passports.io website
residencies.io website
Bank Accounts website
Flag Theory website

Thailand

Board of Investment Promoted Company (Private company limited by shares)

Thailand is the second largest economy of the Association of Southeast Asian Nations (ASEAN) and the gateway of one of the most growing and promising markets worldwide. Thailand has a dynamic diversified economy, with leading industries such as automotive and electronics.

In addition, Thailand has concluded free trade agreements with China, India, Japan, South Korea, Australia and New Zealand, among others.

Incorporating and doing business in Thailand gives access to a growing domestic consumer market, cost-effective skilled labor, a strengthened banking system and a relatively high commercial freedom.

Thailand has a world-class infrastructure, including a developed highway system, 7 international airports, modern city-wide mass transit, 6 deep sea ports and 2 international river ports.

Furthermore, business costs in Bangkok such as office rentals, electricity and water are considerably lower than other trade hubs of the region such as Singapore, Kuala Lumpur, Shanghai or Hong Kong.

Normally it can be difficult for foreigners to come in and set up a competitive business in the Kingdom of Thailand. This is due to many protections put in place to limit the ability of foreigners to compete with Thais for local jobs. However, the Thailand Board of Investment (BOI) has made special rules to promote companies in key sectors in order to compete on par with neighbors in Southeast Asia such as Singapore and Hong Kong.

A Thailand BOI, you can have a 100% foreign-owned company operating physically on Thai soil. This can give you significant advantages such as official tax-residency. In addition to this, your overhead costs will be much lower by operating out of Thailand. There are many benefits to setting up in Thailand as a BOI company.

Benefits of a BOI approved company

  • 0% Corporate Tax – 8-year tax holiday (with option to extend to 11 years)
  • Thai Residency
  • A Thai work Permit
  • A 2-3-year Non-B Visa
  • Diplomatic Entry to Suvarnabhumi airport
  • up to 50% Personal tax reduction (off normal Thai personal tax)
  • 100% foreign ownership
  • 4:1 Foreign to Thai work Permit rule exceptions
  • Permission to own a small piece of land

Application Preparation

The actual paperwork for the application is about 8 pages long. You’ll need to provide basic information, financial projections, and estimated number of employees that you’ll hire among other information. You’ll need to take care to provide evidence and fill everything out in a specific manner. If you’re unfamiliar with the process it can be a daunting task to take on by yourself. The entire application process can be expected to take 3-6 months from start to finish.

Interview at BOI Headquarters

Once the paperwork is submitted there will be an interview at the BOI headquarters in Bangkok. The company founders will need to be present at this meeting. We’ll get you prepared for what to expect at this interview – we know 95% of what the BOI will ask you – for the other 5% you’ll just need to give honest answers about your company. You’ll want to be truthful in every regard to the BOI during this interview – they’ve seen plenty of applicants, so they know when someone is trying to be misleading. Just expect to present them with a normal business plan and your estimated turnover that you anticipate for the business.

Company Promoters

In order to form a Thai company, there are some specific requirements in regards to the company promoters.

Must have at least 3 promoters (20 years or older) for a private limited company – or 12 promoters for a public limited company

Promoters must be registered and available for signing documents during the registration process

Promoters must all be initial shareholders immediately after registration of the company, and they must hold a minimum of one share.

Promoters may be generally free to transfer those shares to other parties afterwards.

This use of promoters is a particularity of Thai law that is not generally needed for setting up a company in other locations.

Name Reservation

The company name will be applied for. The applicant is required to provide three possible names, and the registrar has some authority to reject any of the names if they don’t comply with requirements, are already in use, or are determined unsuitable for other reasons.

MOA Registration

The Memorandum of Association MOA must include the following:

Company name

Province where the company is located

Scope of the business of the compnay

Capital to be registered

Names of the promoters

Capital information needs to include the number of shares and their par value

Capital must all be issued, although only partly paid at this formation step

Company Registration

Following registration of the MOA and receiving BOI approval, the company should be registered. Along with the appropriate government fees, 25% of registered capital must be paid. Other requirements regarding registered capital may apply if the company is employing foreign workers.

Statutory Meeting

Care should be made to observe that all registered shares have been subscribed for, the promoters have handed the business over to the directors, and the payment of at least 25% of total shares has been paid by the shareholders at a statutory meeting in the presence of all subscribers and promoters.

FBL Registration

The company will be required to obtain a Foreign Business License (FBL) before beginning operations if it falls within the definition of a foreign company according to the Foreign Business Act. This is another time consuming step that we can help you with to make your BOI company setup go smoothly.

VAT and Tax Registration

The company will be required to apply for and obtain a tax ID and VAT certificate withing 60 days of incorporating or starting operations. If the company turnover is greater than 1.2 million Baht, registration for VAT with the Revenue Department must also be done within 30 days of crossing this annual revenue threshold.

Foreign Ownership Restrictions

There are just a few business types that do not allow fully foreign ownership.

  • Agriculture – plant propagation and development
  • Mining – Mineral ore prospecting
  • Mining – Mineral or ore dressing (exception for Australians under treaty)
  • Mining – Marble or granite mining
  • Manufacturing – Manufacturing 4-stroke motorcycles
  • Service and Public Utilities – International trading companies

It should be noted that the BOI has the right to set the amount of shares for any promoted project that may be held by foreign investors. However, the BOI has been very reasonable in the past in regard to this point, and they are generally cooperative and great to work with.

Thailand has not signed yet OECD's Automatic Exchange of Information for Tax Purposes (AEoI).

In summary, Thailand is an emerging market and the regional hub of Southeast Asia and a BOI approved company, an excellent tax-free vehicle for doing business in one of the fastest growing regions worldwide.

Taxes

Tax residency – A company is tax resident in Thailand if it is incorporated under the law of Thailand and registered in the Ministry of Commerce.

Basis – Resident companies are subject to tax on their worldwide income. Nonresident companies pay taxes on their income derived from Thailand.

Tax rate – Corporate income tax standard rate is 20%.

SMEs with paid-in capital equal or lower than THB 5,000,000 and trading income not higher than THB 30,000,000 are subject to reduced rates of 0% for net profits lower than THB 300,000, 15% from THB 300,000 to THB 3,000,000 and 20% over THB 3,000,000.

The Investment Promotion Act and the Competitive Enhancement Act provides tax holidays to companies approved by the Board of Investment (BOI). Companies conducting activities in the agricultural, mining, ceramic, metals, light industry, machinery, transportation equipment, electronic industry, electrical appliances, chemical, paper, plastics, services and public utilities, targeted core technologies and enabling services and strategic based activities may benefit from several tax exemptions and incentives.

Incentives available include the exemption from import duties, exemption from corporate income tax for up to 15 years, exclusion of dividends received from promoted enterprises up to 15 years and participation on the THB 10 billion subsidy under the Competitiveness Enhancement fund.

The Investment and promotion Act also provides tax incentives to R&D contractors, including a corporate income tax exemption up to 8 years, exemption from import duties on certain machinery and raw materials, and exclusion of dividends derived during the period.

Capital gains – Capital gains are treated as ordinary income and taxed at the standard rate.

Dividends – Dividends received are included in corporate tax base.

Dividends received from a Thai listed company are exempt from tax. Those received from a local unlisted company may be exempted, provided that the beneficiary holds at least 25% of voting shares for a period of at least 3 months.

Dividends received may be 50% tax exempt, provided that the beneficiary has been held the shares for at least three months before and three months after the dividends were received.

Dividends received from foreign companies are taxable, but may be exempted if beneficiary holds at least 25% of shares with voting rights of the payer for a period not less than 6 months and profits were subject to at least 15% tax on source.

Interests – Interests are subject to corporate income tax.

Royalties – Royalties are taxable at ordinary rates.

Foreign-source income – Foreign-source income is taxed when is accrued.  Foreign tax paid may be creditable against the tax chargeable in Thailand

Withholding taxes – Dividends paid to resident and non-residents are subject to a 10% withholding tax.

Royalties and interests paid to non-residents are subject to a 15% withholding tax. Interests paid on loans from a financial or insurance institution may be subject to a reduced 10% withholding tax if the lender is resident in a country where Thailand has concluded a tax treaty with.

Withholding tax rates may be reduced under a tax treaty.

Losses – Losses arising from taxable income may be carried forward for 5 years. Carryback of losses is not allowed.

Inventory - Inventory may be valued at the lower of acquisition/production costs or market value. To determine costs are allowed First in first out (FIFO), Last in first out (LIFO), Highest in first out (HIFO) methods, but a change in the method may require the approval of the Revenue Department.

Anti-avoidance rules – Related-party transactions must be made on an arm’s length basis, and transfer pricing disclosure is mandatory at the time of tax filling.

Thin capitalization and controlled foreign company regulations do not apply in Thailand.

Labor taxes – Employers and employees are required to make contributions to the social security fund at 5% of the monthly salary, capped at THB 750 per month for each one.

Tax credits and incentives – Foreign tax paid on foreign-source income taxable may be creditable up to the amount of tax payable in Thailand.

The Investment Promotion Act and the Competitive Enhancement Act provides tax holidays to companies approved by the Board of Investment (BOI). Companies conducting activities in the agricultural, mining, ceramic, metals, light industry, machinery, transportation equipment, electronic industry, electrical appliances, chemical, paper, plastics, services and public utilities, targeted core technologies and enabling services and strategic based activities may benefit from several tax exemptions and incentives.

Incentives available include the exemption from import duties, exemption from corporate income tax for up to 15 years, exclusion of dividends received from promoted enterprises up to 15 years and participation on the THB 10 billion subsidy under the Competitiveness Enhancement fund.

The Investment and promotion Act also provides tax incentives to R&D contractors, including a corporate income tax exemption up to 8 years, exemption from import duties on certain machinery and raw materials, and exclusion of dividends derived during the period.

Compliance – On average, a company in Thailand may require 21 payments and 266 hours per year to prepare, file and pay corporate income tax, value added tax, and labor taxes, including payroll taxes and social contributions.

Exchange control – Remittance of profits may not be made in THB, but may be made in any other currency. The Bank of Thailand must approve the remittance of funds exceeding the ceiling set by the bank.

Personal income tax – To be a tax-resident in Thailand an individual must spend at least 180 days in a calendar year in the country.

Tax residents are subject to personal income tax on their income derived from Thailand and their foreign-source income remitted to Thailand in the year in which it is accrued. Income earned outside Thailand remitted after 1 year is tax-exempt.

Non-residents are subject to income tax on their Thai-source income.

Personal income tax is progressive at rates up to 35% for annual income exceeding THB 5,000,000. Expatriates working on companies under certain tax incentives regimes (Regional Operating Headquarters, ROH, International Headquarters, IHQ, and International Trade Centers, ITC) may be entitled to be taxed at a 15% flat rate.

Dividends and interest are subject to a final withholding tax of 10% and 15%, respectively.

Capital gains are treated as ordinary income. However, those obtained from the sale of securities listed on the Stock Exchange of Thailand or any other ASEAN stock exchange are tax exempt, certain exceptions may apply.

Other taxes – A 12.5% real property tax is levied annually on the rental value of the property. Inheritances over THB 100,000,000 are taxed at a 10% rate, reductions may apply under certain circumstances. A gift tax applies on donations of assets exceeding THB 20,000,000 (10 million in the case that recipient is not descendant, ascendant or spouse).

There are no wealth taxes in Thailand.

V.A.T. standard rate is 10% (reduced to 7% until Sept 2017).

  • Offshore Income Tax Exemption
  • Offshore capital gains tax exemption
  • Offshore dividends tax exemption
  • CFC Rules
  • Thin Capitalisation Rules
  • Patent Box
  • Tax Incentives & Credits
  • Property Tax
  • Wealth tax
  • Estate inheritance tax
  • Transfer tax
  • Capital duties
  • 0% Offshore Income Tax Rate
  • 0% Corporate Tax Rate
  • 20% Capital Gains Tax Rate
  • 10% Dividends Received
  • 10% Dividends Withholding Tax Rate
  • 15% Interests Withholding Tax Rate
  • 15% Royalties Withholding Tax Rate
  • 0 Losses carryback (years)
  • 5 Losses carryforward (years)
  • FIFOLIFO Inventory methods permitted
  • 262 Tax time (hours)
  • 21 Tax payments per year
  • 5% Social Security Employee
  • 5% Social Security Employer
  • 35% Personal Income Tax Rate
  • 7% VAT Rate
  • 45 Tax Treaties

Country details

Thailand
THB
Bangkok
Asia
t h , e n
67089500

The Kingdom of Thailand, formerly known as the Kingdom of Siam, is a Southeast Asian country and a member of ASEAN. It is located to the north of the Southeast Asia subregion, bordering east with Laos, through the Mekong River, southeast with Cambodia and Gulf of Thailand, south with Malaysia and west with the Andaman Sea and Myanmar (Burma).

It is inhabited by 68 million people, of which more than a half live in rural areas. Its capital and most populated city is Bangkok (also known as Krung Thep Mahanakon), with over 8 million inhabitants, and 14.5 million including the whole metropolitan area.

Its official language is Thai, although there are several regional languages and dialects. Its official currency is the Thai Baht (THB).

Thailand is the second-largest economy in Southeast Asia, after Indonesia, and the fourth in terms of per capita income, after Singapore, Brunei and Malaysia. The country has a diversified economy, driven by its industry and services, and heavily dependent on exports. Thailand has deposits of natural resources such as gypsum, lead, natural gas, rubber, tin and tungsten.

The services sector plays an important role on its economy, accounting half of its GDP, and mainly comprised by retail, financial and banking services, and tourism, which with over 32 million visitors in 2016, accounted for 17.7 per cent of its GDP.

Its industrial sector, focused on exports, is mainly comprised by the automotive, electronics, electrical appliances and garment industries.

Regarding the primary sector, although it accounts about 10 per cent of its GDP, it is still employing more than a third part of its labor force. Its main crop is rice, being the second largest rice exporter worldwide. Other agricultural products that are produced in significant quantities are tapioca, rubber, cereals, sugar and some tropical fruits such as pineapple. Thailand is also one of the top seafood exporters worldwide.

Tax treaties

Country Type Date Signed
Czech Republic DTC  1994-02-12
South Africa DTC  1996-02-12
Belgium DTC  1978-10-16
Poland DTC  1978-12-08
Canada DTC  1984-04-11
Philippines DTC  2013-06-21
Mauritius DTC  1997-10-01
Ireland DTC  2013-11-05
Chile DTC  2006-09-08
Israel DTC  1996-01-22
Russian Federation DTC  1999-09-23
Austria DTC  1985-05-08
Slovenia DTC  2003-07-11
Italy DTC  1977-12-22
United Arab Emirates DTC  2000-03-01
United Kingdom DTC  1981-02-18
Denmark DTC  1998-02-23
Switzerland DTC  1996-02-12
France DTC  1974-12-27
Pakistan DTC  1980-08-14
Estonia DTC  2012-10-25
China DTC  1986-10-27
Japan DTC  1990-04-07
Turkey DTC  2002-04-11
Luxembourg DTC  1996-05-06
Malaysia DTC  1982-03-29
Ukraine DTC  2004-03-10
Hong Kong, China DTC  2005-09-07
Netherlands DTC  1975-11-09
Seychelles DTC  2001-04-26
Indonesia DTC  2001-06-15
Finland DTC  1985-04-25
Sweden DTC  1988-10-19
United States DTC  1996-11-26
Spain DTC  1997-10-14
Hungary DTC  1989-05-18
Cyprus DTC  1998-10-27
New Zealand DTC  1998-10-22
Singapore DTC  1975-09-15
Australia DTC  1989-08-31
Norway DTC  2003-07-30
Korea, Republic of DTC  2006-11-16
Romania DTC  1996-06-26
Germany DTC  1967-07-10
India DTC  1985-03-22

Tax treaties Map

>

Services

We can help you incorporate a Board of Investment Promoted Company (Private company limited by shares) in Thailand.
Please, contact us to request a free, no obligation consultation.

Disclaimer

Although we use our best efforts to keep the information of this site accurate and up-to-date, we make no representations or warranties with respect to the accuracy, applicability, fitness, or completeness of the contents of this website. We disclaim any warranties expressed or implied, merchantability, or fitness for any particular purpose. We shall in no event be held liable for any loss or other damages, including but not limited to special, incidental, consequential, or other damages. The contents of this website are just for illustrative purposes and are NOT to be considered as a legal opinion or tax advice and should not be relied upon as such. Far Horizon Capital Inc., and any associated company, is not engaged in the practice of law or tax. If you wish to receive a legal opinion or tax advice on the matter(s) in this website please contact our offices and we will refer you to an appropriate legal practitioner. Use of our websites FlagTheory.com, Incorporations.io, Residencies.io, Passports.io, is subject to our terms and conditions.

Flag Theory Weekly Letter

Subscribe to receive Internationalization, Business-driven Structuring Intelligence directly to your inbox. You will also get the Flag Theory Master Course, a 1-month course with valuable and actionable information that you must consider when going global.

Your privacy is important for us and we will keep your information secure. View our privacy policy

View past newsletters

Consultation

In order to better serve you, we ask that you please fill out the following form as accurately as you can and provide as many details as possible. Thank you.

Your privacy is important for us and we will keep your information secure. View our privacy policy