Question:

Is it compulsory in Thailand to appoint a company secretary? Do you provide such service?

Answer:

Appointment of company secretary is not compulsory. However, if your company in Thailand has no secretary at all, you need to rent an office where there is someone to forward mails to you because when Thai authorities send letters a few times a year to the company, you need to get them in case it is a tax audit by the Revenue Department.

Moreover, although there is no necessity to appoint us, we can provide you the services like the role of a company secretary. We can assist you on preparation and filing of various legal documents required under Thai law per time such as Notices, Minutes of Meeting, updating Shareholder Lists, and the likes. We can also help you in changing company’s particulars such as change of office address, company directors, company shareholders, registered capital, etc.

Contact MSNA for your corporate and other business needs.

Thai Government imposes a duty exemption measure to help manufacturers in declared disaster areas whose plants and factories were inundated by the floods.

In summary, eligible flood-affected operators can be exempted from import duty upon meeting the criteria as follows:

1. The business operator has plants in declared disaster area.
2. The business operator imports the goods itself.
3. The imported goods are brand-new and have never been used.
4. The imported goods are the same or similar to those were produced by the business operator at its plants before being inundated by the floods.
5. The imported goods must be pre-approved for import by the Ministry of Industry or other authorized government agency.

The exemption covers imports commencing 1 January 2012 to 30 June 2012.

Further details on the implementation of the above mentioned measures and associated regulations have yet to be announced.

Contact MSNA for your Thailand tax and accounting questions.

THAI ACCOUNTANT answers a question regarding VAT tax point.

Question:

We are going to sign a contract with a Thai government agency and they asked us not to date the service quotation and the invoices that we will send to them until they tell us to. Can we do it that way? Will it affect our taxes?

Answer:

I think you can do it that way if it just only for services. However, you need to make sure your invoice is NOT a Tax Invoice. (When they are going to pay, then you will issue a tax invoice). This is because if you send your tax invoice to the client without a date, it is very risky and your company will be fined if the Revenue Department finds out. And you need to submit the VAT too far in advance even though you don’t need to yet. It affects the cash flow of the company.

The tax point of VAT for a service business is when we get paid not when we invoice the client. Normally, you need to issue a tax invoice when you get paid. However, if part of the business of the Thai company is to sell goods, the tax invoice of the sale transaction must be issued when delivering the goods or getting paid whichever comes first.

Contact MSNA for your accounting and tax questions.

Aside from flood relief loans and tax incentives, the Thai Government has approved
other relief measures for those individuals and industrial sectors that were
really affected by the recent flooding such as follows:

1. Visa and work permit assistance will be provided to foreign skilled workers or
technicians involved in the repair and restoration of damaged machinery,
equipment and infrastructure of BOI promoted companies affected by the
flooding.

2. Exemption of machine import tariff or import duty on all machinery and equipment imported to replace or repair flood-damaged machinery.

3. Appropriate exemptions or reductions of import duty on imported automobiles and auto parts for assembly for domestic sale.

Like MSNA’s Accounting Staffing Solutions, we provide human resource outsourcing services to our clients both based in Thailand and overseas.

In general, we outsource HR functions such as:

• Human resources administration
• Payroll processing
• Employee benefits and office administration
• Office management
• Others, depending on client’s business needs

Our main concern is to maintain the happiness of our clients in doing business. With
MSNA’s services, you can expect:

1. Time and cost efficiency savings because we will handle the paperwork and process the recruitment
2. Reducing usage of office space and stationery because we will outsource such functions
3. Staffing flexibility because we will provide the additional resources for a fixed period of time at a consistent cost.
4. Development of internal staff; because when we outsource such functions, we will also train the company’s staff
5. Level of continuity and reducing the risk on management; because we will outsource such functions, there will be no high employee turnovers and risk on the company’s daily operation.

We understand how to add value to your company that is why we are here as your
partner to ease the burden of your business needs by helping you in saving your
time and costs in managing your human resources.

Please contact MSNA for your questions regarding our Human
Resource Outsourcing Service.

The Thai Cabinet on its recent meeting has approved the Baht 250 billion principal loans to flood-affected businesses: industrial companies, small medium enterprises (SMEs) and independent business operators or self-employed workers.

Out of this Baht 250 billion, approximately Baht 210 billion will be provided to SMEs while an estimated Baht 15 billion are for those flood-hit industrial parks and the rest will be provided to independent business operators and self-employed workers.

Under this scheme, the loan provided to borrower is subject to a 3% annual interest rate with repayment terms of 3 years. Baht 120 billion out of Baht 250 billion will be provided by commercial and private banks and Small Business Credit Guarantee Cooperation will guarantee the 30% of the credit for each borrower. Approximately Baht 50 billion will come from the Japan’s Bank for International Cooperation and an estimated Baht 40 billion will be from matching funds between the Government Savings Bank and commercial banks. The rest of the amount will be distributed by the Government Savings Bank.

The Thai Cabinet has recently approved the following incentives in corporate income
tax rates in order to boost Thailand’s competitiveness:

1. Incentives in general

For companies or juristic partnerships the applicable corporate income tax rates
will be reduced from 30% to:

– 23% for the accounting period ending on or after 31 December 2012

– 20% for the accounting periods commencing on or after 1 January 2013

For small and medium enterprises (SMEs) with paid-up capital of not exceeding Baht 5 million on the last day of the accounting period and income of not exceeding Baht 30 million from sales of goods or services during the accounting period, the
applicable corporate income tax rates are as follows:

– The first Baht 150,000 of net profit is exempted from tax.

– 15% for the portion of net profit exceeding Baht 150,000 and up to Baht 1,000,000 for accounting periods commencing on or after 1 January 2012

– 23% for the portion of net profit exceeding Baht 1,000,000 for the accounting
period ending on or after 31 December 2012

– 20% for the portion of net profit exceeding Baht 1,000,000 for accounting periods commencing on or after 1 January 2013

If paid-up capital exceeds Baht 5 million or income from sales of goods or services
exceeds Baht 30 million, the normal corporate income tax rates will be applied.

2. Incentives for Listed Companies

2.1 For entities listed on the Stock Exchange of Thailand within 31 December 2009
which are entitled to 25% corporate income tax rate, the applicable corporate
income tax rates are:

– 23% for the accounting period ending on or after 31 December 2012

– 20% for the accounting periods commencing on or after 1 January 2013

2.2 For entities listed on the Market for Alternative Investment (MAI) except for
those which are still entitled to 20% corporate income tax rate until the
accounting period ending 31 December 2011, the applicable corporate income tax
rates are:

– 25% on the first Baht 50 million of net profit for accounting periods ending on
or after 31 December 2011.

Eventually, the Cabinet’s resolution does not apply on the applicable tax rates on the sum over Baht 50 million for accounting period ending on or after 31 December 2011.
However, it can be presumed the normal 30% corporate income tax rate should
apply to the sum over Baht 50 million and the reduced tax rates as applicable
to other cases should also apply going forward as follows:

– 23% for the accounting period ending on or after 31 December 2012

– 20% for accounting periods commencing on or after 1 January 2013

Contact MSNA, Thai accounting company, for your Thai tax and accounting questions.

A foreigner who owns a company here in Thailand has asked THAI BUSINESS EXPERT some questions regarding dormant company status.

I own a newly set up limited company here in Thailand but I’ve decided not to
continue its operation for a while as I am planning to go back home to focus on
my existing business. However, I’m a little confused because I heard from
someone that it is impossible in Thailand just to register a company and not to
have any activities. Do I need to close down this company and register anew
when I get back here? But, I also heard from somebody that I can continue my
business later and put it in dormant for the time being. How does it really
work here in Thailand? I would appreciate if you could advise me on this matter.

Answer:

A dormant company refers to a registered company with no trading activities and
accounting transactions for a certain period. It is possible to register a limited
company then keep it inactive since there is no time limit for keeping a
company in dormant status. Thus, you may choose to put your company inactive for
some time as long as you perform some administrative duties each year such as closing
of the accounting books, having them audited by a Thai CPA and filing of the
audited financial statements and corporate income tax returns by 150 days from
the accounting year-end even when you are not trading. Failure to file the
audited financial statements to Department of Business Development, Ministry of
Commerce, may result in a criminal penalty up to Baht 50,000 for the company
and Baht 50,000 for the Director.

In case your company upon its incorporation has registered with VAT and you prefer
to put it in dormant status, the company is still responsible to file its NIL
monthly VAT return. If you are planning to go back home, you should assign
somebody to assist you in filing this monthly return within the 15^th
of each month. Failure to submit it on time would have a penalty of 500 per
return to be paid to the Revenue Department. However, filing NIL monthly VAT
return for many months may be the reason for the Revenue Department to visit
your company. You may choose to file Por Por 09, VAT registration form to inform
the Revenue Department of temporary cease of operation. Usually this is good
for a year. The Revenue Department may choose to erase your company from the VAT
system if you have ceased your operation for more than one year.

Eventually, if you would like to put your newly registered company limited into dormant
status for certain reasons (e.g. you are not ready to trade yet or would like
to take a break for some time), MSNA can help you on how to make it possible. Rest assured that you can always continue your trading activities later and you would not need to close down your company. We can also assist you in filing NIL monthly VAT returns if you have VAT registration. And if you decide to close it down, MSNA is the best
people you should talk to.

Recently Thai Business Expert was asked how to close a Thai limited company.

In line with the growing trend of competition, profitability and economic stability, some business owners choose to wind down their Thai registered company either for the purpose of opening a new company or permanently cease doing business in Thailand. Whatever reasons you have for closing your Thailand business, legal, accounting and auditing assistance are required to ensure that the company will be closed in good faith. However, in closing down a registered company in Thailand, one must consider the following procedures:

1. Sending out invitation letters to all shareholders for an extra-ordinary Shareholders’ Meeting and publishing the letter in a local newspaper.

As prescribed by the Thai law, the company should hold a Shareholders’ Meeting to discuss the agenda of the company dissolution. An invitation letter for the meeting must be sent to all company shareholders by a registered post with an Advice of Delivery Service to ensure that the shareholders acknowledge the receipt of the letter. The same letter must be published in a local newspaper as well. This step must be done at least 14 days before the date of the shareholders’ meeting.

2. Registering the company dissolution at the Department of Business Development, Ministry of Commerce

Within 14 days from the closing date that the Shareholders’ Meeting has approved of, the
application form along with any required documents must be submitted to DBD to
register for company dissolution. The liquidator (either an outsider or one of
the company directors, whoever is appointed in the shareholders’ meeting) must
file the application at the Department of Business Development (DBD), Ministry
of Commerce, with a copy of his / her Thai I.D. card or passport. Once
everything is completed and accepted by the DBD, the officer will issue a
document which is a certification of the company’s dissolution showing the
closing date of the company.

3. Publishing the company dissolution and sending letters to inform creditors

Within 14 days from the date of dissolution, the liquidator must publish in a local newspaper the company dissolution at least once and send letters by registered mail to the
company’s creditors to inform them about the company dissolution.

4. Returning the VAT Registration Certificate (Por Por 20) to the Revenue Department (RD) in case the company is registered in the VAT system.

Within 15 days of the closing date, the company shall file Form Por Por 09 to return its VAT Registration Certificate to RD. In the event that the company fails to file it within the
specified time, there is a penalty of Baht 2,000.

Although the VAT certificate will be returned, the company is still responsible to submit its
monthly VAT return (Por Por 30) every month until the RD officer release their confirmation letter for deregistration of VAT.

5. Completing and auditing of the accounts and the Financial Statements until the closing date.

The company must prepare and complete its accounts and financial statements of the current accounting period until the date of dissolution registration and must have them
audited by a Thai auditor. The liquidator of the company must sign on the financial statements as well as the Corporate Income Tax Return Form (Por Ngor Dor. 50) for submission to the Thai Revenue Department within 150 days after the company closing date.

6. Returning the company’s Tax I.D. card to the Revenue Department

The tax I.D. card of the company must be returned to RD as well. The officer in this unit
will accept the application to return the Tax ID card only if a copy of the filed corporate income tax return and the receipt issued by the Revenue Department is attached to it.

7. Liquidating company’s assets, clearing company’s debts and returning the remaining cash to the shareholders

After step no.2 has been done, the liquidator of the company has to liquidate all assets of the company (converting them to cash), pay off the companies’ creditors and
divide the remaining cash and return it to the company’s shareholders according to the shareholding ratio.

8. Filing liquidation reports and registering the completion of liquidation process with the Department of Business Development

The liquidator has to file a liquidation report to the DBD every three months until the liquidation process is finished and the Revenue Department has issued a letter to the DBD certifying that the company owes no taxes, which will happen after step no.5. When this happens, the liquidator has to register the completion of the liquidation process with the DBD as well as submit the last liquidation report. The DBD will issue a document to certify that the company’s liquidation has been completed.

The above summary of Thai company closure procedures is intended for information purpose only. However, one must seek professional consultation before proceeding to dissolution because there are still a lot of details in the process such as closing of all bank accounts, submission of VAT on the book value of company’s fixed assets as of the closing
date within the 7^th of the following month and what to do if the company’s assets’ value is not enough to cover its debts. Careful planning of the whole process until the completion of liquidation of the company is strongly advised.

Basically, the dissolution process should take about a month to complete. However, if the company has VAT registration, it takes around 6 months to obtain the acceptance letter for
deregistration from the Revenue Department. Thus, for bigger companies, the whole process may be completed within a year or two, depending on how long the company had been in operation and whether its books of accounts were properly maintained and all tax returns were filed as required by the Thai law. The tax authorities may also invite the liquidator (or his representative) to discuss the tax matters of the company upon its liquidation.

Being highly knowledgeable and well-experienced in Thailand Business Set Up Process, we at MSNA can also assist you in the process of Thailand Company
Dissolution. We can also represent you in negotiation with the tax authority (Revenue Department).

Application for registration of a representative office in Thailand of a foreign company engaged in international trading business

Scope of Activities of a Representative Office

As required by the Thai law, the business activities that a representative office can carry out in Thailand are limited to five business activities concerning:

• Sourcing of goods or services inThailand for head office
• Checking and controlling the quality and quantity of goods purchased or hired to manufacture in Thailand by the head office
• Giving advice concerning goods of the head office sold to agents or consumers in Thailand
• Propagation of information concerning new goods or services of the head office
• Reporting on business trends in Thailand to the head office.

The above activities are regarded as service activities under List 3 (21) of the Thailand Foreign Business Law, and thus the registration of a representative office requires a Foreign Business License from the Director-General of the Department of Business Development.

General Characteristics of a Representative Office

1. It has non income-generating activities;
2. It has no authority to accept purchasing order or to make offer for selling or to negotiate for carrying out of business with person or juristic person in the country in which it is registered;
3. All of its incurred expenditures must be shouldered by its head office;
4. Normally, it is not subject to Corporate Income Tax, in accordance with the Revenue Code except for deposit interest of remitted funds from the head office has to pay tax.

Out of scope activities of a Representative Office

The following are the services that a representative office is not permitted to do otherwise it will be considered as an entity doing business here in Thailand and may be subject to the revocation of its license:

1. Purchasing order or payment of goods on behalf of the head office or its affiliated companies or any activities concerning purchasing;
2. Shipment of goods of the head office or its affiliated companies already purchased;
3. Checking and controlling the quality and quantity of goods for any companies that are not the head office nor its affiliated companies;
4. Executing after sale service concerning installation and maintenance;
5. Performing advice concerning goods that were not produced nor sold by the head office or its affiliated companies;
6. Receiving purchase order or service on behalf of the head office or its affiliated companies;
7. Coordinating in purchasing or selling on behalf of the head office or its affiliated companies;
8. Propagation of information concerning previous goods or services that are already sold inThailand;
9. Carrying out activities as middleman or agent between customers in Thailand
   and head office or its affiliated companies;
10. Planning and coordinating with any organization in terms of business on behalf of the head office or its affiliated companies;
11. Being a representative in making any contracts or activities on behalf of the head office or its affiliated companies;
12. Reporting information to any companies that are not the head office nor its affiliated companies

Government Fees for a Representative Office

Application fee (nonrefundable) is THB 2,000. If the application is approved, the government fee will be set at the rate of THB 5 for every THB 1,000 or a fraction thereof of the registered capital, with a minimum of THB 20,000 and a maximum of THB 250,000.

Tax Position of Representative Office

The representative office is required to obtain a corporate tax identification number and submit income tax returns and balance sheets, even if there was no transactions in the past accounting period.

Individual aliens and all local staff of a representative office are required to obtain taxpayer cards and pay personal income tax.

At MSNA, we can assist foreign companies in the Thailand business setup process.