Tax

    The most common type of business entity conducted by foreign investors in Thailand is a limited company. The ownership and management of a corporation that is created with capital that is divided into shares of equal value are kept apart by law. The shareholder’s liability is just for the outstanding balance on the shares they own. Any documents that must be signed in order for the corporation to be bound can only be signed by the director(s). The following characteristics must be met in order to form a limited company:

1. There must be at least three shareholders and one director.

2. Physical address for registration

3. Limited company (Thai Majority) ; Thai citizens must own at least 51% of a company’s shares, No Foreign Business License required

4. Limited company (Foreign Majority) ; Foreigners can own over 49% of a company’s shares, Foreign Business License required.

    A limited partnership is a type of corporate entity where two or more people agree to join together on a venture with a similar goal and distribute profits. In order to be registered, a limited partnership requires at least two or more promoters.

Under the Civil and Commercial Code of Thailand, there are two types of partnerships: ordinary partnership and limited Thai partnership.

1.Section 1025 of the Code defined ordinary partnership as a kind of partnership in which all the partners are jointly and unlimitedly liable for all the obligations of the partnership.

2.On the other hand, a limited partnership as defined in Section 1077 is that kind of partnership in which there are:

    (1) one or more partners whose liability is limited to such amount as they may respectively undertake to contribute to the partnership; and

    (2) one or more partners who are jointly and unlimitedly liable for all the obligations of the partnership.

    A Public company is a company established for the purpose of offering shares for sale to the public and the shareholders shall have the liability limited up to the amount to be paid on shares, no minimum amount of registered capital and public company must be registered as a legal entity. The requirement for public company registration are as follows:

1. A minimum of 15 promoters is required for formation and registration of a public company.

2. The board of directors must have a minimum of 5 members, at least half of whom must have a domicile in Thailand.

3. Each share of the company shall be equal to value and be fully paid up at only one time.

4. No less than one half of the total number of promoters have their domicile in Thailand

5. The promoter shall subscribe for shares and all the shares so subscribed must be paid up in money in an aggregate amount equal to not less than 5 percent of the registered capital and the shares cannot be transferred within two years form the registration, except with the approval of the shareholders at a meeting of the shareholder.

     The Regulation of the Office of the Prime Minister BE 2529 (AD 1986) defines a representative office as a Thailand-based office of a foreign corporation engaged in international trade. It facilitates import and export of goods by head office. Representative office has the following characteristics:

1. A legal entity formed in accordance with foreign legislation with a Thai office established solely for the purpose of providing services to their overseas head office, affiliated firms, or group corporations

2. Provide services to the head office, associated company, or holding company without earning revenue for all of those services, with the exception of funds received from the head office to support the Representative Office’s expenditures

3. The Representative Office is not permitted to accept purchase orders, make sales offers, or engage in business negotiations with any natural or juridical person.

   A branch office is a legal entity that was founded in Thailand in accordance with foreign law and is regarded as the same legal entity as the head office. The Branch Office will not be restricted from conducting business in Thailand alone but also include the head office located elsewhere in the world. The branch office differs from a representative office in such a way that it is permitted to carry out a more wide variety of operations , including the sale and purchase of goods, signing of contracts, and the provision of services whether or not they generate income.  If the business operation nature is a restricted business under the Foreign Business Act B.E. 2542 (FBA), it needs to apply for obtaining Foreign Business License (FBL) at the Ministry of Commerce before starting the operation.

    The main purpose of Thai tax treaties is the avoidance of double taxation. The general

principle is that the country in which the income arises (source country) has the prior right to

tax and the country of residence will grant relief (tax exemption or tax credit) from paying

taxes twice on the same income.

In addition, the treaties also provide for cooperation between governments in preventing the

evasion of taxes.

At present, Thailand has double taxation treaties with the following countries:

Armenia,   Australia,   Austria,  Bahrain,

Bangladesh,   Belgium,   Bulgaria,   Canada,

China (Peoples Republic of China),  Cyprus,

Czech Republic,  Denmark,  Finland,  France,

Germany,  Hong Kong,  Hungary,  India,

Indonesia,  Israel,  Italy,  Japan,  Korea (Rep.)

Kuwait,  Laos,  Luxembourg,  Malaysia,  

Mauritius,  Nepal,  Netherlands,  New Zealand,

Norway,  Oman,  Pakistan,  Philippines, 

Poland,  Romania,  Seychelles,  Singapore,

Slovenia,  South Africa,  Spain,  Sri Lanka,

Sweden,  Switzerland,  Turkey,  Ukraine,

United Arab,  Emirates,  United Kingdom,

U.S.A.,  Uzbekistan,  Vietnam