Skip to main content Skip to search
MSNA Group 65/62 Chamnan Phenjati Business Center, 6/F, Rama 9 Road, Bangkok.
Mon - Fri: 7AM – 4PM
+662-643-2403
info@MSNAgroup.com

Archives for Foreign business in Thailand

VAT Implication on a software application

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.

Read more

Trade and Investment Support Offices (TISO)

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.

Read more

Areas of Consideration for Thailand BOI promotion

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.

Read more

Software Industry in Thailand

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.

Read more

BOI Promotion for Regional Operating Headquarters (ROH) in Thailand – Old Scheme

In general, some companies that receive Thailand BOI promotion get only non-tax incentives. Among those companies which can get both tax and non-tax incentives is ROH or Regional Operating Headquarters.

A Regional Operating Headquarters (ROH) can be incorporated in Thailand provided that it will provide the following services as well as other supporting services to ROH’s foreign branches or associated enterprises:

  • General administration, business planning and coordination
  • Procurement of raw materials and components
  • Research and development of products
  • Technical support
  • Marketing and sales promotion planning
  • Personnel management and regional training
  • Financial advisory services
  • Economic or investment research and analysis
  • Credit control and administration
  • Any other activities stipulated by the Director-General of the Revenue Department

A ROH can apply for BOI promotion. The criteria for ROH in order to qualify for tax privileges under the old scheme are as follows:

  1. Minimum paid-up capital must not be less than 10 Million Baht at the end of each accounting period;
  2. Provide services to its branches or associated enterprises in at least 3 countries;
  3. Half of its total income is derived from administrative, technical and other supporting services provided to its branches or associated enterprises in other countries and royalties received from outside of Thailand for the use of ROH’s Research and Development (R&D). The criteria can be mitigated to one-third of the total revenue in the first three accounting periods of its operation as ROH. In the case of force majeure, the Director-General of the Revenue Department may lower the income threshold for one accounting period; and
  4. Notify the Revenue Department of its incorporation as ROH. The benefits will be given starting from the notified accounting period onwards

ROH incorporated in Thailand can receive the following tax privileges under the old scheme:

  1. Corporate income tax at the rate of 10 % of net profits for income derived from services provided to ROH’s foreign branches or associated enterprises;
  2. Corporate income tax at the rate of 10 percent of net profits for royalties derived from ROH’s foreign branches or associated enterprises for the use of R&D done by ROH in Thailand. This benefit is also extended to royalties received from a third party providing services to ROH’s branches or associated enterprises using ROH’s R&D.
  3. Corporate income tax at the rate of 10% of net profits on interest received from ROH’s foreign branches or associated enterprises for loans granted, provided that such loans are made from other sources and extended to ROH’s branches or associated enterprises;
  4. Tax exemption for dividends received by ROHs from associated enterprises;
  5. Tax exemptions for dividends paid out of ROH’s concessionary profits to its shareholders not carrying on business in Thailand;
  6. Accelerated depreciation for buildings at the rate of 25% on the date of acquisition. The residual value can be depreciated within 20 years.

Privileges for foreigners working for ROH under the old scheme:

  1. Foreigners may opt to be taxed at 15% of gross income. By doing so, the income received must not be calculated together with other income and cannot claim for refunds. This privilege is available only to foreigners employed by ROH and are limited to their first four years of employment in Thailand. It does not matter how extensively the beneficiaries have to travel abroad during the employment period. To be entitled for the benefits once again, foreigners have to discontinue employment with any ROH in Thailand for more than 365 days.
  2. Foreigners who are sent to work in another country by ROH will receive a tax exemption in Thailand on their income paid by the foreign company for services rendered abroad, provided that such income is not directly or indirectly deducted as ROH’s nor its associated enterprise’s expenses in Thailand.

Interested in setting up a Regional Operating Headquarters in Thailand, contact for Thailawyers further consultation.

Read more

Minimum Capital Requirement for Treaty of Amity Companies in Thailand

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.

Read more

Tax registration and filing requirement for foreign companies in Thailand

Foreign companies carrying on business in Thailand, whether as a branch or an office must apply for tax identification number from the Revenue Department. An application form (Lor Por 10.3) together with other relevant documents such as a copy of the company’s registration license, house registration, etc., shall be submitted to the Area Revenue Office within 60 days from the date of registration or operation.

Moreover, all companies whether a Thai or foreign which carries on business in Thailand must submit the corporate income tax returns and payments twice a year:

  1. The half year tax return must be submitted (Corporate Income Tax PND 51 form) within two months after the end of the first six months. The amount of tax due shall be half of the entire year projection of the company’s annual net profit.
  2. The annual tax return (Corporate Income Tax PND 50 form) must be submitted within 150 days after the closing date of its accounting period.

Contact MSNA for further assistance in filing your half year corporate income tax return and annual corporate income tax return in Thailand.

Read more

Thailand Board of Investment extended 2 more years permission for 101 promoted companies

The Board of Investment of Thailand has approved a 2 more year permission for 101 promoted companies to employ foreign unskilled labor.

Under the relief measure on foreign unskilled labor employment, the BOI permits 101 promoted companies to continue hiring foreign unskilled laborers until December 31, 2014. However, these 101 companies are required to propose a concrete plan to gradually reduce the number of foreign unskilled workers to BOI within February 28, 2013. During the extended period, they must implement a plan to reduce the number of foreign unskilled workers by 25% every 6 months until no foreign unskilled labor is hired by January 1, 2015. Any of these 101 companies that fail to implement the plan as proposed will have their corporate tax exemption terminated.

Inquire now with MSNA about Thailand BOI promotion and other options in doing business in Thailand.

Read more

Opening a business bank account in Thailand

Opening a bank account may not be easy for some foreigners who want to open an account with a local bank in Thailand. Most of the time, foreigners are required to present their passport with valid Thai visa and work permit before they can open a personal bank account. The same condition applies to those foreigners who are authorized directors, branch managers or representative office managers of their entities in Thailand whereas copies of company registration papers and other additional supporting documents are also needed before they can open a business bank account.

However, regardless of any type of business entity, foreign business owners or managers can open a business bank account since there are no restrictions on foreign firms opening a business bank account in Thailand.

Aside from major local banks, international banks such as Citibank, HSBC, Standard Chartered and UOB provide business banking services in Thailand. All of these banks are able to provide full online banking facilities and support as well. Both local and foreign currency accounts are available under similar terms and conditions.

In opening a Thailand business bank account, there is a minimum initial deposit required but usually, it is a relatively low amount. Normally, the international banks require Baht 50,000 or more (or the equivalent in foreign currency) as the initial deposit. For major Thai banks such as Bangkok Bank, Kasikorn Bank, Siam Commercial Bank, etc, the minimum initial deposit for a Thai Baht account is usually Baht 10,000 for a current bank account and Baht 500 for a savings account. However, it is advisable to know the terms and conditions of these banks before deciding to open a bank account.

MSNA can assist you in opening a business bank account in Thailand. We can help you coordinate with the respective bank officers and prepare the necessary requirements. Consult now for further information.

Read more

Hiring an English Speaking Accounting Firm

Why should you hire an English speaking accounting firm? We have some reasons for you:

1. Thai accountants who speak a few words of English want a very high salary, higher than a monthly fee you will pay an outsourced accounting firm who can communicate fluently with you in English.

2. With the kind of money you pay to a high quality English speaking accounting firm, which is pretty low, you cannot hire an in-house accountant who has a lot of experience and is knowledgeable enough in the Thai tax law.

3. Thai accountants move between companies easily. A lot of times they do not give you enough time in advance to find a replacement. They just leave a mess behind for the next accountant to clean up after them. With English speaking accounting firms like MSNA, your accounts will be done on time and smoothly. Accounting firms have staff turnover too, but they make sure that the clients’ accounts are uninterrupted.

Now, when you consider hiring an English speaking accounting firm, make sure you do not choose the ones that are very cheap. You know how much experience accountants cost? There is no way accounting firms can keep their good staff if they charge very low fees. The less fee you pay, the cheaper quality you get. (However, this does not mean you should pick the most expensive ones either.) Accounting firms have very high costs like your firms do too. If you are happy with the very low fee they charge you, you will be as unhappy with the quality of work they deliver. Each of their employees is responsible for tens of accounts. They make lots of mistakes and their supervisors do not have time to check their work. You will end up paying much more for tax fines and penalty than the amount you think you save from hiring very cheap Thai accounting firms. So choose wisely.

Contact MSNA for your accounting, audit and tax needs.

Read more