Thailand’s gems and jewelry industry has emerged as a major international player in production, processing and trading. Even while undergoing rapid growth, the industry in Thailand still has plenty of room for development.

The fine jewelry industry in Thailand is labor-intensive and relies on skilled craftsmanship, beautiful designs and modern technology to produce jewelry competitive in international markets. Multinational corporations can leverage Thailand’s unique advantages, including high-quality Thai artisanship in the areas of cutting and polishing colored stones and diamonds, sufficient supply of skilled workers at low cost, natural resources and government promotion.

Thailand has established itself as a competitive production base. Many world-class firms have relocated their operations to Thailand to reduce production costs and benefit from the well-known delicate craftsmanship of Thais. Polished diamonds from Thailand are admired around the world for their high quality. Diamond polishing requires skilled craftsmanship and the operation of sophisticated machines.

Moreover, there is an opportunity for foreign firms to utilize Thailand’s expertise by investing in facilities and equipment with the excellent support of Thailand’s Board of Investment. The Thai BOI offers many attractive non-tax and tax incentives to investors. Other organizations supporting the continued development of the gems and jewelry industry in Thailand include:

– Gems and Jewelry Industries Center, under the Department of Industrial Promotion of the Ministry of Industry

– Department of Export Promotion, under the Ministry of Commerce

– Gem & Jewelry Institute of Thailand

– Thai Gem & Jewelry Traders Association

– Thai Diamond Manufacturers Association

– Thai Gem & Jewelry Manufacturers Association

– Chantaburi Gem & Jewelry Association

– Indian-Thai Diamond and Colorstone Association

– Thai Diamond Manufacturers Association

– Gold Traders Association

– Thai Jewelers Association

– Jewel Fest Club

– Thai Silver Exporter Club

– Gemopolis Industrial Estate

– Gemological Institute of America Research Thailand (GRT)

– Asian Institure of Gemological Sciences

– IGI Bangkok, Thailand International Gemological Institute

– Gem and Jewelry Institute of Thailand

Contact MSNA for Thai company registration and obtaining the BOI promotion for your gems and jewelry business in Thailand.

The Thai government has urged the public and private sectors to adjust themselves and seek new opportunities brought by the upcoming ASEAN integration. ASEAN Community, which will take effect in 2015, is expected to bring challenges and greater opportunities as well. If all sectors of society are well-prepared for changes, they will benefit from new opportunities.

The government had announced the ASEAN issue in its policy so that both public and private sectors would be able to prepare themselves. At the same time, they should work together in setting long-term goals to achieve when the ASEAN Community is in place.

In preparation for the ASEAN Community, the government has also worked out four major strategies as follows:-

(1) In the first strategy, the government will focus on enhancing Thailand’s competitiveness and developing it into a higher-income nation. In this regard, land zoning will be introduced to reduce production costs in agricultural production. The government will invest in transport infrastructure and develop further small and medium-sized enterprises and the “One Tambon, One Product” program.

(2) The second strategy aims to promote social equality by developing the quality of Thai people, reducing disparities between low-income and high-income earners in the country, providing greater opportunities for the people, and introducing education reform.

(3) The third strategy emphasizes “green growth” by promoting a way of life that is environmentally friendly, such as the use of solar energy and the reduction of green-house effects.

(4) In the fourth strategy, the government will create a balance in national development and improve public sector management to order to enhance the efficiency of national administration. For the private sector, the government will seek business partnerships to create regional production networks, while upgrading the standards and quality of products in response to the demands of consumers in ASEAN and beyond.

The government also urged the members of the public to improve their language skills and prepare for the free flow of products, services and labor. The people must still preserve their culture within the diversity of ASEAN and that they should also learn new things and new alternatives brought about by ASEAN integration.

Implementation of these strategies and adjustment for new opportunities brought by AEC has yet to be announced. Contact MSNA for company registration, work permit & visa, Thai labor law and further information about doing business in Thailand.

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.

One-Stop Service Center provides one-stop services for temporary stay in the Kingdom of Thailand to any qualified foreigner in accordance with the Regulations of the Office of the Prime Minister Concerning the Establishment of the Visa and Work Permit Center B.E. 2540, as amended.

Not all foreign applicants can be qualified to use the One-Stop Service Center. The following applicants are eligible to submit an application and may receive services at the Visa and Work Permit Center:

1. An applicant who is an investor, manager or expert and his/her parents, spouse or children who are his/her dependants and part of the family.
2. An applicant who entered into Thailand to work at the representative office of a foreign juristic person for any international; trading business or overseas regional office, and his/her parents, spouse or children who are his/her dependants and part of the family.
3. An applicant who is a manager, expert or professional obtaining special rights under the laws governing petroleum, investment promotion and the Industrial Estate Authority and his/her spouse or children as dependants.
4. An applicant who entered into the Kingdom of Thailand to perform duties in mass media as authorized by the government and his/her parents, spouse or children as dependants and part of the family.
5. An applicant who is a researcher and developer in science and technology and his/her parents, spouse or children as dependants and part of the family.
6. An applicant who is the officer of a foreign bank, international banking facilities of a foreign bank or a representative office of a foreign bank certified from the Bank of Thailand and his/her parents or children as dependants and part of the family.
7. An applicant who is an expert in information technology and his/her parents, spouse or children as dependants and part of the family.
8. An applicant who performs duties at a regional operating headquarters and his/her parents, spouse or children as dependants and part of the family.
9. An applicant who entered into the Kingdom of Thailand due to certain obligations made between the Thai government and a foreign government.
10. An applicant with requirements as specified by the Minister in the Government Gazette.

It is important to note that an applicant who is a manager or expert must work in a juristic person having a paid-up registered capital or working capital of no less than 30 million Thai Baht in order to receive services at the One-Stop Service Center.

Interested in doing business in Thailand and obtaining Thai work permit & visa, contact MSNA for further assistance.

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.

Foreign companies operating in Thailand as a Branch Office or Representative Office of a company incorporated under the laws of a foreign country, or as a Thai limited company incorporated under Thai laws (but with majority shares owned by foreigners), need to have the minimum capital required by Thailand Foreign Business Law. This article only talks about non-American companies. For American companies, please read Minimum Capital Requirement for Treaty of Amity Companies in Thailand.

Minimum Capital

If the foreign companies operate 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 License), the minimum capital is Baht 2 M.

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

Time frame

A. For foreign companies that are not incorporated in Thailand (thus operate as a Branch Office of a Representative Office) must bring in the minimum capital from the day they have been approved of the Foreign Business License within the following time frame:

(1) If the approval to operate the business is for less than 3 years, the minimum capital must all be brought into Thailand within 6 months.

(2) If the approval to operate the business is for 3 years or more, the minimum capital must be brought into Thailand as follows:

– Within the first 3 months, at least 25% of the minimum capital

– Within the first year, a total of 50% of the minimum capital

– In the 2nd and 3rd year, at least 25% of the minimum capital within each year

100% of the minimum capital must be brought in within the three-year period.

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.

B. For foreign companies that are Thai limited companies incorporated in Thailand, they must have their registered capital equal to the minimum capital required by the foreign business law before they will be approved of the Foreign Business License.

Contact MSNA for Foreign Business Law.

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.

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.