One of MSNA’s payroll outsourcing clients asked us about the bonus scheme to be given to employees in Thailand.
Question: Our Thai company is currently still operating at a loss. We are studying into a variable bonus scheme to be given to the employees in Thailand and would like to seek your opinion on this matter. Do you know of any company in our industry or any M&E construction company which pays variable bonuses? If so, what is the average bonus quantum in terms of months? I guess the bonus should be peg to the company profits.
Answer: Regarding bonus scheme, it depends on many factors. For example, companies with western culture usually have a different bonus scheme from the companies with the Thai culture. In many cases, if the monthly salaries are already high, then the number of months for bonus is often lower than if the salaries are low. When you want your company to be an attractive employer, you can pay an attractive salary plus 13th month bonus or you can pay normal salaries plus many months of bonus. Also it depends on the quality of employees. The ones that are very good and can demand higher compensation will stay if the overall remuneration is better than other companies. The ones that are not in high demand will stay even though you do not pay them bonuses. We would suggest having different agreements on the numbers of months for bonus with different employees depending on the levels of performance and the difficulties of finding replacements.
However, if you peg the bonus on company’s profits, it is a non-tax deductible expense. That means all the bonus you pay that is dependent upon the company’s profits will get added back to the bottom line and treated as if it was never an expense of the company for the purpose of calculation of corporate income tax.
Consult MSNA for your questions regarding your doing business in Thailand.
Getting Thailand BOI for service business is possible, especially if you want to operate a Trade and Investment Support Office (TISO). Your business activities must be one of the following:
2.1 Monitoring and/or servicing associated enterprises including providing or letting office or factory building to company’s associated enterprises 2.2 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 government agencies prior to submitting the investment promotion application 2.3 Information services on goods sourcing 2.4 Engineering and technical services, except those related to architecture and civil engineering services 2.5 Business activities related to machinery, engines, tools and equipment, such as: (1) Importing for wholesaling (2) Training services (3) Installation, maintenance and repair (4) Calibration 2.6 Wholesaling products manufactured in Thailand 2.7 International business process outsourcing whose services are provided through telecommunication networks, such as administrative services, finance & accounting services, human resource services, sales and marketing services, customer services, data processing, etc.
Because TISO is such a multipurpose category, businesses in a wide variety of fields may qualify for BOI promotion. Although the BOI does not provide any taxation benefits for TISO, the right to own 100% of a TISO company makes it very attractive to foreign service providers and traders who may not be eligible for other investment promotion. Because the requirements are wide-ranging, the BOI has set 10 million baht in annual selling and administrative expenditures as the minimum qualification. This ensures that only companies that will have the greatest impact on Thailand trade and investment qualify.
Annual selling and administrative expenses must be at least 10 million baht
Must have a business plan and scope of business as approved by the Board
No import duty on raw or essential materials used in manufacturing export products for 1 year or more as deemed appropriate by the BOI
Other non-tax incentives, including getting many work permits for your expat employees
MSNA is available to assist you in numerous ways, including offering consultations and resources.
Foreigners can own the business 100% if their business is eligible for Thailand BOI. For grading, packaging and storage of plants, vegetables, fruits or flowers, it is possible if your business have one of the following features:
If your project uses advanced technology (e.g. fruit ripeness sensor, radio frequency pest control, nuclear magnetic resonance) then for this business activity, the BOI benefits that you will get are:
8 year corporate income tax exemption, not more than 100% of investment (excluding cost of land and working capital);
Exemption of import duty on machinery;
Exemption of import duty on raw or essential materials used in manufacturing export products for 1 year, which can be extended as deemed appropriate by the Board of Investment;
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 (meaning many work permits without the ratio of 4 Thais per expat);
Permit to own land; and
Permit to take out or remit money abroad in foreign currency.
Projects that use modern technology (e.g. color sorter, vapor heat treatment to kill fruit fly eggs, seed coating); or
Project of rice grading (with advanced technology only)
For the business activities in 2 and 3, the BOI benefits that you will get are the same as in 1 above, but the corporate tax exemption is only 5 years and capped at100% of the investment (excluding cost of land and working capital).
Consult with MSNA Group for setting up your BOI promoted business in Thailand.
If your business receives an investment promotion from Thailand BOI for Manufacture of multi-purpose engines and equipment, you will get the following benefits only if your project has forming process of main engine parts, e.g. cylinder head, crank case, crankshaft, camshaft, connecting rod, piston and flywheel:
3 year corporate income tax exemption, capped at 100% of your investment in the project (excluding cost of land and working capital)
Exemption of import duty on machinery
Exemption of import duty on raw or essential materials used in manufacturing export products for 1 year, which can be extended as deemed appropriate by the Board of Investment
Other non-tax incentives, which are many work permits for your foreign skilled workers and experts (without the ratio of 4 Thais per expat), permit to own land; and ability to take out money abroad in foreign currency.
However, if you project is just assembling of multipurpose engine or equipment, you will get the same benefits as mentioned above, except the corporate tax exemption.
If you are interested in getting Thailand BOI promotion for Amusement Parks, Open Zoos, Hotels, Hostels, Race Tracks, Convention Halls, Exhibition Centers, now is the time. As we all know, Thailand is one of the most visited countries in South East Asia. It only makes sense that many foreign investors think about having a business out of tourism in Thailand.
The government makes a lot of effort in bringing and attracting more tourists all over the world. This opens a lot of opportunities and growth in the tourism related businesses. Thailand Board of Investment is offering both tax and non-tax incentives to foreigners who want to invest in Amusement Parks, Open Zoos, Hotels, Hostels, Race Tracks, Convention Halls and Exhibition Centers in the country. The benefits includes owning land for your business, import duty exemption for machineries, corporate tax exemption, dividend tax exemption, big number of work permits for foreign employees, etc.
Take a look at Thailand BOI promotion for more information and contact Thai lawyers at MSNA Group who are BOI experts and knowledgeable in assisting foreigners to set up their business. Contact us and explore the possibilities of owning your tourism related business 100% without a Thai partner.
In a more and more digitalized world, the use of cloud services is in great demand as never before. If you find yourself wishing to bring your cloud services business to Thailand and take advantage of the benefits associated with the BOI promotion, we will be more than happy to assist you in Thailand BOI company registration.
To be qualified for Thailand BOI promotion and to receive the numerous benefits in form of incentives, below are the conditions to meet:
Must be located in at least 2 data centers in Thailand that are certified with ISO/IEC 27001 (data center).
Must have connections among all related data centers with speed of at least 10 Gbps for each connection, with backup connections at the same speed.
Must be certified with ISO/IEC 27001 (cloud security) and ISO/IEC 20000-1 (cloud service).
As a company in the cloud services business, the Thai government acknowledges your importance of activities and categorizes the sector of great significance and value. The incentives under Thailand BOI includes the following.
8-year Corporate Income Tax exemption (without cap) + merit based incentives
Exemption of import duties on machinery
Exemption of import duties on raw materials for use in production for export
With a long and multifarious track record in setting up companies for foreigners and the detailed knowledge about Thailand BOI company registration, we are looking forward to giving you advice and helping you to get your company set up here.
Let us assist you to establish your business in Thailand and contact us here.
In order to process a work permit for expats who work at a BOI company, first your Thailand BOI company needs to register in the BOI E-expert system online, where you will later apply for a work permit for your foreign employees, experts and specialists as well as extend their work visa.
Steps in processing work permits for BOI companies:
The BOI company applies for approval from the BOI to hire the various job positions that it needs to have filled by foreigners. So in case just this one position has not been included in the list of positions approved before, then the company will have to do this step again just for this particular position. In some cases your BOI company may already have all of the positions approved including your position, then you will skip this step. This step takes about 3-5 business days.
The BOI company applies for a visa letter from the BOI for the expat employee to take to a Thai embassy or consulate overseas. This takes 1- 3 business days. Then the company can print out the letter to attach with the visa package for the expat to apply for his non-immigrant “B” Visa.
Preparing a Visa package, which includes a cover letter to the embassy or consulate, a Visa application form, 2 pictures, the company’s documents (certificate of incorporation, Memorandum of Association, Company Affidavit, List of shareholders, VAT registration certificate and VAT returns from the latest 3 months). In case your company is not newly set up, a copy of audited financial statements and corporate income tax return of the latest year must be included too.
After the expat comes back into Thailand with a nonimmigrant Business Visa, the company applies with the BOI to hire the expat into the position from step 1. This takes about 3-5 business days. The expat needs to present his education certificate and work experience certificate at this step.
The company prepares the forms to apply for a work permit and Visa extension for the expat.
The company takes the expat to the one-stop service of the BOI in order to get the work permit book and extend his visa to 1 – 2 years. This usually takes the whole day at the one-stop service location.
MSNA is an expert in BOI work permit process. Contact us for any questions regarding your Thailand BOI company or work permit issues.
If your company outside Thailand buys goods from a Thai supplier and you have someone in the country (your agent, employee or supplier) deliver it to your Thai customer, you are considered doing business in Thailand, which according to the Foreign Business Law, your company needs to apply for a Foreign Business License in order to operate as such legally. The business activity is considered retail or wholesale of goods in Thailand, which are in List three of the Foreign Business Law.
However, if you pay the Thai supplier from your country and have it delivered to your country before you send it back into Thailand to your Thai customer, then it is considered an international trade and you do not need to get a Foreign Business License before you can operate such business.
MSNA Group of companies helps international clients in the areas of foreign business registration, be it representative office, branch office, BOI company, and accounting and taxation. Our clients include the American Chamber of Commerce (AMCHAM) and international groups of companies having an affiliate in Thailand. Contact us for any questions regarding your doing business in the land of smiles.
Does the nature of your business involve industrial chemicals? Are you planning to take your operation to Asia or specifically to Thailand? Do you wonder if this is possible? The answer is YES and we can assist you to make it happen. Your industrial chemicals business can benefit from Thailand BOI company registration as long as your products are not paint, cleaning products, automobile lubricants, compound chemical fertilizers, insecticides, herbicides or cement based adhesives.
There are the advantages of enlisting your business under BOI (Board of Investment) in Thailand.
Corporate tax amnesty for 3 years
No import tax for machinery
No import tax for raw materials for one (1) year (can be extended according to BOI rules & eligibility)
Don’t worry even if your industrial chemical products are similar to those mentioned above. You can still operate your factory here without Thailand BOI.
Sounds interesting and beneficial for your industrial chemicals business? Drop us an email info@MSNAgroup.com. Get an advice from the experts in Thailand BOI company registration. MSNA Group of companies are experts in providing consulting to foreigners wishing to set up their business operation is Thailand at very reasonable prices for world class services.
Thailand Board of Investment launched the Cluster-based Special Economics Development Zone Policy to enhance investment potentials and competitiveness. There are Super Cluster and other targeted clusters. Software is one of the activities granted highest incentives under Super Cluster policy.
Without the cluster policy, embedded software development business normally can get 8 years of corporate income tax exemption while enterprise software and digital content can get 5 year income tax exemption.
Under Super Cluster policy, all types of software development are granted 8 years corporate income tax exemption without cap plus 5 years 50% income tax reduction and import duty exemption on machinery if operating in either Chiangmai or Phuket.
Additionally, the international specialist may enjoy the personal income tax exemption, details of which will be announced soon by the Ministry of Finance.
Apart from the above tax related benefits, other incentives include consideration of granting Permanent Residence to the leading specialist and permission for foreigners to own land to implement the activities that receive Thailand BOI promotion. – However, we checked with the Immigration Office and they do not really have any special treatment regarding permanent residence yet.
General Conditions for BOI incentives
The business have to spend THB 1.5 M in IT employees’ salaries per year.
Projects must include software development process specified by the Software Industry Promotion Agency (SIPA).
Projects with an investment of 10 million baht or more (excluding cost of land and working capital) must obtain a quality standard certificate from SIPA or receive a Capability Maturity Model Integration (CMMI) quality standard certificate or any equivalent standard within two years from the full operation start-up date. If the project fails to meet such conditions, one-year corporate income tax exemption shall be withdrawn.
Revenue derived from sales or the provision of services that are directly related to a promoted software business shall be regarded as revenue of such promoted businesses.
Additional condition for special incentive under Super Cluster
The business must have a cooperation with academic institutions / research institutions / centers of excellence in the designated areas e.g. Talent Mobility / Work-integrated Learning / Co-operative Education / Dual systems or Cooperation in development of human resource or technology as approved by Thailand Board of Investment
The BOI applications must be submitted by the end of 2016.
The production or operation must start by the end of 2017. (Extension is possible if deemed appropriate.)