Requirements after Setting up
a Business in THailand
• Auditing Requirements and Standards
Audited financial statements of juristic entities (i.e. a limited company, registered partnership, branch, representative office, regional office of a foreign corporation, or joint venture) must be certified by an authorized auditor and be submitted to the Revenue Department and to the Commercial Registrar for each accounting year.
However, for a registered partnership with registered capital of less than 5 million baht, total revenue of no more than 30 million baht, and total assets of no more than 30 million baht, financial statement does not need to be certified by an authorized auditor.
Auditing practices conforming to international standards are, for the most part, recognized and practiced by authorized auditors in Thailand.
• Value Added Tax Registration
When the company has more than 1.8 million in revenue in one financial year, you are required to register with the Revenue Dept. for Value Added Tax (VAT), but you can also register immediately to have your company in the Revenue Department record, so that you can offset VAT paid against VAT charged. The VAT rate is 7% and monthly reports need to be submitted and paid. The monthly report is called a PP30, and it is one of the documents required to get your Visa and Work permit.
• Corporate income tax
In Thailand companies can choose their financial year, so that if you register the company in the month of September, your financial year can be September 1st to August 31st. At the end of the financial year, a report must be prepared and submitted for tax payment. The corporate income tax is calculated thus:
Gross Profit (THB) Tax Rate
Not more than 300,000 Exempt
More than 300,000 but not greater than 3,000,000 15%
More than 3,000,000 20%
For executives on high salaries, corporate income tax can be a lot lower than personal income tax, which, for example, can be as high as 35% on an income of THB 5 million.
• Withholding Tax
Every payment the company makes requires that 3-5% withholding tax be deducted on transactions within Thailand. Foreign companies submitting invoices will also be deducted withholding tax, and this can be a much higher rate on service contracts. When you deduct you have to report and submit that money to the Revenue Department. Your Thai supplier can claim it at the end of the year, and foreign suppliers in countries with dual-taxation agreements can also offset against income tax.
• Social Security Fund
When the company has an employee, the company and the employee must register in the social security system within 15 days after starting. Also, the company must report all the resignations and terminations of employees within 15 days from the end of contract. When you pay salaries to employees, you have to make deductions and report to Social Security Office (SSO) monthly. The company matches the employee contribution. ATA Services can help you with payroll services and do the reporting for you. Directors cannot register in the SSO system. Sponsoring a work permit and visa for a foreigner requires four Thai employees registered in the SSO per foreigner.
A company must do accounting, even if trading is zero. At the very least and annual audit is required, which must be done by a registered Thai CPA. When your company is registered for VAT, has transactions of payments or has employees, the accounting need to be completed every month and a tax report submitted to the Revenue Department – without accounting you cannot calculate the tax. ATA Services offers full accounting services.
• Intellectual Property (IP)
In Thailand there are three main types of IP protection, which are copyright, Patent, and Trademark. Only Patent and Trademark can be registered. Copyright cannot be registered, but you can notify the DIP. To register your trademark, the trademark needs to match the numerous conditions under Thai Trademark Law, and must not be similar to any previously registered. The process takes least 3-6 months when no one objects, but if someone does object, the process can take more than a year because you have to fight to get the trademark. Note that trade names cannot be registered in Thailand – this is something to consider when deciding your company name. If the name of the company contains your trade name, then you have protection from others using it in Thailand.
• Labor matters
Labor protection law in Thailand has peculiarities you may not be aware of. You should always consult with a lawyer on calculation of commission payments, overtime, severance pay and termination procedures. Let ATA Services help you draft your statutory work regulation documents and advise you on employee negotiations.
• Dissolution of a Company
The process of closing a company is long and complicated – you will certainly need to visit a lawyer and accountant. The lawyer will work on your documents and applications to dissolve your company. In the case that you never submitted the financial report, you need to pay the fine and submit all previous report sign by an auditor. Then, the accountant will make your balance sheet on your dissolution date; pay any debt to creditors, because all debt needs to be cleared, including debt owed to the Revenue Department and Social Security Office. You have to cancel your VAT registration, SSO registration and any licenses, and finally close the bank account. In the case that the company has money, payment will go to the shareholders according to the share structure.
All juristic companies, partnerships, branches of foreign companies, and joint ventures are required to prepare financial statements for each accounting period. The financial statement must be audited by and subjected to the opinion of a certified auditor, with the exception of the financial statement of a registered partnership established under Thai law, whose total capital, assets, and income are not more than that prescribed in Ministerial Regulations. The performance record is to be certified by the company’s auditor, approved by shareholders, and filed with the Commercial Registration Department of the MOC and with the Revenue Department of the Ministry of Finance (MOF).
1. For a private limited company
- The director is responsible for arranging the annual meeting of shareholders to approve the company’s audited financial statement within 4 months of the end of the fiscal year, and filing the audited statement and supporting documents, including a list of shareholders on the date of the meeting, to the Registrar no later than 1 month after the date of the shareholder meeting.
2. For a foreign company (i.e. branch office, representative office or regional office, and excluding joint ventures)
- The Manager of the branch office must submit a copy of the financial statement to the Registrar no later than 150 days after the end of the fiscal year. Approval of the shareholder meeting is not required.
3. For a public limited company
- The director is responsible for arranging the annual meeting of shareholders to approve the audited financial statements of a company within 4 months of the end of the fiscal year. A copy of the audited financial statement and annual report, together with a copy of the minutes of the shareholder meeting approving the financial statement, should be certified by the director and submitted to the Registrar, along with a list of shareholders on the date of the meeting, no later than 1 month after approval at the shareholder’s meeting. In addition, the company is required to publish the balance sheet for public information in a newspaper for a period of at least 1 day within 1 month of the date it was approved at the shareholder’s meeting.
For more information please contact :
Tel: 063-779-9111 (English)
Line ID: ILSCM