We provide you some very essential general information and advice concerning the setting up of a company in Thailand and carrying out business there, and the working environment prevailing in Thailand.
Basically, if you possess genuine intentions of doing business in Thailand, then establishing a company and carrying out legitimate business in Thailand is relatively straightforward and not difficult, particularly in comparison with lot of other countries.
Thailand is a good choice to invest for your business plans, and not at all a bad place. It is a relatively trouble-free market economy, and comparatively flexible. The Thai legal system concerning company and tax matters is to a great extent designed after the USA and European countries such as Switzerland and France. Therefore almost all foreigners adapt well and discover it reasonable and smooth to work within.
Many people have approached Thailand comprehending the daunting requirements and process, and most of them soon realize that it is not quite so burdening after all. Even though it depends on what you want to achieve and hope to accomplish, it also rests a lot on right guidance and expert support.
The major requirement to be a successful businessman in Thailand is, well, doing business well. By saying this, what we are to underlining is that that the legal part should be the relatively comfortable part in Thailand. Don’t let yourselves to burden your head with the legal procedures you will have to encounter in Thailand. What is relevant is whether your business is financially feasible after considering the products and/or services you are wishing to offer. The legal part should be perceived as the easy part and should stick to that.
Quite often, people are worried by the bad stories they read on the Internet or hear from others. Experienced business consultants in Thailand say that it’s usually a lot safer than what I often find on the Internet and hear from those I don’t deal with, provided your business is really energetic in trying to bestow products and/or services.
Every story is double-sided, but often the Internet is similar to the news; bad news spreads much further than good news, and people always choose to complain. In reality, most of Thailand is friendly, not bad. It is very similar to the “all Thai women really need only your money” myth on the Internet. Be calm and cool and just try to understand the real scenario and you will the right information.
Even though this is the situation there are some small problems which you can, with some care, surely over come. There are fields in which foreigners are not allowed to enter. However, almost all of these are basically low skilled fields and not of attention. But the majority of fields that foreigners of class would choose to work in are allowed. Another problem that everyone must handle with is that the rules, instructions and forms are all provided in the Thai language. But if you are committed enough there is a worthy sum to be made from Thailand.
Reporting requirements and accounting policies are decided by the Civil and Commercial Code, the Revenue Code and the Accounts Act. The accounting standards in Thailand are issued by the Institute of Certified Accountants and Auditors of Thailand.
These standards have usually been manufactured from International Accounting Standards (IAS), or from generally recognized accounting standards (GAAP) prevalent in the United States.
There are mainly two taxes that have a direct impact on businesses functioning in Thailand. They are the Corporate Income Tax and Value Added Tax.
All business firms operating there must possess a taxpayer identification card inside sixty days after establishment. The corporate income tax rate is calculated as 30% of net profit. Corporate taxes are payable semi-annually. Financial statements must be created by a company auditor annually.
The Revenue Department insists that accounts must be in the Thai language. The books must be placed at the business centre for ten years. Corporate Income Tax (CIT) is a direct tax imposed on a juristic company or alliance which is functioning under Thai or foreign law and performs business in Thailand or makes certain types of income from Thailand.
The usage “juristic company or alliance” implies a limited company, a limited alliance or a registered ordinary alliance operating under Thai or foreign law as well as an association and an institution involved in business which brings revenue. The usage also covers any joint venture and any trading or profit-seeking activity performed by a foreign government or its agency or by any other juristic body listed under a foreign law.
Value Added Tax was established in 1992. The VAT is imposed to each stage of the production process, and is payable at a monthly basis. The VAT is levied at a rate of 10%. Exports, domestic transportation and some other sales are freed from VAT. Any person or entity who supplies goods on a continuous basis or delivers services in Thailand and has an annual income in excess of 1.2 million Baht has to pay VAT in Thailand.
Service is regarded to be provided in Thailand if the service is carried out in Thailand no matter where it is made use of or if it is carried out somewhere else and made use of in Thailand.
Some other taxes also need to be considered. It includes the Specific Business Tax, the Remittance Tax, and the Personal Income Tax. Specific Business Tax (SBT) is another type of indirect tax launched in 1992 to substitute Business Tax. Certain businesses will come under Specific Business Tax in place of VAT.
Businesses that come under SBT comprise of Banking, Financial and similar business, life insurance, pawn brokerage, real estate and any other business acknowledged by the Royal Decree i.e. business involves in repurchasing agreement (REPO) and factoring.
While the Remittance Tax has an impact on branch offices, the Withholding Tax, the Personal Income Tax, is calculated at 30-37% for income crossing the mark of $40,000, and the petroleum, stamp duty on some transactions, excise taxes on numerous goods such as liquor and tobacco, and property taxes.
When you consider the Taxation in Thailand the impact of Double Taxation Treaty must have to be mentioned. The U.S. and Thailand agreed on a tax treaty in the year 1996. The treaty will exempt double taxation, allowing U.S. investors to have a credit against their U.S. tax obligations for taxes spend in Thailand, as well as other benefits. The treaty will come into effect in 1998.