Dezan Shira & Associates have maintained an Alliance partner in Thailand since 2013 and provide pre-entry advisory, corporate establishment, tax planning, accounting, compliance and audit services throughout the country, managed from offices in Bangkok. Our Alliance Partner firm employs umerous local legal, tax, accounting and audit staff to support this function and are one of the largest firms in the city.
A unified Thai kingdom was established in the mid-14th century. Known as Siam until 1939, Thailand is the only Southeast Asian country never to have been taken over by a European power. A bloodless revolution in 1932 led to a constitutional monarchy. Since 2005, Thailand has experienced several rounds of political turmoil including military coups in 2006 and 2014.
With a well-developed infrastructure, a free-enterprise economy, generally pro-investment policies, and strong export industries, Thailand has achieved steady growth due largely to industrial and agricultural exports – mostly electronics, agricultural commodities, automobiles and parts, and processed foods. The country’s unemployment stands at less that one percent of the labor force, which has resulted in upward pressure on wages in some industries. The Thai government implemented a nation-wide 300 baht (US$10) per day minimum wage policy in 2013 and deployed new tax reforms designed to lower rates on middle-income earners. On average, depending on the type of business, it takes around 27.5 days to set up a business in Thailand.
The Thai economy has weathered internal and external economic shocks in recent years. The global economic recession severely cut Thailand’s exports, with most sectors experiencing double-digit drops. In late 2011, Thailand’s recovery was interrupted by historic flooding in the industrial areas in Bangkok and its five surrounding provinces, crippling the manufacturing sector. The government approved flood mitigation projects worth US$11.7 billion, which were started in 2012, to prevent similar economic damage, and an additional US$75 billion for infrastructure over the following seven years. This was expected to lead to an economic upsurge but growth has remained slow, in part due to ongoing political unrest and the resulting uncertainties.
The creation of 12 development zones across the country has been put out to tender by the Thai government who has also announced a policy of developing processing zones on its borders with Malaysia and Myanmar and joint ventures with China in Nanning and Kunming to process and repackage Southeast Asian goods for the Chinese market. The new industrial zones are meant to prepare the country for the ASEAN Economic Community in 2015.
Please find the full contact information of our Malaysian Asian Alliance Partner here.Dezan Shira Asian Alliance Member in Thailand
Foreigners looking to work in Thailand need to apply for both a visa and work permit. The nonimmigrant “B” visa is the appropriate visa for anyone looking to conduct business or investment activity within Thailand. There are three “B” visa options based on duration of stay, these include:
The maximum duration of stay per visit for a non-immigrant “B” visa is 90 days, but may be extended upon approval by the Immigration Bureau in Bangkok.
In order to work in Thailand under “B” visa status, the applicant must also posses an officially issued work permit. In order to complete a successful application, both the foreign worker and domestic employer must submit the required paperwork to the Department of Employment. To sponsor a work permit for foreign directors or employees, the company is required to have a minimum capital of 2,000,000 Baht per work permit. The company will also need to employ four Thai staff in order to support one work permit. A work permit can be generally be obtained within one month.
Generally, foreigners are prohibited from the majority of business activities in Thailand. The definition of a foreigner under Thai law includes the following:
Minimum financial investment requirements
|Types of Entity||Capital Requirement|
|Limited Company||No minimum capital requirement. However, if the company needs to sponsor a work permit for foreign employee, a minimum registered capital must be at least 2,000,000 THB, declared as paid up.|
|Representative Office||3,000,000 THB|
|Treaty of Amity Company||3,000,000 THB|
|BOI Company||Depends on the conditions under the approval|
Banking operations and setting up
Once the company has registered with the Ministry of Commerce, a corporate bank account can be opened. Most of the banks in Thailand require the physical presence of the signatories as part of their due diligence procedure in opening a bank account. If the signatory is a foreigner, a work permit of such foreigner is required to open a corporate bank account.
Businesses operating in Thailand are subject to a range of taxes. These include Corporate Income Tax (CIT), a direct tax levied on juristic companies and partnerships carrying on business in Thailand or not carrying on business in Thailand but deriving certain types of income from Thailand. CIT is levied at a rate of 20 percent. However, small companies with revenues of less than 30 million baht may qualify for lower CIT rates.
Certain types of income paid to companies are subject to withholding tax at the source. The withholding tax rates depend on the types of income and the tax status of the recipient. For example, the withholding tax rate on royalty payments to Thai or foreign companies located in Thailand is three percent. Whereas the tax on royalty payments to foreign companies located
Generally, unless specifically exempt, every person who conducts business in Thailand is liable to pay VAT, regardless of whether the business is conducted by an ordinary person, group of persons, partnership, company, or any other juristic person. The standard VAT rate is 10 percent. However, the current VAT rate is seven percent, which is a reduced rate for a temporary period. Additionally, certain types of goods and services, such as goods intended for export, are eligible for a zero percent VAT rate.