Running a business in Thailand involves various expenses, some of which can be deducted to reduce corporate income tax liability, as outlined by the Revenue Code. Companies may also be eligible for tax exemptions on dividends paid between qualifying Thai firms, under double tax treaties, or through Board of Investment promotions.

Understanding available deductions and exemptions is a key point for minimising a company’s tax burden. This article examines what qualifies as deductible expenses for businesses in Thailand.

Key Points

• Deductible business expenses in Thailand include depreciation, bad debts, donations, and more as outlined in the Revenue Code. Proper documentation is required.
• Dividends paid between qualifying Thai companies (parent owns ≥25% for ≥6 months) are exempt from corporate income tax.
• Companies may get reduced tax rates or exemptions under Thailand’s double tax treaties with other countries.
• The Board of Investment offers tax holidays up to 8 years and other incentives like duty exemptions for eligible promoted businesses.

What are Deductible Expenses for businesses in Thailand?

In Thailand, deductible expenses are costs that a company can subtract from its total taxable income, thereby reducing the amount of corporate income tax it owes.

The Revenue Code of Thailand outlines specific rules and limitations on what qualifies as a deductible expense. Companies should maintain proper documentation and adhere to accounting standards when claiming deductions on their annual corporate income tax returns.

What Can be Claimed as a Deductible Expense?

In practice, any expenses incurred by a business that was exclusively for the purpose of generating income or business, can be deducted from their tax calculations. However, section 65 of the Revenue Code does exempt certain expenses from being deducted.

The following are examples of deductions which can be claimed by Thai companies:

Petty Cash

Petty cash expenditure (less than 1,000 THB) per transaction may be claimed as a deductible expense. However, if the company tries to submit too many expense claims as petty cash expenses, they may not be accepted and cannot be deducted from the accounts.

Entertainment Expenses

Entertainment (including food and drink) expenses incurred by a company may be deducted from its gross income. However, the total deduction of entertainment expenses shall not exceed 0.3 % of total gross revenue or gross sales, or of the paid-up capital, whichever is greater in an accounting period. Also, the total entertainment expenses allowed for deduction must not exceed 10 million THB.

For example, if your company has a registered capital of 2,000,000 THB and annual revenue of 6,000,000, the maximum entertainment expenses your company can deduct is as follows:

In this case, since the annual revenue is 6,000,000 THB and is greater than the registered capital, the company will be able to claim up to 0.3% of 6,000,000 THB.

0.3% x 6,000,000 = 18,000 THB.

Therefore, the company will be able to deduct 18,000 THB from their CIT returns as entertainment expenses.

Losses Carried Forward

A company may carry its operating losses forward for five accounting periods to offset against future profits. Please note, there is no provision for the carry back of losses to previous accounting periods.

Depreciation Allowance

Thailand’s tax regulations allow the use of any generally accepted accounting method for calculating depreciation. However, the depreciation rates cannot surpass the limits outlined in the Royal Decree issued under the Revenue Code (№145).

Accelerated depreciation may be permitted for cash registers and machinery or accessories employed in research and technological development projects.

Buses with a seating capacity not exceeding 10 passengers, or passenger cars, are eligible for depreciation, but only for the portion of the cost value that does not exceed 1,000,000 Thai Baht.

Interest Expenses

If a business has any loans or credit card debt, they can deduct the interest payments on these payments. Any interest accrued on loans used to purchase equipment or other assets, as well as interest on credit card balances used for company reasons, might also be included.

Rent

If a business rents any property, the rent can be deducted from their expenditures. Eligible property includes office space, warehouses, and other commercial properties.

Business Expenses

All business expenses, such as the purchase of office supplies, travel expenses, and advertising charges, can be deducted from your taxable income.

Reserves

Deductions are permitted for reserves set aside from insurance premiums, as well as reserves established as provisions for bad or doubtful debts arising from credit extension by banks, finance and securities companies, or credit foncier institutions. However, other types of reserves are not eligible for deductions.

Contribution to Funds

Any contributions made by the company to a provident fund (in accordance with applicable Ministerial Regulations) for employees can be claimed as a deductible expense.

Bad Debts

Bad debts can be a deductible expense, however the company must follow the required legal provisions to do so. Please see this article for more information about how to write off bad debts.

Donations

Donations to public charities valued up to 2% of net profits of the companies can be deducted. Furthermore, donations for education or sports valued up to 2% of net profits may also be deducted.

Travel Expenses

In relation to any expenses claimed for travelling, the auditor who undertakes the company’s annual audit and/or the Revenue Department will typically assume that the trip was for pleasure rather than for business. Therefore, the company will have to prove that:

• the trip was for company business and
• that all the expenses paid on the trip were reasonable for the trip and reimbursed at cost.

If the company cannot prove these 2 key points, the travelling expenses claimed could be added back to your bottom line profit and therefore, the company will have to recalculate the corporate income tax and possibly have to pay more tax.

Please see this article for more information about what travel expenses can be deducted and how to make such deductions.

How Can a Company Claim Expenses?

In Thailand, there are several supporting documents required for claiming deducted expenses for tax purposes. Here are some of the common documents needed:

Tax Invoices

This is the primary supporting document required for deducting expenses. Invoices or receipts should clearly state the date, details of the goods or services purchased, the name and tax identification number and address of both the buyer and seller, and the amount paid.

Withholding Tax Certificates

If you have paid withholding tax on certain expenses, such as professional fees or rental payments, you will need to obtain withholding tax certificates from the payees to claim deductions.

Payroll records

For deducting employee salaries and benefits, you will need to maintain payroll records, including salary slips, social security contribution records, and provident fund contribution records.

Contracts or Agreements

In the case of deducting expenses related to contracts or agreements, such as rental agreements or service agreements, you may need to provide copies of these documents as supporting evidence.

It’s important to note that the specific supporting documents required may vary depending on the type of expense and the tax regulations in effect at the time.

What Expenses Cannot Be Deducted?

The following items have been classified as non-deductible expenses under Section 65 ter of the Revenue Code.

• Personal expenses and gifts.
• Tax penalties, surcharges and criminal fines under the Revenue Code.
• Any artificial or fictitious expenses.
• Consideration for properties owned and used by the juristic entity.
• Interest on capital, reserves, or funds of the juristic entity.
• Any damage recoverable under an insurance or contract of indemnity.
• Any disbursement if the identity of its recipient cannot be proved by the payer.
• The portion of the purchase price of properties and the expenses in connection with the purchase or sale of properties which exceeds a reasonable amount.

What are Add Back Expenses?

Add-back expenses refer to the expenses that are included in a company’s accounting records but are not allowed as deductions in the calculation of net profits for tax purposes. The Thai Revenue Code, specifically Section 65 Ter, outlines the expenses that cannot be claimed as deductions. These expenses need to be added back to the profits in the tax return.

Failing to add back these expenses in the tax return can lead to inaccuracies and potential penalties from the Revenue Department.

Expenses Not Allowed for Deduction

According to the Thai Revenue Code, there are several expenses that are not allowed for deduction in the calculation of net profits. These expenses include:

Reserves

Reserves, except for specific types such as insurance premium reserves for life insurance and other insurance, and reserves for bad debts or suspected bad debts.

Funds

Expenses related to funds, except for provident funds under the rules and regulations prescribed by the Ministerial regulations.

Personal, Gifts, or Charitable Expenses

Expenses for personal, gift, or charitable purposes, except for public charity or public benefit expenses, shall be deductible in an amount not exceeding 2% of net profit. Expenses for education or sports as the Director-General prescribes with the approval of the Minister shall also be deductible in an amount not exceeding 2% of net profit.

Entertainment or Service Fees

Entertainment or service fees that do not comply with the following rules, the total deduction of entertainment expenses shall not exceed 0.3 % of total gross revenue or gross sales, or of the paid-up capital, whichever is greater in an accounting period. Also, the total entertainment expenses allowed for deduction must not exceed 10 million THB.

Capital Expenses

Expenses for the addition, change, expansion, or improvement of an asset, excluding expenses for repairs to maintain its present condition.

Fines and Surcharges

Fines, surcharges, criminal fines, and income tax of a company or juristic partnership.

Excessive Shareholder or Partner Salary

Should one of the shareholders or partners receive an excessively large salary then this may be challenged by the Revenue Department and any excess salary (i.e. the difference that would be considered excessive) will be added back to the accounts as non-deductible. In such a case, a salary may be considered as excessive when the amount awarded to the shareholder or partner is disproportionate to the revenue earned by the company.

Unrealized or Deferred Expenses

Expenses that are not actually incurred or should have been paid in another accounting period, except in certain cases where it cannot be entered in any accounting period.

Remuneration for Company-Owned Assets

Remuneration for assets owned and used by a company. For example, any items bought for personal use and not for undertaking business activities by the company directors or shareholders.

Interest Paid to Equity, Reserves, or Funds

Interest paid to equity, reserves, or funds of the company.

Damages Claimable from Insurance

Damages claimable from insurance or other protection contracts, or losses from previous accounting periods, except for net loss carried forward for a specific period.

Non-Business Expenses

Expenses that are not for the purpose of making profits or for the business.

Non-Business Expenses in Thailand

Expenses that are not for the purpose of business in Thailand.

Excessive Asset Purchase Costs

Costs related to the purchase or sale of assets that exceed the normal cost and expense without reasonable cause.

Lost or Depleted Natural Resources

Value of lost or depleted natural resources due to the carrying on of business.

Non-Devalued Assets

Value of assets apart from devalued assets subject to specific provisions. The value of assets shall be assessed using the normal purchase price of such assets. Should the asset receive appreciation in the value of the asset, this appreciation shall not be included in the calculation of net profit or net loss.

Unidentified Expense Recipients

Expense for which the payer cannot identify the recipient. For example, if a company uses a third party to help with the process in an unofficial way or without a proper contract or agreement. Please note, in such a case, precedent from Thai case law highlights that for this kind of situation, the courts will allow such a payment to be deducted if the following can be provided:

• Evidence of the payment
• Witnesses that can prove that the expense was received by a real person and is not a false claim.

Post-Accounting Period Expenses

Any expense payable from profits received after the end of an accounting period. Please note that in Thailand, most companies opt to have their financial year end on the 31st of December.

An example of an expense payable from profits received after the end of an accounting period include:

• Bonuses payable to employees
• Dividends payable to shareholders

Other Prescribed Expenses

Expenses similar to those specified above, as prescribed by a Royal Decree.

Our Thoughts

Understanding the requirements for deductible expenses and what can be claimed for companies in Thailand is essential for businesses operating in the country. Companies must comply with tax regulations and ensure all deductions are eligible for claiming.

It’s really important for companies to understand that Thailand, unlike other countries, has a lot of limitations regarding the ability for companies to deduct expenses. In order to be able to make these deductions, a lot of supporting documents are required and have to be correctly filled out. Should the documents be incorrectly issued, it will be rejected and that expense will not be eligible for deduction. The reason for this being that the accountant may refuse to accept it and/or the auditor will flag them in their annual audit. Also, should the Revenue Department become aware of such claims in an investigation, they will add it back as taxable income.

Therefore, it is very important for companies in Thailand to be aware of this and properly maintain all proper supporting documents.

Book a Call with our expert

Up to an hour consultation on the process of starting and running a business in Thailand.

During this session, our lawyer will provide insights into key areas, including company structure, outsourced employment services, taxes, accounting, and other general facets of running a business in Thailand. Additionally, we are here to address any other legal queries you might have, ensuring you have a comprehensive understanding of the topic at hand.

Our responses will be pragmatic, breaking down both the legal aspects and local practices in a manner that’s easy to grasp.

Should your questions require additional research, our experts will delve deeper and follow up with further insights via email.

This consultation is offered by legal experts fluent in English, French, or Thai.

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Introduction

When a business in Thailand is unable to collect a debt from a debtor, it may be eligible to write off the debt from its accounts. However, in order to do so the company must follow specific rules as required by Thai law. Failure to follow these rules can result in the debt write-off being classified as a non-tax deductible expense, thereby affecting the company’s bottom line profit and corporate income tax calculations.

What is a Bad Debt?

The write-off of bad debts in Thailand is governed by Ministerial Regulation №186 (1991), which defines the characteristics of what a bad debt is and what is eligible for write-off. These criteria include:

• The debts must have arisen from carrying on a business operation or be connected to the business operation.
• The debts must have been included as revenue in the calculation of net profits.
• The debts must not be owed by a person who is or used to be a director or managing partner.
• The claim for debts must not be barred from court action by statute of limitations and should have sufficient evidence for the purpose of suing the debtor.

Is VAT Required to be Paid on the Income Derived From Writing-off Debts?

As per Thai Tax Law, VAT is not levied on income earned from forgiven debts, as it is not considered compensation for the sale of goods or services. Essentially, when companies write off debts, they must assess the corporate tax implications. If a company decides to keep the liabilities on its books upon closure, the Thai revenue department may require the these liabilities to be recognised as income, which may result in the company having taxable profits and, incurring further tax obligations.

Can Writing Off a Debt be Deducted as a Tax Expense?

Unrecoverable debts are written off from the creditor’s records and are considered as accounting expenses. However, for this write-off to be eligible for deduction in the creditor’s income tax calculation it must satisfy all legal requirements.

As per section 65 bis (9) of the Revenue written off debts can only be deducted from corporate income tax expenses if:

1. The origin of the debt must come from the business operations or be associated with the business activities. Alternatively, the debt has been recorded as revenue in the company’s net taxable profit calculation.

2. The debt can be redeemed through the judicial system (i.e., the creditor has enough proof to support their claim, and the relevant prescription period has not yet dened).

Furthermore, there must be evidence of debt collection attempts before the creditor can write off the bad debt for tax purposes. The required actions for collecting the debt depend on the size of the debt.

For a bad debt (from one debtor) exceeding THB 500,000,the following must be satisfied:

1. Creditor has demanded payment from the debtor and can provide evidence of the attempt (e.g., a demand letter).

2. Undertaken judicial action (e.g., a lawsuit or motion in a civil case or bankruptcy proceedings) after the failed attempts to collect, which resulted in a court-ordered debt collection. This court-ordered debt collection must also remain unpaid.

There are two exceptions to the requirement that a creditor take judicial action. Firstly, if the debtor has died/disappeared and there are no remaining assets which can be used to recover the debt, the creditor may write off the bad debt after taking step one and issuing a demand for payment. Likewise, the requirement for judicial action will not be needed if the debtor has ceased its business operations and the debts of other creditors who are ranked above the creditor exceed the total assets of the debtor.

For bad debt between THB 100,001 and 500,000, the requirements that must be satisfied by a company looking to write off the debt are basically the same as above. However, the threshold of required judicial action is lower. For example, the creditor does not have to wait for a court order or ruling and will have fulfilled their obligations when their case (civil or bankruptcy) is accepted by the court. Please note, the same exceptions mentioned above will apply and will remove the need for judicial action.

For debts that do not exceed THB 100,000 (or THB 200,000 if the creditor is a bank), the creditor may proceed to write off the bad debt for tax purposes after issuing a demand for payment.

If the debtor has begun the business reorganization process in compliance with the bankruptcy law, the company’s debts may end up being restructured, thus reducing the amount or even writing off any debts owed entirely. In this case, a creditor can write off whatever amount of debt is reduced or written off in the court-approved debt restructuring plan. In such a case there is no need to fulfil the debt collection attempt requirements.

When Would a Company Need to Write Off Debts?

A company may need to write off debts under various circumstances, typically when it becomes apparent that the company is unlikely to recover the full amount owed.

Here are some common situations when a company might need to write off debts:

Customer Insolvency: If a customer declares bankruptcy or is insolvent, the likelihood of recovering the full amount owed diminishes. In such cases, the company may choose to write off the debt as a loss.

Protracted Non-Payment: When a customer consistently fails to make payments over an extended period, and efforts to collect the debt have been unsuccessful, the company may decide to write off the debt to reflect the economic reality.

Settlement Agreements: In some cases, a company may negotiate a settlement with a debtor, accepting a partial payment as full satisfaction of the debt. The remaining portion of the debt may then be written off.

Disputed Debts: If a debt becomes subject to a legal dispute, and it is uncertain whether the company will be able to collect the full amount, the company might write off the disputed portion until the matter is resolved.

Change in Business Circumstances: Economic downturns, changes in market conditions, or shifts in a company’s financial health may lead to the decision to write off certain debts that are deemed uncollectible.

Accounting Standards and Policies: Companies follow accounting principles, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), which may require the recognition of bad debts or impairment losses based on specific criteria.

Ceasing Collection Efforts: If a company decides to stop pursuing the collection of a debt due to various reasons, it may choose to write off the debt as uncollectible.

Acquisition or Merger: In cases of business acquisitions or mergers, the acquiring company may assess the collectability of debts on the books of the acquired company. If certain debts are deemed uncollectible, they may be written off.

It’s important for companies to carefully assess the financial implications of writing off debts and to comply with any relevant accounting standards and regulations. Writing off debts allows companies to accurately reflect the financial health of their business and make informed decisions about future credit and lending practices.

Our Thoughts

Managing bad debts is an important component of a businesses financial health. While owed money remaining on the books may seem beneficial on the surface, retaining such assets skews financial reporting and can cause significant problems later on.

By formally writing off irrecoverable debts through proper legal procedures provides a transparent outlook. This allows for redirecting efforts toward solvent clients, modifying risk levels on future credit issues, noting red flags if bad debt spikes suddenly, and more. By keeping diligent track of bad debts and then accounting for them accordingly provides a company with insight that informs operational adjustments that can allow a company to adjust accordingly. Whether stemming from a struggling client or overall trends, effectively handling bad debts provides accuracy and adaptability for a company.

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Overview Thailand is a popular destination for foreign businesses, but it’s crucial to understand the country’s rules on foreign ownership. The Foreign Business Act (FBA) restricts foreign companies from engaging in specific activities.

This can be confusing for foreign investors unfamiliar with Thai law. This blog post aims to simplify Thailand’s restricted business activities for foreign companies, providing information to help you make informed decisions for your business venture.

Key Points

The FBA limits foreigners or foreign-owned companies from participating in over 50 business activities.

If 50% or more of a company’s shares are owned by a foreigner, it is considered foreign-owned.

To engage in the 50 prohibited activities, a Foreign Business Licence or BOI promotion is required.

Understanding Foreign Company Status under the FBA

The FBA considers individuals who are not Thai citizens, legal entities not registered in Thailand, and entities with at least half of their capital or total capital owned by foreigners as “foreigners” or “foreign-owned.” If you fall into these categories, you may be subject to FBA restrictions. Some exceptions exist, such as businesses eligible for a Foreign Business License, allowing them to operate in Thailand despite foreign ownership.

Restricted Activities Lists

The FBA categorizes over 50 restricted activities into three lists.

List One: Prohibits foreigners from operating businesses for special reasons without an approval process.

List Two: Involves businesses related to national security, requiring approval from the Minister of Commerce and the Cabinet.

List Three: Includes businesses where Thai nationals are not ready to compete with foreigners, requiring approval for foreign operation.

Overcoming Ownership Caps Foreign ownership in a limited company engaged in restricted activities is typically capped at 49.99%. However, options exist for 100% foreign ownership:

1. Foreign Business License (FBL): Allows engagement in restricted activities but is challenging to obtain approval.
2. Board of Investment (BOI) promotion: Grants a Foreign Business Certificate for 100% foreign-owned companies in approved activities.

Another option is to partner with a majority Thai-owned company while maintaining control through carefully drafted agreements.

Conclusion While the Foreign Business Act is restrictive, international businesses can navigate these restrictions in certain situations. The most effective option is often a BOI promotion, providing 100% foreign ownership and a Foreign Business Certificate.

However, alternative approaches, such as obtaining a Foreign Business License or partnering with a Thai company, are available. Legal experts can assist in choosing the best option for your business needs.

Book a Call with our expert

Up to an hour consultation on the process of starting and running a business in Thailand.

During this session, our lawyer will provide insights into key areas, including company structure, outsourced employment services, taxes, accounting, and other general facets of running a business in Thailand. Additionally, we are here to address any other legal queries you might have, ensuring you have a comprehensive understanding of the topic at hand.

Our responses will be pragmatic, breaking down both the legal aspects and local practices in a manner that’s easy to grasp.

Should your questions require additional research, our experts will delve deeper and follow up with further insights via email.

This consultation is offered by legal experts fluent in English, French, or Thai.

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In Thailand, every legal entity, be it a limited company, a branch of a foreign company, or a representative office, must prepare financial statements for each accounting period. These statements are then audited by a Certified Thai Auditor and approved by the company’s shareholders. This process is crucial for maintaining transparency and accountability in financial reporting. Failure to comply with the annual audit requirement can lead to hefty penalties, reaching up to THB 200,000.

Key Points

• All legal entities in Thailand are obligated to prepare financial statements for each accounting period.
• Even companies with no transactions or income must undergo financial statement audits.
• Financial statements must be submitted to the Ministry of Commerce within 150 days of the fiscal year’s end.
• An Annual General Meeting (AGM) must be held for shareholders to review and approve the auditor’s report.
• Penalties for non-compliance can include fines, surcharges, and potential imprisonment.

Understanding Annual Audits in Thailand

Every entity operating in Thailand, regardless of its business activity level, must maintain proper accounts. This includes dormant entities that may not engage in any transactions throughout the year. As part of the regulatory requirements, companies need to submit their financial statements for the previous fiscal year to the Ministry of Commerce within 150 days after the fiscal year’s end. For most companies in Thailand, whose fiscal year ends on December 31st, this means submitting statements before the end of May.

To ensure accuracy and compliance, these financial statements undergo an independent audit conducted by a certified auditor. This step is crucial and cannot be performed by the company’s internal accounting team.

Reporting and Documentation Requirements

The financial statements submitted to the Ministry of Commerce must include various essential details:

• Company name and business type.
• Information about company directors.
• Audited financial statements, including balance sheets and profit and loss accounts.
• A list of shareholders.
• Minutes from the Annual General Meeting (AGM).

These documents must be provided in Thai, even if the original statements are in English or another language.

Submitting an Annual Audit

The process of conducting an annual audit involves several steps:

1. Document Collection: Essential financial documents, such as income and expense records, bank statements, and property titles, are collected.
2. Audit Execution: An independent auditor verifies the company’s financial records, including journals, ledgers, and trial balances.
3. Review and Authorization: The company reviews and signs the audit report, acknowledging the auditor’s conclusions.
4. Tax Compliance: Any identified tax liabilities must be addressed by making necessary payments to the Revenue Department.
5. Shareholder Engagement: The company organizes the AGM within 30 days of the auditor’s report signature, inviting shareholders to review and approve the audit.

Consequences of Non-Compliance

Failure to comply with Thailand’s accounting regulations can lead to severe penalties. These include fines up to 200,000 THB and additional surcharges. Companies understating profits by more than 25% may face further penalties and surcharges.

In Conclusion

Annual audits are essential for maintaining transparency and adherence to financial regulations in Thailand. By understanding the requirements and processes involved, companies can ensure compliance, avoid penalties, and uphold accountability in financial reporting.

Book a Call with our expert

Up to an hour consultation on the process of starting and running a business in Thailand.

During this session, our lawyer will provide insights into key areas, including company structure, outsourced employment services, taxes, accounting, and other general facets of running a business in Thailand. Additionally, we are here to address any other legal queries you might have, ensuring you have a comprehensive understanding of the topic at hand.

Our responses will be pragmatic, breaking down both the legal aspects and local practices in a manner that’s easy to grasp.

Should your questions require additional research, our experts will delve deeper and follow up with further insights via email.

This consultation is offered by legal experts fluent in English, French, or Thai.
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Introduction

Transferring money out of Thailand can be a complex process, laden with regulatory intricacies. Both businesses and individuals often encounter challenges due to the country’s stringent regulations on foreign exchange transactions and profit remittance taxes. In this guide, we delve into key considerations, including necessary information for transfers, withholding taxes, approved transactions, and more.

Key Points

• Both companies and individuals can remit money from Thailand to other countries.
• Specific transfers may be subject to withholding and other taxes.
• Approval from the Bank of Thailand may be required for certain transactions.

What is Required to Transfer Money Out of Thailand?

Before initiating a money transfer from Thailand, gather the following essential information:

• Recipient’s account name, number, and bank details.
• Currency and amount to be transferred.
• SWIFT code or IBAN code for international transactions.
• Reason for funds transfer, supported by relevant documents such as invoices or contracts.

Commercial banks must obtain detailed customer documentation, ensuring compliance with regulations, especially for companies transferring funds for goods or services.

Requirements for Individuals

Foreign individuals must provide specific documentation, depending on the nature of the transfer:

• A letter from the employer, confirming income and tax payment for employment-related transfers.
• Documentation explaining the source of funds for non-employment or substantial transfers.

For instance, selling a condo and remitting proceeds abroad requires documents like the Land Office Sale Agreement, Land Office Tax Receipt, Condo Title Deed, Foreign Exchange Transaction Form (FET), Sale Contract, and potentially a Tax Clearance Certificate.

Approval for Certain Transactions

Certain transactions necessitate approval from commercial banks authorized by the Bank of Thailand. These include:

1. Remittance of USD 100 million (or equivalent) for foreign investment or lending.
2. Remittance of USD 1 million (or equivalent) for purchasing affiliate company shares.
3. Unlimited remittance for returning investment funds, dividends, or profits to a foreign company.

Withholding Taxes for Profit Repatriation

When remitting profits to non-Thai entities, withholding taxes apply:

• Dividends: Subject to a 10% withholding tax, with potential reductions under Double Tax Agreements (DTAs).
• Interest: A 15% withholding tax, variable under DTAs, with exceptions for certain countries.
• Royalties: Subject to a 15% withholding tax, which DTAs may reduce.
• Branch Remittance Tax: Profits remitted from a branch office to a foreign company are subject to a 10% tax.

Our Thoughts

While repatriating significant sums from Thailand may pose challenges without proper documentation, understanding the regulatory landscape is crucial. Compliance with regulations and tax obligations makes repatriating money entirely feasible.

For more information on remitting money abroad or understanding tax obligations, consult with one of our experts today.

Introduction:

The Thailand Investment Visa, officially known as the Non-Immigrant IM visa, is designed to attract foreign investors to the country, offering them long-term residency opportunities. This article provides an in-depth understanding of this visa, including eligibility criteria, investment options, and renewal requirements.

Overview of the Thailand Investment Visa:

The Thailand Investment Visa allows individuals to stay in the country for an extended period, contingent upon meeting specific criteria and investing a minimum of 10 million THB in the Thai economy. This article explores the key aspects of the visa, shedding light on its benefits and the obligations it entails.

Eligibility Criteria:

To qualify for the Thailand Investment Visa, applicants must be at least 20 years old, possess a valid passport with a minimum of 6 months’ validity, and invest a minimum of 10 million THB in approved categories. These investment options include purchasing or leasing property, maintaining a fixed deposit account with a Thai bank, or investing in government or state enterprise bonds. Family members, including parents, spouses, and children under 20, can also apply for dependent visas based on the primary applicant’s investment visa.

Investment Options:

This section explores the various investment options available to meet the 10 million THB threshold. Options include purchasing or leasing a condominium, maintaining a fixed deposit account with a Thai bank, or investing in government or state enterprise bonds. The article emphasizes that the total investment sum does not have to be in a single category but can be spread across different eligible options.

Renewal Requirements:

To renew the Thailand Investment Visa, applicants must maintain their investment of at least 10 million THB in Thailand. The renewal process involves providing supporting documents, such as bank statements or sale and purchase agreements, to prove the sustained investment. The visa is renewable annually as long as the investment is maintained, allowing the holder to continue residing in Thailand.

Conclusion:

While the Thailand Investment Visa presents a compelling option for those seeking long-term residency without employment, it requires a substantial investment. The article suggests alternatives such as the LTR visa or Thai Visa Elite, both offering additional benefits. For further information or assistance with visa applications, readers are encouraged to reach out to experts experienced in navigating the intricacies of the application process.

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During this session, our lawyer will provide insights into key areas, including company structure, outsourced employment services, taxes, accounting, and other general facets of running a business in Thailand. Additionally, we are here to address any other legal queries you might have, ensuring you have a comprehensive understanding of the topic at hand.

Our responses will be pragmatic, breaking down both the legal aspects and local practices in a manner that’s easy to grasp.

Should your questions require additional research, our experts will delve deeper and follow up with further insights via email.

This consultation is offered by legal experts fluent in English, French, or Thai.

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Thailand aims to entice global talents with exceptional skills and cutting-edge expertise, inviting them to establish long-term careers within its borders. Recognizing its status as a sought-after destination for both work and travel, Thailand introduces the Long-Term Resident Visa (LTR Visa) tailored for Highly Skilled Professionals. This 10-year visa offers specialized benefits, attracting affluent individuals and professionals eager to contribute to the country’s growth.

Key Features

• LTR Visa: A 10-year opportunity to captivate high-potential foreign talents.
• Available to skilled professionals in 15 specified industries.
• Benefits include a digital work permit, a 17% Personal Income Tax rate, and tax-free money remittance from abroad.

Understanding the Long-Term Residency Visa for Highly Skilled Professionals

The LTR Visa, spanning a decade, aims to lure skilled individuals keen on long-term relocation to Thailand. Specifically targeted at 15 areas of modern technology, this visa category seeks to bolster Thailand’s economic development.

Eligibility Criteria

To qualify for the LTR Visa for highly skilled professionals, applicants must meet specific requisites:

• Possession of a bachelor’s degree or higher from an accredited institution.
• A minimum of five years’ work experience in a highly skilled field.
• Annual income exceeding USD 80,000 for the past two years.
• A valid job offer from a Thai company within a BOI-approved industry.

Approved Fields of Expertise The Board of Investment (BOI) recognizes 15 specialized industries, enabling skilled professionals to apply for the LTR Visa:

• Automotive, Electronics, Quality Tourism, Agriculture & Biotechnology, Transportation & Logistics, Industrial Automation & Robotics, Aerospace, Biofuels & Biochemicals, Petrochemicals & Chemicals, Digital, Medical, Defense, Circular Economy Support, International Business Hub, and Other Specialized Fields.

Benefits of the LTR Visa Highly skilled professionals granted the LTR Visa enjoy several advantages:

• A 10-year tenure in Thailand without visa renewals.
• Fixed 17% personal income tax rate.
• Exemption from taxes on overseas income.
• Streamlined immigration and work permit services.
• Access to Digital Work Permits and dependent visas for family members.

Application Process To secure the Thailand Professional Visa for highly skilled professionals:

• Obtain a Certificate of Qualification (QEL) from the Board of Investment.
• Submit necessary documents (resume, diploma, job offer) for the QEL.
• Apply for the LTR Visa at a Thai embassy/consulate or immigration office.

Tips for Application

• Initiate the process early to avoid delays.
• Ensure all required documentation is complete.
• Be prepared to elaborate on work experience and skills.
• Exercise patience during the application processing period.

Insights and Consultation

Navigating the LTR application process can be complex. Seek expert guidance to streamline your application and understand the nuances of living and working in Thailand. Our legal experts offer consultation sessions providing comprehensive insights into business setup, taxation, and other essential aspects.

Book a Consultation with Our Lawyer Get an hour-long session covering business initiation, employment services, taxes, and more in Thailand. Our experts ensure clarity on legal aspects and local practices, aiding in a seamless application process.

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The year might be winding down, but for savvy businesses in Thailand, it’s crunch time! December 31st marks the closing of many financial years, and with it comes the inevitable dance with the Revenue Department: Corporate Income Tax (CIT) season. Fear not, intrepid tax explorers! This guide will equip you with the knowledge to navigate the CIT jungle in Thailand.

Who’s Caught in the CIT Web?

First things first, not everyone gets entangled in the CIT vines. If your company is a lean, mean fighting machine with a paid-up capital under 5 million baht and annual sales under 30 million baht, you get a sweet pass — your profits are tax-free! But for the rest of us, it’s time to understand the tax rates:

• Standard Rate: 20% — the big kahuna for most companies.
• Small Company Rates:
• Under 300,000 baht profit: You’re golden, no tax!
• Between 300,000 and 1 million baht: 15% — a lighter bite.
• Over 1 million baht: Welcome to the 20% club.
• Foreign Companies: It depends on your income source:
• Dividends: 10% — not bad for sharing your wealth.
• Other income: 15% — take a slightly deeper breath.
• Sending profits abroad: 10% — keep a chunk of your hard-earned baht.

Special Perks for the Bold and Savvy:

• BOI Promoted Companies: Did you win the Board of Investment lottery? Congrats! You might be eligible for a 7-year CIT exemption — basically, a free pass to the tax-free beach.
• Special Economic Zones (SEZs): Setting up shop in an SEZ? You hit the jackpot! 0% CIT — who needs a beach when you have your own tax-free paradise?

Deadlines: Don’t Be Late for the Tax Party!

Missing tax deadlines is like forgetting your passport on vacation — stressful and expensive. Mark your calendars, folks:

• Annual CIT Return (Form PND 50): Due 150 days after your accounting year ends. For most December closers, that’s May 30th, 2024 (June 7th if you’re online-savvy).
• Half-Year CIT Return (Form CIT 51): Due within 2 months of the first 6 months of your accounting year. So, if you’re on a calendar year, that’s August 31st.

Pro tip: e-filing gives you an extra 8 days of grace — just don’t push your luck!

Latecomers Beware: The Penalty Pitfalls

Missed deadlines and underpayments come with unwelcome guests: penalties. Be prepared for:

• Annual Return: 1.5% surcharge per month on unpaid tax — ouch!
• Half-Year Return: 20% surcharge on underpaid tax — double ouch!
• Missing Info: Fines or even jail time in extreme cases — triple ouch!

Slashing Your Tax Bill: The Art of Deductibles

Every baht saved is a baht earned, right? Mastering the art of deductible expenses is like wielding a tax-reducing Excalibur:

• Operational Costs: Rent, utilities, salaries, business travel — these workhorses can pull weight when it comes to reducing your taxable income.
• Other Deductibles: Research and development, donations, interest on business loans — explore the full arsenal of options!

Remember, This is Just the Tip of the Tax Iceberg

This guide is your compass, but for a detailed map, seek professional help! Remember, tax regulations are evolving creatures, and a qualified advisor can navigate the ever-changing landscape for you. So, stay informed, be compliant, and remember — with the right knowledge, you can conquer the Corporate Income Tax jungle and emerge victorious!

Bonus Tip: Share this guide with your fellow tax adventurers! Knowledge is power, and spreading the word might just save someone a financial headache.

With this, you’ve got the basic tools to navigate the CIT jungle. Remember, understanding your tax obligations is key to running a successful business in Thailand. So, stay informed, plan ahead, and don’t hesitate to seek professional guidance when needed. Good luck, tax explorers!

VB & Partners
Vincent Birot | December 21, 2023

Imagine this: you’re launching your dream business in Thailand, surrounded by palm trees and endless possibilities. But navigating the visa and work permit maze can feel like a tropical shipwreck. Fear not, globetrotting entrepreneurs! The Board of Investment (BOI) visa holds the key to a smooth landing in the Land of Smiles.

Unlock 100% Ownership and Supercharge Your Startup:

• Ditch the limitations of Thai company structures. The BOI unlocks 100% foreign ownership, giving you complete control over your destiny.
• Tax breaks? Yes, please! Enjoy income tax exemptions for specific business activities, fueling your financial rocket ship.
• Need expert hands on deck? No sweat. The BOI eases restrictions on hiring skilled foreign talents, letting you build your dream team.
• Land ownership dreams taking root? The BOI makes that a reality too, letting you invest in your vision from the ground up.

One Stop Shop for Visa Smooth Sailing:

Forget paperwork purgatory. BOI-promoted companies breeze through the visa process at the One Stop Service Centre. No more months of waiting — get your BOI visa and work permit within a day!

Meet the BOI, Your Thailand Business BFF:

Think of the BOI as your Thai business sherpa. They clear the path, remove bureaucratic roadblocks, and help you navigate the sometimes-murky waters of Thai regulations. Their mission? To attract foreign investment and make your entrepreneurial journey in Thailand a tropical breeze.

Benefits Beyond Paperwork Bliss:

• Fast Forward Your Hustle: The BOI streamlines everything, from visa extensions to airport Fast Track for management-level employees. Time saved, more coconuts sipped.
• Residency Roadmap: Depending on your BOI promotion, long-term residency opportunities could be yours, opening doors to a truly Thai life.
• Temporary Visa Bridge: While your BOI application sails through, a temporary visa keeps you in the game, ensuring continuity and momentum.

Ready to Chart Your Thailand Business Course?

The BOI visa is your passport to paradise — business paradise, that is. With its simplified processes, generous incentives, and expert support, the BOI paves the way for a thriving venture in Thailand.

But wait, there’s more!

• Dive deeper into specific BOI promotions and find the perfect fit for your business goals.
• Uncover the nitty-gritty details of the application process with BOI experts or immigration officials.
• Connect with fellow global adventurers who’ve navigated the BOI journey before you.

Remember, a little research and preparation go a long way. With the BOI as your compass and this guide as your map, your Thailand business adventure is just a visa stamp away. So, pack your bags, grab your sunscreen, and get ready to make your entrepreneurial dreams a reality in the heart of Southeast Asia!

P.S. Don’t forget to share your BOI journey in the comments below! Your insights could inspire the next wave of Thailand business trailblazers.

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Up to an hour consultation on the process of starting and running a business in Thailand.

During this session, our lawyer will provide insights into key areas, including company structure, outsourced employment services, taxes, accounting, and other general facets of running a business in Thailand. Additionally, we are here to address any other legal queries you might have, ensuring you have a comprehensive understanding of the topic at hand.

Our responses will be pragmatic, breaking down both the legal aspects and local practices in a manner that’s easy to grasp.

Should your questions require additional research, our experts will delve deeper and follow up with further insights via email.

This consultation is offered by legal experts fluent in English, French, or Thai.

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