INVEST IN THAILAND
Thailand is an international business hub for multinationals in search of a well-developed infrastructure, pro-investment policies, a highly skilled workforce and strong export industries at the center of Asia.
Investing in Thailand gives companies a powerful export base with an abundance of developed industries and supply chains, and also offers direct access to Thailand’s ripe domestic market of over 67 million consumers with increasing purchasing power parity.
With an impressive average growth rate of 8-10% over the past decade, Thailand provides investors with access to comparable emerging markets in the Asian region that amount to almost 4 billion consumers, offering unlimited business potential in the coming year.
BOI’s New Investment Promotion (2015-2021)
What are the procedures for starting a company in Thailand?
There are three kinds of business organizations in Thailand: sole proprietorships, partnerships and limited companies. The most popular form of business organization among foreign investors is the limited company. To start a company in Thailand a foreign investor must submit an application including details of the type of business and supporting documents to the Bureau of Foreign Business Administration.
Formation of a limited company requires five steps:
1. The company name must be registered with the Ministry of Commerce.
2. The filing of a Memorandum of Association (MOA) must be undertaken. The names of at least seven shareholders must be provided in the MOA.
3. A statutory meeting must be held.
4. The Directors must file a company registration application with the Ministry of Commerce.
5. The company must obtain an income tax identity card and number from the Revenue Department.
For more information on company registration and preparing your business application, please refer to Department of Business Development website.
INDUSTRIAL LICENSES & REGULATIONS
Do I need to apply for factory licenses in Thailand?
The degree of government control required varies depending on your type of business. To ensure environmental safety, cautious regulations are utilized for factories likely to output pollution.
How do I register my factory or machinery business in Thailand?
Find the procedures for registering your factory or machinery business at the Department of Industrial Work’s website.
PATENTS, TRADEMARK AND COPYRIGHTS
Thailand recognizes three broad categories of property rights: Patents, Trademarks, and Copyrights. The Patent Act protects inventions, product designs and pharmaceuticals. The Trademark Act governs the registration and protection for trademarks. The Copyright Act protects literary, artistic works and performance rights by making it unlawful to reproduce or publish such works without the owner’s permission.
Corporate Income Tax
All business establishments must have a taxpayer identification card within sixty days of incorporation. The corporate income tax rate is 30% of net profit. Corporate taxes are due semi-annually. Financial statements must be prepared annually by a company auditor. The Revenue Department requires that accounts be in the Thai language. The books must be kept at a place of business for ten years.
Value Added Tax
Created in 1992, the VAT is applied to each stage of the production process, and is paid on a monthly basis. The VAT rate is 7%. Exports, domestic transportation and certain other sales are exempted from VAT.
Personal Income Tax
Every person, resident or non-resident, who derives assessable income from employment or business in Thailand, or has assets located in Thailand, is subject to personal income tax, whether such income is paid in or outside of Thailand. Personal income tax rate is 30% if the net annual income is between 1,000,001 – 4,000,000 Baht, and 37% if the net annual income is over 4,000,001 Baht.
Treaties to avoid double taxation
Thailand has treaty agreements to eliminate double taxation with most EU countries. The treaties generally place taxpayers in a more favorable position for Thai income than they would be under the Revenue Code, as profits will only be taxable if the taxpayer has a permanent establishment in Thailand.
Employers should be aware of the following labor protection laws per the Labor Protection Act B.E. 2541:
Work Hours and Holidays: The maximum number of work hours is 8 hours a day or 48 hours a week in total. Employees are entitled to no fewer than 13 national holidays a year and a minimum of 6 days of annual vacation after working consecutively for one full year. Employees have the choice of whether they wish to work overtime or on holidays. A female employee is entitled to maternity leave for a period of 90 days including holidays, but the amount of paid leave shall not exceed 45 days.
IMPORT AND EXPORT REGULATIONS
The Ministry of Commerce determines classes of goods that are subject to import controls. These regulations usually take the form of permission and licensing. At present more than 50 classes of goods require import licenses from the Ministry of Commerce. The Ministry will notify when there are changes to the categories of goods.
A license to import any of the specified items must be secured from the Ministry of Commerce. Application for the license must be accompanied by a supplier’s order, confirmation, invoice, and other pertinent documents.
The Act Controlling the Importation and Exportation of Goods authorizes the Ministry of Commerce exert control over the exporting of products.
At present, close to 50 items require such control. Certain goods require export licenses under other laws, such as seeds, trees, and leaves of tobacco. Certain goods, such as sugar and rice, are subject to export licenses under the Export Standard Act, which aims to ensure that such exports are of a set quality. In addition, the exporters of agricultural commodities may find that membership to trade associations is mandatory. These associations may in turn impose their own regulations for membership.
INVESTMENT PROMOTION SERVICES
One of the reasons why you should consider locating your operations in Thailand is the country’s liberal investment policies. The Thai Government has supported and will continue to support foreign investment. There are no restrictions on foreign currency remittances, no export requirements, no foreign equity restrictions in manufacturing sectors, and no local content requirements.
What can the BOI offer?
BOI provides tax and non-tax incentives for investors to help alleviate the costs of an international expansion and enhance their global competitiveness, which generally include the following:
• Corporate income tax (CIT) exemption up to 8 years
• Additional 50 percent reduction of the corporate income tax for another 5 years
• Exemption or reduction of import duties on machinery and raw materials
• Double deduction of transportation, electricity, and water supply costs
• Additional 25 percent deduction of infrastructure construction / installation costs
• Permit to bring in foreign skilled workers and experts to work
• Permit to own land
• Permit to take out or remit money abroad in foreign currency
What kinds of activities are eligible for BOI promotion?
Currently, there are 7 categories covering over 300 activities in both manufacturing and services eligible for BOI investment promotion:
• Agriculture and agricultural products
• Mining, ceramics, and basic metals
• Light industry
• Metal products, machinery and transport equipment
• Electronics and electrical appliances
• Chemicals, paper and plastics
• Services and public utilities