land to implement the activities that receive Thailand BOI promotion. – However, we checked with the Immigration Office and they do not really have any special treatment regarding permanent residence yet.

General Conditions for BOI incentives

• The business have to spend THB 1.5 M in IT employees’ salaries per year.
• Projects must include software development process specified by the Software Industry Promotion Agency (SIPA).
• Projects with an investment of 10 million baht or more (excluding cost of land and working capital) must obtain a quality standard certificate from SIPA or receive a Capability Maturity Model Integration (CMMI) quality standard certificate or any equivalent standard within two years from the full operation start-up date. If the project fails to meet such conditions, one-year corporate income tax exemption shall be withdrawn.
• Revenue derived from sales or the provision of services that are directly related to a promoted software business shall be regarded as revenue of such promoted businesses.

Additional condition for special incentive under Super Cluster

• The business must have a cooperation with academic institutions / research institutions / centers of excellence in the designated areas e.g. Talent Mobility / Work-integrated Learning / Co-operative Education / Dual systems or Cooperation in development of human resource or technology as approved by Thailand Board of Investment
• The BOI applications must be submitted by the end of 2016.
• The production or operation must start by the end of 2017. (Extension is possible if deemed appropriate.)

Read Thailand BOI promotion process for more information.

Contact us today for your BOI needs.

We often receive inquiries concerning Thailand company registration with BOI. For the benefit of those wondering whether to apply for BOI or not, below are some questions from one of our clients before they decided to register their software business and apply for BOI privileges.

Questions:

We are a software developer from Denmark. As what we understand, we must apply for BOI status, and we know that this may not be approved 100%. However, we will appreciate if you could give us advice on the following:

1. What are the benefits of getting BOI promotion?
2. The registered capital (1M Baht), do we have to show this amount? If not, what does it actually mean that it is “registered” then?
3. We would like to have the company 100% owned by Danes, not Thais. Does that weaken our case with the BOI?

Answers:

1. Benefits of BOI promotion

If what your new company will do is to develop software, then we can help you get a BOI promotion. Below are the actual benefits that will be given to your software business if you get approved.

Under Section 25, the promoted company can bring in the foreign technicians or experts, spouse and person under the guardian of such foreign technicians or experts, in to Thailand. The number of foreign technicians or experts and the period to work and stay in Thailand will be fixed as the Committee deems appropriate.

Under Section 26, the foreign technicians or experts, who are authorized to stay in Thailand under Section 25, shall be allowed to work only in the position that the Committee approves throughout the approval period.

Under Section 27, the promoted company is permitted to own the land according to the criteria approved by the committee.

Under Section 28, the promoted company is exempted for the import duty for the machinery as approved by the Committee.

Under Section 31;

– Paragraph 2, the promoted company is exempted for the corporate income tax for the net profit generated from the promoted activity for a period of 5 years from the date you start to generate such income.

– Paragraph 4, in case the promoted company suffers loss during the period of corporate income tax exemption under paragraph 2, the promoted company is allowed to carry over the loss to deduct from the net profit generated after the exemption period for a period of FIVE years after the end of the exempted period. The promoted company may deduct the loss from the net profit of any year or many years.

Under Section 34, the dividends derived from the promoted activity, which is exempted from corporate income tax under Section 31; do not have to be included for income tax calculation throughout the period of corporate income tax exemption of the promoted company.

Under Section 37, the promoted company is allowed to transfer money to overseas in foreign currency.

If you get BOI approval, your registered capital can be only Baht 1M (100% owned by the 2 Danes, and able to get more than 2 work permits), instead of Baht 4M if you will do it another way (51% Thai and 49% foreign share structure) because you will need 2 work permits for the 2 Danes (For non-BOI companies, the ratio of work permit to paid-up capital is 1: Baht2M.)

2. Registered capital

The registered capital is the capital you registered with the Department of Business Development that the company will have, but it can be different from the paid-up capital, which means the shareholders put their money into the company according to the number of shares held by them. In most cases, because the foreigner in the company needs a work permit, the paid up capital and registered capital both need to be Baht 2M for the company to be able to sponsor one work permit.

3. 100% foreign ownership

It will not affect the result of BOI approval at all whether you decide to register the company as 100% Danes owned. Actually the BOI’s purpose is to attract investment to the country so it is fine that the company will be 100% owned by foreigners.

We hope that the above information would be a great help to those who are still undecided. Please contact MSNA for expert advice on Thailand BOI application.

Business people frequently have problems concerning the Thai taxation and cannot find the answers in the Revenue Code. Therefore, it is necessary for them to consult with the revenue department of Thailand. In some cases, you can ask an official verbally to get answers. However the best way is to write a letter detailing the tax question to the Revenue Department. The answer obtained with this process is called ‘’ruling’’.

Ruling is a letter written by people who have tax problems for consulting with Revenue Department to get their official answers. The following is how to get a Revenue Department’s ruling.

1. The letter should be addressed to the Director-general of the Revenue Department.
2. You should describe the problem clearly with the details and attach it with supporting documents.
3. If possible, you should ask the question in reference to the Revenue Code by specifying sections or terms in the code because the answer will refer to the terms and sections of the law.
4. You should keep a copy of the answer from the Revenue Department (ruling) and a copy of your letter for future reference.

However, ruling is only a legal opinion given by the legal team of the Revenue Department. It is not the law. Taxpayers are not obliged to follow it.

Contact MSNA for any tax and accounting needs in your doing business in Thailand.

Today, we got this inquiry regarding the expenses of a branch office in Thailand.

Question:

For the expenses of our Thailand branch office, can it only be paid from our branch office account or the head office can pay on its behalf and then invoice the branch office later for reimbursement?

Answer:

Expenses incurred by the branch office can be paid by anyone. The head office can pay expenses on behalf of the branch but please make sure the branch get all invoices and receipts from the vendors in its official name and address. Also, the branch must withhold taxes where applicable. Thus, then the branch has to pay back to the head office, you can just send a memo or an invoice.

Contact MSNA for your accounting and tax questions.

With regard to the recently issued Announcement of the Board of Investment No. 1/2557, the Thailand BOI is encouraging both BOI-promoted and non-BOI promoted manufacturers to invest additionally for the improvement of production efficiency. This improvement is to be achieved through 3 measures as follows:-

The announcement includes 3 measures as follows:

1. A measure to promote energy conservation, alternative energy utilization, or reduction of negative environmental impact. The investor must submit an investment plan detailing proposed upgrading of machinery to save energy, a plan to introduce alternative energy into the project or a plan to reduce damaging environmental impact according to the stipulated criteria.
2. A measure to promote investment to upgrade manufacturing technology and machinery to increase production efficiency. Investors must submit an investment plan detailing replacement or modification of machinery used in automated production lines.
3. A measure to promote investment in research and development to upgrade manufacturing technology and advanced engineering designs for improving efficiency. Investors must submit an investment plan for research and development or implementation of advanced engineer designs that conform to the stipulated criteria. Investors with large projects must invest no less than 1% of their total revenue for the first three years from the date of application submission in research and development or advanced engineering designs. For SMEs, projects must invest no less than 0.5% of their total revenue for the first three years from the date the application is submitted in research and development or advanced engineering designs.

Interested investors for incentives under these measures must operate businesses of a type that is specified on the BOI list of businesses that are eligible for promotion. The minimum capital investment requirement for each project must not be less than 1 million Baht, excluding land cost and working capital. For Small and Medium Enterprise (SME) projects, the BOI requires an investment value of Baht 500,000, excluding the cost of land and working capital.

The incentives given to approved projects in all zones include exemption from import duty on machinery and a three-year corporate income tax exemption based on the revenue of an existing project, and will not exceed 50% of the total investment value under this measure, excluding land cost and working capital. Project applications must be submitted by December 31, 2017 and the projects must be completed within three years from the date the promotion certificate is issued.

The investment promotion measures to improve production efficiency are in accordance with the National Economic and Social Development Plan No. 11 which outlines a strategy for restructuring the economy to ensure quality and sustainable growth, with the focus on improving manufacturing production efficiency and promoting the use of advanced science, technology and innovation while also furthering the use of clean energy and alternative energy.

Know more about Thailand BOI promotion and its benefits for your business. Consult with ThaiLawyers for getting BOI certificate, Thai company registration, visa and work permit application.

The Thai Immigration has recently announced the new regulations for extension of temporary stay in Thailand. Under the Order of Royal Thai Police No. 327/2557 which has been effective since 29 August 2014, the regulations that have been changed are as follows:

1. Foreign nationals of certain countries entitled for Visa Exemption for tourism purposes and permitted to stay in the Kingdom for 30 days upon arrival according to the Interior Ministerial Announcements, shall be granted extension of stay for one time and not exceeding 30 days from the expiry date.
2. In case that the application for extension of temporary stay is not approved due to incomplete qualifications and the foreigner has been granted extension of stay for 7 days in order to leave the Kingdom, such foreigner is not able to appeal for reconsideration of non-permission.
3. For the reason of study in a private educational institution particularly for Non-school system (such as Language School etc.) each permission of stay shall be granted for not longer than 90 days but the total permitted period of stay for this reason consecutively shall not exceed one year from the date of entry into the Kingdom.
4. For the reason of performing duties in a public charity organization, a foundation, a non-government organization, an association, a foreign chamber of commerce, the Federation of Thai Industries, in case of no certification letter by the relevant government department, each permission of stay shall be granted for not longer than 90 days but the total permitted period of stay for this reason consecutively shall not exceed one year from the date of entry into the Kingdom.

Contact ThaiLawyers for your visa and work permit questions.

Thailand BOI has recently approved the seven-year draft investment promotion strategy which will commence from 2015 to 2021. The new investment strategy will shift from broad-based to focused and prioritized investment promotion that will lead to the restructuring of the Thai economy. It will also move the country forward to become a higher-income economy with sustainable growth in the long run.

The new strategy will still offer promotional privileges to seven groups of industries: agro-industry and agricultural products; mining, ceramics and basic metals; light industry, metal products, machinery and transport equipment, electronics industry and electrical appliances; chemicals, paper and plastic; and services and public utilities although greater emphasis will be placed on high technology, high added value, research and development or design and environmentally friendly activities.

There are two types of incentives to be offered: (1) activity-based incentives and; (2) merit-based incentives. For instance, basic incentives will be offered in accordance with the types of activities. Additional incentives will also be provided for projects that will benefit the country, such as research and development, high-skill development, and the distribution of wealth to regional areas.

Meanwhile, the previous zoning policy, whereby Thailand was divided into three zones for investment purposes, will be revoked. It will be replaced by the promotion of new regional clusters in order to create new investment concentration in each region and stronger value chains.

Moreover, the new strategy will attach importance to both inbound and outbound investment promotion. This will help ease constraints in terms of domestic resources. It will also enable the country to seek new business opportunities for the Thai private sector, especially when the ASEAN Economic Community (AEC) goes into full effect and Thailand plays a greater role in the international arena.

In this regard, the first target countries include Indonesia, Myanmar, Vietnam, Cambodia and Laos. The second ones are China, India and other ASEAN nations, while the third group includes Central Asia, South Asia and Africa.

Contact MSNA for company setup, BOI promotion, Foreign Business License, factory license, visa and work permit application in Thailand.

One of our tax clients is planning to purchase a condominium unit in Bangkok. He asked us if there is any tax to be paid to the authorities. Today, we answer his question based on two scenarios: if the condominium will be purchased under his name or the company’s name.

1. When he buys it in his name, he needs to hold it for 5 years otherwise, he has to pay for Specific Business Tax (SBT) 3.3% of the selling price when he sells it on top of the 2% transfer fee and his personal income tax because it will be considered as purchasing a condo for business purpose. However, if he sells the unit after 5 years, he doesn’t have to pay for SBT of 3.3% although he needs to pay for the transfer fee and income tax.

2. When the purchase is done in company’s name, the company has to pay the transfer fee plus Specific Business Tax 3.3% of the selling price whether he sells it before 5 years or after. Although we are not yet sure how much corporate income tax the company has to pay in the future, tax will be based on the net profit of the company, part of which is the profit from selling the condominium. Furthermore, if he use it personally, when the Revenue Department comes to check the condominium and they know that he is staying there, they will make the company charge him for rent and this will be part of company’s income. The company can also use the depreciation of the condo as company’s expenses.

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