Comments Off on Board of Investment (BOI) Thailand: what incentives are available?
The BOI was established as a government agency under the office of the Prime Minister carrying out the Investment Promotion Act (B.E. 2520; 1977, as amended) to promote certain types of highly sought-after foreign and domestic investment in Thailand. Today, the BOI can guarantee different incentives to an investor.
The BOI has discretionary authority to grant certain trade, taxation, employment, financial and other benefits.
In this article, we would like to summarize what incentives can be obtained, in an ideal scenario, as a maximum:
Exemption of import duties on
Machinery
Raw or essential materials imported for use in production for export
Materials for R&D activities
Corporate income tax exemption for up to 13 years
Maximum 50% CIT reduction for up to 10 years (in case of no CIT exemption)
50% CIT reduction for up to five years in the case of investments being located in the designated areas
Deduction of up to 70% of the invested capital from net profits derived within 10 years (ITA- Investment Tax Allowance)
Double deduction of public utilities costs (for investments located in the designated areas
25% additional deduction of infrastructure construction and installation (for investments located in the designated areas)
Non-tax incentives are available at the BOI’s discretion and include such investment privileges as:
Foreign ownership of the Company
Control over Thai corporations
Land ownership
Expedited visas and work permits for foreign executives and technicians (and their families).
If you have any questions regarding the BOI application and its benefits, feel free to contact us at [email protected]
Comments Off on Thailand Factory Act Amendments 2019
Amendments to Thailand’s Factory Act will greatly affect the entire industrial factory business throughout the country. On 30 April 2019, the Royal Thai Government Gazette declared an amendment to the Factory Act B.E. 2535 (1992) by The Factory Act (No. 2 and No. 3) B.E. 2562 (2019). Recently, The Factory Act (No. 3) passed the 180 days period and became effective on 1 May 2019. The Factory Act (No. 2) is not effective yet.
In the amendment, the word ‘factory’ has been modified to mean a building, place, or vehicle using machinery with 50 horsepower or more, or 50 workers with or without machinery, in its operations. This means that around 60,000 factories nationwide with machineries and workers under the old factory act will from now on not be classified as a factory governed by the factory act any longer, but they still need to comply with the local ordinances, issued under e.g. the Town Planning Act, or the Public Health Act 1992.
Moreover, the word “construction of buildings” was removed from the definition of a “factory set up”. As a result, the factory license is no longer required for the building construction process as it is not considered as part of “factory set up” but it will be required for installation of machinery in the building.
It is stated in the new Factory Act that the factory or machinery inspection may be carried out by a factory inspector who is a qualified person or juristic person to perform and prepare the report, instead of a competent government official. Previously, checking the machinery or factory condition was the responsibility of the Department of Industrial Works officials.
Also, the officer in charge will have the authority to stipulate an exemption to the following factories, from complying with certain provisions of the Factory Act ( in certain cases and under specific rules, procedures and conditions):
(1) Factory belonging to a state agency; (2) Factory that is used for research; (3) Factory belonging to educational institutes that is used for training; (4) Factory that operates as a household industry; (5) Factory with necessary operations that connect to other business which are not factories according to the Factory Act and established in the same area.
Lastly, according to The Factory Act (No. 2) the general factory operators do not have to renew the factory license (Ror.Ngor. 4) anymore until the factory ceases operations. This is good news for all factory operators, because typically they used to require a renewal every five years in order to avoid that the license expires.
If you would like any further information, please do not hesitate to contact us [email protected]
Comments Off on Update on Thai Labor Law Protection Act
A new amendment for the Labor Law Protection Act has been announced in the Government Gazette on 5April 2562 and the Act will come into force 30 days after its publication in the Gazette.
The amendments introduce additional rights for employees, such as:
Increase of statutory severance pay for an employee who has worked for at least 20 years;
Employees are now entitled to personal leave of at least 3 days/year and will be paid during the leaving date;
Maternity leave increase from 90 days to 98 days and split the leave period to 2 periods:
Prenatal period before the delivery date and;
Maternity leave period.
Employers must pay up to 45 days during maternity leave;
Employers must pay wages, overtime payments, payments for working on holidays, and payments for working overtime on holidays, at the same rate for both male and female employees;
If it’s necessary for the employer to suspend the business, partially or as a whole, for any reason, the employer must pay the employee at least 75 percent of his or her usual daily wages throughout the suspension period.
The above changes will certainly be welcomed by Thai employees.
Comments Off on New tax amnesty regulation in Thailand
A newly enacted law, The Act for Exemption on Penalties, Surcharges, and Criminal Offenses and Support of Operations Under the Revenue Code BE 2562 (the “Tax Amnesty 2019”) will provide a good opportunity for a small and medium-sized enterprises (SMEs) that are subject to corporate income tax (CIT), provided that they are a company or juristic partnership and they meet the following requirements:
Subject to corporate tax on net profits with taxable income from its business for the last accounting period (latest 12-month) ending on or before 30 September 2018 of not exceeding THB 500 million and
Having submitted a PND 50 form for the last accounting period (latest 12-month) ending on or before 30 September 2018 within 25 March 2019 and
Never having committed a tax invoice forgery or using false tax invoice and Revenue Department has brought a criminal case to the police before the Amnesty becomes enforceable.
For anyone who is interested in applying for the Tax Amnesty program, the application must be registered with the RD (Revenue Department) by:
Submitting the related documents according to the rules, procedures and conditions prescribed by the Director General of RD to the official website of the RD (www.rd.go.th) during the period of 1 April to 30 June 2019 and
filing a Tax returns and paying unpaid Corporate Tax or additional Corporate Tax to the RD by 30 June 2019 for the following periods:
CIT: Accounting period of 1 January 2016 to 31 December 2017.
VAT/SBT: Accounting period of 1 January 2559 to 28 February 2019
Stamp Duty Tax: Any transaction within 1 January 2016 to 25 March 2019 and pay the unpaid tax in full amount within 30 June 2019
The benefits that are offered in this program are significant:
Qualified taxpayers will get an exemption from penalties, surcharges for the taxes (CIT, VAT, SBT, and SD) under this Act and shall be exempted from criminal liability under the Revenue Code. After that tax-payers should continue to submit tax returns via e-filing online on the period from 1 July 2019-30 June 2020. Then, the company’s accounts or financial statements shall be deemed accurate.
The law came into force on 26 March 2019.
if you have any question regarding the Tax amnesty regulation in Thailand, Please feel fee to contact us at [email protected] or call us at +66 (0)2 117 9131-2
Comments Off on Amusement Parks: a Guide to Regulation in Thailand
With tourism playing a significant role in Thailand and increasing demand to diversify tourist entertainment offerings, amusement parks are booming. When setting up such a park, even if it is part of a mall or a hotel, many different areas of Thai law need to be taken into account. The most important regulations are detailed as follows:
Building Control Law
Usually, an amusement park can be defined as a “plaything”, according to the Ministry Announcement regarding Plaything Control B.E. 2558 (2015), issued under the Building Control Act B.E. 2522 (1979). The Announcement specifies the meaning of “plaything” as a construction which is used for playing in a theme park or any other place and has one of the following features:
Movement of the players with a speed of not less than 5 meters in 1 second
Height from the ground to the top of more than 2.50 meters
Power of the machinery over 15 horsepower (11 Kilowatts)
Containing parts which use water for the plaything and are deeper than 0.80 meters
Plaything itself is defined as “usage control building” and “construction of plaything”. So even if the plaything is only installed inside a building as a side attraction, this building is deemed as a construction control building which requires the following licenses:
Construction License
Usage Permit (to be granted permission for a plaything construction)
Once the plaything is entirely constructed, the applicant shall notify the district office to examine whether the construction was built in line with the license or not, to get the approval to use the plaything.
An engineer is required to control the construction of the plaything . Furthermore, insurance which covers third party damages is required. The Insurance must comprise at least 200,000 THB for the loss of life and more than 100,000 THB for medical treatment. In total: Over 1 million THB per accident. The Usage Permit is valid for 1 year and is renewable.
BOI Promotion
An investment promotion by the Board of Investment can be obtained under category 7.22.3 (Amusement Parks). Therefore, a minimum investment (excluding the cost of land and working capital) of more than THB 500 million in the amusement park is needed. The BOI promotion requires new investment, because of that, an existing project is not easily eligible to be promoted.
Public Health Control Law
According to the Announcement of the Ministry of Public Health Regarding Hazardous Activities to Health B.E. 2558 (2015), clause 3-9(14), theme park activity is deemed as a hazardous activity to health. Because of that, permission under the Public Health Act B.E. 2535 (1992) is required before operation.
To apply for this permission, a Construction License under the Building Control Act B.E. 2522 (1979) is required. The license under the Public Health Control Law is valid for one year and is renewable.
If you have any questions related to this topic, please feel free to contact us [email protected]
Comments Off on Social security registration process in Thailand
Under the Thai Social Security Act, B.E. 2533 a company was required to register as an employer at the Social Security Office (SSO) within 30 days after the first employee has started to work for the company.
This rule has now changed with the latest notice letter by the SSO which was sent to one of our clients. From now on the following rule applies:
A corporation is required to register at the SSO as an employer immediately after incorporation. This rule also applies if the company
does not have employees at this time;
is not operating yet, and/or;
is still in the process of preparing to start operating.
This new and significantly stricter rule should be noted by anyone who intends to set up a new business or is operating a business that is not registered at the SSO yet.
If there are any questions regarding the Social security registration process in Thailand, feel free to contact us at [email protected].
Comments Off on Thailand’s International Business Center Incentives
Under the Foreign Business Act (“FBA”), foreigners are legally restricted in doing certain businesses in Thailand as prescribed in the lists Annexed to the FBA.
Fortunately, there are various possibilities to obtain official permissions. And there are also government schemes available which provide for tax exemptions and tax reductions. Until now the Thai government authorities offered investment promotions for international headquarters (IHQ) and international trading centers (ITC). These have been replaced by the international business center (IBC). The differences between IHQ/ITC and IBC are as follows:
BOI Promotion for International Business Center
On 11th December 2018, the BOI has published BOI Announcement No. Ngor. 1/2561 to suspend the investment promotion for 7.5 International Headquarters: IHQ and 7.6 International Trading Center: ITC. This suspension is active since the date of the announcement.
At the same time, the BOI published Announcement No. Sor. 6/2561 to facilitate 7.34 International Business Center: IBC as a newly promoted activity. Any company wishing to apply for the new BOI promotion for IBC must comply with the conditions as follows:
The company must have a business plan to provide at leastone of the services enlisted in 1.1.- 1.11, to associated enterprises:
Organizational administration and management and business planning
Procurement of raw materials and parts
Research and development
Technical support
Marketing and sales promotion
Human resources and training and development
Financial management advisory service
Credit management and control
Treasury center
International trade
Other services as approved by the Board
The companies paid-up registered capital must not be less than 10 million THB.
The Applicant must employ at least 10 full-time employees who have knowledge and skill which are necessary for an IBC. Exception: If the IBC hast the scope of a treasury center, only 5 full-time employees are required.
In comparison: There is no minimum amount of employees required for IHQ/ITC.
For international trade: The applicant must have at least one scope of business from no. 1.1 – 1.10 included.
The company may not be eligible for the exemption of import duties on raw or essential materials used in production for export.
The corporation may not be eligible for merit-based incentives.
The IBC shall receive B1 incentives which include all Non-Tax Incentives and exemption of import duties on machinery. The new promoted activity is valid since 11th December 2018.
Revenue Department Promotion for IBC
Regardless of whether a company operates the IBC business with BOI promotion or conducts a business exempted from FBA requirements, the company may also be eligible to apply for certain IBC tax privileges directly at the Thai Revenue Department.
An IBC is a company incorporated under Thai law and approved by the Thailand Revenue Department to provide administrative and technical support service, treasury service and/or international trading service.
To obtain the tax privileges from Royal Decree (No 674) for IBC, a company has to fulfill much stricter requirements than under the ITC/IHQ schemes. Applicants must have paid up a minimum capital of 10 million THB, which is similar to the IHQ and ITC, but annual expenses for operation in Thailand must be at least 60 million THB, while it was 15 million THB in the former schemes. Further, the applicant is required to employ a minimum of 10 employees (if the applicant will only provide treasury services; only 5 employees). Such a rule does not exist in the IHQ/ ITC.
There is also a possibility to switch from an old IHQ/ITC scheme to the new IBC scheme. Applicants switching from an old plan are only required to have at least 15 million THB of annual local spending.
Because of the Royal Decree No. 674, from December the 28th 2018, there are several tax incentives for the IBC, these privileges are guaranteed for 15 years. These privileges are shown and compared to the old ITC/IHQ schemes as follows:
Corporate Income tax
The net income from support services, treasury services and royalty income from affiliates is reduced by:
8% for companies with an annual operating expenditure between 60 – 300 million THB,
5% for companies with an annual operating expenditure between 300 – 600 million THB,
3% for companies with an annual operating expenditure of over 600 million THB.
There is an exemption from co-operating income tax on behalf of dividend income (local and overseas). In IHQ and ITC, there is only an exemption from dividend income derived from affiliates in Thailand.
Capital gains and trading income are not mentioned in the IBC, but there is an explicit exemption in IHQ and ITC.
There is an exemption from withholding tax for dividend distribution to overseas and interest payment to overseas, no difference to ITC and IHQ.
There is no specific business tax for financial management service income derived from affiliated companies.
Personal income tax for expatriate employees for the IBC is based on a 15% flat tax rate.
Litigation is usually the last resort to solve a dispute or enforce a claim. Many parties of a dispute try to avoid a litigation process because they fear the court costs or lose the process. However, sometimes litigation is the only way for a party to obtain relief. Therefore, it is good to know that the Thai justice system is generally accessible and unbiased. Also, the time it takes for a judgment is reasonably fast.
Initiating a litigation case in Thailand could be described as follows:
Before the litigation starts, the creditor’s lawyer should send a written notice to the debtor demanding the outstanding payment and giving a certain period of approx. 14-30 days to comply with. If the debtor is still unwilling to pay, the creditor’s lawyer will prepare a case and submit to the first instance court. Thereby the party has to take into account that the Thai Civil and Commercial Code (CCC) prescribes prescription periods (from one month to ten years) within which legal action must be taken. For most commercial contracts, the prescription period runs from two years to five years. Due to the fact that the distinction of the different prescriptions can be difficult, it makes sense to take action earlier rather than later.
After accepting the complaint, the court will schedule the first court hearing date in order to pursue the case. The defendant has to submit his answer to the complaint of the plaintiff to the court within 15 days if he or one of his representatives received the complaint personally. If personal delivery is not possible, the court officer will post the complaint at the defendant’s address, in this case, the defendant has to submit his reply within 30 days after the complaint was posted.
If requested by the defendant, the court may set a date for mediation between the plaintiff and the defendant. Such mediation may take place one or two times depending on the negotiation result. If the mediation is successful, a formal settlement is established, and the court can close the case.
If the Mediation is not successful, the court will set a date for the formal hearing in which the plaintiff and the defendant may present evidence to the court. The parties have to submit a list of witnesses prior to the hearing. It is possible to call evidence from a witness who is not on the evidence list if the court approves it. If a witness does not speak Thai, the party who called the witness must provide a translator. Documentary evidence must be authenticated by a witness. If the document is not in Thai, a certified Thai translation must be enclosed.
After completion of the regular court proceeding, the judge will then render the judgment based on the evidence presented to the court. The judgement is given in writing and read in court. Time spent to pursue the case in the first instance court is approx. 6-12 months.
The case may be elevated to the appeal court if either the plaintiff or the defendant does not agree with the judgment to be made by the first instance court. An appeal must be filed within one month after the judgement. Time spent to continue pursuing the case in the appeal court is approx. 1-2 years.
After the final judgment has been rendered in favour of the plaintiff, the plaintiff will submit it to the Legal Execution Department for enforcement.
Please contact us if you have any questions about this topic [email protected]
Comments Off on Legalization of Cannabis in Thailand
Before its ban in 1934, cannabis was an essential part of the rural culture in Thailand. It was used as medicine, as fiber for clothing and even as a traditional spice for the Thai boat noodle soup. Under the Marijuana Act, B.E. 2477, released in 1934, the possession, usage and sale of cannabis was criminalized and punished. Although the climatic conditions to produce cannabis in Thailand are excellent and the value of the plant for agriculture is immense, Thailand followed the anti-drug course; as one of the original signatories of the International Opium Convention of 1912 (Den Hague) Thailand announced in 1976 the Narcotics Control Act, B.E. 2519 and its amendments in 1985 (Narcotics Act No. 2) and 1987 (Narcotics Act No. 3)
Since then cannabis was classified as a Category 5 narcotic and Thailand forfeited its status as one of the world’s largest exporters of cannabis. Consequences of this classification: those trying to profit from the cultivation and trade of cannabis face imprisonment of up to 15 years and substantial financial fines.
Now that the medical and even recreational use of cannabis was legalized in several countries the Thai Government is in the process of approving the legalization of cannabis for medical use and research as well. The approval of medical cannabis will be a turning point in Thailand’s zero-tolerance politic on drugs; Thailand will be the first country in Southeast Asia to legalize cannabis.
The new drug law in brief:
Cannabis will – according to the ONCB – be permitted for patients suffering chemotherapy side effects, Parkinson’s disease, epilepsy, multiple sclerosis, or cancer pain.
Both medical doctors and Thai traditional healers will be able to prescribe these medications under Thailand’s Food and Drug Administration and the Ministry of Health.
Individuals will not be permitted to grow marijuana at home personally.
Private firms are able to cultivate, produce, and sell medical marijuana.
Foreign Investors are allowed to invest in cannabis-producing companies, but they are only allowed to hold up to 1/3 of the shares,
Strict controls on cultivation, including a mandate that all medical marijuana is grown indoors, to avoid illegal abuse, even if this order increases the production costs by factor five.
Organizations need to be authorized and registered under the law to be allowed to produce cannabis.
Only governmental research institutions and universities are allowed to give licenses to the cannabis producing companies.
Any expansion of these licenses is under a five-year restriction by law, and further, a two-year mandated review could, in theory, result in a complete reversal of legalization if the impacts are assessed to be negative.
After all, this development draws the attention of foreign companies and investors of the global cannabis market to Thailand. Thailand’s geographical position and favorable climate could help to cut the costs in production and the business of import/export. However, it remains to be seen whether foreign companies will be able to file patents on cannabis and hence exclude Thai companies from the billion market.
Thailand has introduced a new program to attract highly skilled experts and investors. This program shall target several industries and enhance the scientific and technological sector. SMART Visa and its privileges will help to recruit various talents, senior executives, entrepreneurs and investors for the country’s development in the fields of next-generation automotive, smart electronics, medical and wellness tourism, agriculture and biotechnology, future food technologies, automation and robotics, aviation and logistics, biofuels and biochemicals, digitization and health technologies.
Depending on the qualifications the SMART Visa application requirements vary:
Highly skilled experts in the fields of science and technology have to apply for Smart T. Smart T requires a minimum salary of THB 200,000 per month and an employment agreement which guarantees employment in Thailand for at least one year.
Investors must directly invest at least THB 20 million in the targeted industries in Thailand, which apply technologies related to manufacturing or delivering services. Smart I is the relevant visa type.
Senior executives of companies in the targeted industry which use technologies in manufacturing or delivering services must earn not less than THB 200,000 per month, hold a bachelor’s degree or higher and be engaged at least ten years in the relevant field. Senior executives must have an employment agreement with a company in Thailand or abroad, with a work assignment in Thailand. If the requirements are met, senior executives are eligible for the visa type Smart E.
Smart S is suitable for foreign startup entrepreneurs who wish to invest and operate in the targeted industries in Thailand. Entrepreneurs must have a fixed savings account with at least THB 600,000. This amount varies if spouses and children follow. Health insurance must be concluded which covers the entire period of stay in Thailand. The startup must be set up within one year and participate in an incubation or accelerator program.
The qualifications of the targeted group must be certified by the relevant government agency, such as the National Science and Technology Development Agency (NSTA), Digital Economy Promotion Agency (DEPA), the National Innovation Agency (NIA), etc.
Privileges range from a 4-year visa without the necessity of a re-entry permit, no obligation to obtain a work permit, an extension of the 90-day Immigration reporting to one year and a right for spouses and children to stay and work in Thailand without a work permit.
The Smart Visa is a model which applies to companies that are promoted by the BOI. The Smart Visa unit under the BOI will issue a letter which certifies the qualifications. This letter is valid 60 days and is required for the Smart Visa application at Thai Embassies or the One-Stop Immigration Center for Visas and Work Permits in Thailand.
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.Ok
