We assist corporations who wish to advance to Thailand and found a company there. Please entrust Thai Visa & Law Consulting with founding a company, factory operation, applying for BOI investment encouragement, opening a restaurant, monthly accounting and tax affairs. (A service price list is shown below.)
A Sole proprietorship is not approved for non-Thais, so a work permit is not obtainable. In case of a Thai, his or her business starts as he or she, not making a corporation, notifies the tax office. Unlimited liability.
A joint venture equivalent to an ordinary partnership company is composed of 2 or more members of unlimited liability.
A joint venture equivalent to a limited partnership company is composed of 1 or more members each of unlimited liability and limited liability.
A public limited has listed shares in the stock market. The shareholder has limited liability. A public limited is composed of 15 or more founders/shareholders and 5 or more directors.
Most of the foreign-affiliated/Japanese-affiliated companies have this form. The shareholder has limited liability. A company limited is composed of 3 or more founders/shareholders and 1 or more directors.
A company with the foreign capital amount accounting for 40% or more being deemed a foreign-affiliated company, its representatives may be non-Thais only. Also, a company with the foreign capital amount accounting for less than 40% being deemed a Thai company, its representatives may be Thais only or Thais and non-Thais in their joint names.
A representative office, being a foreign company’s outpost, has a limited scope of service and has a purpose of gathering information, so it cannot make profit-making activities. From digging up commodities to purchase to commodity inspection, quality control, advice and services to a Thai agent, supplying information of a new product, reporting to the head office. The number of resident officers is 1 ~ 2. 1 Thai employee is to be employed per resident officer. There is an imposition of withholding tax but no corporate tax. The capital of 3 million baht or more. A detailed explanation is shown below.
A regional operating headquarters provides a branch office with business management services in place of the head office. It is establishable at foreign capital 100%. The capital of 10 million baht or more.
While a branch office of a foreign company can make operating activities, the matter is complicated due to tax affairs, legal responsibilities lying astride Thailand and Japan. The capital of 3 million baht or more. A branch office of a foreign company not being a general mode of advancement, there are few cases of approval except for banks.
The Factory Law provides that a factory is a building that uses machinery of a total of 5 horsepower or more or that employs 7 or more laborers. Factories are classified into 3 classes according to scale. A Class 1 factory uses 20 horsepower or less and is operable not requiring an establishment permit. A Class 2 factory uses more than 20 horsepower ~ 50 horsepower and requires notification. A Class 3 factory uses more than 50 horsepower and requires a permit.
Establishment of a factory is applied to the Ministry of Industry’s Factory Bureau or, if local, to the office of the provincial officer in charge of industry or, if moving into the Industrial Estate Authority of Thailand’s (IEAT) industrial complex, to the IEAT.
In 2015 a new investment encouragement policy was introduced. The content of benefits changes per level of 6 groups according to the degree of importance of business type or production process/conditions. Corporate tax exemption, machine/raw material import duty exemption. Tax deduction for transport cost, electricity bill, water bill. Permission of land ownership by foreign capital, permission of foreign remittance by foreign capital. Simplification of visa, work permit, etc. A detailed explanation is shown below.
It is general to acquire the BOI’s investment encouragement. Though even a manufacturing business not regulated by the Foreigner’s Business Law can be run by foreign capital only, the scope of manufacturing businesses being different from in Japan, OEM production, make-to-order production is a service business. Production of a special order product applies to a contracted business and is not a manufacturing business.
A Flow of foundation of a company limited
Memorandum of association and registration of company foundation
Location of the head office (Lease agreement. ・ The landlord may not let one to a company as, for a company, it is necessary to declare taxes, so a house rent income comes to light. ・ Also, an apartment or condominium may not be approved at tax registration. ・ The withholding tax for house rent is 5%. While it is usually borne by the landlord, please check the contract document to see if tax included or tax excluded. ・ At the time of company foundation, such documents as the rental agreement, landlord’s and business office’s residential certificates, landlord’s ID card are not necessary. They become necessary at tax registration.).
Tax is imposed on services and merchandise sale in Thailand at 7%, which the consumer bears. The amount of tax payment is the amount of OUTPUT VAT (sale VAT) when a business operator sold a service or merchandise minus INPUT VAT (purchase VAT) when bought and paid.
In case of a negative value, that portion is either carried over to the next month onwards or claimed for refund. Refund claim involves tax inspection, which is troublesome, however, so carry-over to the next month is usually preferred.
Thailand’s value added tax being in an invoice system, the VAT-registered business operator has to issue a tax invoice.
Tax invoice’s description requirements
Clear notification of “TAX INVOICE”
Issuing business operator’s name, address, taxpayer identification number (TAX ID)
Other-party business operator’s name, address, taxpayer identification number (TAX ID)
TAX INVOICE number and, if any, book number
Service, merchandise item, quantity, price
Amount of tax
Date of issuance
Regarding import, as an alternative documentary evidence to tax invoice, the receipt issued by the customs bureau at customs clearance applies in case of merchandise and the receipt (tax payment by the 7th of next month using the declaration form PorPor 36) issued by the tax office at tax payment applies in case of a service.
In case of import, tax is imposed at 7% on the price of the CIF price, customs duty, commodity tax having been added. Regarding export, a zero tax rate is applied. Also, VAT non-taxable transactions are available in the sale, service, import of specific merchandise.
The tax rate differs per type of income. Major ones include insurance/transport 1%, advertisement 2%, service/royalty 3%, rental/rent 5%, dividend 10%.
A portion which is 10% of the salary is borne by the employer at 5% and the employee at 5%. The upper limit of the amount to be borne is a total of 1500 baht (salary 15,000 baht). One place of a public hospital having been designated, you can receive from diagnosis to prescription of medication free of charge in that hospital only. The drawback being a long waiting time and basic medical care only being available, you will have to consult a private hospital if you want a better level.
Intermediate declaration (PorNgorDor 51)
Thailand’s corporate income tax is to be paid twice a year. For the 1st time of intermediate declaration, 1/2 of the assessable amount for the planned annual balance of payments is to be paid within 2 months after half a year has passed. This is not necessary if 12 months have not passed in the first financial year of foundation.
If the planned annual balance of payments fell below the actual balance of payments by 25% or more, an overdue tax of 20% is imposed on the balance due of tax payment unless there is a rational reason (the intermediate amount of tax payment is 1/2 or more of the amount of tax payment in the previous financial year and so on).
Settlement declaration (PorNgorDor 50)
Financial statements are approved by holding a shareholders’ general meeting within 120 days from the account closing date. Declaration to the tax office and tax payment are to be made within 150 days from the account closing date. Declaration to the Ministry of Commerce is to be made within 1 month from the day of holding the shareholders’ general meeting.
Corporate tax
While the corporate tax rate is in principle 30%, a tax-cut measure is being taken by temporary legislation, and a tax rate of 20% is being applied.
In a special tax-cut measure for small- to medium-sized businesses (capital 5 million baht or less, sales amount of 30 million baht or less), progressive taxation is applied according to the size of profit.
Individual income tax
Each individual files an income tax return of every year by March of the next year. Business operators, withholding, pay tax every month.
Major individual income tax deductions
Basic exemption・・40%, 60 thousand baht being the upper limit
Individual deduction・・30 thousand baht
Spousal deduction・・30 thousand baht
Child credit・・Up to 3 persons, 50 thousand baht
Parental dependent deduction (60 years of age or older, income limit applicable)・・30 thousand baht
Education cost deduction・・2,000 baht per person
Social insurance premium deduction・・Amount of social insurance contribution
Life insurance premium deduction・・Maximum 100 thousand baht
Entertainment cost (amusement cost)
Though not deductible in monthly declarations, booked as an expense at a settlement of accounts. 10 million baht per year being the upper limit, up to 0.3% of the total sales for the year or the capital, whichever is greater.
Signboard tax
A tax imposed according to the area of a signboard on the building exterior. To be declared once a year in March. After installing a new signboard, a declaration is to be made within 15 days. A tax of at least 200 baht is to be paid per signboard.
Letters of Thai language only・・3 baht per 500 cm2.
A combination of Thai language written above and thereunder a foreign language or a picture/photograph /mark・・20 baht per 500 cm2.
What lacks Thai language. Or Thai language is written under a foreign language・・40 baht per 500 cm2.
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Opening a restaurant
Application for restaurant operating license
To be applied at a pre-opening time after company foundation. To be applied to the ward office’s environmental sanitation section if in Bangkok City and to each city’s/county’s sanitation office if in a province.
To be applied for a permission slip for using the shop’s place (the public office’s service charge being 4 baht per m2 and a maximum of 3,000 baht) if the shop area is 200 m2 or more and for a certificate of acceptance of notification (the public office’s service charge being 2,000 baht) if less than 200 m2. There is a need for updating every year, a fine is issued if disobeyed.
Designation of the day of witnessed inspection from the person in charge.
Shop inspection (kitchen, drainpipe, oil dump yard)
Training Thai company staff on food sanitation
Acquisition of restaurant operating license
If you are planning to advance to Thailand for company foundation, factory operation, establishing a representative office, opening a restaurant, applying for BOI investment encouragement as well as monthly accounting and tax affairs, please contact Thai Visa & Law Consulting.
We are waiting for you.
Let’s get to the start line of business in Thailand!!