Legal Blog Archives

Important Updates on New Tax Regulations for Foreign Income in Thailand

November 28, 2023 10:54 am Comments Off

Key Information on Revenue Department Order No. 162/2023

Additionally, to the Q & A paper on the new tax regulations published by the Thai Revenue Department, the Thai Tax Authority published the Revenue Department Order No. 162/2023 on 20. November 2023.

This order states, that the following paragraph shall be added to the Revenue Department Order No. 161/2023 regarding income tax payment according to Section 41, paragraph two of the Revenue Code, dated September 15, 2023:

“The provision in paragraph one shall not apply to assessable income arising before January 1, 2024.”

This is an important clarification, because it means that for income that was received before this date, the old rules still apply. This order shall take effect for income brought into Thailand starting from January 1, 2024. This means it applies to income assessable from foreign sources at the domicile of the income earner from the tax year 2024 onwards. Therefore, for income from foreign sources generated before the tax year 2024, the previous principle still applies: the income must be brought into Thailand in the same tax year it is earned, and individuals are not required to pay personal income tax according to the Revenue Code. This is because it does not comply with the traditional interpretation.

Why this new amendment is important shows the following example:

A person is living in Thailand for more than 180 days a year but receives income outside of Thailand since the last 10 years and transfers this money into Thailand. Starting from 01. January 2024, this income will be subject to tax regardless of when it was earned. Due to the new clarification, the taxation does not apply to income he is transferring into Thailand, if he can prove that the income was earned before 2024.

Before this Order 162/2023, the regulations could be read that he has to pay taxes starting from 2024 on any income he is transferring into Thailand, regardless of when it was earned. This assumption is now corrected. Income that was earned in for example 2020 can still be transferred into Thailand after 01. January 2024, without being subject to tax, if it can be proved that this income was earned in 2020.

If you have any questions about minimizing your tax burden in Thailand, please contact us at [email protected].

Andreas Seela

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Andreas, Associate at FRANK Legal & Tax, is a licensed German lawyer with expertise in corporate/commercial, real estate, and tax law, and has been living and working in Thailand since 2023.

Important Announcement: Amendment to Hotel Definition and New Regulations

November 23, 2023 8:11 pm Comments Off

On 30 August 2023, the Royal Gazette issued the ministerial regulations as an announcement regarding the amendment in the definition of the hotel, which led to changes in the requirements for owners who wish to operate hotels.

According to the regulation amendment, this alters the criteria for operating a hotel. A significant modification has been made to Section 4 of the Hotel Act B.E.2547(2004), which sets forth the definition of “Hotel”. Thus, the amendment has identified a new exception where such circumstances would not be considered a hotel. It is stated that, in the case where the residential premises contain a number of not exceeding eight rooms on all floors in total, whether in single or several buildings and with a total service capacity of not more than 30 guests with the purpose to operate as a temporary accommodation for travelers or the other person, this would not be considered as a hotel.

The main goal of this ministerial regulation is to support local businesses that wish to generate income from their residential properties. Many of these local residences have distinctive uniqueness and attractive architecture that draw in tourists but often fall short of the specific requirements necessary to obtain a hotel license and operate as such. Hence, this amendment simplifies the hotel license requirements, which are typically too stringent for many residential premises to meet. This, in turn, enables property owners to continue profiting from their residences without the need for a hotel license.

While property owners may be exempt from obtaining a hotel license in certain cases, they are still required to pursue Non-Hotel registration to operate their business.

If you have any questions regarding the Non-Hotel license. Please feel free to contact [email protected]

Fabian Doppler Connect with me on LinkedIn

Fabian, a founding partner of FRANK Legal & Tax, is a German-trained lawyer with expertise in corporate/commercial and real estate law, and litigation, and has been living and working in Thailand since 2005.

Transforming Building Safety: Thailand’s New Ministry Regulation

October 30, 2023 7:21 am Comments Off

In an effort to boost building safety and elevate construction standards, Thailand has introduced a comprehensive new Ministry regulation. This updated regulation, a revision of the existing Ministry of Interior’s guidelines, places a strong emphasis on various critical aspects of construction, including load-bearing capacities, fire resistance, and the materials used in structural elements.

Background and Objectives:

For decades, Thailand had relied on regulations established under the Building Control Act of 1979. However, as the construction industry dynamics evolved, a pressing need for an update became apparent. The newly introduced regulation addresses several vital concerns:

Enhanced Safety: The primary objective is to bolster the safety of buildings and structures. This encompasses provisions related to load-bearing walls, earthquake resistance, and fire safety measures. Notably, the regulation imposes stricter requirements for fire-resistant materials, particularly in tall buildings and those used for public gatherings.

Global Compliance: In a bid to align with international best practices, the regulation underscores the importance of adhering to global standards. This not only ensures that Thai buildings meet internationally recognized safety benchmarks but also positions the country’s construction industry competitively on the global stage.

Environmental Considerations: The regulation places significant importance on eco-friendly construction practices. By curbing the use of flammable materials, particularly in tall structures, and promoting the adoption of sustainable and fire-resistant materials, the regulation strives to mitigate the environmental impact of construction.

Clearer Guidelines: To facilitate adherence to safety and quality standards, the regulation provides clear and comprehensive guidelines for construction professionals. It addresses essential aspects such as materials, load-bearing capacities, and more.

Reasons for the Regulation:

The Ministry’s decision to introduce this regulation stems from several critical considerations. Firstly, it addresses the necessity to align with modern construction practices and international standards to ensure the safety and resilience of buildings. Secondly, it aims to minimize the risk of accidents, especially in fire or natural disaster scenarios like earthquakes. Lastly, it emphasizes environmental sustainability, promoting the use of materials that are not only safe but also eco-friendly.

Conclusion:

Thailand’s new Ministry regulation marks a significant stride towards elevating construction standards, reinforcing safety measures, and championing sustainability. By embracing global best practices, Thailand’s construction industry is positioned for growth and competitiveness worldwide. The regulation’s focus on safety, environmental responsibility, and clear guidelines will benefit both construction professionals and the public, ensuring that Thailand’s buildings are not just secure but also eco-friendly and resilient.

For additional information and details, please refer to the official Thai Ministry regulation issued on September 6, 2023 B.E.

Disclaimer: This summary serves informational purposes only. For legal and regulatory compliance, readers are advised to consult the official Thai Ministry regulation document.

Thailand Privilege Visa: DIAMOND Package

The DIAMOND Package is tailored for long-term stays and premium advantages. With a 15-year membership that includes a 5-year multiple-entry visa, renewable twice during the 15-year period, this option offers in-depth exploration opportunities. The main applicant invests 2.5 million Thai Baht upfront, with no annual fees, and additional applicants can join for 1.5 million Thai Baht each. Holders of this package benefit from 55 privilege points per year.

Thailand Privilege Visa: RESERVE Package

The RESERVE Package stands out as the most exclusive option, extending for 20 years or more. It includes a 5-year multiple-entry visa, renewable three times within the initial 20-year membership, and an option to apply for another 5-year visa afterward. This package is available only by invitation and is priced at 5 million Thai Baht, without any annual fees. Holders receive 120 privilege points annually, offering access to Thailand’s finest experiences.

Eligibility Criteria

Before delving into the specifics of these Elite Visa programs, it’s crucial to understand the requirements for qualification. To be eligible for these programs, applicants must meet certain criteria:

Hold a foreign passport.
Complying with Thai immigration laws, which means having no record of overstaying in Thailand.
Please note that according to current information, these programs do not have an age limit.
Have no history of imprisonment in any country, except for offenses committed due to negligence.
Not have a bankruptcy record.
Not have a legal status as a person of unsound mind, incompetent, or quasi-incompetent.

These new Thailand Elite Visa programs cater to a diverse and wealthy audience, whether you’re a traveler, an entrepreneur, or someone simply looking to immerse yourself in the rich tapestry of Thai culture. With multiple options to choose from, Thailand continues to welcome individuals from around the world, offering a chance to explore the country’s unique charm and opportunities.

If you’re considering an extended stay in Thailand, these Elite Visa programs provide a gateway to the country’s rich culture and diverse landscapes. Stay tuned for further updates and insights into travel and business in Thailand.

Disclaimer: Visa requirements and terms are subject to change. It is advisable to consult official sources or legal experts for the most up-to-date information.

If you have any questions about the Property Law in Thailand, please contact us at [email protected]

Andreas Seela

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Andreas, Associate at FRANK Legal & Tax, is a licensed German lawyer with expertise in corporate/commercial, real estate, and tax law, and has been living and working in Thailand since 2023.

Thailand Elite Visa Membership Packages Set to Transform

October 24, 2023 8:22 am Comments Off

Thailand Elite Visa Membership Packages Set to Transform

The current Thailand Elite Visa membership packages are due to be discontinued in their current form. To adapt to the global economic landscape, a new suite of offerings will be made in October 2023. This move reflects the intent to modernize and cater to a diverse client base, aligning with changes in the world economy. The packages in their old form were stopped on September 15, 2003.

The End of the Old, the Dawn of the New

The previous Thailand Elite Visa, which garnered much attention for its exclusivity and privileges, has been discontinued. In its place, Thailand now presents a revamped selection of Elite Visa programs, catering to a wider range of preferences and needs.

Thailand Privilege Visa: GOLD Package

The GOLD Package is designed for individuals seeking a 5-year stay in Thailand. It provides a 5-year multiple-entry visa at a cost of 900,000 Thai Baht, without any recurring annual fees. This visa option includes 20 privilege points annually, allowing holders to explore the country’s rich culture and landscapes.

Thailand Privilege Visa: PLATINUM Package

For those interested in an extended stay and additional benefits, the PLATINUM Package is a viable choice. It offers a 10-year membership with a 5-year multiple-entry visa, which can be renewed for an extra 5 years. The main applicant pays 1.5 million Thai Baht upfront, with no annual fees, while additional applicants can join at a cost of 1 million Thai Baht each. This package provides 35 privilege points per year, enhancing the Thai experience.

Thailand Privilege Visa: DIAMOND Package

Thailand Privilege Visa: RESERVE Package

Eligibility Criteria

Hold a foreign passport.
Complying with Thai immigration laws, which means having no record of overstaying in Thailand.
Please note that according to current information, these programs do not have an age limit.
Have no history of imprisonment in any country, except for offenses committed due to negligence.
Not have a bankruptcy record.
Not have a legal status as a person of unsound mind, incompetent, or quasi-incompetent.

Disclaimer: Visa requirements and terms are subject to change. It is advisable to consult official sources or legal experts for the most up-to-date information.

If you have any questions about the Thailand Elite Visa membership options, please contact us at [email protected]

Andreas Seela

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Andreas, Associate at FRANK Legal & Tax, is a licensed German lawyer with expertise in corporate/commercial, real estate, and labor law, and has been living and working in Thailand since 2023.

Guide to the Available Legal Structures for NGOs in Thailand

October 12, 2023 7:21 pm Comments Off

Our latest article analyzes the available options regarding the legal structures of NGOs in Thailand, and we provide some recommendations based on our experience.

The term “NGO / Non-Governmental Organization” is not a legal term, and the legal forms of NGOs are diverse. Most are set up in the form of not-for-profit associations or foundations. However, there are other possibilities as well.

Under Thai law, the foundation and the association are required to be registered as juristic persons. They may generate income, but the income must be reinvested for the objectives of the association/foundation, and it must comply with tax law and other laws of Thailand. They are required to file annual reports with the competent Thailand government ministries including financial statements certified by an accountant and a copy of the minutes of the annual meeting.

Additionally, Thai law provides the option of a so-called “Permission to Operate in Thailand for Foreign Private Organizations”.

Furthermore, we will discuss the possibility of using a private limited liability company and a Social Enterprise for the purposes of carrying on the business of an NGO.

Characteristics of Foundation (Thai: mulanitee):

A foundation consists of assets appropriated for charitable, religious, artistic, scientific, literary, educational or other purposes for the benefit of the public and not for profit sharing.

The specially allocated assets of the foundation must be managed to (or “intending to”) implementing the objectives of the foundation. They shall strictly not be used for individual interest. Some typical examples of activities of foundations include the management of a fund, building, etc.

To be established, a foundation must have an initial registered capital of THB 500,000 or not less than THB 250,000 if there are other assets included instead of monetary funds. The initial registered capital may be reduced if the foundation has a charitable purpose.

The foundation shall have regulations related to the management, in particular, accounting. It shall have a committee, consisting of at least three persons. It is legally not required to have Thai nationals as committee members. However, this may be advisable from a practical point of view.

The foundation shall not be involved in political activities.

A foundation is a relatively rigid legal structure. Once the objectives are adopted on registration, they can only be changed for following purposes:

to enable the implementation of the goals of the foundation;
if circumstances make the objective of the foundation undesirable or if the objectives are impossible to achieve, the objectives shall be amended in a manner that reflects the initial objectives as closely as possible.

Based on our experience, we would therefore recommend drafting regulations that are as broad as possible.

We note that the Registrar shall have the authority to inspect, control and supervise the management of the foundation to ensure conformity with the regulations of the foundation. This may even include the dismissal of a committee member or the entire committee in severe cases of wrongful actions, and the appointment of a new committee member or committee.

The dissolution of a foundation may only take place under specific conditions set forth by the foundation’s regulations or by law. It is important to note that the committee is notauthorized to dissolve the foundation independently.

Characteristics of Association (Thai: samakom)

The non-profit association is the most common legal form for NGOs in Thailand.

An association may be created for any lawful activity that, according to its nature, is to be done continuously and collectively by persons other than distributing profits to its members.

It may engage in activities beneficial to the public, however, by definition associations are organizations of members who act together to achieve specified objectives. Some typical examples of activities of associations include sports clubs, hobby clubs, and religious organizations.

The association is not required to hold an initial registered capital.

The association shall have at least ten members. Their names, addresses, and occupation shall be indicated in the application for registration of the association. The members shall pay a subscription fee to the association.

The association shall adopt regulations in accordance with Thai laws. Alterations of and additions to the regulations may be made by a resolution of the general meeting. This means that the legal structure of the association is more flexible compared to that of the foundation.

An association is represented by its committee in its relations with third parties. The appointment of committee members shall take place according to the regulations of the Association and Thai law. The appointment must then be registered. The Registrar may refuse the appointment of a committee member, but only under specific circumstances such as the committee member not having the status or conduct required for implementing the object of the association. The registrar would then have to notify the association in writing regarding the reasons for such a decision.

The association may be dissolved under specific circumstances, including a resolution to dissolve passed in a general meeting. In the case of dissolution, the liquidation of assets will follow the principles of liquidations of (for-profit) companies.

Permission to Operate in Thailand for Foreign Private Organizations

Juristic persons under the law of another country that do not have a profit-making or political purpose have the possibility to obtain a Permission to Operate in Thailand for Foreign Private Organizations (“FPO”).

Such organizations should have the objective to provide assistance in economic, social and academic aspects for Thailand with assistance guidelines in connection with the development and stability policy of Thai government.

The permitted scope of operations can be categorized as follows:

A foreign private organization applies for the establishment of an office and/or sending the officials to serve in the office.
A foreign private organization does not wish to operate in Thailand by itself but providing financial or other assistance instead.
A foreign private organization wishes to enter for seminar arrangement in Thailand
A foreign private organization does not arrange seminars by itself but provides financial or other assistance for the seminar arrangement.

The requirements for the permission vary depending on the category as per above.

For Category 1, the duration of the permission is limited to one year for the first application. In the case of an extension of permission, two-year periods shall be granted at a time.

The permission does not involve the establishment of a juristic person in Thailand. The head office abroad would always act on its own behalf.

We note that the FPO will by nature have a strong involvement of the head office abroad. It will furthermore be able to benefit from the good reputation and standing of the head office.

The time required to obtain the FPO permission will be significantly shorter than for the establishment of a foundation or an association.

Social Enterprise

NGOs may be set up as private limited liability companies (“LLC”) as well, if there is an objective to generate income and profit.

If it is meant to be not-for-profit, the Social Enterprise (“SE”) may be suitable being a hybrid company with specified social goals as its primary objective. In the SE, profits are primarily utilized to fund social activities, and SEs attempt to maximize profits while maximizing benefits to society and the environment.

The core characteristics of social enterprises in Thailand are:

A financially sustainable business model, socially and environmentally friendly.
Operating with transparency and good morals.
Earning at least 50% of the income from the sale of products or services unless a business that does not wish to share profits with partners or shareholders may earn less than 50% from the sale of goods or services.
Use at least 70% of profits for social purposes and share profits with business owners or shareholders of not more than 30% of total profits.
No partner, director or person with power of management on behalf of a juristic person or shareholders holding 25% or more who used to be partners, directors, or managers on behalf of juristic persons or shareholders 25% or more in social enterprise that have been revoked the licenses within the past two years.

The key advantages of social enterprises are:

A person who invests in shares in the qualified social enterprise will be exempted for an income tax as paid up to a maximum of 100,000 Baht per year.
A company that invests in shares in the qualified social enterprise will be exempted for an expense amount equal to shares investment.
A qualified non-profit sharing social enterprise shall be exempted from corporate income tax on net profits from business operations as prescribed conditions by the Director General of the Revenue Department.

A social enterprise is a business that aims to give back to society in the form of an enterprise that will take into account social responsibility, fairness and sharing. Furthermore, based on our experience, the potential tax exemptions for social enterprises may be advantageous for a person or firm that wants to help society while also running a business at the same time.

Conclusion and Our Recommendation

As a result, we note that traditionally two types of non-governmental organizations may be registered in Thailand: foundations and associations. The association is the more common legal form for NGOs.

NGOs registered in foreign countries may apply for a “Permission to Operate in Thailand for FPO”.

If the operations of the NGO involve profit-generating activities, the ordinary limited liability company or the newer legal form of a Social Enterprise may be suitable as well.

Please feel free to contact us if you have any inquiries regarding NGOs in Thailand at [email protected]

Fabian Doppler Connect with me on LinkedIn

Thailand’s New Tax Rules: Reporting Foreign Income for Residents

September 20, 2023 10:40 am Comments Off

The Revenue Department of Thailand has issued Order No. 161/2023, which means a significant shift in tax obligations for residents earning income abroad or possessing overseas assets. This directive, signed by the Director-General of the Revenue Department, mandates that specific criteria must be met by individuals living in Thailand who must now report and pay income tax on their foreign earnings.

The primary focus of Revenue Department Order No. 161/2023 is the taxation of assessable income earned abroad by individuals residing in Thailand. This directive pertains to Section 41, paragraph 2, of the revenue code, which stipulates that individuals must declare income acquired abroad if their work duties, business activities, or assets are based outside of Thailand, and this income was brought into the country in a given tax year.

Key Provisions of the Order

Clause 1: The order applies to individuals falling under Section 41, paragraph 3, of the Revenue Code, who have assessable income due to work duties, business activities, or assets located abroad, as defined in Section 41, paragraph 2, in the tax year and bring this assessable income into Thailand in any tax year. These individuals are required to report this assessable income and include it in their income tax calculations under Section 48 of the Revenue Code. The tax assessment should coincide with the tax year in which the income was brought into Thailand.

Article 2: In line with the issuance of this order, all existing rules, regulations, orders, responses to inquiries, or any practices that contradict or oppose the provisions laid out in Order No. 161/2023 shall be void.

Article 3: The order will be effective for assessable income imported into Thailand from January 1, 2024, onwards.

Conclusion

This directive represents a significant change in the tax obligations of residents in Thailand who earn income abroad or possess overseas assets. Affected individuals are now required to ensure that their foreign earnings are accurately reported and appropriately taxed in accordance with Thai tax laws. The order aims to enhance transparency and compliance with tax regulations among residents in Thailand who engage in international economic activities.

Please don’t hesitate to contact us if you have any questions regarding Thai and international taxation at [email protected]

Sireetorn Keeratiwetchakul

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Sireetorn is a Thai attorney with nine years of experience. She specializes in taxation law. Her expertise encompasses a wide array of transactions, including share purchases, asset acquisitions, and various combinations thereof.

Thailand’s International Tax Landscape

September 8, 2023 6:37 pm Comments Off

A Closer Look at Double Taxation Agreements and Global Tax Initiatives

Thailand has a comprehensive network of Double Taxation Agreements (“DTAs”), with agreements in place with over 60 countries to prevent double taxation and promote international trade and investment.

Double Taxation Agreements are bilateral agreements established between two countries to eliminate or reduce the tax obstacles that arise when a taxpayer’s income is taxable in both countries. The agreements typically cover various types of taxes, including income tax, capital gains tax, and corporate tax.

Based on our experience, the key provisions commonly found in a DTA may include:

Resident and Non-Resident Status: A DTA outlines criteria to determine an individual or company’s residency status for tax purposes. It helps determine the country that has the primary right to tax specific types of income.
Permanent Establishment: A DTA establishes guidelines for determining whether a permanent establishment exists in one country, which can subject a business to taxation in that country.
Income from Employment: The agreement usually provides rules to allocate taxing rights on employment income, considering factors such as the place of employment, duration of stay, and citizenship.
Dividends, Interest, and Royalties: A DTA typically sets the maximum withholding tax rates on dividends, interest, and royalties paid between the two contracting countries.

5. Capital Gains: A double taxation agreement may specify how capital gains are treated, including whether they are taxed in the country of residence or the source country.

6. Avoidance of Double Taxation: The DTA establishes mechanisms to avoid double taxation. This may include allowing taxpayers to claim a tax credit or exemption in one country for taxes paid in the other country.

7. Exchange of Information: The agreement includes provisions for the exchange of tax-related information between the tax authorities of both countries to combat tax evasion and promote transparency.

Thailand as a country is actively involved in the global tax community. It has been working on aligning its tax system with international standards and best practices. It is a member of various international organizations, such as the Organization for Economic Co-operation and Development (OECD) and the United Nations (UN), which play important roles in shaping international tax policies.

Thailand has also been implementing measures to combat base erosion and profit shifting (BEPS) and enhance tax transparency. It has adopted BEPS Action Plans and is a participant in the Automatic Exchange of Financial Account Information (AEOI) under the Common Reporting Standard (CRS).

Please don’t hesitate to contact us if you have any questions regarding Thai and international taxation at [email protected]

Fabian Doppler
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Thailand’s Strategic Location: Why It’s the Ideal Gateway to ASEAN and Beyond

August 15, 2023 11:00 am Comments Off

Thailand is an ideal location for international expansion, as it provides quick access to both local and international markets in the ASEAN region. The nation offers enterprises numerous benefits for trade and investment, as a gateway to ASEAN and beyond.

Thailand’s Geographic Location

Thailand enjoys an excellent geographic position right in the center of Southeast Asia. Its boundaries touch Malaysia, Myanmar, Laos, and Cambodia. Due to its close proximity to important markets like China and India, the nation has become a popular destination for international investors hoping to profit from the region’s expanding marketplaces.

Cities like Hong Kong and Singapore are only a short flight away.

Thailand’s growth as a regional commerce hub has also been significantly influenced by its location at the intersection of important sea routes.

Access to a Large and Growing Consumer Market

Thailand provides easy access to a sizable and expanding consumer base. With a population of over 70 million, the nation is one of the largest in the area, and its proximity to other important countries like China and India makes it a prime location for companies looking to expand their market share.

Excellent Infrastructure and Connectivity

Thailand has a well-developed transportation infrastructure, including modern highways, ports, and airports. This makes it easy for businesses to transport goods and services both domestically and internationally.

Thai ports like Laem Chabang and Map Ta Phut, which rank among the busiest in Southeast Asia, have played a crucial role in the development of the nation’s export-focused economy.

Bangkok offers a top-class airport and the city welcomes more visitors than any other city in the world.

In terms of telecommunications, Thailand has a highly advanced and reliable network, with 4G and 5G coverage available in most areas. This makes it easier for businesses to communicate and stay connected with their partners and customers both domestically and internationally.

And Thailand certainly offers a good quality of life for expat managers who are sent to work there.

Strong Economic Growth

Thailand’s economy is robust and stable. Thailand has grown into a desirable market for companies wanting to distribute their goods and services due to the country’s rising middle class and rising purchasing power.

Government Support (in particular through the BOI)

The Thai government is committed to bringing in foreign investment and has set up a variety of initiatives and incentives to help companies wishing to set up shop there. To assist companies in setting up operations in the country, the Board of Investment of Thailand (“BOI”) provides a variety of advantages, such as tax holidays, import duty exemptions, rights to own property and simplified visa and work permit procedures.

Thailand is becoming a highly desirable location for foreign investment and a center for multinational corporations looking to grow their operations thanks to these advantages.

Thailand’s Geopolitical Significance and Role in ASEAN Trade

The Association of Southeast Asian Nations (ASEAN) is a group of ten nations with a combined population of more than 600 million and a gross domestic product (GDP) of more than $3 trillion.

Since ASEAN’s founding in 1967, Thailand served as a member and has been a major proponent of regional cooperation and integration. Thailand has actively participated in the negotiation of free trade agreements with significant trading partners and has been a steadfast supporter of the ASEAN Free Trade Area (AFTA).

Free Trade Agreements

Thailand has also signed a number of free trade agreements with nations both inside and outside of the ASEAN bloc, including:

ASEAN Free Trade Area (AFTA)
ASEAN Economic Community (AEC)
ASEAN-China
ASEAN-India
ASEAN-Japan
ASEAN-South Korea
ASEAN-Australia-New Zealand
ASEAN-Hong Kong
Thailand-Australia
Thailand-New Zealand
Thailand-Japan
Thailand-Peru
Thailand-Chile
Thailand-India
The Regional Comprehensive Economic Partnership (RCEP is the FTA between the ASEAN and Australia, China, Japan, New Zealand, and South Korea)

(Source: https://www.trade.gov/country-commercial-guides/thailand-trade-agreements)

These agreements offer preferential tariffs and duty-free access to markets in the region, making Thailand a prime location for businesses looking to establish a regional presence.

Thailand’s Work Force

Thailand offers a highly skilled and educated workforce and an increasing number of graduates in science and technology fields. This makes it an ideal location for companies looking to establish research and development centers or high-tech manufacturing facilities.

A Smart Choice for Businesses Looking to Expand

Thailand should definitely be taken into consideration if you are contemplating expanding your business to Asia, in particular to the ASEAN region. It is a valid alternative to mainland China, thanks to its advantageous location, pro-business legislation, and alluring investment incentives.

If you would like any legal or tax support with setting up in Thailand or have any questions, do not hesitate to contact us at [email protected]

Fabian Doppler
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The Role of Earn-Outs in M&A Transactions: A Strategic Pricing Mechanism

July 14, 2023 5:36 pm Comments Off

In the dynamic landscape of mergers and acquisitions (M&A), earn-outs have emerged as a strategic pricing mechanism that can greatly impact the success of a transaction. Earn-outs introduce a contingent element to the final purchase price, allowing buyers and sellers to align their interests and bridge valuation gaps, particularly in deals involving privately-held companies or transactions with values below $250 million.

At its core, an earn-out is a pricing mechanism that links a portion of the purchase price to the target company’s post-sale performance. This approach is commonly employed when the buyer faces challenges in effectively valuing the business or when disagreements on valuation arise between the parties. By tying a portion of the purchase price to future performance, buyers can mitigate risks and sellers can be incentivized to maximize the business’s potential.

In our experience, earn-outs typically involve the identification of specific achievement criteria that need to be met for the contingent portion of the purchase price to be paid out. These criteria may be based on financial targets, such as revenue or earnings, or operational milestones, such as market penetration or product development.

One of the primary advantages of using earn-outs is that they allow buyers to overcome limitations in available cash at the time of closing. Instead of paying the full purchase price upfront, buyers can structure the payments to be made over time based on the achievement of specified milestones. This flexibility can be particularly valuable in situations where the buyer wants to conserve cash for other purposes or needs to allocate resources strategically post-acquisition.

However, it is important for both buyers and sellers to approach earn-outs with careful consideration. The terms of the earn-out, including the achievement criteria and the payout structure, should be negotiated and clearly defined in the transaction agreement. Additionally, mechanisms for dispute resolution and potential contingencies should be addressed to ensure a fair and transparent process.

In conclusion, earn-outs have become an increasingly common element in M&A transactions, providing a valuable tool for buyers and sellers to navigate complex valuation challenges and align their interests. By effectively utilizing earn-outs, parties can unlock opportunities for mutually beneficial outcomes and facilitate smoother transitions in the ever-evolving business landscape.

If you have any questions, Please feel free to contact us at [email protected]

Fabian Doppler
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Setting Up a Second Residence in Thailand

April 27, 2023 11:17 am Comments Off

Setting up a second residence in Thailand has become a popular option for many high-net-worth individuals looking for a safe, stable, and convenient location to reside. With its favorable climate, world-class healthcare system, and vibrant culture, Thailand offers a unique and appealing lifestyle for those seeking a second home. However, before making the decision to establish a second residence, it is important to consider the legal and tax implications, as well as the family’s circumstances and priorities.

In this article, we will outline the key steps based on our experience to take in order to establish a second residence in Thailand, as well as some of the legal and financial considerations you should keep in mind.

Determine your eligibility

The first step in setting up a second residence in Thailand is to determine whether you are eligible to do so. In order to establish a second residence in Thailand, you must have a valid non-immigrant visa. This can be obtained through a variety of means, including work, education or retirement.

Setting up a business in Thailand

There are many legal requirements associated with setting up a business in Thailand. You may need help during the planning stage of your investment or during your day-to-day business operations. In our experience, without the expertise of a law firm that can communicate in Thai, registering your company in Thailand can be complicated and time-consuming.

Obtain the necessary work permit and visa

In order to live in your second residence in Thailand, you will need to obtain certain permits, such as a work permit if business is bringing you to Thailand. As with all work permit applications, experience really speeds up the whole process.

Research property options

The next step once you have decided where in Thailand you would like to set up a second residence is to research the different property options available to you. This may include apartments, condos, or houses. There are many websites and resources available to help you find the right property for you, including real estate agents and online listings. When researching properties, it is important to keep in mind your budget, as well as any legal and financial considerations, such as taxes and insurance, and legal limitations for foreigners.

Register your property

Once you have found the right accommodation, you will need to register your property with the appropriate authorities. This will typically involve filling out various forms and providing proof of ownership.

Tax implications

Thailand has a number of taxes that you will need to consider when setting up a second residence. These may include income tax, property tax, and other taxes and fees.

When considering the tax implications, it is important to keep in mind that taxes are not typically the top priority for families setting up a second residence. Higher priorities include safety, geopolitical stability, healthcare, language, location, climate, schools, cost of living, and quality of life. However, the tax rules and legal system should still be evaluated and considered before making a decision.

Conclusion

When setting up a second residence, it is crucial to work with a reputable and reliable law firm that can guide you through the process. The law and tax firm will work closely with the client’s external advisors to evaluate the family’s matrimonial property regime, estate plan, and tax breaks offered by the destination country. They will also play a key role in ensuring that no aspects are overlooked, as they have a holistic view of the situation.

If you have any legal or tax questions about setting up a second residence in Thailand, please contact our expert team at [email protected]

Fabian Doppler
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Category Archive: Legal Blog