Sometimes you set up a company in Thailand to handle only marketing, or servicing clients, or any other functions for the head office overseas. You do not think that the Thai operation is big enough to justify having an accounting and financial department in the Thai company. MSNA is an excellent answer to your business needs.

Some of our clients in Bangkok have their headquarters outside Thailand, with their HR, accounting and finance in Hong Kong, Singapore, the US, Australia or Europe. They have MSNA handle the payroll of their staff in Bangkok, process their vendors’ payment requests and take care of the invoicing and issuing receipts and tax invoices for their Bangkok operation.

Payroll: Usually, MSNA processes payroll calculation for the client’s employees, taking into account the allowances and deductions allowed by the Thai tax law, then sends the month’s payroll summary and detailed calculation of payroll taxes and social security to the client for approval. Then we send the data to the client’s bank to process the deposits into the employees’ accounts. With some clients, they send the money into our account for us to issue our checks to deposit into the employees’ accounts. Then we send the confidential payroll slip to each employee.

Processing vendors’ invoices: We gather all the invoices from the client’s suppliers, make sure the invoices have been approved by the client’s authorized person and prepare payment vouchers with accounts coding and withholding tax certificates for the transaction. We then send everything with supporting documents via email to the client’s finance department overseas to approve. With some clients, the clients send the money to us and we issue our checks to pay the suppliers. With others, the clients let us log on to their bank’s website to process the checks online and the authorized person overseas logs on to approve them. Later we pick up the checks from the bank and distribute them to the vendors at our office.

Invoicing and issuing receipts and tax invoices for the client: We issue invoices with the details supplied to us by the client, send them to their clients, follow up to check if the payment has been processed, then we issue receipts and tax invoices and send them to exchange for the client’s checks. We then deposit the checks into the client’s account.

Accounting service: I believe it is the most important thing that a Bangkok company with overseas headquarters needs. You need your accounts to be done in compliance with the Thai accounting standards and the Thai tax laws. Your accounts need to be signed off by a qualified and licensed Thai accountant. Also your accounts need to be audited by a Thai CPA.

For your Thai accounting needs in Bangkok, please contact www.msnagroup.com.

Foreigners doing business in Thailand need Thai accountants who speak good English to be able to communicate with them and consult with them for the best use of accounting and tax planning and avoiding costly mistakes. Because of being naive, many foreigners in Thailand trust their Thai accountants even though they cannot communicate with them efficiently. Many more just want to go the cheap way because they think accounting does not make money and they choose non English speakers for they charge lower fees. If you are a foreigner doing business in Thailand or thinking of establishing a business in Thailand, you really want to consider the popular saying; you get what you pay for. The truth is accounting and especially knowledgeable Thai accountants who speak good English can help you save a lot of money down the road especially by tax planning and making sure you pay your tax due correctly to avoid hefty but unnecessary interests and tax fines.

One of our clients just referred one of his friends to us, who has a manufacturing business in a rural area of Thailand. His company has been having tax problems with the Thai tax authority and the court has ordered the company to pay millions of Thai Baht in taxes and fines. The root of the problem is that their accountant is not knowledgeable and the client could never tell because the accountant does not speak enough English. When he found out the mistakes he made, he could not communicate the problems in English to the management who could have otherwise made better decisions on how to deal with the problems. He chose to fix things in his own way which later on proved to make the problems worse and more costly. This client will have to sell his manufacturing facilities and property to pay for the taxes and fines. The lesson learned here is that foreigners doing business in Thailand need English speaking Thai accountants as part of their successful business undertaking.

MSNA is a English speaking Thai accounting firm based in Bangkok, Thailand, who works with foreign businesses from all over the world. Our Thai accountants are knowledgeable and speak English fluently. Please contact MSNA Ltd. for accounting and tax services.

Today Thai Work Permit Expert discusses Visa for getting a work permit in Thailand.

Foreigners wanting to apply for a work permit in Thailand must enter the country with a non-immigrant “B” visa. Here are the documents you need to obtain a non-immigrant “B” visa from a Thai embassy or consulate if you are going to work for a company in Thailand.

1. One completed and signed visa application form with application fee (please check with the embassy in the country you are applying for the visa to see the current fee schedule.)
2. One recent passport-sized photograph (3.5 x 4.5cm)
3. Passport (valid for no less than 6 months)
4. Invitation letter from a company in Thailand (the letter must be typed on the company’s letter head and signed by authorized director(s) of the company) attached with these documents:

• Company’s registration documents in Thailand (or Company Affidavit)
• List of shareholders
• Business registration and business license
• Company profile
• Details of business operation
• List of foreign workers stating names, nationalities and positions
• Map indicating the location of the company
• Latest year’s audited financial statements
• Latest year’s corporate income tax return
• Latest year’s VAT returns
• Valued Added Tax registration paper
  (Copies of company documents must be signed by authorized director(s) and affixed the company seal)

Thai Business Expert is asked very often about the minimum capital to register a Thai company and whether it needs to actually be paid or not. We need to take into consideration a few factors.

If you are a foreigner, we assume that you will need a work permit to run the day-to-day operation of the Thai company, you will need at least THB 2M as the registered capital for each work permit your company will sponsor. However, if you have a Thai partner who will be the authorized director who signs to bind the company, and you will not want a work permit for any foreigner, then the capital can be as little as THB 5 per share and because a company needs at least 3 shareholders, the registered capital can be as low as THB 15. However, the fee to register a company in Thailand is the same for THB 15 capital or THB 1M.

The capital has to be at least 25% paid up. However, if you need a work permit, it has to be paid up at least THB 2M for each work permit. In case the foreigner who requires a work permit is married to a Thai national, the capital can be THB 1 M for the work permit of that foreigner.

Regarding the question about whether or not you have to actually pay up the capital, you will have to in the beginning and later the company can lend the money that it has left to its directors or shareholders or any third parties.

Contact MSNA for Thai company registration or work permit services.

One of our accounting clients, a Thai company which is a software and computer dealer, has to pay a German company for software. The software can be installed only once on one computer with a specific period of usage. The transaction is considered permission to use or right to use the software pursuant to the double taxation treaty between Thailand and Germany. The company has a duty to withhold 5% tax from the software price when paying to Germany.

If the company has withheld the tax and paid to the authority higher than the amount required by law, the company has the right to file a claim for a refund within three years from the last day that the company had to submit the tax.

The law requires that all companies publish their notice for their shareholders’ meeting in a local newspaper and send to their shareholders a copy of the notice by returned receipt registered mail at least 7 days before the meeting date. Failure to do so may result in a fine of up to Baht 20,000.

One of the shareholders’ meetings that all companies are required by law to hold is called the Annual General Meeting (AGM), where the company has to have its shareholders approve the Financial Statements of the previous fiscal year and appoint the auditor for the current year. This meeting must be held within 4 months from the accounting year-end. The Ministry of Commerce issued some announcement to stress that companies need to really follow the AGM procedures prescribed by law or they will face some penalties.

If the company’s accounting year-end is 31 December 2010, then the AGM must be held within 30 April 2011. The last day to publish the Notice for AGM is AGM date minus 8 = 22 April 2011. This is also the last day the company can send the copy of the notice for AGM to your shareholders by returned receipt registered mail at the post office.

Usually most companies use cheap newspapers that are in circulation specifically for this purpose of publishing notices for AGM only.

If your company does not have the manpower to take care of the notice for AGM, MSNA can handle it for you for a minimal fee.

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.

Personal Income Tax (PIT) is a direct tax levied on income of a person. A person means an individual, an ordinary partnership, a non-juristic body of person and an undivided estate. In general, a person liable to Personal Income Tax has to compute his tax liability, file tax return and pay tax, if any, accordingly on a calendar year basis.

Taxpayers are classified into “resident” and “non-resident”.

“Resident” means any person residing in Thailand for a period or periods aggregating more than 180 days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand.

A non-resident is, however, subject to tax only on income from sources in Thailand.

Talk to your tax consultant like MSNA to find out if your income is subject to personal income tax in Thailand.

Thailand Accounting Standards and Financial Reporting Standards are announced by Thailand Federation of Accounting Professions (FAP) and correspond with the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS). The ones that are currently effective as of 1 January 2011 are summarized in the below table. Note that all of Thailand accounting standards and Thailand financial reporting standards have to be employed by all public companies in Thailand. Non-public companies may choose not to employ the accounting standards and financial reporting standards that FAP has exempted them from.

The Thai accounting standards that have been approved and will become effective for accounting periods that begin on or after 1 January 2013 are:

TAS 12 Income Taxes

TAS 20 Accounting for Government Grants and Disclosure of Government Assistance

TAS 21 The Effects of Changes in Foreign Exchange Rate

Source: http://www.fap.or.th/index.php?lay=show&ac=article&Ntype=10&Id=539609025 as of 18 March 2011

The companies that rent out building space and provide water, electricity and security to the tenants within the rented building usually have their tenants sign two separate contracts. One is for rental of space. The other is for purchases of water, electricity and services.

There are a few things related to taxes that need to be addressed as follow:

1. Withholding tax

1.1 The contract for rental of space: when the lessee company pays rent to the lessor company (landlord), it needs to withhold 5% tax from the rental amount.

1.2 The contract of purchases of water, electricity and services can be separately considered as follow:

(1) Payments for water and electricity in accordance with actual monthly usage is considered buying of intangible goods. The tenants are not required to withhold tax.

(2) When the lessee company pays for services (the landlord provides services to the common area e.g. security services, cleaning, toilet provisions and usage of electricity and water), it needs to withhold 3% tax from the service fee amount.

2. Stamp duty

2.1 A contract for rental of space is required to be affixed with stamp duty by the lessor.

2.2 A contract for purchases of water, electricity or services is not subject to affixation of stamp duty.

Furthermore, if the rental agreement is of more than 3 years, the company has to register the lease with the Land Department.