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MSNA Group 65/62 Chamnan Phenjati Business Center, 6/F, Rama 9 Road, Bangkok.
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+662-643-2403
info@MSNAgroup.com

Archives for Thai Audit

Factory License Application – Steps and Timeline by MSNA

Question:

We would like to operate a factory in the industrial estate. How do you usually process the application for a factory license, say in Chonburi area? How long will it take to complete the application?

Answer:

As our company policy, we will require the first payment of our fees then, we will send to you the list of preliminary documents that we need in order to prepare the application.

It should take us 3-5 business days to finish the application after getting all information and documents from your side.

After submitting the application to the Industrial Estate Authority of Thailand (IEAT), the official will contact you to have a meeting to visit the factory site within 1-2 weeks if all documents are complete, which we will work with you for the most convenient time for the appointment of the meeting and the visit by the official. We will also consult with you and provide all support on the phone. If necessary, we will send our team to Chonburi to liaise with the IEAT officials.

It may take the IEAT official up to a few weeks (in most cases, shorter than that) for finish the evaluation of the project. Then the IEAT will notify us of its approval and we will request for the fees to pay to the IEAT before the licenses are issued.

Once we obtain the license, we will need 2 business days to translate it for you.

Contact MSNA for company registration, BOI promotion application and factory license application in Thailand.

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Thai Taxation – Inventory Report

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.

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Thailand Audit – Procedures to be done to finalize the audited accounts

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

Question:

We are not familiar with what procedures are needed to be done to finalize audited accounts. Could you kindly advise us?

Answer:

Our sister company, MSN Audit Ltd., can provide you their audit service. It includes preparing the audited financials in Thai for filing with the authorities and in English for the management.

You need to hold an Annual General Meeting (AGM) to approve the audited financial statements within 4 month from the accounting year-end. And you need to file the audited financial statements with the Ministry of Commerce within 1 month after that. Also, the annual corporate income tax must be filed with the Revenue Department within 150 days from the accounting year-end. Because you hired Libra Accounting Ltd., as your accountant for the whole year, we will prepare the tax return and file those things for you complimentary.

MSNA Ltd., can help you prepare an AGM with the Minutes of Meeting, publishing the AGM notice in a local newspaper and also sending it by return registered mail to all the company shareholders.

Contact MSNA group for your Thai accounting, Thai tax, Thai audit and related business needs.

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Reporting requirements for business entities in Thailand

In Thailand, all juristic companies, partnerships, branches of foreign companies and joint ventures are required to prepare financial statements for each accounting period. The financial statements must be audited by and subjected to the opinion of a certified Thai auditor with the exception of the financial statement of a registered partnership established under Thai law, whose total capital, assets and income are not more than that prescribed in Ministerial Regulations. The performance record is to be certified by the company’s auditor, approved by shareholders and filed with the Commercial Registration Department of the Ministry of Commerce and with the Revenue Department of the Ministry of Finance.

Preparation and filing of reporting requirements vary based upon the type of business entity selected such as follows:

For a private limited company

The company director is responsible for arranging the annual meeting of shareholders to approve the company’s audited financial statements within 4 months at the end of the fiscal year and filing the audited statement and supporting documents including a list of shareholders on the date of the meeting to the Registrar no later than 1 month after the date of the shareholder meeting.

For a public limited company

The company director is responsible for arranging the annual meeting of shareholders to approve the audited financial statements of a company within 4 months at the end of the fiscal year. A copy of the audited financial statement and annual report, together with a copy of the minutes of the shareholder meeting approving the financial statement, should be certified by the director and submitted to the Registrar along with a list of shareholders on the date of the meeting no later than 1 month after approval at the shareholder’s meeting. The company is also required to publish the balance sheet for public information in a newspaper for a period of at least 1 day within 1 month of the date it was approved at the shareholder’s meeting.

For a foreign company such as branch office, representative office or regional office and excluding joint ventures

The Manager of the branch office must submit a copy of the financial statement to the Registrar no later than 150 days after the end of the fiscal year. In this kind of set up, approval of the shareholder meeting is not required.

To ensure that your reporting requirements are prepared properly and submitted within the specified deadline, it is essential to have a good and diligent accountant. Contact English speaking accountants of MSNA for your accounting, tax and audit needs.

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Thai Financial Reporting Standard for Non-Publicly Accountable Entities – NPAEs

For the accounting year that began 1 January 2011 onwards, the Federation of Accounting Professions of Thailand (FAP) requires all companies in Thailand to use either the new Thai Financial Reporting Standards (TFRS) (all of which are based on the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB)) or the Thai Financial Reporting Standard for Non-Publicly Accountable Entities – NPAEs.

Because the IFRS and by extension, TFRS, are intended for publicly accountable entities (stock exchange listed companies, etc.) and very complicated, especially applying the concept of “Fair Value” in preparing Financial Reports, it will be too costly and burdensome for SMEs or non-publicly accountable entities to adopt those standards. It is estimated that 95% of entities in the world are SMEs and SMEs often produce financial statements only for the use of owner-managers or only for the use of tax authorities or other governmental authorities.

Therefore the IASB developed and published a separate standard intended to apply to small and medium-sized entities (SMEs), private entities, and non-publicly accountable entities. That standard is called the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs). And Thailand’s FAP published the Thai Financial Reporting Standard for Non-Publicly Accountable Entities- NPAEs for the same purpose.

A non-publicly accountable entity is an entity that is not one of the following:

(a) Its debt or equity instruments are traded in a public market or it is in the process of issuing such instruments for trading in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets),

(b) An entity that holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses, such as financial institutions, insurance companies, securities brokers/dealers, mutual funds and Agricultural Futures Exchange of Thailand,

(c) Public companies,

(d) Other entities that may be specified in the future.

Some entities may also hold assets in a fiduciary capacity for a broad group of outsiders because they hold and manage financial resources entrusted to them by clients, customers or members not involved in the management of the entity. However, if they do so for reasons incidental to a primary business (as, for example, may be the case for travel or real estate agents, schools, charitable organizations, co-operative enterprises requiring a nominal membership deposit, and sellers that receive payment in advance of delivery of the goods or services such as utility companies), that does not make them publicly accountable.

It is worth noting that a subsidiary whose parent uses full TFRSs, or that is part of a consolidated group that uses full TFRSs, is not prohibited from using the Thai Financial Reporting Standard for Non-Publicly Accountable Entities – NPAEs in its own financial statements if that subsidiary by itself does not have public accountability. If its financial statements are described as conforming to the TFRS for NPAEs, it must comply with all of the provisions of this TFRS.

If any non-publicly accountable entities choose not to adopt the Thai Financial Reporting Standard for Non-Publicly Accountable Entities – NPAEs, they have to comply with each and every TFRS.

Contact Thailand Accountant, MSNA, for your accounting and audit questions.

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Year end audit for your Thai company

As required by the Thai law, all Thai registered companies, joint ventures, foreign businesses operating in Thailand and other forms of juristic entities are required to have their fiscal year-end financial statements audited by an independent auditor. This audit, sometimes called external auditing, is a kind of audit conducted in accordance with specific laws or generally accepted auditing standards on the financial statements of either a company, government sector, other legal and registered entity or organization. The auditor who conducts the audit must be appointed and independent of the entity that is being audited. The external auditor will then present an independent and fair audit report which is essential for the end-users of audited financial statements such as the entity’s investors, shareholders, financial institutions, government agencies like the Department of Business Development and the Revenue Department and the general public, etc.

With the specific auditing standards being followed, careful planning and professional thinking are required to obtain a reasonable assurance in checking the accuracy and completeness of the financial statements. The procedures also include evaluation of the significant policies and assessment of accounting standards used by the management of the entity specifically how the overall financial statements are presented.

Contact MSNA for your audit needs whether it is an external or internal audit.

 

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Thailand Accounting Year – End – What do companies have to do?

Thailand accountants are busiest during the first 5 months of the year. The accounting period (12 months or in case of newly set up companies, less than 12 months) of most companies in Thailand falls on 31 of December of each year. If your company’s accounting year-end is 31 December 2010, then your Thai accountants should close the accounts of 2010 by now and have an auditor or certified public accountant audit the accounts. You need to have the audited financial statements ready by end of April. The laws require that these things need to happen:

  1. The company needs to hold an AGM (annual general shareholders’ meeting) within four months after the year-end, which is by 30 April 2011, to approve the audited financial statements of 2010.
  2. The company needs to file the 2010 audited financial statements with the Ministry of Commerce within 30 days from the AGM date.
  3. The company has to file the 2010 corporate income tax return and the audited financial statements with the Thai Revenue Department within 150 days from the accounting year-end, which is 29 May, 2011.

Failure to do any of the above will result in a fine and a possible jail term for the company’s directors in some serious cases.

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