In forming a company in Thailand, company promoters are responsible for registering the company with the Ministry of Commerce (MOC). The promoters must be individuals, not juristic persons and must be available to sign documentation during the registration process.

For a private limited company, there must be a minimum of 3 promoters and at least 15 promoters for a public limited company. The promoters of a private limited company must be 12 years of age or older while for a public limited company, the promoters must be 20 years of age or older.

Each promoter of a private limited company is required to be among the company’s initial shareholders immediately after the company’s registration and is required to hold a minimum of one share upon the company’s registration. They are generally free to transfer those shares to existing shareholders or third parties, thereafter, if they wish. It is not required for the individuals serving as promoters to reside in Thailand.

The promoters of a public limited company must also be among the company’s initial shareholders immediately after the company’s registration. All promoters must subscribe for shares, which must be paid up in an aggregate amount equal to or not less than five percent of the registered capital. Said shares may not be transferred before the expiration of 2 years from the date of the company’s registration, unless specifically approved at a meeting of shareholders. Nevertheless, it is required that one-half of the individuals serving as promoters have their domicile in the Kingdom of Thailand.

Promoter’s potential legal liability is generally limited to the par value of the shares they will hold after registration is completed. The promoters are also responsible for paying expenses associated with the company’s registration. After registration, however, the company may choose to reimburse the promoters for those expenses.

Interested in forming a company in Thailand, contact ThaiLawyers for more information.

Are foreigners allowed to open foreign currency bank account in Thailand? How about a bank account in Thai Baht currency?

Yes, foreigners or non-residents may open and maintain foreign currency bank accounts with authorized banks in Thailand without limit. The accounts can be freely credited with funds coming from abroad. Payments from Thai residents or borrowing from authorized banks can be deposited subject to supporting evidences. Moreover, balances on such accounts may be freely withdrawn.

Non-residents may also open Thai Baht accounts with authorized banks in Thailand as follows:

1) Non-resident Baht Account for Securities (NRBS): The account may be debited or credited for the purpose of investment in securities and other financial instruments such as equity instruments, debt instruments, unit trusts, derivatives transactions traded on the Thailand Futures Exchange and the Agricultural Futures Exchange of Thailand;

2) Non-resident Baht Account (NRBA): The account may be debited or credited for general purposes (i.e. other than investment in securities) such as trade, services, foreign direct investment, investment in immovable assets and loans.

The total daily outstanding balances for each type of account shall not exceed THB 300 million per non-resident. However, transfers between different types of accounts are not allowed.

Contact MSNA if you need assistance in preparing the requirements to open a bank account in Thailand.

One of our accounting clients has asked us about the preparation of inventory report.

Question:

Is it mandatory for all Thai companies to prepare the inventory report? Do you provide this service?

Answer:

Sorry, but we do not prepare inventory movement report for our clients. It is the responsibility of every VAT registered Thai company that produce, import or sell products.

The Revenue Code of the Thai Revenue Department specifies that VAT registrants must not only keep in input VAT and output VAT reports but also stock or goods and inventory records. Since your company sells products, you need to print out and prepare the inventory movement report in the format set by the VAT law (it is like a stock card, each model one report). Even though you never keep stock, you need to prepare this report.

Each model has to have a stock card in the format set by the Thai tax law. Apart from the header of the report, each stock card contains the following columns:

Date, Document Number, Quantity In, Quantity Out, Balance

And when you import it or sell your product, you need to fill out this report within 3 days. If the Revenue Department comes to check your company, they will ask to see this report. And if they see that you do not have it, or it is not correct, they will fine you.

Contact MSNA for your Thai accounting and tax questions.

The Revenue Department has recently set the condition for a Specific Business Tax exemption on certain businesses. Under the Royal Decree no. 571, such conditions are as follows:

On Employees Loan

– Interests from loans to employees by policy of a provident fund or other similar funds which give loan to employees for the company or registered ordinary partnership.

On Inter-company Loan

– Inter-company loans between companies not carrying on business of commercial banks, finance companies including payment for bills of exchange issued by or deposits made to financial institutions under the law on the financial institution in return for normal interest rate.

Contact MSNA for your Thailand accounting and tax questions.

In order to relieve the fiscal burden of the government and to respond to current and future economic situations, the Board of Investment prescribes investment policies as follows:

1.1 The efficiency and effectiveness of tax privileges given shall be enhanced. Privileges shall be granted to projects that actually benefit the economy and good governance shall be used for managing and supervising the application of tax and duty privileges. Promoted entities shall report the operating results of their promoted projects to the Board of Investment for review prior to the application of tax and duty privileges for that year.

1.2 Every promoted project that has investment capital of 10 million baht and upwards (not including land and working capital) must obtain ISO 9000 certification or similar international certification. This is to promote development of quality and production standards in Thai industries and, thereby, to enhance the competitiveness of Thai industry in the world market.

1.3 Previous conditions on exports and use of local material are repealed so that the criteria for promotion will be in line with international trade and investment agreements.

1.4 Special promotion shall be given to regions or areas with low income and inadequate investment facilities. Maximum tax and duty privileges shall be given to these regions or areas.

1.5 Importance is given to small and medium industries by applying a minimum level of investment capital of 1 million baht (excluding cost of land and working capital) for projects eligible for promotion.

1.6 Priority is given to activities in agriculture and agricultural products, projects related to technological and human resource development, public utilities and infrastructure, environmental protection and conservation and targeted industries.

Know more about Thailand BOI promotion and its privileges. Contact ThaiLawyers for consultation.

Can a company providing R&D activities apply for BOI promotion in Thailand?

Thai companies providing research and development business can apply for BOI promotion. Qualifying R&D activities are defined as follows:-

1. Basic research – involves theoretical or operational activities that are conducted to explore new knowledge from basic natural phenomena and factual observation, without initially considering the application.
2. Experimental development – involves a systematic operation based on the knowledge from research and/or experience with the objective of producing new materials, products or inventions; to install new procedures, systems and services; or to substantially improve the existing products.
3. Applied Science – involves research to explore new knowledge with an objective to put it in practice for specific use.

Interested in getting Thailand BOI, contact ThaiLawyers for application requirements and procedures.

Stamp duties are taxed on instruments and not on transactions or persons. For the purposes of stamp duty, an instrument is defined as any document chargeable with duty under the Revenue Code.

The instruments liable to stamp duty include the following:

– transfers of land,

– a lease,

– inter alia,

– power of attorney,

– promissory notes,

– letters of credit,

– travelers cheques,

– stock transfers,

– debentures,

– mortgages,

– life assurance policies,

– annuities

Who are liable to stamp duty?

1. Only instruments listed in the stamp duty schedule are subject to the stamp duty and the persons liable to pay stamp duty are those listed in column 3 of the schedule. They are for example, the persons executing the instrument, the holders of the instrument or the beneficiary such as landlord, contractor, lender, insurer, etc.
2. If an instrument liable to duty is executed outside of Thailand, the first holder of the instrument in Thailand shall pay the duty by stamping at the full amount and cancelling within 30 days from the date of receiving the instrument. If he does not comply as such, the instrument shall not be deemed duty stamped.

If he does not comply with the provisions of Paragraph 1, any holder of the instrument shall pay the duty by stamping at the full amount and cancelling and then he shall be able to submit the instrument for collection, endorsement, transfer or claiming of benefit.

Any holder who acquires possession of the instrument in accordance with this Section before the expiration of the time limit specified in Paragraph 1 may pay the duty by stamping at the full amount and cancelling and he has the right of recourse against the previous holders.

3. If a bill submitted for payment is not duty stamped, the recipient of the bill may pay the duty by stamping at the full amount and cancelling and may either have the right of recourse against the person liable to duty or deduct the amount of duty from the payment due.

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

From the day the company has registered in the VAT system of Thai Revenue Department, the company director and the staff member have to always ask for an official receipt from the vendor when buying goods or services for company’s use otherwise, such expense cannot be used to reduce the company’s profit and may end up having to pay more tax. Even when buying goods or services from individuals (who are not companies), they still can issue a receipt or some kind of documents to prove that they received money from the company director or staff member. In this way, the company can have legitimate receipts that are tax deductible.

When asking for an official receipt, if the vendors (companies or individuals) are registered in the VAT system, they normally will ask to charge 7% VAT and because they charge VAT, they will also have to issue a tax invoice for you. It is important to know the information about Thailand VAT and tax invoice.

The company also needs to withhold taxes from vendors. Please read this article about withholding taxes from vendors for better clarifications.

Contact www.msna.co.th for your Thai accounting, taxation and other business needs.

Today, we got a question from one of our accounting clients whom we also assisted in getting BOI promotion for their software business in Thailand.

Question: As you may have already known, our sister company (which is not BOI promoted) has proposed to develop an application that will enable users to download e-books in exchange for payment on a monthly basis. Would this activity be considered as sales of goods which I believe are VAT-exempt or will this be qualified for zero rate VAT in case our customer downloaded and used the e-book abroad.

Answer:

We verified it with the Thai Revenue Department and according to them, downloading of e-books is not categorized as sales of newspaper, magazine and textbook but it should be treated as a service which is subject to VAT. Hence, the zero rate VAT applies if such service is used overseas.

Contact MSNA, English speaking Thai accountants for your Thai accounting and tax questions.

Today, we got a question from one of our accounting clients.

Question:

We registered the company into the VAT system because I need it for my work permit application. However, are we obliged to charge VAT even though we only do export activities in Thailand? If so, what rate? Please advice.

Answer:

Under the value-added tax (VAT) system of Thailand, you are allowed to export goods and services tax-free, in short; you are entitled to a zero VAT rate. This means that you are not required to charge VAT and therefore, can claim back the input VAT (VAT that you paid). However, it takes time before you can refund your VAT because the Revenue Department usually does VAT audits to ensure that your claim is true and each transaction paper qualifies as an “export” activity per Thai VAT law.

Contact MSNA for your Thai accounting and tax questions.