Thread: Starting a New Business

Originally Posted by 12Call

Originally Posted by DrB0b

Take a look here, there's some useful advice along the lines of what you asked for in your OP rather than what you got in most of this thread

http://www.siam-legal.com/Business-in-Thailand/thailand-company.php

More advertising.

Says the man whose nick is the name of a mobile-phone company
More bullshit from you. Why is that whenever somebody posts useful information the dipshits come crawling out from under their rocks?

From the link I posted

Business registration in Thailand

Doing business in Thailand

Company Structures

Business registration has increased as more foreigners are doing business in Thailand.During the second quarter of 2007, the Thai economy had expanded by more than 4%, with exports mainly serving as the main engine of growth for the greater Thai economy together with government spending. The latest economic figures this year has reflected that domestic demand was improving owing to greater political clarity, continued economic stimulus and lower inflation.
Doing business in Thailand has never been better than now. With regard to economic stability in Thailand, inflationary pressure continued to decline due to retail oil prices which had remained below the 2006 level this owing to a much stronger baht amongst other factors.

Doing business in Thailand, you have the choice over what type of business organization to establish. There are 3 different types of businesses which can be registered. There is a Thai partnership, a Thai representative office, or a Thai limited company. More common than not, a Thai limited company is the most commonly used form of business setup chosen by foreigners doing business in Thailand.


Brief summary of options:

Thai partnership : Ordinary partnership is a business set up by a minimum of two persons.

Thai limited company : Private limited companies require a minimum of three promoters.

Thai representative office : There are terms and conditions to open a representative office.

Partnership

Ordinary Partnership

Ordinary Thai partnership is a business set up by a minimum of two persons. The persons are joint partners who share unlimited liability for all the company’s obligations. It is not mandatory to register an Ordinary Thai Partnership but partners can choose to do so as provided in Section 1064 of Thai CCC, reads in part “An ordinary Thai partnership may be registered”
Each partner is, jointly and severally, personally liable for debts and taxes of the partnership. For example, if the partnership assets are insufficient to satisfy a creditor's claims, the partners' personal assets are subject to attachment and liquidation to pay the business debts.

Each partner may be held jointly and severally liable for a co-partner wrongdoing or tortuous act (e.g. the misapplication of another person's money or property).
Unless otherwise provided in the partnership agreement, no one can become a member of the Thai partnership without the consent of all partners.

Limited Partnership

A Limited Thai Partnership is in several ways similar to an Ordinary Thai Partnership, though it provides that there must be two types of partnership. The first one is where partners whose liability are limited and the other one is partners whose liability are jointly and unlimited.

Representative Office

Thai Representative Office
Certain conditions apply to those Thai representative offices which require an Alien Business License. It is important to clarify beforehand what constitutes income and subject to Thai taxes. In order to form a representative office, at least one of the following purposes would need to be sought for the purposes of limited “non-trading” activities.

• The business is to search for the source of goods or services in Thailand for the headquarters overseas.
• To check the quality and quantity of the product ordered by the headquarters overseas
• To give advices to the headquarters about the goods to order
• To supply the information of the headquarters' products to the customers in Thailand
• To report the economic movement in Thailand to the headquarters

Corporate Income Tax
Corporate Income Tax is paid in Thailand by companies and partnerships established under Thai laws are subject to income tax on income earned from sources within and outside of Thailand. The juristic companies and partnerships for income tax purposes include, but are not limited to:

Limited companies. Registered ordinary and limited liability partnerships. Joint ventures. Foundations and associations A branch of a foreign corporation earning from sources within Thailand.

Corporate Income Tax is imposed on the net profits as per the generally accepted accounting principles and according o the conditions described in the Revenue Code of Thailand.

Corporate Taxpayer shall bear in mind that:

Every return must be accompanied by audited financial statement. Shall file a half-year return and pay 50 percent of the estimated annual income tax by the end of the eighth month of the accounting period. If it fails to pay the estimated tax or under-payment by more than 25 percent may subject the taxpayer to a fine amounting to 20 percent of the amount in deficit.

However the Corporate gets some kind of exemption on dividend

Dividends received by Thai companies or foreign companies carrying on business in Thailand are taxable as ordinary income. It is entitled to include in its taxable income only one-half of the dividends received from another Thai company, provided that shares have been held for a period of at least three months before and three months (Holding period) after receipt of such dividends. A Thai company will be exempt from taxation on all dividends received from another Thai company if the recipient company holds at least 25% of the total shares with voting rights in the paying company and has so held such shares in compliance with the holding period, and the paying company does not hold any shares of the recipient company, either directly or indirectly. Thai companies listed on the Stock Exchange of Thailand are exempt from taxation on all dividends received from other Thai companies if they merely comply with the defined holding period.

If the Corporate taxpayer fails to file a tax return, late filing or filing a return containing false or inadequate information may subject the taxpayer to various penalties. Failure to file a return, and sub-sequent non-compliance with an order to pay the tax assessed, may result in a penalty equal to twice the amount of tax due. Penalties are due within 30 days of assessment.

An annual income tax return must be filed within 150 days after the end of each accounting period, and must be accompanied by audited financial statements.

Income under this head

Income under this head includes:

gross income from sale or disposal of petroleum, gross income arising from transfer of any property or right-related petroleum business, Any other income arising from conducting petroleum business. value of petroleum delivered as a royalty payment to the government

Double Taxation avoidance

Petroleum income tax is charged on net profit at the rate of 50% after allowing deductions.

The tax treaties entered by the Thai Government are mainly concerned with the avoidance of double taxation. The principle of Double Taxation Avoidance is that a person will not be subjected to tax in another country where he resides if he is already paid the tax in the country where he earns the income. It saves the person from paying tax twice. The treaty aims at providing for cooperation between governments in preventing the evasion of taxes. The scope of the Thai tax treaties covers taxes on income and on the capital of individual and juristic entities. The provisions of these tax treaties minimize or exempt certain types of income from taxation.

Value Added Tax (VAT)

The Value Added Tax (VAT) is generally imposed to goods and services supplied in or imported into Thailand. VAT includes municipal tax, which is charged at the rate of one-ninth of the VAT rate. Under the tax regime, value added at every stage of the production process is subject to tax. This tax affects: Producers, providers of services, wholesalers, retailers, exporters and importers. A zero per cent rate applies to certain businesses, for example, the Export of Goods or Services, international transportation by sea or air, and the sale of goods and services to United Nations-related organizations. The trader will charge VAT on the sale of goods or provision of services to the consumer. The businesses which are excluded from VAT subject to specific business tax, businesses necessary for maintenance of life and social welfare (i.e. health care services, educational services, domestic transportation, sale of unprocessed agricultural products), cultural services, religious and charitable services. Traders who do only zero-rate supply business will not be required to collect VAT on their supplies, but can refund all VAT paid for purchase of goods and services from others. Services provided by traders residing abroad and utilized in Thailand are regarded as being rendered in Thailand and subject to VAT.

The VAT payer is required to file a monthly VAT return and pay the tax monthly, on or before the fifteenth day of the following month.
Failure to register as a VAT payer, file a VAT return, or issue a tax invoice to a customer, is subject to a penalty of twice the amount of the tax due. A monthly surcharge of certain percentage for failure to pay the VAT is levied on the tax due. In addition, punishment for noncompliance with VAT regulations allows for a maximum punishment of imprisonment up to seven years and a fine of up to Baht 200,000.

Specific Business Tax (SBT)
This tax is imposed on certain types of businesses whose value added is difficult to define such as banking, finance, life insurance, pawnshops, and real estate. Such businesses are considered to be outside the VAT system and therefore are not subject to VAT. Specific business tax is computed on monthly gross receipts which do not include municipal tax.

Municipal Tax
When specific business tax is paid, municipal tax is paid at the rate specified by the Government is imposed thereon. When VAT is paid, one-ninth of its rate goes to municipal tax.

Stamp Duty
Stamp duty can be imposed on the instruments listed in the Stamp Duty Schedule of the Revenue Code at different rates specified therein. The instruments are such as promissory notes, bills of exchange, powers of attorney, letters of credit etc. If the instrument is executed in Thailand, the stamp duty is due within 15 days after the execution date. However, if the instrument is executed outside Thailand, the stamp duty is due within 30 days after arrival of the instrument in Thailand.

EXCISE TAX This tax is imposed mainly on luxury items such as gasoline and petroleum products, tobacco, liquor, soft drinks, playing cards, crystal glasses etc. Excise tax will be computed according to the Excise Tax Tariff on an ad valorem basis or at a specific rate, whichever is higher. All goods subject to excise tax also remain subject to VAT. The excise tax is collected by the Excise Department and usually imposed at the time of delivery of the goods from factories.

Customs Duty
Customs duty is mainly imposed on import and some export goods specified in the Customs Tariff statute. Exported goods that are subject to customs duty include rice, rubber, leather, and teak. In general, the invoice price is the basis for computation of duty and normally applied to CIF (Cost, Insurance, and Freight) value for import and FOB (Free On Board) for export.

Thailand being a member country of the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) adopts practices and standards in accordance with the GATT codes in determining customs price.

Income Tax Guide for Foreign Companies

In Thailand, there are many kinds of business identities. The type of business you chose will affect your tax rates and tax benefits.

In general, the most common types of business are:
>>
Thai company

• A company registered under Thai law.

>>
Foreign company

• A company carrying on business in Thailand but registered under foreign law.
• A company not carrying on business in Thailand but deriving income from Thailand.

Thai company
A Thai company generally pays tax at 30% of net profit. However, some types of company are entitled to a rate reduction.

Rates:

Small business with paid-up capital less than 5 million baht
25% of net profit < 300 million baht for 5 consecutive accounting periods starting from 6th September B.E.2545.
25% of net profit 1-3 million baht


Company registered in the Stock Exchange of Thailand (SET)
20% of net profit < 1million baht ,15% of net profit< 1 million baht starting from 1st January B.E.2547

Newly registered company in the Stock Exchange of Thailand (SET) and Market for Alternative Investment (MAI) within
3 years starting from 6th September B.E.2545
25% of net profit for newly registered company in SET for 5 consecutive accounting periods.

20% of net profit for newly registered company in MAI for 5 consecutive accounting periods.


Bangkok International Banking Facility and Regional Operating Headquarters
10% of net profit from qualified income


Association and foundation
2% or 10% on gross receipts

Foreign Company
A foreign company carrying on business in Thailand, whether it has a branch, an office, an employee or an agent in Thailand shall pay 30% tax only on profit deriving from business in Thailand. However, international transportation company shall pay tax at the rate of 3% on gross receipts.

Foreign Company Abroad
A foreign company that does not carry on business in Thailand will be subject to withholding tax on certain categories of income derived from Thailand. The withholding tax rates may be further reduced or exempted depending on types of income under the provision of Double Taxation Agreement.

Rates:
Remittance of profits
10%
Dividends
10%
Other income such as interests, royalties, capital gains, rents and professional fees
15%

Tax Registration

A foreign company carrying on business in Thailand, whether setting up a branch or an office must apply for tax identification number from the Revenue Department. An application form (Lor Por 10.3) together with other relevant documents i.e. a copy of a company’s registration license, house registration, etc. shall be submitted to the Area Revenue Office within 60 days for the date of registration or operation.

Tax Treaties to avoid Double Taxation
Currently, Thailand has concluded tax treaty agreements with 49 countries: Armenia, Australia, Austria, Bangladesh, Bahrain, Belgium, Bulgaria, Canada, China P.R., Cyprus, Czech Republic, Denmark, Finland, France, Germany, Hungary, India, Indonesia, Israel, Italy, Japan, Korea, Laos, Luxembourg, Malaysia, Mauritius, Nepal, the Netherlands, New Zealand, Norway, Oman, Pakistan, the Philippines, Poland, Romania, Singapore, Slovenia, South Africa, Spain, Srilanka, Sweden, Switzerland, Turkey, Ukraine, United Arab Emirates, United Kingdom of Great Britain and Northern Ireland, United States of America, Uzbekistan, and Vietnam.

Originally Posted by madjbs

Originally Posted by Smug Farang Bore

Forget everything you've learn t doing business in the real world.

That is precisely what you shouldn't do and is the main reason why so many farangs get burnt in business here. Cultural differences do not take priority over good business sense and practice.

As far as running a business goes, that's certainly true (not so much for the boss/employee dynamic, where here you're more like a father-figure, but the nuts-'n'-bolts stuff doesn't change).

The differences come when there is a serious conflict between partners or rival business owners- there's very little legal recourse the foreigner can exercise- outright theft is just over-looked by the justice system, and the courts are a joke- if it comes down to 'your money or your life' (which is not uncommon) which will you choose?

Business problems in Thailand are settled much differently than they are in the West, and that's where many foreigners go wrong (even if they're right)- I learned a few very hard lessons here, and I managed to benefit from them- not everybody has been able to do that.

My comment was just meant as a jest but with a warning that this place will test you in ways that you just will not have expected.

Some make it but many more fail because they try things that are alien to them in their own country let alone here.

You wouldn't want me to wire your house.

Good luck to the guy but take on board what people say about the money - if you can't loose it don't spend it.