Introduction Of Thai Company Investment

The reason why Thailand can successfully attract a large number of foreign investment companies to invest here is not only the investment preferential policies issued by the Thai Investment Promotion Board (BOI), but also the first-class infrastructure construction, which is in line with a series of clear Effective policies are inseparable. 

Thai company investment profile

  • The geographical environment is located in the central part of the Indochina Peninsula. It is bordered by Cambodia in the southeast, Malaysia in the south, Myanmar in the west, Laos in the northeast, and Siam in the north. The land area is 513,120 square kilometers.
  • Thailand’s economic development policy direction. Since the financial crisis, Thailand has recognized the importance of establishing an industrial foundation and encouraged the development of SMEs to meet its future economic development needs. In the future, our company will invest in more developed and competitive industries in Thailand, such as food processing and related packaging industry, auto parts industry, electronic parts industry, and information software industry.
  • You can also consider the investment and manufacturing industry and services encouraged in Thailand. industry. The National Economic and Social Commission of Thailand proposed the “Vision 2020” plan as a strategic goal for the country’s long-term development. It intends to change the economic growth path of attracting foreign investment with dense and low-cost labor in the past. The changing trend of the environment, adjusting the industrial structure, providing potentially huge business opportunities for the food industry, medical equipment, machinery industry, automobile industry, tourism industry, textile industry, and rubber industry, etc. It is a huge advantage for investors who intend to enter the Thai market. In addition, Thailand has stepped up the promotion of investment in creative industries by cooperating with four major industries, including cultural heritage and cuisine, arts and performing arts, music and digital content, and design, which are currently included in the creative economy.
    1.Capital and important cities Bangkok, Chiang Mai, Chiang Rai, Hat Yai, etc.
    2.The top five industries with the highest output value are the automobile industry, computer electronics industry, jewelry industry, rubber industry, and plastic chemical industry.
    3.Automatic data processing machines and spare parts for main export products, integrated circuits, rubber, rice, automobiles and components, precious metal products, air-conditioning equipment, precious stones and jewelry, aquatic products and meat products, petrochemical products, motor vehicles, Ready-to-wear, etc.
    4.The main imported products are crude oil and its products, integrated circuits, gold, steel products, computer components, fish products, electrical equipment and components, diamonds, printed circuits, metal products, and plastic products.

Excellent infrastructure in Thailand

  • In recent years, the reason why Thailand has successfully attracted a large number of foreign investment companies to invest here is not only the investment incentives issued by the BOI but also the first-class infrastructure construction. A series of clear and efficient policies are inseparable. To further reduce logistics costs and play its role as the hub of the ASEAN Economic Community (AEC), the Thai government will continue to improve and build many new large-scale infrastructure projects. Among them, it can be seen from Bangkok’s overall transportation system, port expansion operations, and road and railway projects that Thailand’s modern infrastructure is undergoing rapid development. In addition, in the water resources management and infrastructure construction projects from 2013 to 2020, the government invested more than $ 80 billion; the major infrastructure development projects include: upgrading the national railway system, developing a high-speed railway network, and improving the road network. , Expand Bangkok’s public transportation system, construct a new intercity highway, widen existing roads, and strive to achieve the repair of more than 200 highways and other related projects. Vigorously develop the transport facility project and multimodal transport facility project to better support interconnection with the ASEAN Economic Community (AEC) subregion.
  • Industrial area
    There are about 60 industrial zones in Thailand, which are developed and managed by the Thai Industrial Zones Authority (IEAT). Currently, of the 48 industrial zones in 15 provinces, 11 are directly managed by the Thai Industrial Zone Authority, and 37 are jointly operated by the Thai Industrial Zone Authority and private companies.

Preferential policies of the Thai Investment Promotion Board (BOI) 

The Thailand Investment Promotion Council has issued a series of preferential policies for foreign investment, as follows:

  1. Non-tax preferential policies
    -Land ownership in foreign enterprises.
    -Allow the introduction of foreign experts and technicians.
    -Depending on the factory location and industry category, up to 8 years of corporate income tax exemption.
    -Reduction of import duties on machinery and raw materials.
    -Additional preferential policies for the third zone.
    -After the income tax exemption expires, you can enjoy another 50% discount for five years.
    -Utility cost can be double deducted for 10 years.
    -Infrastructure construction and installation costs are deducted from net profit.
  2. Tax incentives
    -Depending on the location of the factory and industry category, up to 8 years of corporate income tax exemption.
    -Reduction of import duties on machinery and raw materials.
    -Additional preferential policies for the third zone.
    -After the income tax exemption expires, you can enjoy another 50% discount for five years.
    -Utility cost can be double deducted for 10 years.
    -Infrastructure construction and installation costs are deducted from net profit.

Civil and Commercial Code, Public Limited Company Act

  • Setting up a company in Thailand-There are three types of corporate organizations in Thailand: sole proprietorships, cooperative companies, and limited companies. The most common among foreign investors is a private limited company.
    -Public limited company: at least 15 promoters.
    -Private limited company: at least 7 promoters and 7 shareholders.
    -Representative Office: Engage in limited “non-trade” activities, such as providing resource goods or services in Thailand to the headquarters or inspecting and controlling the quantity and quality of goods sold by the company to Thailand.
    -A regional office of a multinational company can be established to assist and be directly responsible for branch operations in this area in accordance with instructions from the headquarters, but it cannot have business income and is not authorized to negotiate business with individuals and legal entities in Thailand. To apply for the establishment of a representative office or regional office, an application form must be submitted to the Commercial Registry.
  • Limited company:
    (1) The responsibilities of partners are limited, and they each take part of the partnership.
    (2) The partners are interconnected and assume all obligations without restriction. A limited liability company must be registered.
    -Limited companies require a minimum of 7 sponsors to draft a joint memorandum, organize a statutory meeting, register the company with the Department of Business Development and the Revenue Department, Ministry of Finance Apply for Company’s Tax ID Card / No.
    -Must comply with the relevant civil and commercial accounting procedures. Each year, you need to make a capital balance sheet to the Commercial Registration Department and the Taxation Bureau.In addition, the company is required to pay the salary income tax of fixed employees. The Ministry of Industry is responsible for implementing the Factory Law, managing the establishment, operation of factories, production safety, and pollution control. In some cases, factories do not need to apply for licenses, some factories only need to notify the relevant departments before starting work, others need to apply for licenses before starting work. The license is valid for 5 years and can be renewed upon expiry.
    -Three types of intellectual property rights recognized by Thailand: patents, trademarks, and copyrights. The patent law protects inventions, product designs, and pharmaceutical products; copyright law protects literary and artistic works. All copying and publishing use without the consent of author are considered illegal.
  • The registration process for setting up a company in Thailand:
    (1) Draft a joint memorandum: prepare a memorandum and submit it to the company registry of the Ministry of Commerce. The memorandum should include the company’s name and address, business scope and total capital. Capital should include the number of shares and the price per share. In addition, detailed information and the number of shares held by no less than seven sponsors are required. There is no minimum amount of funds, and the amount of funds depends on the development of the enterprise. A handling fee of 50 baht is paid for every 100,000 baht of registered capital. The minimum handling fee is 500 baht; the highest handling fee is 25,000 baht.
    (2) Convene a statutory meeting: Once the shareholder structure has been established, a statutory meeting needs to be held. At least 25% of the shares need to be in place.
    (3) Registration: Within 3 months of convening the statutory meeting, the person in charge must submit an application for the establishment of the company. The company registration fee is 500 BAHT per 100,000 BAHT of registered capital.
    (4) Tax registration: The company should pay income tax. You need to collect the company income tax identification card and number at the tax department within 60 days of the company’s establishment or when the company opens.
    -The minimum capital for the establishment of a company in Thailand: if it belongs to an industry permitted by the Foreign Business Law, the foreign equity exceeds 51%, and the minimum capital is an average of 3 years of annual operating expenses of 25% or not less than 3 million baht. Otherwise, for industries that are not regulated by foreign laws, the minimum capital is at least 2 million baht; if foreign employees are to be hired, there are other minimum capital requirements.
    -There should be at least one employee who must apply to the Social Security Office to register an employer account.
    -Alien Occupation Law stipulates that all foreigners working in Thailand should first obtain a work permit. If the project is approved by the Investment Promotion Committee, their foreign employees can apply for it within 30 days and allow It works during the work permit process.

The Main Related Acts

  1. Foreign Business Act.
  2. Civil and Commercial Code (related to company form, organization and application for registration).
  3. Regulations on the occupational control of foreigners (provisions for applying for work permits for foreigners).
  4. Factory Act (Acquisition of Factory License, Construction or Expansion).
  5. Labor Protection Law (employment regulations).
  6. Property Law (Acquisition of Property).
  7. Investment Promotion Act
  8. Tax law (management of various tax bases).
  9. Social Security Act.

The basic tax system for establishing a company in Thailand

  • 1.Corporate income tax:
    A company established under the Thai Company Law is taxed on the income (net benefit) derived from within and outside of Thailand. The tax grades are as follows.
    (1) General company-registered capital of 50,000 baht or more: 20%.
    (2) Small companies-registered capital below 50,000 baht: a. Net profit of 150,000 to 1 million baht: 15%; b. Net profit of 1 million to 3 million baht: 20%.
  • 2.Personal income tax:
THB Tax Rate
0 – 150,000 0%
150,001 – 500,000 10%
500,001 – 1,000,000 20%
1,000,001 – 4,000,000 30%
Over 4,000,001 37%
  • 3.With the sale of various goods and services, the tax rate is 7%.
  • 4.Tariffs: Customs duties are levied on a specific or ad valorem basis.
  • 5.Stamp duty:
  • 6.Dividend income tax: the tax rate is 10%.
  • 7.Bank interest withholding tax:
    A. For individuals: 15%;
    B. For companies: 1%;
    C. For foundations: 10%.
  • 8.Goods tax.
  • 9.Countries/regions with bilateral taxation treaties signed by Thailand: 55 countries in total(Armenia, Australia, Austria, Bahrein, Bangladesh, Belgium, Bulgaria, Canada, China, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Hong Kong, Hungary, India, Indonesia, Israel, Italy, Japan, Korea, Kuwait, Laos, Luxembourg, Malaysia, Mauritius, Myanmar, Nepal, the Netherlands, New Zealand, Norway, Pakistan, the Philippines, Poland, Romania, Russian, Seychelles, Singapore, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Turkey, Ukraine, United Arab Emirates, United Kingdom of Great Britain and Northern Ireland, United States, Uzbekistan, and Vietnam.)

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