Today, one of our prospective clients has asked us about registering a company that will deal with either manufacturing or importing of products in Thailand.

Question:

We want to register a Thai company with our Thai partners but we are not sure yet if we will just manufacture our own food products or import the food products from our suppliers overseas in order to sell them locally. Do we need to get a license from any government department after we register the company?

Answer:

In Thailand, the Food Control Division of Food and Drug Administration (FDA) is responsible for regulating food control activities before and after you start the operation. Here, we outline how FDA will control your activities before you start the operation.

Such activities include issuance of Manufacturing License and Importation License to manufacturer and importer respectively; registration of controlled food products before marketing; approval of food additives to be used in foods, labeling and advertising approvals.

In obtaining a Manufacturing License, plant lay-out is to be submitted for approval and plant inspection by food inspector is required before and manufacturing license is issued. This license is to be renewed every three years.

Meanwhile, if you want to import food products, a license is required in order to import food into Thailand. A licensed importer may import various kinds of food providing that they are approved by the Thai FDA. The designated storage or warehouse has to be inspected and approved by the Thai FDA before a license is issued. An importation license is to be renewed every three years, as well.

In the event that a food product, either you manufactured or imported is categorized as Specific Controlled Food, it must be registered. Analysis of the product as well as details of the process and ingredients is required for the registration process and the standard of these food products have to meet the standard specified in the Ministerial Notification.

If you intend to manufacture or import some products such as dietary supplement, that product is required to bear labels containing Thai language and subject to be approved by the Thai FDA before you sell it in the Thai market. Hence, food products in general must be labeled in accordance with the Notifications of the Ministry of Public Health No. 194 (B.E. 2544).

Moreover, if you plan to promote your product to the public, any form of advertisement for food through any media is also subject to Thai FDA’s approval. Whether you manufacture or import your products, please note that false or deceptive advertisement on the quality or benefits of your food products is prohibited.

Interested in setting up a manufacturing or importing company in Thailand? Contact ThaiLawyers for company registration, obtaining business license, BOI promotion and maintaining Thai work permits and visas of foreign expats.

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.

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.

Software industry continues its strong growth in Thailand due to strategic government policies, an increasingly high-technology infrastructure and an expanding technical labor force. The Thai government offers many benefits for firms engaged in software development, data center management and the production of animation and games. Inventors benefit from the country’s central location in Southeast Asia with competitive labor costs, educated and experienced workforce and domestic market with high growth potential.

Thailand is helping companies to grow through sound policies that provide critical infrastructure, ongoing training for IT professionals, and internship experience for recent software and animation graduates and access for financing for investors to undertake capital and labor upgrades.

There are great opportunities for investment in software, animation and gaming and data centers in Thailand due to strong government and private sector support which includes:

1. Business software
2. Animation and computer-generated imagery
3. Web-based applications and interactive applications
4. Entertainment software for mobile platforms, online games or Windows-based games
5. Multimedia video conferencing applications
6. E-learning content via broadband or multimedia
7. Embedded software
8. Data centers

The Thai government is committed to promoting the software, animation and gaming and date center sectors through incentives for foreign investment, direct support of software start-ups, ongoing professional training for developers and engineers and flexible loan programs that allow digital content firms to expand without capital constraints. This includes a range of fiscal and non-tax incentives for investors offered by the Board of Investment of Thailand.

Interested in setting up a software business in Thailand, contact ThaiLawyers Ltd. for Thailand BOI company registration.

Today, Thai Tax Expert answers a question from one of our accounting clients.

Question:

Our Thai company issues Purchase Order to a company overseas but everything will be manufactured in Thailand. In this instance, there will be invoice from overseas company to our Thai company but there will be no physical documentation of shipment from overseas to Thailand. Do we need to pay taxes in Thailand? What are the taxed and tax rates involved?

Answer:

Normally when you buy goods for use or sale in Thailand from an overseas supplier, you will have to import it and pay 7% VAT at the Customs.

In your case, because the goods will be produced in Thailand and sent to you domestically, you will have to submit to the Thai Revenue Department 7% VAT with Form PP.36 within the 7th of the following month. This is to pay VAT on behalf of your overseas vendor. This VAT becomes your input VAT in the month that you submit it and it will be used to offset the Output VAT that you have to submit normally. If your company is not VAT registered, you will still need to submit Form PP.36, but you will not be able to use that VAT. It becomes part of your product cost.

And the producer in Thailand should invoice your overseas vendor for the price of the product plus 7% VAT. However, it will be your concern whether or not they treat the transaction correctly.

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

Treaty of Amity companies operating in Thailand, whether as a branch office of a company incorporated under USA laws or as a Thai limited company with American majority shareholders, incorporated under Thai laws, have to comply with the Ministerial Regulations regarding minimum capital and timeframe to bring the minimum capital into Thailand issued on 30 August 2009 under the Foreign Business Act B.E. 2542.

Minimum Capital Amount

If the Treaty of Amity company operates businesses that are not in the schedules annexed to the Foreign Business Act B.E. 2542 (thus it is not required to obtain a Foreign Business Certificate), the minimum capital is Baht 2 M.

If the Treaty of Amity company operates businesses that are in the schedules annexed to the Foreign Business Act B.E. 2542 (thus it is required to obtain a Foreign Business Certificate before it can operate the businesses), the minimum capital must be no less than 25% of one-year average of the three-year operating expense forecast (that was submitted when applying for the foreign business certificate) and no less than Baht 3 M per business.

Time frame

For the Treaty of Amity companies that started their business operation or received their Foreign Business Certificate before 30 August 2009, they must bring in the required minimum capital in foreign currency to Thailand within 29 August 2019.

For the Treaty of Amity companies that started their business operation or received their Foreign Business Certificate on or after 30 August 2009, they must bring in the required minimum capital in foreign currency to Thailand within 29 August 2024.

Method of Compliance

For the Treaty of Amity companies that operate in Thailand as a branch office of a US company, the way to comply with this regulation is to bring in the capital by sending the money in a foreign currency within the above time frame and inform the Director of Good Governance Office of the Department of Business Development within 15 days from remittance.

For the Treaty of Amity companies that are Thai limited companies incorporated under Thai laws, when they apply for the Foreign Business Certificate, they will get it without reference to the level of their registered capital. The way to comply with this regulation is whenever they wire an amount of money in a foreign currency, intended to be part of the minimum capital per this regulation, they need to increase their registered capital, but they do not have to inform the Director of Good Governance Office of the Department of Business Development. The remittance of the required minimum capital (and thus, increase of the registered capital) must be completed within the above time frame.

Contact MSNA for information about Treaty of Amity companies.

Question:

Is there any tax involve when a foreign company overseas got paid by a Thai-based company?

Answer:

Yes. A foreign company that does not carry on business in Thailand but received income from Thailand will be subject to withholding tax on certain categories of income derived from Thailand. The withholding tax rates may be further reduced or exempted depending on types of income under the provision of Double Taxation Treaty.

Contact MSNA for your accounting and tax questions.

As a way to move Thailand forward, the Thai Government is focusing on four major areas in provincial development which will be adjusted to be in line with the “Country Strategy”. At the same time, all provinces have been urged to be prepared for the arrival of ASEAN Community in 2015.

The four areas in provincial development seek to: (1) generate income on a sustainable basis, (2) promote inclusive growth in order to reduce poverty and close income gaps, (3) accommodate community growth that is friendly to the environment, (4) prepare infrastructure for Government’s mega-projects on transport and water management.

On the other hand, the Thai Government is also developing road and railway networks linking with neighboring countries. This was initiated in a joint meeting between provincial governors and Thai ambassadors and consuls-general to ASEAN countries. Various border checkpoints will be upgraded and Thailand and its neighbors need to manage goods production for mutual benefit.

In this regard, the Government urged provincial governors to explain to local residents about both advantages and disadvantages of free trade arrangements. Each province must also work out its provincial strategies to manufacture products in response to the demands of neighboring countries. Moreover, provincial governors must help create better understanding about neighboring countries, as Thailand moves toward the ASEAN Community.

Contact MSNA for your questions about doing business in Thailand.

As stated, foreigners seeking to engage in List 3 activities as per Thailand Foreign Business Law are required to apply for and obtain a Foreign Business License prior to commencing operations.

The Foreign Business Act sets forth the process by which the Foreign Business Committee (“Committee”) reviews the application. It states that the Committee is required to rule on the application within 60 days of submission. However, the application process in general has 2 district steps as follows:

(1) The process by which the presiding official at the Ministry of Commerce (MOC) accepts the application for review by the Committee

An application for a Foreign Business License is submitted to the MOC together with all required documents and information. The presiding MOC official, who is in charged with accepting the application will normally not do so until he is satisfied that all documents are in order. The official will perform the preliminary inspection upon presentation but usually he will require the person submitting the application to leave it for later inspection. The time frame for the official’s review of the application is not specified by statute.

In order to avoid these delays, make sure that the person designated to submit the application is familiar with the intended operations of the company to respond on the spot to the official’s questions regarding the application. In the case that the official requests additional documents and/or information, make sure the designated person supplies those documents in a timely fashion.

(2) The Committee’s actual review of the application.

Once the official accepts the application and issues a receipt, the sixty-day consideration period begins. The factors considered by the Committee when reviewing applications are:

– The advantages and disadvantages to the nation’s safety and security

– Public order, good morals, art, culture and traditions of the country

– Technology transfer and research and development

– Economic and social development

– Natural resources, conservation, energy and environment, consumer protection, size of the enterprises, employment

Technology transfer and research and development (R&D) are probably the most important. In 2004, the Ministry issued a document advising foreign investors on how they should describe technology transfer in the license application. Technology here is not just limited to R&D and use of sophisticated equipment, but also specifically includes “administration, management and marketing”. In addition, any planned programs the company has with Thai universities are taken under consideration by the committee.

In the event that the Foreign Business License application is rejected, the law requires that the MOC inform the applicant within 15 days of the decision. The notification of rejection must be in writing and expressly state the reasons why the application was rejected.

If the application is rejected, the applicant has the right to appeal the decision. The appeal must be submitted within 30 days of the date on which the applicant received the rejection notice. The Minister of Commerce is required to rule on the appeal within 30 days of receipt. The decision of the Minister shall be final.

Interested foreigners, who wish to operate a foreign business in Thailand, contact MSNA for further assistance in application for a Foreign Business License.

To avoid double taxation, Thailand has concluded tax treaty agreements with certain countries. As of March 2021, the countries which currently have tax treaties with the Kingdom are as follows:

1. Armenia
2. Australia
3. Austria
4. Bahrain
5. Bangladesh
6. Belarus
7. Belgium
8. Bulgaria
9. Canada
10. Cambodia
11. Chile
12. China P.R.
13. Cyprus
14. Czech Republic
15. Denmark
16. Estonia
17. Finland
18. France
19. Germany
20. Great Britain and Northern Ireland
21. Hong Kong
22. Hungary
23. India
24. Indonesia
25. Ireland
26. Israel
27. Italy
28. Japan
29. Korea
30. Kuwait
31. Laos
32. Luxembourg
33. Malaysia
34. Mauritius
35. Myanmar
36. Nepal
37. The Netherlands
38. New Zealand
39. Norway
40. Oman
41. Pakistan
42. Philippines
43. Poland
44. Romania
45. Russia
46. Seychelles
47. Singapore
48. Slovenia
49. South Africa
50. Spain
51. Sri Lanka
52. Sweden
53. Switzerland
54. Chinese Taipei
55. Tajikistan
56. Turkey
57. Ukraine
58. United Arab Emirates
59. United States of America
60. Uzbekistan
61. Vietnam

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