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MSNA Group 65/62 Chamnan Phenjati Business Center, 6/F, Rama 9 Road, Bangkok.
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Smart Visa and Work Permit

Thailand Board of Investment offers a smart visa program in many categories. Smart visa and work permit are two different things. You may think that you have a smart visa, and work permit will never be needed.  Remember that if you want to work for another company, you will need a work permit. Here in this article we want to explain about cancelling a smart visa and getting a work permit to work with another company.

Because your smart visa is related to Board of Investment (BOI) approval, you can cancel it and ask for your stay to remain for upto 21 days after the cancellation. Before doing this cancellation, your new employer company must already have prepared for the new position with the BOI’s single window system. Make sure to study the steps of transferring work permits from a BOI company to another BOI company for a better understanding. Basically, they need to get an approval for your new position first if they have not had it already. Then you process your smart visa cancellation in advance to still have 21 days for your stay. After that your new employer will be able to get the approval from the BOI to fill you into that position.

Most foreigners find smart visa and work permit related issues so complicated. Be it Thailand BOI company registration, smart visa and work permit application, we will guide you through all the steps and make everything so easy for you. We have been in the business of BOI consulting for over 25 years.

Please contact MSNA Group for questions about smart visa and work permit.

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Americans Can Sell Products in Thailand?

Due to the Treaty of Amity between Thailand and USA, signed on May 29, 1966, Americans can sell products in Thailand. The treaty gives, not only Thai and American nationals, the right to enter the opposite party’s territory for business and investment purposes, but also business entities engaging in commercial enterprises in the opposite party’s territory. Therefore both corporate and individual Americans can sell products in Thailand. In fact they can do most businesses in Thailand without having to have majority Thai partners.

Note that there are important exceptions like the fact that the Treaty of Amity allows both parties to impose restrictions on letting the citizens of the opposite party engage in the reserved businesses of communications, transportation, fiduciary functions, banking involving depository functions, land ownership, exploitation of land or other natural resources and domestic trade in indigenous agricultural products.

Non-Americans do not enjoy the same rights as they have to get Thai nationals to be their majority partner. Or they have to obtain a Foreign Business License in order to do business as a foreigner in Thailand. They may be able to get the Board of Investment Promotion for their business if it is one in the eligible activities, which will enable them to have the majority foreign ownership of the business. Whether Americans or not, the BOI promotion is always the best way for foreigners to do business in Thailand. It gives the right to own land for the foreigners, the right to sponsors many work permits without the infamous ratio of THB 2M capital and 4 Thai employees for each expat, import tax exemption or reduction and corporate tax exemption in many cases, etc. Of course there are more conditions to be met than non-BOI companies.

You want to work with MSNA Group for your Treaty of Amity business needs. You may be able to get the BOI promotion for your American business. We have many solutions for you.

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100% Foreign Owned Company to Sell Software in Thailand

Many foreign companies want to enter the Thai market to sell their software or platform. Some want to just hire an employee in The Kingdom and do the business. Others want to set up 100% foreign owned company to sell software in Thailand. Both violate the Foreign Business Law. If you want to retail or wholesale your software and do not want to have majority Thai partners in your company, you will need to obtain a Foreign Business License for your 100% foreign owned company to sell software in Thailand. Most likely you will not get approved because Thai majority companies can sell software too. You need to be able to prove why Thailand needs your foreign majority company to do the business that Thai people can do.

Now we want to point out the law; Numbers 14 and 15 from Schedule 3 annexed to Thailand Foreign Business Law, are about retail and wholesale of goods:

14. Retail of goods of all kinds having the total minimum capital less than Baht 100,000,000 or having the minimum capital of each shop less than Baht 20,000,000; and

15. Wholesale of goods of all kinds having the minimum capital of each shop less than Baht 100,000,000.

If you can have Baht 100M capital, then you can have 100% foreign owned company to sell software in Thailand. However, most likely, you do not want to set up a company with Baht 100M capital. That means you will not be able to own the majority of your company in Thailand for doing such business.

Now, if you want to develop software or platforms in Thailand, you may be eligible to apply for the Board of Investment promotion, which will allow you to sell the software you make. Read here for how we answered questions about Thailand BOI companies for software developers.

Talk to MSNA Group today to discuss many solutions that we have for you.

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Companies From India Got BOI for 100% Foreign Ownership

Some of our clients, companies from Indore, India, got BOI to operate as 100% foreign ownership companies, with MSNA Group’s assistance. One got the BOI promotion for software activity for the software development business. Another one got the Board of Investment approval to operate in Thailand with 100% foreign ownership in the Trade and Investment Support Office category for their telecommunication engineering business. Hear what our clients say about working with MSNA Group:

“We are entities based in Indore, India, in the businesses of Software, Digital translation and Telecom Network Infrastructure.  We have been using Thai Lawyers Ltd./MSNA Group to set up our Thailand BOI companies since 2017. It is always a wonderful experience with the many services offered by MSNA Group. – Mr. Manmohan Saxena, Financial Controller, Diaspark Infotech Private Limited

We thank you so much for your business. Our team enjoy working with you too. We strive to have our clients’ most satisfaction.

Foreigners looking to have 100% foreign ownership in their business in Thailand, please contact ThaiLawyers or MSNA Group. We have solutions for you. Whether you are in the service business, IT, manufacturing, engineering, etc., you may be able to get a BOI company, which will allow 100% foreign ownership and many work permits.

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Making Payment to a Singapore Company from Thailand

Today we got a question about making payment to a Singapore company from Thailand. The invoice is for research services rendered in Singapore for use in Thailand. For this we look into the double taxation treaty between Thailand and Singapore. The vendor does not have a permanent establishment in Thailand, so in this case Singapore, not Thailand, should get the tax from the business profits. Therefore when the Thai company makes payment to the Singaporean company, it does not have to withhold tax to submit to the Thai Revenue Department.

The next thing to really consider is whether the Thai company has to submit VAT on behalf of the Singaporean company. Since the research services were rendered in Singapore and the result of the work was to be used in Thailand, VAT must be submitted with Form PP36 by the 7th of the month following the payment. If the Thai company is VAT registered, it can use the receipt of PP36 as one of its input tax invoices and claim back the amount of VAT in the Form PP30 of the same month as PP36 submission.

Looking for a great team of Thai accountants who speak fluent English at reasonable prices? Contact us today.

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Writing Off Debts By Companies

Here we want to talk about writing off debts by companies which can happen when the creditors are related to the company (shareholders, group companies, etc). Thai accountant should know how to treat writing off debts by companies on the accounting books. You have to recognize the amounts as the company’s income. They are part of the profit to calculate corporate income tax for the year.

When you are closing down a Thai limited Company, most likely the company still has liabilities in its accounting books. You need to send a registered mail to each creditor to let them know you have decided to close down. This is so that if they have money owed by the company, they will know where to contact the liquidator. If you do not pay any of the debts, it will become an income. The treatment is the same as writing off debts by companies.

Do you need to pay VAT on the income recognized from writing off debts? Thai Tax Law does not impose VAT on revenue from forgiven debts as it is not compensation from selling goods or services. To summarize, when writing off debts by companies, you need to consider how much corporate tax the company will pay. In case of closing down the company, if you choose to leave the liabilities on the books, the Thai revenue department will make you recognize them as incomes which may make the company have a profit, thus pay tax, anyway.

For accounting, audit, closing down companies, etc., contact MSNA Group now.

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Thai Nominee Shareholders Stealing From The Company

Foreigners having business in Thailand should beware of Thai nominee shareholders stealing from the company. Many want to set up their business in the Kingdom, but cannot own their company 100% because Thailand Foreign Business Law does not allow foreigners to do so. It allows only a few activities, like exporting products from Thailand, having a manufacturing plant to produce goods to export or sell them in Thailand, etc. Most businesses need to have Thai majority ownership and many unethical lawyers would provide some Thai names to hold the 51% shares for the foreigner.  Or the foreigner may have a Thai employee to hold shares on their behalf. Thai nominee shareholders stealing from the company is not the only risk you have. Using nominee shareholders is breaking the Foreign Business Law. Penalty can be a big fine and a jail term.

Here are some cases we see from Thai nominee shareholders stealing from the company. Thai employees who hold majority shares for the foreigner will demand millions from you in order for them to give back the ownership later. Many of them are also authorized directors of the company and they sign checks to themselves. One of our clients is a property developer and bought a lot of land in Chiang Mai. The Thai director (who is also the nominee shareholder) told them that the Land Department needed the company to have only Thai shareholders and Thai directors. So the company took of the foreign director who is the real owner of the company and the money. Later our client learned that the Thai director actually bought the land in her own name and refused to transfer the land to the company. She even sold some land and did not return all the proceeds to the company. We hope that these cases of Thai nominee shareholders stealing from the company will open the investors’ eyes. Do not practice nominee shareholding. Talk to us, we have solutions for you. If you need to have Thai shareholders, you need to protect your investment. Use good lawyers who will provide your protection so you do not have Thai nominee shareholders stealing from the company later.

MSNA Group of companies have helped foreigners setting up their business in Thailand for 25 years. We have seen it all. You may be eligible to have Board of Investment promotion (see List of Business Activities Eligible for Thailand BOI Promotion). You may be able to obtain a Foreign Business License to operate your business as a foreign company, or to get the protection of the Treaty of Amity if you are American. Save yourself from Thai nominee shareholders stealing from the company. Talk to us now for all your business needs in Thailand. We are a one stop shop who can help you from setting up your new company, payroll outsourcing, accounting, tax filing, auditing, or even due diligence for your next merger and acquisition.

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Work Permit for Working Anywhere in Thailand

At MSNA Group, we get quite often an inquiry about a work permit for working anywhere in Thailand.

In each work permit, it shows the name of your employer company, your work position and a brief job description. In addition, it says the province where you work, which is the province where your employer’s registered address is.

As a foreign employee, you need to be able to show your work permit to a police officer or a Labor officer when asked for. The Alien Working Act B.E. 2551 (2008) says you have to have your work permit on your possession or at the place where you are working, during work hours, otherwise, you may need to pay a fine of up to Baht 10,000.

Many foreigners think that they can work anywhere in Thailand when they have a work permit. Or they can work legally in different jobs to earn more incomes because of having just one work permit. No, it is not that simple. Your work permit can have more than one job or one employer. That means, all of the jobs and all of the employers need to be listed on your work permit. Now, it is not going to happen that easily. You will find that many employers are not able to sponsor your work permit. This is because each employer needs at least Baht 2M paid up capital and 4 Thai employees, both per expat employee they hire. Only BOI promoted companies may have different ratio, but then you cannot add a BOI company as one of your employers. If you get caught working where you do not have a work permit, you could face up to 5 years jail term or a fine of Baht 2,000 to 100,000 or both. Plus, you may be deported.

Now, let’s talk about working for the only employer listed on your work permit. Most likely the area you can work is the same province where your employer’s official address is. Some companies have branches in different provinces. If your work permit lists those provinces as the areas you will be working in, then you are okay. Section 52 of Foreigner Working Act, B.E. 2551 (2008) stipulates a fine of not more than Baht 20,000 if a Thailand work permit holder works in jobs or places other than at his official employer. So please make sure, if you are sent to work in different places, that they are listed in your work permit book.

Talk to us at MSNA Group. We can assist you with all your work permit needs. Whatever your scenarios are, we will have a solution for you.

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Deposit is not an Income

The money you receive for your goods or services as a deposit is not an income per Thai accounting law. A deposit received is treated as a liability on your books because it is an unearned income. Once you have delivered the goods or rendered the services, the deposit amount has become “earned”. Thus, it will be moved from being a liability in the statement of financial position to income in the profit and loss statement. However, per tax laws, the value added tax incurs when you receive money or when you deliver goods, whichever comes first. When you receive a deposit, you need to issue a tax invoice and submit the output VAT on the deposit in the VAT return of the month that you receive the deposit.

Deposits received is a reason why your total income reported in the accounts is different from the total income reported in the VAT returns throughout the accounting period. After you close the year’s accounts, your accountant should prepare a reconciliation of the revenues per books against the total revenues reported in the VAT returns of the same period. The Thai Revenue Department may ask to see it.

Contact MSNA Group for your tax and accounting needs in Thailand.

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When to issue a tax invoice

In Thailand, when a VAT registered company is in the business of selling goods (wholesale or retail), the value added tax (VAT) point occurs when you deliver the goods or when you get paid whichever comes first. VAT point determines when to issue a tax invoice. For more clarification:

  1. When you deliver goods, even when you have not received payment, you need to issue a tax invoice.
  2. If a customer just makes a deposit, though you have not delivered the goods, you need to give them a tax invoice (and a receipt) for the amount you got.

Now, for service businesses, when to issue a tax invoice? The VAT point occurs when you receive payment, whether or not you have rendered the service. So make sure you issue a tax invoice and a receipt for the amount of money you receive. If you just send an invoice to your client asking them to pay you, you don’t have to prepare a tax invoice yet.

Please note that not everyone can register in the VAT system. Some business activities are exempt from VAT. Others can register in the system, but if they have not reached Baht 1.8 M in gross sales, they may choose not to be in the VAT system yet.

If an individual or a company is not registered in the VAT system, they cannot issue a tax invoice and they cannot claim the 7% VAT they pay to vendors.

Contact MSNA Group for tax planning, accounting and tax compliance services.

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