SETTING UP BUSINESS IN THAILAND 2024

General Aspects

Thailand is one of the largest countries in Southeast Asia with a population estimated at 69 million. It shares borders with Myanmar, Lao PDR, Cambodia and Malaysia. Although the official language is Thai, but English is regularly used for business life. the

Department of Business Development, Ministry of Commerce (“DBD”) is the regulator for establishing legal entities.

Legal forms of Commercial Entities

Branch Office Branch Office is considered a part of the foreign parent company. Thus, the foreign parent company will be responsible for any actions done by the branch office according to Thai law.

Representative Offices (RO)

RO is considered the same legal entity as its foreign parent company. Its business function is basically to provide local information and support the foreign parent company. Therefore, the business activities of RO are not for profit generation by itself.

Reginal Offices A Regional Office is similar to RO as it is considered a part of the foreign parent company. Business activities of the Regional Office are restricted to specific tasks like coordinating and supervising operations of business units within the group located in Thailand and Asia. The Regional Office is not allowed to engage in profit-making activities.

There are the following partnerships in Thai Law:

Ordinary Partnerships Establishing an Ordinary Partnership is not required registration with the DBD. It is considered a separate legal entity from its partners. All partners in ordinary partnerships are jointly and severally responsible for unlimited liabilities.

Limited Partnerships Unlike an Ordinary Partnership, establishing a Limited Partnership is required registration with the DBD and is considered a separate legal entity from its partners. Among partnerships, at least one must be the managing partner and is jointly, severally, and unlimitedly liable to the Limited Partnership.

Remarks

There are the following corporations in Thai law:

Private Limited Company A Private Limited Company is a separate legal entity from its shareholders or foreign parent company. Shareholders’ liabilities are limited to several unpaid share values. Incorporating this type of entity can be formed by two promoters. Articles of Association are to govern the relationship among shareholders and the operation of the company.

Public Limited Company A Public Limited Company is managed most similarly to a Private Limited Company with the board of directors and shareholders. However, a Public Limited Company is required to have 15 promoters. Only this type of entity is allowed to be listed in the Stock Exchange of Thailand (SET).

Organizational Questions

Topic Feature

Foreign majority-owned company is restricted to do certain businesses; unless and until a foreign business license has been obtained. Certain privileges can be applied under the approval of the Board of Investment of Thailand.

Commercial Register The aforementioned legal forms of business, i.e. Branch Office, Representative Office, Reginal Office, Limited Partnership, and Private and Public Company Limited must be registered with the DBD.

Tax Register Individuals:

Thai ID number is the same number as tax ID number. For foreign individuals, they can obtain a tax ID number from the Thai Revenue Department.

Company:

The registration number is the same number as tax ID number. Furthermore, the company with annual earnings exceeding 1.8 million THB is subject to VAT registration.

Bank Account Individuals:

In order to open a bank account, individuals are required to submit an ID card for Thai individuals or valid passport and other identification documents such as work permit for foreign individuals. All must be physically presented at the bank on the date of opening of the account.

Company:

An authorized signatory of the company and a person who will be a signatory of the account shall physically present at the bank with corporate documents and minutes of the board of directors or shareholder meeting of the company showing a resolution for opening a bank account.

Remarks

Transfer of Goods and Machinery

Importation and exportation of goods are subjected to legislations governed by Thai Customs.

Transfer of Capital The number of funds can be transferred with no limitation. However, the purpose of every transaction across the border is required to be shown.

Visa and Residence permit Foreigners who work in Thailand are required to obtain a Non-Immigrant Category “B” visa. Resident permit can also be obtained under certain conditions such as those must hold any type of the non-immigrant visa for 3 years consecutively.

Employment

Topic Feature

Work permit All foreigners must obtain a work permit from the Ministry of Labor and Social Welfare for working in Thailand. The employer is required to hire 4 Thai employees for 1 foreign employee. The registered capital of the employer must be 2 million THB for 1 foreign employee.

Labour law

• The maximum number of working hours is 8 hours a day, or 48 hours a week.

• Employees are entitled to a minimum of 13 national holidays a year, plus a minimum of 6 days for annual leave after 1 year of consecutive work.

• Thailand’s new minimum wages, range from 330 THB to 370 THB per day depending on the location.

• The company is required to register as an employer at the Social Security Office (SSO) after the first employee starts working with the company and register the employee as an insured person within 30 days.

• To terminate a non-fixed-term period contract with an employee, a termination notice is required to be given to an employee within a minimum period of one prospective payment period but no more than 3 months unless otherwise specified in the employment contract.

Social system Thai citizens are provided employment security and stability from the Social Security Fund (SSF). The employee, who will be considered as insured person, is required to be at the age of 15 – 60 years old.

Remarks

Taxation

There are 2 types of tax (i.e. direct tax and indirect tax). The direct tax consists of personal income tax and corporate income tax. Indirect tax, on the other hand, consists of several types of taxes relevant to activities in Thailand such as value-added tax (VAT), withholding tax, specific business tax, etc.

Corporate Income Tax (CIT)

The CIT rate in Thailand is divided into two criteria, i.e. the standard CIT rate and the CIT rate for SMEs. The standard CIT rate is up to 20% on profits. The CIT rate for SMEs consists of 0- 300,000 THB is granted for tax exemption, 300,001- 3,000,000 THB is subjected to tax at the rate of 15% and more than 3,000,000 THB is subject to tax at the rate of 20%.

Any company registered in Thailand is obliged to submit a half-year tax filing form estimating a net profit and amount of tax payment.

Personal Income Tax

Personal Income Tax calculated by progressive rate starts from the rate of 5% for individuals with annual earnings from 1 to 300,000 THB to the maximum rate at 35% for annual earnings of more than 5,000,000 THB.

Earnings from 0 to 150,000 THB are granted for tax exemption. However, individuals whose earnings reach 120,000 THB have a duty of filing the tax filing form for the declaration of annual income.

Ordinary partnership is not registered as a legal entity. Thus, this kind of partnership is subject to Personal Income Tax.

A Thai resident (a foreigner who stays in Thailand for more than 180 days) who brings income incurred from January 2024 from sources outside Thailand or from properties located outside Thailand is required to pay personal income tax upon bringing such income into Thailand at any time.

Withholding Tax (WHT)

Value Added Tax (VAT)

Special Business Tax (SBT)

Stamp Duty

Companies in Thailand have a duty to deduct the WHT before making payment for services or salary payments for employees and filing the deduction of WHT to the Revenue Department.

Value Added Tax is collected from the value of the trade of goods or services at a fixed rate of 7%. A company whose annual earnings exceed 1,800,000 THB is subject to VAT registration.

Some companies with certain types of businesses are required to be collected SBT such as the sale for-profit real estate or banking.

Some legal transactions are subjected to stamp duty such as issuing power of attorney, issuing proxies for attending shareholders’ meeting, or issuing bills of exchange. Stamp duty can be purchased at any revenue office.

Any company having VAT registration is required to file a monthly VAT payment form and issue tax invoice document.

Excise Tax

Some goods and services are subjected to additional tax payment such as goods that have negative impact on health and services that pollute the environment.

Any company that is subject to the excise tax payment is required to report the financial statement monthly to the local excise office.

Land and Buildings Tax

Double taxation agreement

Non-resident Taxation

Any person who owns a property for commercial use is liable for tax payment at the minimum rate of 0.3% to the maximum rate of 0.6% depending on the value of the property.

Thailand enters into a double taxation agreement with several countries in which the transactions between Thailand and those countries will get privileges such as exemption of tax payment or creditability for tax payment.

Individuals:

Non-resident, who lives in Thailand for up to 180 days and earns income in Thailand during taxable year, is subject to Personal Income Tax.

Company:

Company and Partnerships, registered under foreign law with income derived from Thailand during taxable year, are subject to Corporate Income Tax.

This guide has been prepared by THE LEGAL CO, an independent member of Antea

THE LEGAL CO

No. 62 The Millennia Tower, 15th and 18th Floors, Bangkok, Tailand Tel.: +66 2 047 3766 info@thelegal.co.th www.thelegal.co.th/

Mallorca, 260 àtic

08008 – Barcelona

Tel.: + 34 93 215 59 89

Fax: + 34 93 487 28 76

Email: info@antea-int.com www.antea-int.com

This publication is intended as general guide only. Accordingly, we recommend that readers seek appropriate professional advice regarding any particular problems that they encounter. This information should not be relied on as a substitute for such an advice. While all reasonable attempts have been made to ensure that the information contained herein is accurate, not Antea Alliance of Independent Firms neither its members accepts no responsibility for any errors or omission it may contain whether caused by negligence or otherwise, or forany losses, however caused, sustained by any person that relies upon it.