In one of our previous posts, we talked about Tax Clearance Certificate, which is a certificate issued by the Revenue Department to a non-Thai tax resident who is departing Thailand to indicate that he has already paid taxes or that he has provided a guarantor or securities as guarantee for tax liabilities and tax payable. In this post, we want to give more information about the types of tax clearance certificate in Thailand.
There are 2 types of Tax Clearance Certificate:
P. 3 Tax Clearance Certificate
This is issued to a foreigner who is temporarily departing Thailand. It is valid for a single departure and must be used within 15 days from the issuance date. If he/she could not depart Thailand within the specified period, P.3 Tax Clearance Certificate becomes invalid unless he/she renewed it before the expiry date.
P.3.1 Tax Clearance Certificate
This is issued to a foreigner who enters and leaves Thailand on a regular basis due to his/her business or profession. It is valid for multiple departure within the specified period in the Tax Clearance Certificate but not exceeding 180 days from the issuance date. P.3.1 Tax Clearance Certificate cannot be renewed.
Consult with MSNA how to get a Tax Clearance Certificate.
As part of Covid-19 subsidy scheme to small and medium enterprises, the Thai government is giving three-month subsidies to SMEs registered in the Social Security system. Such SMEs are the companies with not more than Baht 5 million capital and their gross income has never reached more than Baht 30 million in any accounting year. The subsidy will be at a rate of THB 3,000 per employee per month for 3 months from November 2021 to January 2022.
In order to qualify for this subsidy, SMEs must register to join the scheme from now until November 20, 2021. However, if the company has not registered with SSO e-Service yet, they have to be registered in the system first before they can register to join the scheme. SSO e-Service is the online system of the Social Security Office whereas the company can also add new Thai employees when they join the company or remove their names once they resigned.
Know more about this subsidy and check out if your company can apply for this scheme. MSNA Group has vast knowledge and experience in Thai accounting, tax and payroll matters. Contact us now for consultation.
What do we mean by “Representative Office in Thailand wants to earn income”? Many foreign companies first started their operation in Thailand as a representative office. They thought they only wanted to do the business activities that do not involve earning incomes, which are one or more of the below. Later they want to start selling their products/services in the country.
The activities that are allowed to be engaged by a Representative Office:
1) To report the business movements in Thailand to the head office or affiliated company or the group company;
2) To give advice on various aspects pertaining to the goods distributed by the head office or affiliated company or the group company to the distributors or the users;
3) To seek for the supply source of goods or services in Thailand for the head office or affiliated company or the group company;
4) To inspect and control the quality and quantity of the goods that the head office or affiliated company or the group company purchased or hired to manufacture in Thailand;
5) To disseminate the information in relation to the new goods or services of the head office or affiliated company or the group company.
When the head office overseas wants to change its course in Thailand, they need to apply for a foreign business license to operate their income earning activities. Then they need to cancel their representative office status. A representative office cannot be transformed into a branch office. This is because a representative office does not need to obtain a foreign business license. It just needs to notify the Department of Business Development who will issue a document called “Certificate of the Identification Number of the Juristic Person established under foreign laws which operates in Thailand”. However, a branch office of a foreign company, to operate their business in the Kingdom, needs to apply for a foreign business license.
MSNA Group has been helping foreigners set up their branch office, representative office, Thai limited company and BOI promoted company for 25 years. Consult with us for your business needs today.
We have a client who asked the question “As a shareholder, how much are you liable for the company’s debts?” Here is the detail of the question and our answer:
Question:
I bought the company (with Baht 4 M registered and paid up capital) from someone years ago. Now the business is not going well and I do not have THB 4 M to pay the company’s creditors. Should I reduce the capital of the company to 1M, or should I do anything?
Answer:
Your company’s capital has been fully paid up. You bought the shares from the old shareholders who had already paid up their shares. Therefore, as a shareholder you will not have to pay anymore into the company.
Your company’s registered capital has nothing to do with how much you (as shareholder) have to be liable if the company does not have enough to pay the creditors. If all the company’s shares have been fully paid up, the shareholders are not liable any more to pay the creditors of the company.
Look at how much liabilities on the company’s balance sheet are. They are the amount the company has to pay to the creditors. Then you need to look at the assets of the company and see how much you think you can get from them. The money you will get from all your assets is the amount you will have available to pay off your liabilities. If you can get less money from your assets than the amounts you owe others, then you will not be able to pay all the creditors. However, your creditors will be the one to take the company to the bankruptcy court. This is because the bankruptcy procedures in Thailand can be started only by a creditor against a debtor who is regarded insolvent and owes more than 2 million Baht in the case of a company (or more than 1 million Baht in the case of an individual). Please read here for the translation of Thailand Bankruptcy Act.
Consult with MSNA Group for accounting and tax services.
During this pandemic, our clients asked questions about sick leave for COVID 19 cases. How many days can employees take off if they are sick? Normally the Thai labor law allows employees to take up to 30 days of sick leave per year. What can they do if they are sick more than 30 days a year? Here is the question from one of our clients:
Question: Is there any government regulation to give more sick leave if an employee is contracted with Covid-19? For example, if an employee is found to be COVID positive and if the person does not have any sick leave balance, can he use the annual leave to cover and can the company deduct no pay leave if they have used up all their sick leave?
Answer: The company cannot make him use his annual leave for his COVID sick leave after he has used all his yearly allowable 30 days of sick leave. You may deduct his salary based on the number of sick leave days in excess of 30.
In this COVID era, the employee may file a form with the Social Security Office for a compensation for his loss of income. The company will have to issue a letter confirming he has used up his 30 days of sick leave allowed by law attached with his sick leave request form.
When your company considers changing accounting year-end, for example from 31 August to be 31 December of every year, you need to get approval from both the Revenue Department and the Department of Business Development. Mostly, the documents you need for changing accounting year-end are as follows:
1. Copy of company affidavit;
2. Copy of Minute of Statutory Meeting (This is the document you made when you registered the company. It says whether or not the company has adopted Articles of Association) or copy of the company’s Articles of Association (which most likely says when the accounting year-end is);
3. Minute of shareholders’ meeting with the resolution to change the accounting year-end;
4. Copy of the latest Corporate Income Tax Return and audited financial statements
5. Others
For the Revenue Department you will need to write a letter explain why you want to change your company’s accounting year-end and say what your first accounting period will be once they approve your new accounting year-end. After the RD has checked all your documents, they will approve it and send a letter to the company within a few weeks/months.
After you got the letter of approval from the RD, you will submit online some forms with more or less the above set of documents for changing accounting year-end to the DBD.
Once the DBD approves, you will be able to change your accounting year-end. However, no set of accounts will be for more than 12 months. From the example, if your current accounting year-end is 31 August and you have been approved to change it to 31 December of every year, here are what you will do (now is September 2021):
1. The financial year ended 31 August 2021 – you need to submit the audited financials and corporate income tax return to the Revenue Department within 150 days from 31 August 2021. However, for the Department of Business Development, you need to hold an AGM to approve the audited financials within 31 Dec 2021 and submit it within one month from the AGM date.
2. For the following accounting period, because the DBD’s approval comes out before 31 December 2021, then you will have to close the accounts as of 31 December 2021 within about 5 months about end of May 2022.
Note that if the DBD’s approval comes out after 31 December 2021, then you will close the accounts as of 31 August 2022, then 31 December 2022.
Consult with MSNA Group, your trusted Thai accountants who speak fluent English and have been in the business servicing international business community for over 25 years.
Foreigners wanting to work or invest in Thailand wonder what smart visas and targeted industries are. Smart Visas were designed to attract experts, investors, executives and startups entrepreneurs wishing to work or invest in the targeted industries in Thailand. Smart Visas allows 6 month to 4-year permit to stay in the country without having a work permit. Here are the four types of smart visas:
SMART “T” (Talent):
Highly skilled professionals in the targeted industries. In this case, the Employers in Thailand must be endorsed for being engaged in the targeted industries by relevant government agencies such as the National Innovation Agency and Digital Economy Promotion Agency.
Experts working in government agencies / higher education institutions / specialized training institutions / Alternative Dispute Resolution (In case of experts working for a government agency, a higher education institution and a specialized training institution in the private sector, the applicant must have expertise in the fields of science and technology in the targeted industries.
SMART “I” (Investor) : Investors in technology-based business in the targeted industries
SMART “E” (Executive) : Senior executives in technology-based companies in the targeted industries
SMART “S” (Startup) : Technology-based startup entrepreneurs in the targeted industries
SAMRT “O” (Other) : Spouse and legitimate children of Smart Visa holders
The above paragraph mentioned the targeted industries many times. They are the industries that the Board of Investment targets to promote in different zones or different times. As of September 2021, the targeted industries are:
Next-Generation Automotive
Smart Electronics
Affluent, Medical and Wellness Tourism
Agriculture and Biotechnology
Food for the Future
Automation and Robotics
Aviation and Logistics
Biofuels and Biochemicals
Digital
Medical Hub
Human Resource Development in Science and Technology
You might already thought about opening a restaurant in
Thailand to contribute your unique taste in the “Kitchen of the
World”. Well, that’s a good idea, but here are some pitfalls you should
wonder about.
No matter what type of business you are attempting to
run, Thai company registration laws apply to you and vary depending
on your type of business.
The bad news that you can’t just easily and legally run a
100% foreign owned restaurant in Thailand, because the bar and restaurant ownership in Thailand
is subject to the rules and regulations contained within the Foreign Business
Act.
The only one way is to find Thai partner who you can trust
and open a Thai company. That means the majority of shares in this company must
be owned by that Thai citizen. And you as a foreigner can only own up to 49% of
that company. This limit can be exceeded or exempted for certain business
activities, if a Foreign Business License is granted, but not in this case.
The process
of opening a restaurant in Thailand
The process begins with reserving the name of the company
with the Department of Business Development. You have to submit a minimum of
three company names which follow current ministry regulations. The DBD will
choose then one out of the three.
Next, the promoters must file a Memorandum of Association
with the Commercial Registration Department. If you are going to have foreign
workers, some requirements must be met:
2 million baht minimum registered capital and 4 Thai employees per one
work permit for foreigner.
After filling a Memorandum of Association directors should
submit an application within 3 months to register the company.
Once registration is finished, the company can begin the
process of getting business licenses and start the operation of its new
business. For restaurant, you have to get food license from FDA Thailand as
well as alcohol license, in case you want to sell beer and other sprits.
If you have personal questions, don’t hesitate to contact ThaiLawyers – qualified English speaking lawyers that can help you to go through entire process of registration step by step.
So you have a new idea and are excited about it. We want to hear about it too. Here we want to talk about how to write a business plan for your new startup. We will cover most of the things that your future investors and lenders need to see so that they understand your vision. If you don’t know how to write a business plan for your new startup, it is OK. We can help you do it. With our help, it is very likely that you will be able to get funding.
Normally a startup business plan has a one-page Executive Summary in the beginning, which is a summary of the whole business plan. Some readers only read the executive summary and can make a decision already. The business plan should have at least the following topics:
The Company or your background
Mission & vision
– Mission – Describe your organization’s mission
– Vision – Describe your organization’s vision
Management team – List the people behind the idea and briefly describe their role.
Products / services – Describe features and benefits of your products and services.
Technology and innovation applied – Explain why your startup is innovative.
Industry description/ competition/ trends
– Industry description – Explain how your startup impacts to the targeted industry*.
– Competition – Who are your competitors (company or business)? How is your product/service different from others? What can you do better that really matters to consumers or profitability?
– Trends – How do you see the overall trend affect your product/services?
Marketing & sales strategies
– Marketing strategies – Who are your target customers? How are you going to promote and distribute your products/services?
– Sales strategies – How are you going to get customers or clients to buy your products/services?
Financial plan/ Exit strategy/ Funds required
– Financial Plan – Explain funding & investment plan. How are you going to seek funding? What are you going to do with the money?
– Exit strategy
– Funds required
Revenue model – Explain how the startup is going to make money, the average price of sales or services the startup will receive and from which group of customers, etc.
Growth strategies – Explain your growth objectives and how you intend to develop your startup business.
Contact MSNA Group for our expert advice because we know how to write a business plan for your new startup!
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.
