Investing in Thailand

FDI Profile Thailand
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Manoj Mehta & Co. Chartered Accountants. India. Tel: (91-22) 22005454. Email: mail@manojmehta.com 1

Section I General Profile

Political Background
A unified Thai kingdom was established in the mid-14th
century. Known as Siam until 1939, Thailand is the only
Southeast Asian country never to have been taken over by a
European power. A bloodless revolution in 1932 led to a
constitutional monarchy. In alliance with J apan during World
War II, Thailand became a US treaty ally following the conflict.
A military coup in September 2006 ousted then Prime Minister
Thaksin Chinnawat.

The anti-Thaksin People's Alliance for Democracy (PAD) in
May 2008 began street demonstrations against the new
government and ended their protests in early December 2008
following a court ruling that dissolved the ruling PPP and two
other coalition parties for election violations. The Democrat
Party then formed a new coalition government and Abhisit
Wetchachiwa became prime minister. In October 2008 Thaksin
supporters re-organized into the United Front for Democracy
Against Dictatorship (UDD) and rioted in April 2009, shutting
down an ASEAN meeting in Phuket, and in early 2010
protested a court verdict confiscating most of Thaksin's wealth.
Since J anuary 2004, thousands have been killed as separatists
in Thailand's southern ethnic Malay-Muslim provinces
increased the violence associated with their cause.

Country name conventional long form: Kingdom of Thailand
conventional short form: Thailand
former: Siam
Government type constitutional monarchy
Capital Bangkok
Population, religion,
language
Total: 67,089,500 (33% Urban) (Sex Ratio: 1.054 male(s)/female)
Ethnic groups: Thai 75%, Chinese 14%, other 11%
Religions: Buddhist 94.6%, Muslim 4.6%, Christian 0.7%, other 0.1%
Languages: Thai, English (secondary language of the elite), ethnic and regional dialects
Age structure
(2010 est.)
0-14 years: 20.8% (male 7,013,877/female 6,690,554)
15-64 years: 70.5% (male 23,000,156/female 23,519,298)
65 years and over: 8.7% (male 2,612,269/female 3,162,282)
Median age: total: 34 years male: 33.2 years female: 34.8 years
National holiday Birthday of King PHUMIPHON, 5 December (1927)
Suffrage 18 years of age; universal and compulsory
Location Southeastern Asia, bordering the Andaman Sea and the Gulf of Thailand, southeast of
Burma
Geographic
coordinates
15 00 N, 100 00 E
Map references Southeast Asia
Area total: 514,000 sq km
water: 2,230 sq km
land: 511,770 sq km

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Land boundaries total: 4,863 km
border countries: Burma 1800 km, Cambodia 803 km, Laos 1754 km, Malaysia 506 km
Coastline 3,219 km
Climate tropical; rainy, warm, cloudy southwest monsoon (mid-May to September); dry, cool
northeast monsoon (November to mid-March); southern isthmus always hot and humid
Terrain central plain; Khorat Plateau in the east; mountains elsewhere
Elevation extremes lowest point: Gulf of Thailand 0 m
highest point: Doi Inthanon 2,576 m
Natural resources tin, rubber, natural gas, tungsten, timber, lead, fish, gypsum, lignite, fluorite, arable land
Land use arable land: 27.54%
permanent crops: 6.93%
other: 65.53% (2005)
Administrative
divisions
76 provinces (changwat, singular and plural); Amnat Charoen, Ang Thong, Buriram,
Chachoengsao, Chai Nat, Chaiyaphum, Chanthaburi, Chiang Mai, Chiang Rai, Chon
Buri, Chumphon, Kalasin, Kamphaeng Phet, Kanchanaburi, Khon Kaen, Krabi, Krung
Thep Mahanakhon (Bangkok), Lampang, Lamphun, Loei, Lop Buri, Mae Hong Son,
Maha Sarakham, Mukdahan, Nakhon Nayok, Nakhon Pathom, Nakhon Phanom,
Nakhon Ratchasima, Nakhon Sawan, Nakhon Si Thammarat, Nan, Narathiwat, Nong
Bua Lamphu, Nong Khai, Nonthaburi, Pathum Thani, Pattani, Phangnga, Phatthalung,
Phayao, Phetchabun, Phetchaburi, Phichit, Phitsanulok, Phra Nakhon Si Ayutthaya,
Phrae, Phuket, Prachin Buri, Prachuap Khiri Khan, Ranong, Ratchaburi, Rayong, Roi
Et, Sa Kaeo, Sakon Nakhon, Samut Prakan, Samut Sakhon, Samut Songkhram, Sara
Buri, Satun, Sing Buri, Sisaket, Songkhla, Sukhothai, Suphan Buri, Surat Thani, Surin,
Tak, Trang, Trat, Ubon Ratchathani, Udon Thani, Uthai Thani, Uttaradit, Yala, Yasothon
GDP
(data are in 2009 US
dollars)
$538.6 billion (2009 est.)
$554.1 billion (2008 est.)
$540.6 billion (2007 est.)
GDP - real growth
rate
-2.8% (2009 est.)
2.5% (2008 est.)
4.9% (2007 est.)
GDP - per capita $8,100 (2009 est.)
$8,300 (2007 est.)
GDP - composition
by sector
agriculture: 11.6%
industry: 43.3%
services: 45.1%
Labor force - by
occupation
agriculture: 42.4%
industry: 19.7%
services: 37.9% (2008 est.)
Economy With a well-developed infrastructure, a free-enterprise economy, generally pro-
investment policies, and strong export industries, Thailand enjoyed solid growth from
2000 to 2008 - averaging more than 4% per year - as it recovered from the Asian
financial crisis of 1997-98. Thai exports - mostly machinery and electronic components,
agricultural commodities, and jewelry - continue to drive the economy, accounting for
more than half of GDP. The global financial c risis of 2008-09 severely cut Thailand's
exports, with most sectors experiencing double-digit drops. In 2009, the economy
contracted 2.8%. The Thai government is focusing on financing domestic infrastructure
projects and stimulus programs to revive the economy, as external trade is still
recovering and persistent internal political tension and investment disputes threaten to
damage the investment climate.

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Industries tourism, textiles and garments, agricultural processing, beverages, tobacco, cement,
light manufacturing such as jewelry and electric appliances, computers and parts,
integrated circuits, furniture, plastics, automobiles and automotive parts; world's
second-largest tungsten producer and third-largest tin producer
Agriculture products rice, cassava (tapioca), rubber, corn, sugarcane, coconuts, soybeans
Exports $154.2 billion (2009 est.)
Exports -
commodities
textiles and footwear, fishery products, rice, rubber, jewelry, automobiles, computers
and electrical appliances
Exports - partners US 10.9%, China 10.6%, J apan 10.3%, Hong Kong 6.2%, Australia 5.6%, Malaysia 5%
(2009 est.)
Imports $119 billion (2009 est.)
Imports commodities capital goods, intermediate goods and raw materials, consumer goods, fuels
Imports - partners J apan 18.7%, China 12.7%, Malaysia 6.4%, US 6.3%, UAE 5%, Singapore 4.3%, South
Korea 4.1% (2009 est.)
Currency baht (THB)
Currency code THB
Exchange rates baht per US $ - 34.31 (2009), 33.37 (2008), 34.52 (2007), 37.88 (2006), 40.22 (2005)
Fiscal year 1 October - 30 September
Legal System based on civil law system with influences of common law; has not accepted compulsory
ICJ jurisdiction
Political parties Chat Thai Phattana Party or CP (Thai Nation Development Party) [CHUMPON Silpa-
archa]; Democrat Party or DP (Prachathipat Party) [ABHISIT Wetchachiwa, also spelled
ABHISIT Vejjajiva]; Motherland Party (Phuea Phaendin Party) [CHANCHAI
Chairungrueng]; Phuea Thai Party (For Thais Party) or PTP [YONGYUTH Wichaidit];
Phumjai (Bhumjai) Thai Party or PJ T (Thai Pride) [CHAWARAT Chanvirakun]; Royalist
People's Party (Pracharaj) [SANOH Thienthong]; Ruam J ai Thai Party (Thai Unity
Party) [WANNARAT Channukun]
Capital Market Market Capitalisation of publicly traded securities $142.2 billion (31 December 2009)
Energy
(2008-09 est.)
Electricity production: 148.2 billion kWh
Electricity consumption: 134.4 billion kWh
Oil production: 340,900 bbl/day
Oil consumption: 923,000 bbl/day
Natural gas production: 28.76 billion cu m
Natural gas consumption: 37.31 billion cu m
Debt & Reserves
(2009)
Reserves of foreign exchange and gold: $138.4 billion
Debt - external: $66.3 billion
Foreign Direct
Investments
Stock of direct foreign investment - Inbound: $93.84 billion
Stock of direct foreign investment - Outbound: $10.52 billion
Telecommuni-
cations
Telephone system: high quality system, especially in urban areas like Bangkok;
domestic: fixed line system provided by both a government owned and commercial
provider; wireless service expanding rapidly and outpacing fixed lines;
international: country code - 66; connected to major submarine cable systems providing
links throughout Asia, Australia, Middle East, Europe, and US; satellite earth stations
2 Intelsat (1 Indian Ocean, 1 Pacific Ocean)

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Broadcast media 6 terrestrial TV stations in Bangkok broadcast nationally via relay stations - 2 of the
networks are owned by the military, the other 4 are government-owned or controlled,
leased to private enterprise, and are all required to broadcast government-produced
news programs twice a day; multi-channel satellite and cable TV subscription services
are available; radio frequencies have been allotted for more than 500 government and
commercial radio stations; many small community radio stations operate with low-power
transmitters (2008)
Internet Internet country code: .th
Internet hosts: 1.335 million (2010)
Internet users: 16.1 million (2008)
Transport Airports: 105
Heliports: 4
Pipelines: gas 1,348 km; refined products 323 km
Railways: total: 4,071 km
Roadways: total: 180,053 km (includes 450 km of expressways)
Waterways: 4,000 km
Ports and terminals: Bangkok, Laem Chabang, Map Ta Phut, Prachuap Port, Si Racha
Disputes -
international
separatist violence in Thailand's predominantly Muslim southern provinces prompt
border closures and controls with Malaysia to stem terrorist activities; Southeast Asian
states have enhanced border surveillance to check the spread of avian flu; talks
continue on completion of demarcation with Laos but disputes remain over several
islands in the Mekong River; despite continuing border committee talks, Thailand must
deal with Karen and other ethnic rebels, refugees, and illegal cross-border activities,
and as of 2006, over 116,000 Karen, Hmong, and other refugees and asylum seekers
from Burma; Cambodia
and Thailand dispute sections of historic boundary with missing boundary markers;
Cambodia claims Thai encroachments into Cambodian territory

Investment Climate

Foreign Investment
Foreigners in Thailand derive their legal rights primarily from the domestic laws of Thailand. In general,
foreigners enjoy the same basic rights as Thai nationals. Restrictions on foreign ownership in commercial
banks, insurance companies, commercial fishing, aviation businesses, commercial transportation, commodity
export, mining and other enterprises exist under various laws. In addition, Thai participation will frequently be
required in those activities seeking permission from the BOI.

The Foreign Business Act
The Foreign Business Act of 1999, which became effective on March 4, 2000, repeals and replaces the 1972
National Executive Council Announcement 281, better known as the Alien Business Law. The Act serves to
define an "alien," and identifies the scope of foreign participation in business in Thailand.
An "alien" is defined as:
A natural person who is not of Thai nationality;
A juristic entity that is not registered in Thailand;
A juristic entity incorporated in Thailand with foreign shareholding accounting for one-half or more of the
total number or value of shares;
A limited partnership or ordinary registered partnership whose managing partner or manager is a
foreigner.

Businesses Subject to Regulation
Businesses that initiate activities that fall under Lists 1, 2, or 3 of the Foreign Business Act (listed below) are
subject to the limitations imposed by the Act.

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Activities that fall under List 1 are strictly prohibited to aliens. Businesses that are covered by List 2 are
prohibited to aliens unless specific permission is granted by the Commerce Ministry, by and with an
appropriate Cabinet resolution. Alien juristic entities allowed to engage in List 2 activities must meet the
following two conditions:
At least 40 percent of all shares are held by Thai persons or non-alien juristic entities (This may be
reduced to 25 percent on a case-by-case basis);
Two-fifths of the members of the Board of Directors are Thai.

Activities in List 3 are prohibited to aliens unless permission is granted by the Director General of the
Department of Commercial Registration, Ministry of Commerce, by and with the approval of the Foreign
Business Board.

An alien can engage in businesses in Lists 2 or 3 if he is a promoted investor in accordance with either the
Investment Promotion Act, the Industrial Estate Authority of Thailand Act, or other laws.

List 1 - Businesses in which alien participation is not permitted
Newspaper undertakings and radio and television station undertakings
Lowland farming, upland farming, or horticulture
Raising animals
Forestry and timber conversions from natural forests
Fishing for aquatic animals in Thai waters and Thailand's Exclusive Economic Zone
Extraction of Thai medical herbs
Trade in and auctioning of Thai ancient objects or ancient objects of national historical value
Making or casting Buddha images and making monk's bowls
Dealing in land

List 2 - Businesses concerning national security or safety with an adverse effect on art and culture, customs,
or native manufacture/handicrafts, or with an impact on natural resources and the environment.
Production, disposal, sale, and overhead of:
Firearms, ammunition, gunpowder, and explosives;
Components of firearms, gunpowder, and explosives;
Armaments and military vessels, aircraft, or conveyances;
All kinds of war equipment or their components.
Domestic transport by land, water, or air, inclusive of the undertaking of domestic aviation
Dealing in antiques or objects of art and works of art, and Thai handicrafts
Production of wood carvings
Raising silkworms, producing Thai silk thread and weaving, or printing patterns on Thai silk textiles
Production of Thai musical instruments
Production of articles of gold or silver, nielloware, nickel-bronze ware, or lacquerware
Production of crockery and terra cotta ware that is Thai art or culture
Production of sugar from sugarcane
Salt farming inclusive of making salt from salty earth
Making rock salt
Mining, inclusive of stone blasting or crushing
Timber conversions to make furniture and articles of wood

List 3 - Businesses in which Thais are not ready to compete in undertakings with aliens
Rice milling and production of flour from rice and farm crops
Fishery, limited to propagation of aquatic animals
Forestry from replanted forests
Production of plywood, wood veneer, chipboard, or hardboard
Production of natural lime
Accounting service undertakings
Legal service undertakings
Architectural service undertakings
Engineering service undertakings

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Construction, except construction of things that provide basic services, both to the public with respect to
public utilities or communications and which require the use of special instruments, machinery, technology
or expertise in construction and a minimum capital of the alien of at least 500 million baht
Brokerage or agency undertakings, except:
Trading in securities or services concerning futures trading in agricultural commodities, financial
instruments, or securities;
Trading in or the procurement of goods or services needed for production by, or providing the services
of, an enterprise in the same group;
Trading, purchasing (for others) or distributing or finding domestic or overseas markets for selling
goods made domestically or imports as an international trading business, with a minimum capital of
the alien of at least 100 million baht;
Other lines of business stipulated in Ministerial Regulations
Auctioning, except:
International bidding that is not bidding in antiques, ancient objects or objects of Thai works of art,
handicraft or ancient objects, or of national historical value;
Other types of auction, as stipulated in Ministerial Regulations.
Domestic trade concerning indigenous agricultural produce or products not prohibited by any present law
Retail trade in all kinds of goods with an aggregated minimum capital of less than 100 million baht or a
minimum capital for each store of less than 20 million baht
Wholesale trade in all kinds of goods with a minimum capital for each store of less than 100 million baht
Advertising undertakings
Hotel undertakings, except for hotel management services
Tourism
Sale of food or beverages
Plant breeding and propagation, or plant improvement undertakings
Doing other service businesses except for service businesses prescribed in Ministerial Regulations.

Many American-owned enterprises have invoked the provisions of the Treaty of Amity and Economic
Relations between Thailand and the United States to claim exemption from the Law. The treaty requires
national treatment be granted to persons of each country by the other country. To receive protection,
Americans must register under the Treaty.

Miscellaneous Issues
An alien must invest at least two or three million baht in his business, depending on the kind of business,
however the minimum capital requirement will not be enforced for re-investment.

Under the Foreign Business Act, the Foreign Business Board will review the business listed at least once a
year, and present it to the Commerce Minister. The Commerce Minister, by the recommendation of the
Foreign Business Board, is empowered to issue Ministerial Regulations. Significantly, the Ministerial
Regulations of service businesses must absolutely be considered by the Foreign Business Board. Aliens also
can do business with respect to the businesses described in List 2 or List 3, in accordance with other laws,
such as Investment Promotion Act, Industrial Estate Authority of Thailand Act, etc., and then notify and
procure a Certificate from the Director-General.

Penalty Provisions
Under the new penalty provision, the range of the fine has increased from baht 30,000 to 500,000 to baht
100,000 to 1,000,000, and increased imprisonment of no more than three years. The imprisonment measure
serves to settle or decrease any contravention. If any alien who obtains an Alien Business License under the
act (a) jointly does a business which belongs to another alien not permitted to do a business under this Act, or
(b) does a business of which such other alien is a co-owner by expressing that such business solely belongs
to itself, so as to allow such other alien to evade or violate the provisions of this Act, shall be liable to
imprisonment for a term not exceeding three years or to a fine from baht 100,000 to baht 1,000,000, or both,
and the cessation of such business or such joint business upon court order.

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Aliens that engage in regulated businesses by permission of the Thai Government for a definite duration, or
under protection of a treaty to which Thailand is a signatory or abides by the obligations thereof, are exempt
from certain requirements under the Act, including permission to engage in the prohibited or restricted
businesses and Thai shareholding and directorship requirements. Such aliens must first notify and procure a
Certificate from the Director-General.

The Act has provided a transition provision. Aliens that have already been permitted to engage in the
business under the Foreign Business Act are entitled to continue the business operation in accordance with
the conditions and duration of that permission. Aliens that have been engaging in businesses that are
specified in the business categories of the Act, but were not previously specified in the business categories of
the Foreign Business Act and which intend to continue such businesses, must notify and procure a Certificate
from the Director-General within one year.

Licenses
A foreigner wishing to engage in any business in Lists Two and Three must submit an application to the
Minister of Commerce for the operation of the business in List Two and the Director General of the
Commercial Registration Department for List Three.

The Cabinet in the case of List Two businesses and the Director General in the case of List Three businesses
review and make a decision within 60 days of the application filing date.

The Cabinet may postpone making a decision for another 60 days at most. Once the Cabinet or the Director
General approve the application, the Ministry of Commerce or the Director General shall issue a license to the
applicant within 15 days of the approval date. If the Cabinet or the Director General do not approve the List
Two license application, the Minster must give a written notification to the applicant within 30 days clearly
specifying the reason for the disapproval. Likewise, the Director General in the case of List Three license
applications must do the same, but within 15 days. In the latter case, the applicant may file an appeal with the
Minister, who is required to respond within 30 days. His decision is final.

Although the licenses have a perpetual life, they will be automatically invalid when the licensees stop doing
the licensed business. The licenses must be displayed in a prominent place on the business premises.

The Minister by a recommendation of the Committee may revoke the licenses or certificates if the licensees or
certificate holders:
Do not comply with the conditions the Thai Government, treaties or the Minister impose on them.
Do not meet the Thai participation ratio requirements.
Fail to maintain the licensee qualification.
Engage in other businesses or assist other foreigners in doing business with a view to violating the
Foreign Business Act.

The Director General will give a warning letter to the violators ordering them to comply with the conditions
within a reasonable time. If the violation persists, the Director General has the power to suspend the licenses
for a reasonable period, but not exceeding 60 days. The licenses can be revoked if the violation persists after
the initial suspension period ends.

The violators may file an appeal against the suspension or revocation with the Minister within 30 days of the
date on which they receive the order. The appeal will not stay the enforcement of the order unless the Minister
relaxes the suspension or revocation. The Minister is required to review the appeal and make a decision
within 30 days. His decision is final.

Bangkok International Banking Facility
The Ministry of Finance and the Bank of Thailand have established rules and conditions for commercial banks
to establish international banking facilities in Thailand. The annual fee for participants is 500,000 baht.

A commercial bank that receives a license will be able to undertake international banking facilities (IBF)
business for :

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Offshore Lending
Accepting deposits or borrowing from abroad in foreign currencies from foreign natural or juristic persons
who have no establishment in or business with Thailand. An exception is made for receiving money from
foreign banks that have a branch or representative office in Thailand, from foreign branches of Thai
commercial banks, and from the Ministry of Finance, the Bank of Thailand, or the Exchange Equalization
Funds. These foreign currencies may be lent abroad, to other IBF businesses, and to the Ministry of
Finance, the Bank of Thailand and the Exchange Equalization Funds.

Acceptance of deposits or borrowing of offshore baht funds from offshore banks, foreign branches of
Thai commercial banks and other IBF. These funds may be lent to foreign banks, foreign branches of
Thai commercial banks, or other IBF businesses.

Local Lending
Acceptance of deposits, or borrowing from abroad in foreign currencies from foreign natural or juristic
persons who have no establishment in or business with Thailand, foreign branches of Thai commercial
banks, and other IBFs to lend foreign currencies in Thailand. However, each withdrawal and
disbursement must be of an amount not less than US$2,000,000 except in one of the following two
cases, where the minimum disbursement is US$500,000:
An exporter who has income from export in excess of 50 percent of all income during the last
accounting period
An exporter who has goods and services that are sold to an exporter who meets the above-specified
condition.

Other Related Business
Cross-currency transactions with overseas customers, other IBF businesses, the Bank of Thailand, the
Ministry of Finance, the Foreign Equalization Funds, banks licensed under the foreign exchange control
laws, or local customers to whom such IBF businesses have lent foreign currencies

Giving acceptance or guarantee against any debts in foreign currencies when either:
- The bank is licensed under the foreign exchange control laws; or
- The parties involved reside outside of Thailand.
All matters dealing with letters of credit in cases where the buyer and the seller of goods involved with the
letter of credit purchasing agreement both reside abroad and the goods involved in the agreement have not
been either exported out of or imported into Thailand.

Procuring, or managing the loan syndication procurement of, foreign currency loans from foreign sources to
those requiring loans in foreign currencies.

Other Unrelated Business
Commercial banks licensed to undertake IBF businesses may also:
Provide news, financial and general economic information
Prepare or analyze investment projects
Advise in the purchase, merger or amalgamation of businesses
Give financial advice; and
Arrange or underwrite debt instruments issued for sale abroad. If the debt instruments are issued
from Thailand, this must be undertaken in conjunction with the IBF business of a commercial bank
registered in Thailand.
However, these activities must be separated from the accounts of the IBF business - as if the commercial
bank were a separate juristic person.

Conditions for Participating in BIBF
The Bank of Thailand stipulates that the IBF must be separate from other banking business as if it were a
separate juristic person. In addition, the IBF business in offshore lending must be separate from the IBF
business in local lending, and the IBF business in local lending cannot transfer or raise funds to the IBF for
offshore accounts. Customers of IBF are required to provide their actual names, addresses, and information
for correspondence, and the names on the accounts must be the actual names of customers.

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Incentives Under the Investment Promotion Act
Government Role
The Board of Investment (BOI) is the government agency responsible for administering incentives to
encourage private-sector investment in priority areas. The structure, role, and policies of the BOI today
basically follow the guidelines contained in the Investment Promotion Act.

The BOI is chaired by the Prime Minister and includes as members and advisors, key ministers and private-
sector representatives. The office of the BOI functions as the administrative arm of the Board. It is headed by
a secretary- general, and has eight divisions, four regional offices in Songkhla, Nakhon Ratchasima, Chieng
Mai and Chonburi, and six overseas offices in New York, Frankfurt, Tokyo, Osaka, Paris and Sydney.

Foreign Equity Participation Rules
The BOI uses the following criteria in considering the extent of foreign equity participation allowed in a
promoted investment project:

Criteria
Maximum Foreign Equity
Participation
1. Projects in primary production, mining or service sectors. (If the
project capital is more than Baht 1,000 million, there must be
majority Thai ownership by year 5)
49%
2. Manufacturing projects
- mainly for domestic distribution 49%
- mainly for domestic distribution and located in Zone III 100%
- at least 50% for export majority
- at least 80% for export 100%

Foreign ownership requirements for the following projects are considered on a case-by-case basis by the
responsible ministry:
Development of transportation systems
Public utilities
Environmental conservation and restoration
Direct involvement in technological development

Objectives of BOI
The BOI has a policy of giving special consideration to investment projects which:
1. Locate operations in provincial areas,
2. Establish or develop industries which form the base for further stages of industrial development,
3. Develop public utilities and basic infrastructure,
4. Conserve natural resources and reduce environmental problems,
5. Conserve energy or replace imported energy supplies,
6. Contribute to technological development, and
7. Strengthen significantly the balance of payments.

Promoted Company
The types of entities that may be promoted by the BOI and granted investment incentives are: a limited
company, a foundation, or a cooperative. Application for promotion may be submitted in accordance with the
rules, procedures, and forms prescribed by the BOI prior to the formation of the qualified promoted company.

Non-Tax Incentives for Promoted Companies
The following non-tax incentives may be granted to promoted companies:

Guarantees:
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Against nationalization.
Against competition of new state enterprises.
Against state monopolies.
Against price controls.
Against tax-free imports by the public sector.

Permission:
To own land.
To bring in foreign nationals to undertake investment feasibility studies.
To bring in foreign technicians and experts to work on the promoted project.

Protection Measures:
Imposition of a surcharge on competing imported products of up to 50% of CIF value for a period of one
year at a time.
Import ban on competing products.
Implementation of other tax relief measures as appropriate.

Investment Promotion Zones
In line with the national goals of decentralizing and spreading the benefits of development to the country's
provinces, the BOI has divided all provinces of Thailand into three investment zones. Investors who set up
their operations in provinces outside the central region of Thailand are entitled to a wider range of tax
incentives. The three investment zones are as follows:

Zone I:
Six (6) provinces, namely: Bangkok, Samut Prakan, Nakhon Pathom, Nontaburi, Pathum Thani, and Samut
Sakhon.

Zone II:
Ten (10) provinces, namely: Suphan Buri, Ayuthaya, Nakhon Nayok, Chachoengsao, Chonburi, Ratchburi,
Samut Songkram, Saraburi, Kanchanaburi, and Ang Thong.

Zone III:
All the remaining provinces, and Laem Chabang Industrial Estate in Chonburi Province.

Major Tax Incentives for Promoted Companies
The BOI grants two major types of tax incentives to promoted companies, namely:
1. Exemption or reductions of tariffs on imported machinery and equipment, as well as raw materials for the
promoted activity, and
2. Exemption from income tax on net profits and dividends.

The extent of these incentives varies according to the percentage of products exported and the location of the
promoted company.

Customs Duty Exemption
The general rules for granting import duty exemptions on the import of machinery and raw materials by
promoted companies are outlined in the table below.

Import Duty Reduction
Zone Machinery Raw Materials
I 50% (A) or (B) 100% (C)
II 50% 100% (C)
III 100% 75% (D) or 100% (E)

Conditions:
A. Not less than 80% of sales are for export and the machinery is subject to import duty of 10% or more.
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B. Located in an industrial estate or promoted industrial zone, and the machinery are subject to import duty
of 10% or more.
C. For a period of one year, and not less than 30% of sales are for export.
D. For a period of 5 years (reviewed annually) and the materials are not readily available in Thailand, not
including projects located in Laem Chabang Industrial Estate.
E. For a period of 5 years, and not less than 30% of sales are for export.

Income Tax Exemption
In general, the duration of income tax exemption granted to promoted companies depends on the project's
location and the amount of export sales. The period of tax exemption generally starts from the date of the first
sale. The exemptions are shown in the table below.

Years of Income Tax Exemption
Zone General Conditional Total
I 0 3 (A)+(B) 3
II 3 4 (B) 7
III 8 - 8

Conditions:
A. Exports not less than 80% of total sales.
B. Located in an industrial estate or promoted industrial zone.

Additional Fiscal Incentives
For Projects Located in Zone III
Promoted activities located in Investment Zone III may also be eligible for the following additional incentives:
1. Fifty percent (50%) reduction of income tax for 5 years after the exemption period.
2. Double deduction for income tax purposes on the costs of water supply, electricity, and freight for 10
years from the date of the first sale.
3. Additional 25%, deduction for income tax purposes of the costs of installation or construction of the
project's infrastructure facilities.

Priority Activities
The BOI have identified the following areas as priority activities:
Basic transportation systems,
Public utilities,
Environmental protection and/or restoration,
Direct involvement in technological development, and
Basic industries.

The priority activities may receive the following tax privileges:
Corporate income tax exemption for 8 years, regardless of location.
Fifty percent (50%) customs duty reduction on the import of machinery, otherwise subject to import duty of
10% or more for projects located in Zones I or II; 100% duty exemption for independent power producers
(IPP) awarded concessions by the Electricity Generating Authority of Thailand (EGAT), regardless of
project location.
Customs duty exemption on the import of machinery for projects located in Zone III.

Factory Relocation Incentives
The BOI has introduced incentives to encourage the relocation of existing factories, regardless of whether
they previously had BOI promotion, to the less developed regions of Thailand. The following general
conditions are imposed:
1. The new factory must comply with the same rules of eligibility for BOI promotion as discussed above for
new projects. However, the BOI may consider granting incentives even where this condition is not met.

2. For factories required to relocate by the Ministry of Industry for environmental reasons:
It must be relocated to an industrial estate or promoted industrial zone, and
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The existing factory must be closed and all machines moved and in operation in the new area within
two years.
3. For factories that move voluntarily:
The relocated factory must have at least 50 employees, and
The main machinery of the existing factory must be relocated and in operation within two years.

The fiscal incentives available are limited to exemptions for corporate income taxes. Factories relocated from
Zone I to Zone II are entitled to the same income tax exemptions as new Zone II projects discussed above.
Factories relocated from Zone I or II to Zone III are entitled to the same income tax exemptions as new Zone
III projects.

Application Procedures
All applications for promotional privileges under the Investment Promotion Act are filed in duplicate with the
BOI. The completed application forms will be passed to the Investment Promotion Division where an officer
may discuss the application with the designated representative of the applicant.

Once the application is approved, the BOI will inform the applicant of the privileges awarded and the
conditions for investment promotion. Within one month from the date of the notice of approval, the applicant
must confirm in writing to the BOI its acceptance of the investment promotion package, or otherwise seek any
changes in the conditions and /or privileges outlined.

The BOI will issue the Promotion Certificate to the applicant after receiving the following documents: evidence
of the registration of the promoted company; list of shareholders and their nationalities; copies of licensing
agreements and technology transfer contracts, if any; and a completed Promotion Certificate application form.

Thereafter, machinery and equipment must be imported within the period specified by the BOI. Normally, the
factory must be ready to commence operations within 30 months after the receipt of the Promotion Certificate.
The BOI must be informed in writing at least 15 days before the factory operations commence in order to
allow an officer to inspect the premises. An official permit to start operations will then be issued by the BOI.

Incentives Under the Industrial Estate Authority of Thailand Act
The Industrial Estate Authority of Thailand (IEAT) was established in 1972 as a government agency under the
Ministry of Industry and is responsible for industrial development and pollution control of industrial operations
by setting up "industrial estates." An industrial estate may also be set up in joint venture with private
developers. Industrial estates are divided into 2 zones according to the nature of the industries as follows:
1. General Industrial Zone (GIZ), an area designated for industrial and supporting operations.
2. Export Processing Zone (EPZ), an area designated for industrial and supporting operations for exports
exclusively.

Industrial operators locating their projects in GIZ or EPZ may be granted certain investment incentives without
having to apply for BOI promotion as follows:
1. Permission to own land in an industrial estate.
2. Permission to bring in foreign technicians and experts.

Moreover, industrial operators locating in the EPZ may be granted the following tax incentives:
Exemption from import duty, value added tax and excise tax on machinery and construction materials for
the factory.
Exemption from import duty value added tax and excise tax on raw materials used in production.
Exemption from export duty, value added tax and excise tax on products, by-products, and other
products derived from production in the export industrial zone if these are to be exported from Thailand.
Exemption or refund of taxes for any goods sent into the export industrial zone for manufacturing. Such
goods must be goods entitled to exemption or refund of taxes if they are exported from Thailand.

Incentives Under the Petroleum Laws
Governing Laws
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The Petroleum Act and the Petroleum Income Tax Act of Thailand enacted in 1971, together with various
amendments, grant special incentives to concessionaires engaged in petroleum survey, exploration, and
production.

This is consistent with the government's policy to develop Thailand's natural resources.

Qualification of Concession Applicant
The applicant for concessions must be a company with sufficient capital, machinery, equipment, and experts
to execute the survey, production, sale, and supply of petroleum.

Investment Incentives
The incentives extended to concessionaires under the Petroleum Act and the Petroleum Income Tax Act are:
Assurance that the state will not nationalize any private industrial activity.
Permission to own land required for its operations.
Freedom to export its products.
Permission to bring in alien experts and technical staff and their dependents, including those of its
contractors.
Exemption from tariffs on imported machinery, spare parts, and materials required for its business, or for
the use of its drilling and oil field service contractors.

Reporting Requirements
During the exploration period, the concessionaire is required to make periodic reports to the specific
government entities on the progress of work, including a statement of expenditures. During the survey and
exploration period, a concessionaire is not required to submit an income tax return to the Revenue
Department. The first accounting period, for income tax purposes, starts from the date production starts.

Taxation in Thailand

Corporate Income Tax
Corporate Income Tax (CIT) is a direct tax levied on a juristic company or partnership that is established
under Thai or foreign law and carries on business in Thailand or derives certain types of income from
Thailand.

The term juristic company or partnership (hereinafter called company) means a limited company, a limited
partnership, or a registered ordinary partnership incorporated under Thai or foreign law as well as an
association or foundation engaged in revenue producing business. The term also includes any joint venture
and any trading or profit-seeking activity carried on by a foreign government or its agencies or by any other
juristic body incorporated under a foreign law.

Taxable Persons
CIT is levied on both Thai and foreign companies. A Thai company is a company incorporated under the law
of Thailand. A Thai company is subject to tax in Thailand on its worldwide income, both from Thailand and
foreign sources. These taxes are levied at the end of each accounting period (12 months).

A foreign company is a company incorporated under foreign law. Generally, a foreign company is deemed as
carrying on business in Thailand if it has an office, a branch, or any other place of business in Thailand, or it
has an employee, agent, representative, or go-between in Thailand to carry on its affairs and thereby derives
income or gains here.

A foreign company carrying on business in Thailand is subject to CIT only for income arising from or in
consequence of such business. These taxes are levied at the end of each accounting period. However, a
foreign company engaged in international transport is only subject to tax on its gross ticket receipts collected
in Thailand for passenger transportation and its gross freight charges collected anywhere for transportation of
goods from Thailand in lieu of tax on net profit. Additionally, when a foreign company disposes its profits
outside of Thailand, such profits will be subject to tax relative to the sum disposed. Profit also entails any sum
set aside out of profits as well as any sum that may be regarded as profit.

Tax Calculation
The CIT of a company carrying on business in Thailand is calculated from the company's net profit on an
accrual basis. A company shall take into account all revenue arising from or in consequence of the business
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carried on in an accounting period and deduct from that figure all expenses as prescribed by the Revenue
Code. For dividend income, one-half of the dividends received by Thai companies from any other Thai
companies may be excluded from the taxable income. However, the full amount may be excluded from
taxable income if the recipient is a company listed on the SET or the recipient owns at least 25% of the
distributing companys capital interest, provided that the distributing company does not own a direct or indirect
capital interest in the recipient company. The exclusion of dividends is applied only if the shares are acquired
not less than three months before receiving the dividends and are not disposed of within three months after
receiving the dividends.

Since September 2008, where a company has entered into an interest rate swap, cross currency swap, or
cross currency interest rate swap contracts of which the swapper is also a lender, the payment for the
differences derived from the currency and interest rate swap will be regarded as income under Section
40(4)(a) of the revenue Code only if there is a circumstance showing that the counterparties have an intention
to enter into a loan agreement and intentionally execute an additional swap contract to change the
remuneration stipulated under the loan agreement to be a remuneration item under the swap contracts, i.e.
the swap contract is created without an intention to hedge against the fluctuation in the interest rate and
foreign currency. If the transaction is truly for a hedging purpose, the payment for the difference under the
swap transaction will be regarded as income under Section 40(8) of the Revenue Code and the payer will not
be required to withhold tax when making such payment.

In calculating CIT, deductible expenses are as follows.
1. Ordinary and necessary expenses. However, the deductible amount of the following expenses is allowed
at a special rate:
200% deduction of Research and Development expense,
200% deduction of job training expense,
200% deduction of expenditure on the provision of equipment for the disabled;
2. Interest, except interest on capital reserves or funds of the company;
3. Taxes, except for CIT and Value Added Tax paid to the Thai government;
4. Net losses carried forward from the last five accounting periods;
5. Bad debts;
6. Wear and tear;
7. Donations of up to 2% of net profits;
8. Provident fund contributions;
9. Entertainment expenses up to 0.3% of gross receipts but not exceeding 10 million baht;
10. Donations made to public education institutions or for the maintenance of public parks, public
playgrounds, and/or sports grounds;
11. Depreciation: Provided that in no case shall the deduction exceed the following percentage of cost as
shown below. However, if a company adopts an accounting method in which the depreciation rates vary
from year to year, the company is allowed to do so, so long as the number of years over which an asset
is depreciated is not less than 100 divided by the percentage prescribed below.

Type of Asset Rate of Depreciation
1. Building
1.1 Durable buildings
A building acquired within September 5, 2001
September 4, 2002

Plant of SMEs*
1.2 Temporary buildings
5%
Initial allowance of 20% on the date of acquisition
and the residual shall be depreciated at 5%
and the residual shall be depreciated at 5%
100%
2. Cost of acquisition of depleted natural resources 5%

3. Cost of acquisition of lease rights
3.1 No written lease agreement or written lease
10%
100% divided by the original and renewable lease
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agreement containing a renewal clause whereby
continuous renewals are permitted

3.2 Written lease agreement containing no renewal
clause or containing a renewal clause but restricting
renewable periods to a definitely limited duration
periods
4. Cost of acquisition of the right in a process,
formula, goodwill, trademark, business license,
patent, copyright, or any other rights:
4.1 Unlimited period of use
4.2 Limited period of use
10%
100% divided by number of years used
5. Other depreciable assets not mentioned above
excluding land and stock-in-trade, which have value
altogether not exceeding 500,000 baht, and are
acquired before December 31, 2010:
5.1 Machinery used R&D*
5.2 Machinery used in SMEs**
5.3 Cash registering machine
5.4 Passenger car of bus with capacity of no more than
10 passengers
100%
and the remaining cost can be depreciated
according to normal depreciation method; a
maximum of 20% per annum
and the residual can be depreciated at 100%
100 % or initial allowance of 40 % on the date of
acquisition and the residual can be depreciated at
100%
Depreciated at 100% but the depreciable value is
limited to one million Baht
6. Computers and computer accessories and
programs
6.1 SMEs**
6.2 Other businesses*
Initial allowance of 40 % on the date of
acquisition and the residual can be depreciated
over 3 years
Depreciated over 3 years, starting from
acquisition date
*Companies that benefit from this method will not be permitted to take the benefit of the tax exemption on
income equal to 25% of capital expenditure that is otherwise available under Royal Decree No. 460.
** SMEs refer to any Thai companies with fixed assets less than 200 million Baht and number of employee not
exceeding 200 people.

Tax Rates
The corporate income tax rate in Thailand is 30% on net profit. However, the rates vary depending on the type
of taxpayer.

Taxpayer Taxable Net Profit (baht) Rate (%)
Small company (has paid capital not
exceeding Baht 5 million)
0 - 150,000
150,001 1,000,000
1,000,001 3,000,000
3,000,001+
0
15
25
30
Companies listed on Stock Exchange of
Thailand (SET)
0 300,000,000
300,000,001+(from 2008-2010)
25
30
Companies applying for listing on SET
between 1 J anuary 2008 and 31
December 2009 or applied for listing on
SET between 1 J anuary 2007 and 31
December 2008
Total Amount
(for 3 accounting periods from 2008-2010)
25

Companies newly listed on Market for
Alternative Investment (MAI)
Net Profit for first 5 accounting periods
Net Profit after first 5 accounting periods
20
30
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Bank deriving profits from Inter-national
Banking Facilities (IBF)
Net Profit 10
Foreign company engaging in
international transportation
Gross Receipts 3
Foreign company not carrying on
business in Thailand receiving dividends
from Thailand
Gross Receipts 10
Foreign company not carrying on
business in Thailand receiving other types
of income apart from dividend from
Thailand
Gross Receipts 15
Foreign company disposing profit out of
Thailand
Amount Disposed 10
Regional Operating Headquarters (ROH) Net Profit 10
Profitable Associations and Foundations Gross Receipts 2% or 10%

Withholding Tax
Certain types of income paid to companies are subject to a withholding tax at the source of income. The
withholding tax rate depends on the type of income and the tax status of the recipient. The payer of income is
required to file the return (Form CIT 53) and submit the amount of tax withheld to the District Revenue Office
within seven days of the following month in which the payment is made. The tax withheld will be credited
against the final tax liability of the taxpayer.

Type of Income Withholding Tax Rate (%)
Dividends 10
Interest
If paid to associations or foundations
In other cases

10
1
Royalties
If paid to associations or foundations
In other cases

10
3
Advertising Fees 2
Service and professional fees
If paid to Thai company or foreign company having permanent branch in
Thailand
If paid to foreign company not having permanent branch in Thailand

3

5
Prizes 5
Government agencies are required to withhold tax at the rate of 1% on all types of income paid to companies.

Tax Return and Payment
Thai and foreign companies carrying on business in Thailand are required to file their tax returns (Form CIT
50) within 150 days of the closing date of their accounting period. Tax payment must be submitted with the tax
return. Any company disposing profits outside of Thailand is also required to pay tax on the sum so disposed
within seven days of the disposal date (Form CIT 54).

In addition to the annual tax payment, any company subject to CIT on net profit is also liable for tax
prepayment (Form CIT 51). A company is obliged to estimate its annual net profit as well as its tax liability and
pay half of the estimated tax amount within two months of the end of the first half of its accounting period.
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Prepaid tax is creditable against annual tax liability. Failure to pay the estimated tax or underpayment by more
than 25% may subject the taxpayer to a fine amounting to 20% of the amount in deficit.

A foreign company paying income to foreign companies not carrying on business in Thailand is subject to a
flat tax that must be withheld at the time of payment. The payer must file the return (Form CIT 54) and make
the payment to the Area Revenue Branch Office within seven days of the following month in which the
payment is made.

Failure to file a tax return, late filing, or filing a return containing false or inadequate information may subject
the taxpayer to various penalties. Failure to file a return, and subsequent non-compliance with an order to pay
the tax assessed, may result in a penalty equal to twice the amount of tax due. Penalties are due within 30
days of assessment.

Small and medium sized enterprises (SME) have been granted exemption from corporate income tax for the
first Baht 150,000 of net taxable profit and the net taxable profit in excess of Baht 150,000 will be taxed as
follows: 15% on net profit exceeding baht 150,000 but not exceeding baht 1 million; 25% on net profit
exceeding Baht 1 million but not exceeding Baht 3 Million; and 30% on net profit exceeding Baht 3 million.

Losses
Net losses may be carried forward for five accounting periods so that they may be offset against future profits
from all sources. There is no provision for loss carry-back.

If a company has more than one project that has been granted investment promotion, income and expenses
of all promoted projects within the same accounting period must be computed under the provisions of the
Revenue Code, so as to incur a net profit or net loss of the promoted project. Thus, the loss of a promoted
project is required to be offset against a profit from another promoted project within the same accounting
period in order to obtain a net profit or net loss of all promoted projects within the accounting period.

If one promoted business is subject to a reduction of 50% of the corporate income tax rate and a non-
promoted business is subject to the normal tax rate, the company is entitled to first deduct the annual loss of
the promoted business against the net profit of the promoted business. If an annual loss remains, the
company is entitled to deduct such loss against the net profit of the non-promoted business.

Note: The Board of Investment has appealed this decision and it is now being considered by the Minister of
Finance.

Loss on Investment from Liquidation
Where a Thai debtor company has incurred a significant loss and increases the share capital for settlement of
the liability owed to its parent company for liquidation purposes, the Thai creditor company can recognize the
loss on the investment in such increased share capital as a deductible expense. The loss will be allowed to be
deductable only upon the completion of the liquidation of the debtor and to an extent not exceeding the
amount receivable from the debtor as of the date of the capital increase. The following conditions must be
met:

The creditor is organized under Thai law and holds at least 25% of the voting shares in the debtor from the
time of the incorporation of the debtor until the increase in capital.

The receivable due from the debtor qualifies for writing-off under Ministerial Regulation No. 186.
The dissolution and liquidation of the debtor must commence within a period not exceeding one
accounting period from the accounting period in which the debtor has increased its capital.

Tax Credits
Thai companies can use foreign tax paid on business income or dividends received as a credit against their
CIT liability. The credit cannot exceed the amount of Thai tax on the income had the income been derived in
Thailand.

Credit is also given for any Thai CIT that has been deducted at the source (as mentioned above) and for the
half-year tax paid.

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Remittance Taxes
There are two final types of withholding tax imposed on the remittance of income or profits to foreign
companies:
Remittance of income in the form of :
Brokerage, fees for services 15%
Royalties 15%
Interest 15%
Dividends 10%
Capital gains 15%
Rental of property 15%
Liberal professionals 15%
Remittance of profits after corporate income tax, a sum representing profits, or a sum set aside out of
profits or regarded as profits is subject to 10% withholding tax.

Double Taxation Treaties
Countries that have concluded double tax treaties with Thailand and the applicable rates of withholding taxes
are as follows:

SN Country Date of Signing
Date of Ratification /
Exchange of Note
Date of Entry into
Force
1. Armenia 7 Nov 2001 12 Nov 2002 12 Nov 2002
2. Australia 31 Aug 1989 27 Dec 1989 27 Dec 1989
3. Austria 8 May 1985 22 Apr 1986 1 J ul 1986
4. Bahrain 3 Nov 2001 27 Dec 2003 27 Dec 2003
5. Bangladesh 20 Apr 1997 9 J ul 1998 9 J ul 1998
6. Belarus 15 Dec 2005 - -
7. Belgium 16 Oct 1978 28 Nov 1980 29 Dec 1980
8. Bulgaria 16 J un 2000 13 Feb 2001 13 Feb 2001
9. Canada 11 Apr 1984 16 J ul 1985 16 J ul 1985
10. Cyprus 29 Oct 1998 4 Apr 2000 4 Apr 2000
11. Czech Republic 12 Feb 1994 13 Aug 1995 14 Aug 1995
12. Denmark 23 Feb 1998 12 J an 1999 12 J an 1999
13. Egypt 29 J an 2006 - -
14. Finland 25 Apr 1985 26 Feb 1986 26 Feb 1986
15. France 27 Dec 1974 29 Aug 1975 29 Aug 1975
16. Germany 10 J ul 1967 4 Nov 1968 4 Dec 1968
17. Hong Kong SAR 7 Sep 2005 21 Feb 2008
7 Dec 2005
(retroactive)
18. Hungary 18 May 1989 16 Oct 1989 16 Oct 1989
19. India 22 Mar 1985 13 Mar 1986 13 Mar 1986
20. Indonesia 15 J un 2001 23 Sep 2003 23 Oct 2003
21. Israel 12 Feb 1996 24 Dec 1996 24 Dec 1996
22. Italy 20 Dec 1979 31 Dec 1980 31 May 1980
23. J apan 7 Apr 1990 1 Aug 1999 30 Aug 1990
24. Kuwait 29 J ul 2003 - -
25. Laos 20 Mar 1997 23 Dec 1997 23 Dec 1997
26. Luxembourg 7 May 1996 22 J un 1998 22 J un 1998
27. Malaysia 29 Mar 1982 2 Feb 1983 2 Feb 1983
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28. Mauritius 1 Oct 1997 10 J un 1998 10 J un 1998
29. Mongolia 17 Aug 2006 - -
30. Myanmar 7 Feb 2002 - -
31. Nepal 2 Feb 1998 14 J ul 1998 14 J ul 1998
32. Netherlands 11 Sep 1975 9 J un 1976 9 J un 1976
33. New Zealand 22 Oct 1998 22 Oct 1998 14 Dec 1998
34. Norway 31 J ul 2003 29 Dec 2003 29 Dec 2003
35. Oman 13 Oct 2003 27 Feb 2004 27 Feb 2004
36. Pakistan 14 Aug 1980 7 J an 1981 7 J an 1981
37.
People's Republic of
China
27 Oct 1986 29 Nov 1986 29 Dec 1986
38. Poland 8 Dec 1978 13 May 1983 13 May 1983
39. Republic of Korea 7 Sep 2005 12 Sep 1977 30 Sep 1977
40. Romania 26 J un 1996 13 Apr 1997 13 Apr 1997
41. Russian Federation 23 Sep 1999 - -
42. Seychelles 26 Apr 2001 13 Mar 2006 13 Mar 2006
43. Singapore 15 Sep 1975 27 Apr 1976 27 Apr 1976
44. Slovenia 11 J ul 2003 4 May 2004 4 May 2004
45. South Africa 12 Feb 1996 27 Aug 1996 27 Aug 1996
46. Spain 14 Oct 1997 16 Sep 1998 16 Sep 1998
47. Sri Lanka 14 Dec 1988 12 Mar 1990 12 Mar 1999
48. Sweden 19 Oct 1988 26 Sep 1989 26 Sep 1989
49. Switzerland 27 J an 1996 19 Dec 1996 19 Dec 1996
50. Taiwan 9 J ul 1999 - -
51. The Philippines 14 J ul 1982 11 Apr 1983 11 Apr 1983
52. Turkey 11 Apr 2002 13 J an 2005 13 J an 2005
53. Ukraine 10 Mar 2004 24 Nov 2004 24 Nov 2004
54. United Arab Emirates 1 Mar 2000 28 Dec 2000 28 Dec 2000
55. United Kingdom 18 Feb 1981 20 Oct 1981 20 Nov 1981
56.
United States of
America
26 Nov 1996 15 Dec 1997 15 Dec 1997
57. Uzbekistan 23 Apr 1999 21 J ul 1999 21 J ul 1999
58. Vietnam 23 Dec 1992 31 Dec 1992 31 Dec 1992
Source: Thailand Revenue Department

The treaties generally place taxpayers in a more favorable position for Thai income than they would be under
the Revenue Code, as profits will only be taxable if the taxpayer has a permanent establishment in Thailand.

Transfer Pricing Rules
Thailand has no detailed transfer pricing legislation. However, transfer pricing guidelines issued by the Thai
Revenue Department on 16 May 2002 define the term market price, detail the permitted pricing methods,
describe the transfer pricing documentation requirements and provide for advance pricing agreements.
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Value Added Taxes
Value Added Tax (VAT) has been in place in Thailand since 1992, replacing the Business Tax (BT). VAT is an
indirect tax imposed on the value added of each stage of production and distribution.

Taxable Persons
Any person or entity that regularly supplies goods or provides services in Thailand and has an annual turnover
exceeding 1.8 million baht is subject to VAT. Service is deemed to be provided in Thailand if the service is
performed in Thailand, regardless of where it is utilized or if it is performed elsewhere and utilized in Thailand.

An importer is also subject to VAT regardless of whether or not they are registered person. VAT will be
collected by the Customs Department at the time goods are imported. Certain businesses are excluded from
VAT and are instead subject to Specific Business Tax (SBT).
Under VAT, taxable goods denote all types of property, tangible or intangible, whether they are available for
sale, for personal use, or for any other purpose. It also includes any type of article imported into Thailand.
Services refer to any activity conducted for the benefit of a person or an entity.

Exemptions from VAT
Certain activities are exempted from VAT. Those activities are:
1. Small businesses whose annual turnover is less than 1.8 million baht;
2. Sales and import of unprocessed agricultural products and related goods such as fertilizers,
animal feeds, pesticides, etc.;
3. Sales and import of newspapers, magazines, and textbooks;
4. Certain basic services such:
Transportation: domestic and international transportation by way of land;
Healthcare services provided by the government and private hospitals and clinics;
Educational services provided by the government and private schools and other recognized
educational institutions;
Professional services: medical and auditing services, lawyer services in court, and other similar
professional services that have laws regulating such professions;
Renting of immovable properties;
5. Cultural services such as amateur sports, services of libraries, museums, zoos;
6. Services in the nature of employment of labor, research and technical services, and services of public
entertainers;
7. Goods exempted from import duties under the Industrial Estate law imported into an Export Processing
Zone (EPZ) and under Chapter 4 of the Customs Tariff Act;
8. Imported goods that are kept under the supervision of the Customs Department which will be re-
exported and be entitled to a refund for import duties; and
9. Other services such as religious and charitable services and services of government agencies and local
authorities.

Tax Rates
The current VAT rate is 7%.
A zero percent rate is applied to the following items:
Exported goods
Services provided in Thailand but totally used in a foreign country
Sales of goods or services to government agencies or state enterprises under foreign aid programs
Sales of goods or services to the United Nations or its specialized agencies, such as embassies and
consulate generals
Sales of goods and services between bonded warehouses or between enterprises located in a Duty Free
Zone.

VAT Calculation
VAT must be paid on a monthly basis and is calculated as:
Output tax - Input tax =Tax paid
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where output tax is the VAT that the operator collects from the purchaser when a sale is made, and input tax
is the VAT that an operator pays to the seller of a goods or service that are then used in the operators
business.

Refund
Each month, if input tax exceeds output tax, the taxpayer can claim a refund, either in the form of cash or in
the form of a tax credit to be used in the following months. Therefore, in a zero-rated case, the taxpayer will
always be entitled to a VAT refund. As for unused input tax, it may be creditable against output tax within the
next six months. However, the refund can only be claimed within three years of the last filing date. Certain
input taxes, such as tax in relation to entertainment expenses, are not creditable under VAT. However, those
non-creditable input taxes can instead be used as deductible expenses under CIT.

VAT Registration
Any person or entity who is liable for VAT in Thailand must register to be a VAT registered person or entity
(Form VAT 01) before the operation of business or within 30 days after its income reaches the threshold. The
registration application must be submitted to the Area Revenue Office if the business is situated in Bangkok or
to the Area Revenue Branch Office if it situated elsewhere. Should the taxpayer have several branches, the
registration application should be submitted to the Area Revenue Office of the province in which the
headquarters is located.

Tax Return and Payment
The VAT taxable period is a calendar month. VAT return therefore must be filed on a monthly basis. VAT
return (Form VAT 30) together with tax payment, if any, must be submitted to the Area Revenue Branch Office
within 15 days of the following month. If the taxpayer has more than one place of business, each place of
business must file the return and make a payment separately unless there is approval from the Director-
General of the Revenue Department. Services utilized in Thailand and supplied by service providers in other
countries are also subject to VAT in Thailand. In such a case, the service recipient in Thailand is obliged to file
a VAT return (Form VAT 36) and pay tax, if any, on behalf of the service providers.

In the case where the supply of goods or services is also subject to Excise tax, VAT return and tax payment, if
any, must be submitted to the Excise Department together with Excise tax return and tax payment within 15
days of the following month. In the case of imported goods, VAT return and tax payment must be submitted to
the Customs Department at the point of import.

Personal Income Tax
Personal Income Tax (PIT) is a direct tax levied on an individual taxpayers income derived from sources both
inside and outside of Thailand. In general, an individual liable for PIT has to compute their tax liability, file a
tax return, and pay tax accordingly on a calendar year basis.

Taxable Persons
Individual taxpayers are classified into five categories: a natural person, a group of persons that do not
constitute a legal entity, an unregistered ordinary partnership, a deceased person for their assessable income
and estate throughout the year in which death occurred, and an undistributed estate of the deceased.

The natural person class can be further divided into resident and non-resident. Resident means any
person residing in Thailand for one or more periods totaling more than 180 days in any tax (calendar) year. A
resident of Thailand is liable to pay tax on income from sources in Thailand, regardless where the money is
paid, as well as on the portion of income from foreign sources that are brought into Thailand. A non-resident
is subject only to tax on income from sources in Thailand, regardless of payment location.

Assessable Income
Income liable to the PIT is called "assessable income". The term covers income both in cash and in kind.
Therefore, any benefits provided by an employer or other persons, such as a rent-free house or the amount of
tax paid by the employer on behalf of the employee are also treated as assessable income of the employee
for the purpose of PIT.

Assessable income is divided into eight categories:
1. Income derived from personal services rendered to employers (employment income)
2. Income derived by virtue of a post, office of employment, or services rendered
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3. Income from goodwill, copyrights, franchises, patents, other rights, annuities, etc.
4. Income in the nature of interest (including interest derived on bank deposits in Thailand), dividends,
bonuses for investors, gains from amalgamation, acquisition or dissolution of juristic companies or
partnerships, and gains from transferring of shares or partnership holdings, etc.
5. Income from leasing property, breaches of contract of installment sales or hire-purchase contracts;
6. Income from liberal professions (e.g. law, medicine, engineering, architecture, accountancy and fine
arts)
7. Income from construction and other contracts of work;
8. Income from business, commerce, agriculture, industry, transport or any other activity not specified
above.

Capital Gains
Most types of capital gains are taxable as ordinary income, with the following exemptions:
Capital gains from the sale of shares in a company listed on the SET, provided that the sale is made on
the SET, and capital gains from the sale of investment units in a mutual fund.
Capital gains from the sale of non-interest bearing government bonds, debentures, bills, or debt
instruments issued by a corporate entity or other juristic entities, except in the case where the bonds or
debt instruments were sold for the first time to an individual at a price lower than their redemption price
and the tax has been withheld from the difference between the redemption price earned and the selling
price and the instrument has been stamped to the effect that tax has been so withheld.
Gains from the sale of government bonds.

Exemptions
Certain types of income are exempt from PIT. In relation to income from employment, money derived in the
form of per diem, traveling expenses, and certain fringe benefits (such as medical treatment) are tax exempt.
The exemptions also cover the share of profits obtained from a non-juristic body of persons, maintenance
income, income derived under moral obligation, corpus of a legacy, or inheritance, income from a mutual fund
or from the sale of investment units in a mutual fund, interest from government bonds earned by a non-
resident, etc.

Additionally, in order to support low-income earners and the elderly, an income exemption is granted to
taxpayers. The first 150,000 baht of net income is tax exempt. A Thai resident who is 65 years of age or older
is also granted a PIT exemption on income received up to an amount not exceeding 190,000 baht.

Computation
Thailand uses a self-assessment system in collecting taxes. Taxpayers are required to declare their tax
liabilities in the specified tax returns (PND 90, PND 91) and pay the tax due at the time of filing.

Certain deductions and allowances are allowed in the calculation of taxable income. Taxpayers shall make
deductions from assessable income before the allowances are granted. Therefore, taxable income is
calculated by:

TAXABLE INCOME =assessable income - deductions allowances

Deductions and Allowances
Deductions allowed for the calculation of PIT

Type of Income Deduction
Income from employment 40% but not exceeding 60,000 Baht
Income received from copyright 40% but not exceeding 60,000 Baht

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Income from letting out of property on hire
1. Building and wharves
2. Agricultural land
3. All other types of land
4. Vehicles
5. Any other type of property

30%
20%
15%
30%
10%
Income from liberal professions 30% except for medical profession where 60% is allowed
Income derived from contract of work whereby
the contractor provides essential materials
besides tools
Actual expense or 70%
Income derived from business, commerce,
agriculture, industry, transport, or any other
activities not specified earlier
Actual expense or 65-85% depending on the types of
income
Income of Community Enterprise
A Community Enterprise operated by an ordinary
partnership or a non-juristic body of persons under the
law governing Community Enterprise Promotion whose
assessable income does not exceed Baht 1,200,000 per
tax year will be exempted from personal income tax on
assessable income received from 1 J anuary 2008 to 31
December 2010.

Special Allowances

Personal allowance
1. Single taxpayer
2. Undivided estate
3. Non-juristic partnership or
body of persons

30,000 Baht for the taxpayer
30,000 Baht for the taxpayer's spouse
30,000 Baht for each partner but not exceeding 60,000 Baht in
total
Spouse allowance 30,000 Baht
Child allowance (child under 25 years
of age and studying at educational
institution, or a minor, or an adjusted
incompetent or quasi-incompetent
person)
15,000 Baht each (limited to three children)
Parents allowance (parents over 60
years of age with income less than
30,000 Baht)
30,000 Baht each
Old age allowance (over 65 years of
age)
190,000 Baht income exemption each
Education (additional allowance for
child studying in educational institution
in Thailand)
2,000 Baht each child
Life insurance premium paid by
taxpayer or spouse
Amount actually paid but not exceeding 100,000 Baht each, if
purchased by 1 J anuary 2009. After that date, only premium
relating to life insurance is deductible; embedded health or
accident premium is not. If the policy includes a savings plan that
provides an annual return to the policy holder exceeding 20% of
the annual premium, the entire premium will be non-deductible.

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Approved provident fund
contributions and/or retirement
mutual fund contributions
Maximum allowance (exemption) of 500,000 Baht; 700,000 Baht
for RMF, but not exceeding 15% of income for either
Government Pension Fund Maximum allowance of 500,000 Baht per year
Long term equity fund Maximum allowance (exemption) of 700,000 Baht, but not
exceeding 15% of income
Home mortgage interest Amount actually paid but not exceeding 100,000 Baht
Social insurance contributions paid
by taxpayer or spouse
Amount actually paid each
Charitable contributions Amount actually donated but not exceeding 10% of income after
standard deductions and allowances

Tax Credits
Any taxpayer who domiciles in Thailand and receives dividends from a juristic company or partnership
incorporated in Thailand is entitled to a tax credit of 3/7 of the amount of dividend received. In computing
assessable income, a taxpayer shall gross up his dividends by the amount of the tax credit received. The
amount of tax credit is then creditable against his tax liability.

Tax Credit = Dividend x Corporate Tax Rate/ (100 Corporate Tax Rate)

Tax Rates
Personal income tax rates applicable to taxable income are as follows.

Taxable Income Tax Rate (%) Tax Amount Accumulated Tax
0 - 150,000 Exempt - -
150,001 - 500,000 10 35,000 35,000
500,001 - 1,000,000 20 100,000 135,000
1,000,001 - 4,000,000 30 900,000 1,035,000
4,000,001 and over 37
Effective for taxable income arising from 2008 onward

Withholding Tax for Personal Income Tax
For certain categories of income, the payer of income has to withhold tax at source, file tax return (Form PIT
1, 2, or 3 as the case may be) and submit the amount of tax withheld to the District Revenue Office. The tax
withheld shall then be credited against the tax liability of the taxpayer at the time of filing PIT return. The
following are the withholding rates on some categories of income.

Other Taxes
Specific Business Tax (SBT)
Types of Income Withholding Tax Rate
1. Employment income 5-37%
2. Rents and prizes 5%
3. Ship rental charges 1%
4. Service and professional fees 3%
5. Public entertainer remuneration
- Thai resident
- non-resident

5%
5-37%
6. Advertising fees 2%

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Due to the difficulty in determining the value added by certain businesses for the purpose of VAT imposition,
an alternative tax levy on services, especially in the financial services sectors, was introduced in tandem with
the VAT regime. Specific business tax (SBT) is collected on gross revenue at fixed rates.

The SBT is computed on the monthly gross receipts at the following rates:

Business Subject to SBT Rate
Commercial Banks, Finance, Securities and Credit Foncier Businesses 0.01%
Life Insurance 2.5%
Pawnshop Brokerage 2.5%
Sale of Securities in the Stock Exchange 0.1%
Sale of Immovable Property, Real Estate 0.1%*
Businesses with Regular Transactions Similar to Commercial Banking 3.0%
* Scheduled to expire 29 March 2009, it has been extended for one year to 28 March 2010. No regulation
issued yet, but approved by Cabinet on 2 December 2008.

Stamp Duty
Certain documents mentioned in the Stamp Duty Schedule of the Revenue Code (e.g. power of attorney,
letter of credit, check, bill of lading, service contracts, etc.) must contain documentary stamps of various
specified denominations. While the stamp duty is generally at nominal rates, failure to affix such stamps may
be subject to a surcharge of up to 600%.

Petroleum Income Tax
The Petroleum Income Tax Act replaced the Revenue Code in imposing tax on income from anybody who
holds a petroleum concession or has a joint interest in one, or anybody who purchases crude oil produced by
any concessionaire, all of which is intended for export. Net income from petroleum operations includes
revenue from production, transport, or sale of oil and gas, the value of gas delivered to the government as a
royalty, and the proceeds of a transfer of interest in a concession. The tax rate for most operators is not less
than 50% and not more than 60% of net profits.

Individuals who obtain dividends from a company subject to petroleum income tax which are paid oput of the
net profits of the petroleum business are not entitled to the benefit of the dividend tax credit under Section 47
bis of the Revenue Code; the credit is granted only if the dividends are paid out of net profits which have been
subject to income tax under the Revenue Code.

In the event a company receives dividends paid out under the net profits of a petroleum business subject to
petroleum income tax and then distributes such dividends to individual shareholders, these individuals are not
entitled to the tax credit for dividends under Section 47 bis of the Revenue Code. Since the dividends
obtained by the company are exempt from tax under the Revenue Code by virtue of the law governing
petroleum income tax, they are not regarded as dividends paid out of net profits which have been subject to
income tax under the Revenue Code.

Excise Tax
Excise tax is currently levied on the following commodities:
Fuel oil & petroleum products
Beverages
Electrical appliances
Crystal glassware
Motor vehicles
Boats
Perfume products & cosmetics
Entertainment services
Liquor and beer
Cigarettes containing tobacco
Woolen carpets
Motor bicycles
Batteries
Playing cards

The manufacturer of these products must file a return and remit the tax due prior to taking the goods from the
factory or bonded warehouse. If a VAT liability arises before the goods are taken out of such locations, the
manufacturer must file a return and remit the tax to the Excise Department within 15 days of the end of the
month.

Property Tax
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There are two kinds of property tax in Thailand: house and land tax and local development tax.

House and land tax is imposed on the owners of a house, building structure, or land that is rented or
otherwise put to commercial use. The tax rate is 12.5% of the actual or assessed annual rental value of the
property.

Local development tax is imposed on any person who either owns land or is in possession of land. The tax
rates vary according to the appraised value of the property, as assessed by the local authorities, and usually
range from 0.25%-0.95% annually. An allowance is granted for land utilized for personal dwellings, the raising
of livestock, and the cultivation of crops by the owner. Cultivated land in excess of the exempt is subject to
one-half the statutory rate, while idle land is subject to twice the statutory rate.

Customs Duties
Customs duties are governed by the Customs Tariff Decree of 1987, an amendment of previous tariff codes,
to conform to the Harmonized System of the Customs Cooperation Council. Tariff duties on goods are levied
on an ad valorem or a specific rate basis. The majority of goods imported by businesses are subject to rates
between zero and 80%.

The majority of imported articles are subject to two different taxes: tariff duty and VAT. Tariff duty is computed
by multiplying the CIF value of the goods by the duty rate. The duty thus determined is added to the value of
the goods determined with reference to the CIP price.

VAT is then levied on the total sum of the CIF value, duty, and excise tax, if any. Goods imported for re-export
are generally exempted from import duty and VAT. Export duties are imposed on only a few items including
rice; hides, skins, and leather; scrap iron and steel; rubber, including latex, rubber waste, tree and lump
scraps, earth rubber, and bark shavings from rubber trees; teak and other kinds of wood.

Tariff duties may be lowered at the discretion of the Minister of Finance and with the approval of the Cabinet.
Two exceptions to the obligation to pay customs duties apply to the importation of machinery, equipment, and
materials for use by oil and gas concessionaires, their contractors, and certain companies promoted by the
Board of Investment.

As a part of the BOIs Investment Promotion Program, BOI-promoted companies are eligible to receive
exemptions or reductions from import duties on raw and essential materials as well as machinery.

Further, companies that belong to the BOIs Investor Club Association (IC) are eligible to use the ICs Raw
Materials Tracking System (RMTS) and Machinery Tracking System (MCTS). For companies that take
advantage of this service, release of raw materials and machinery can be done in three hours or less. For
more information, please contact the Investor Club at: Rasa Tower 2, 16th Floor, 555 Phaholyothin Road,
Chatuchak, Bangkok 10900. The telephone number is 02 937 1155.

All exported goods are exempt from export duties except raw hides and skins, wood and sawn (including
lumber) items. Interested persons can receive advice and additional information from the Export Promotion
and Privileges Group, Customs Department at Tel: 02 240 2513.

Business Travel Information
All persons, other than those in transit and citizens of certain countries, are required to obtain a visa in order
to enter Thailand. Foreign nationals who intend to remain in Thailand to work or conduct business must
comply with visa requirements in addition to obtaining a work permit.

A. Visa Categories
Tourist
Visitor transit
Immigrant
Non-quota immigrant
Non-immigrant

Nationals of most countries will, without applying for a visa from a Thai embassy or consulate in advance, be
given a 30 day-visa, except for those who are eligible for 90 day-visas. Nationals of some countries who are
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entitled to the 30 day-visa may be requested by the immigration officials to produce an onward ticket to
establish that they will leave the Kingdom within 30 days.

Tourist
Tourist visas are initially valid for 60 days and are renewable at the discretion of the Immigration Department.
Renewals are normally granted for periods of up to 30 days at a time.

Visitor Transit
Aliens who have obtained a transit visa from a Thai embassy or consulate will be granted a 30-day stay in the
Kingdom. Extensions of stay are normally granted for periods of 7-10 days.
Note: Transit, visitor transit and tourist visa holders are not authorised to work in Thailand.

Non-quota immigrant
This category includes, inter alia, former residents who have lost their resident status but who have reapplied
to resume their residency and who have been able to demonstrate a convincing reason to support the
granting of this type of visa.

Members of the diplomatic or consular corps, aliens coming to perform their duties in Thailand with the
approval of the Thai government, aliens performing their duties in Thailand under an agreement between the
Thai government and a foreign government, heads of international organizations or agencies operating in
Thailand, and dependents of all the aforementioned persons, including private servants of members of the
diplomatic corps, are exempted by the Act from the normal visa requirements.

Non-Immigrant Visa
Aliens seeking a prolonged stay, or those coming to work in Thailand, should obtain non-immigrant visas for
all family members prior to entering the Kingdom. There are several categories of Non-Immigrant visas which
include, among others, business visa category (B); dependent visa category (O); investment subject to the
provision of the laws on investment promotion (BOI IB); diplomatic and consular visa category (D);
performance of duties with the mass media (M); performance of skilled or expert work (EX); investment (with
concurrence of ministries and departments concerned)-(capital investment IM); study or observation (ED).

Advantages of a Non-Immigrant visa include:
Entitlement of the holder to apply for a multiple re-entry visa to Thailand from the Immigration Division in
Bangkok
Subject to the regulations of the Immigration Authorities, entitlement of the holder to apply for permanent
residence in Thailand
Eligibility for issuance of a Work Permit to the holder
Eligibility for temporary visa renewal while processing issuance of a long- term annual visa.

Aliens are advised to strictly adhere to the rules governing each visa category. They should report any
changes of address or status to local police within 24 hours.

In addition, foreigners residing in Thailand for more than 90 consecutive days are required to register their
address with the Immigration Bureau every 90 days. This requirement applies to all foreigners, including
holders of work permits and long-term visas. Failure to do so can result in substantial penalties.

Transit, Visitor, Tourist and Non-Immigrant Visas are issued only for the following purposes and duration:
Diplomats or consular missions (duration as
necessary)
Official missions (duration as necessary)
Tourism (90 days)
Sports (30 days)
Business purposes (one year)
An investment which has received
authorisation from the appropriate government
authorities (two years)
Investment or other business in connection with
investment under the Investment Promotion Act
(as determined by the Board of Investment)
Transit (30 days)
The controller or crew of a conveyance entering
a port or other locality in the Kingdom (30 days)
Work as a skilled laborer or specialist (one year).

In response to feedback from investors, the Board of Investment coordinated the establishment of a One-Stop
Service center for Visas and Work Permits, Through joint cooperation with the Immigration Bureau and the
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Ministry of labor, the center can process applications or renewals of visas and work permits within three hours,
upon receipt of proper and complete documentation.

In addition, the center handles other transactions, including the issuance of multiple reentry stamps, changes
in class of visa (to non-immigrant from tourist or transit), and payment of fines.

The One-Stop Service Center is located at 207 Rachadapisek Road, 3rd Floor, Bangkok, and they may be
reached by phone at (66) (2) 693-9333-9. Work permits, which are valid for the period of the visa, have to be
renewed every year. When an individual applies for a renewal of visa, he or she has to show that taxes for the
previous year have been paid.

Foreigners may also apply for permanent residence permits for Thailand under certain conditions, such as
investment in a business, or a condominium. Application can either be made to the Board of Investment or the
Immigration Department.

*******
End of Section One
*******

Section II Business Profile

Business Set-up Strategies & Structuring Issues

The investment project described in your inquiry namely Setting-up Chemical Processing
Facility along with a 100% Foreign Owned Company vehicle in Thailand is potentially
eligible for promotional benefits offered by the Thai Board of Investment (BOI) to qualifying
Foreign Direct Investment in Thailand. I will address BOI consideration in a separate
message. This first reply message addresses generic company startup processes and
costs

Nothing prevents you from starting a company in Thailand with majority or total foreign
ownership. But the Foreign Business Act of 1999 prohibits most foreign majority owned
companies from pursuing most activities (all activities except manufacturing, sourcing Thai
products for export, and hotel management services), unless they first obtain an Alien
Business License (ABL). Presently, it is quite expensive to obtain an ABL almost US
$20,000

Summary of Key Considerations Company Start-Up in Thailand

Companies must be started by at least three individual initial shareholders

- Following incorporation, one or more shareholders may sell shares to a corporation

- Original signatures and signed copies of identity documents are needed for the initial
three shareholders subsequent shareholders can be certified by a Directors signature

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- One of the original three shareholders (designated as the company promoter) must file
three sets of actions over a two-week period, as part of the incorporation process

Company must have at least one Director

- No restrictions on location or nationality of Director(s)

- It is not practical to operate a company without a readily-available signatory Director on
the ground in Thailand (hence one work permit is mandatory).

Minimum lawful company capitalization level is 15 baht (USD $0.45)

- To employ foreigners, minimum registered capitalization is 2,000,000 baht. An
additional 2,000,000 baht in registered capitalisation is required per each additional
work permit that company seeks to sponsor.

- To apply to legally operate as a company whose shares are majority-owned by non-
Thais, minimum registered capitalisation is 3,000,000 baht except for companies who
activities are limited to manufacturing or sourcing for export.

- To apply for Thai-US Amity Treaty protection, minimum registered capitalisation is
2,000,000 baht

- To be taken seriously, company should initially be capitalised at no less than 100,000
baht (USD $2,850). Most banks will not open an account for a company capitalised at
less than 100,000 baht.

Foreign share ownership rules exist

- There are no restrictions preventing three foreigners from registering a company ,and
being the majority shareholders

- There are severe restrictions on what business activities a majority foreign-owned
company may pursue, without obtaining an Alien Business License (ABL)

- Obtaining an ABL is a laborious and expensive process.

- It has been common to use Thai nominee (proxy) shareholders to hold majority of
shares on paper, to avoid requirement to obtain ABL. Recent new restrictions make
the use of Thai nominee shareholders more problematic (and expensive).

Costs

- Typical cost to prepare and process incorporation for a company with 2,000,000 baht
initial registered capitalization, including VAT and tax registrations: 60,000 baht (USD
$1,860)

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- Cost to prepare and process application for Thai-US Amity Treaty coverage is roughly
39,000 baht (USD $1,115), over and above incorporation costs. Upon approval, an
additional government fee of 22,000 baht must be paid.

- Cost to prepare and successfully process an application for an ABL: 420,000 baht
(USD $12,000), over and above incorporation costs.

Other Considerations

- Thai law specifies that at least 25% of registered capital must be paid-in within 90 days
following incorporation. If company will seek to sponsor a foreigner for extended entry
permit status, company must have net assets on the books of at least 1,000,000 baht

- Thai banking law stipulates that in order to exercise signature control over a Thai
corporate bank account, a foreigner must be a company director with a work permit. As
of May 2006, virtually all Thai banks are complying with this rule.

- Thai Revenue Department is very strict about requiring companies to maintain a legally-
sufficient registered business address business occupancy must be certified by
building owner, and office must be occupied by at least one staff person during normal
business hours.

- Accounting submissions must be initiated in calendar month following incorporation
negative reports are required in three categories of tax records-keeping

- Shelf companies typically do not exist, due to costs of maintaining legally sufficient
address, and accomplishing monthly accounting submissions. A shelf company made
to order can be supplied on a turn-key basis in 30 days, for an extra 16,000 baht
(USD $480), over and above normal costs of incorporation.

- In order to own land outright in Thailand, more than 50% of a companys shares must be
held by Thai citizens and these Thai individuals must be able to document significant
personal wealth.

- Minimum time to incorporate a company from a standing start is four days. 7-10 days is
comfortable.

- A Thai Private Co. Ltd. may not maintain a foreign currency bank account, and must
conduct all domestic transactions in Thai baht. Invoices to overseas customers may be
expressed in foreign currency, but all remittances will be converted to Thai baht before
credit to company bank account.

Summary of Taxation Issues
(discussed in detail before)
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For companies with less than 5,000,000 baht registered capital, Thailand corporate tax
rates are 15%, 25% and 30% maximum rate.

15% tax on first 1,000,000 baht of annual profit

25% tax on next 2,000,000 baht in annual profit

30% tax on all annual profit in excess of 3,000,000 baht

For companies with more than 5,000,000 baht registered capital, Thailand corporate tax
rate is a flat 30% of profits.

Thai Revenue Department does not expect newly-formed companies to earn profit for first
two years.

Beginning in third year, tax authorities expect taxes to be paid on a modest profit. Typical
third-year target for corporate taxes paid is under 30,000 baht.

Thailand collects 7% VAT on most business transactions in Thailand

There is a mandatory Social Fund program in Thailand 5% is withheld from salaries, and
a matching 5% must be contributed by employer with maximum combined monthly
collection of 1,500 baht per employee.

Labor Issues

Authorized workweek is 48 hours eight hours per day, six days per week.

Typical white collar work week is five days, eight hours per day plus lunchtime.

Severance pay must be paid for summary termination, once employees have completed
120 days employment. Severance rates increase as employment tenure increases
ranging from one months salary to ten months salary.

Summary termination requires payment of current month, following month, and THEN
severance pay, if due.

Visas and Entry Permits

There are no Visas for visitors, only Entry Permits. Visitors to Thailand mistakenly refer to
entry permits as visas.

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Visitors are allowed to enter Thailand without visas using Entry Upon Arrival procedures
that provide a 30 day Entry Permit, provided that such persons have an onward airline flight
ticket for an outbound flight within 30 days.

Persons seeking to work in Thailand must obtain a non-immigrant visa (Class B visa) from
a Thai diplomatic post outside Thailand. A Class B visa is issued as either a 90-day single
entry visa or as a one-year, multiple-entry visa.

Dependents of the person with Class B visa can get a matching Class O non-immigrant
visa (provided they are listed on the employer sponsor letter).

Application for extention of a non-immigrant entry permit should be made 30 days before
expiration.

A non-immigrant entry permit holder MUST obtain a Re-Entry Permit before departing
Thailand otherwise your entry permit is cancelled the moment you depart Thailand.

For any entry permit if you depart Thailand without a Re-Entry Permit, your entry permit is
cancelled the moment you depart Thailand. When you reenter, you receive a fresh entry
permit for whatever period to which you are entitled but not to exceed 90 days. This
means that:

Work Permits

Someone who is a shareholder and company director of a brand new company can apply
for a work permit as soon as the company has obtained tax and VAT registrations
provided that company has 2,000,000 baht registered capital per EACH work permit
sponsored. The company must also have at least two documented Thai employees per
EACH foreigner sponsored for a work permit.

The Labor Ministry requires that company certify that its registered capital is 100% paid up,
in order to apply for work permits. But in most cases there is no actual requirement to
show bank document documenting pay-in. However, to keep the company balance sheet
consistent with the document that certifies full capital pay-in, it is common practice to enter
onto the balance sheet that capital was 100% paid-up (in cash) and then for any capital
for which there is no bank record or receipts for expenditure of these funds the books
reflect that the missing money has been loaned out to a director.

It takes approximately 12 days between application for work permit, and receiving the blue
work permit booklet.

You must state in the work permit application the salary of the job for which approval is
sought. Once the work permit is issued, personal income tax withholding must be paid on
the approved salary each month.

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A non-immigrant entry permit is required in order to apply for a work permit. The validity
period of the work permit will be until the last day of the entry permit that is in the applicants
passport on the day that you pick up the work permit. This means that if you obtain a work
permit while on a 90-day entry permit, the validity period of that work permit will be less
than 80 days. In order to keep such a work permit alive, the holder of that permit must
exit Thailand and return with a fresh non-immigrant visa BEFORE the expiration date on the
work permit. The work permit can then be revalidated to match the period of the new entry
permit for a government fee of 850 baht.

For work permits, the applicant need only appear at the work permit office on the day that
he picks up a new blue work permit booklet.

The BOI Process

You first prepare the application (in English language) for permission to be obtained from
Board of Investment (BOI), Thailand, by a foreign national for investment in Thailand. A
general format of the application is attached to this report as an Annexure.

Once complete, the next step is to submit the application to BOI where it is screened by a
generic receiving section. If found satisfactory in respect of technical details and overall
completeness of the application, it is accepted and you receive an acceptance letter. This
letter assigns your project a case/file number, and gives you instructions to wait a few days
(usually 10-14 days), and then call a number to make an appointment to meet with the
Investment Promotion Officer (IPO) to discuss your project.

The next step is making a detailed presentation to your assigned IPO. The IPO is the
individual officer who must take your application, and turn it into a Thai language
presentation to the BOI approval board. The approval Board meets roughly every 30 days.

When things go well, at each board meeting, the members are briefed and given copies of
presentations on four to eight new applications and they then discuss and vote on the four
to eight applications briefed to them at their last meeting. When things dont go well, an
application can be kicked back because some board member(s) found some aspect of the
presentation inadequate or objectionable. If this happens, it reflects very badly on the IPO,
and it also causes that application to be returned to the applicant for correction or
amplification. It then needs to be resubmitted and it starts out again at the beginning of a
30 day queue. So getting back to your initial meeting with the IPO that individual will
typically ask you for an additional level of detail beyond your initial application because he
or she wants to make sure that he/she can answer any questions raised by the board, and
ensure that the application does not get kicked back. Sometimes, the IPO may ask for
additional information that you do not have immediately available in which case your
application is set aside until such time as you return the requested additional information to
the IPO. One the IPO is satisfied, he/she then takes a few days to prepare the presentation
for the approval board and then waits for the next board meeting which could be one
day away or 29 days away.

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Once your application is accepted by the board, it then takes 30 days before the board
votes on approval. If approved, the BOI then issues to you, the applicant, a BOI approval
letter, usually about five days after the board approves the project. This letter lists the
documents that you must return to them before they will issue you the BOI approval
certificate. Such items may include your company incorporation documents (if you had not
previously incorporated), copy of lease agreement, copies of software licenses, bank
certification of pay-in of capital, etc. As fast as you return these documents, they will issue
you the BOI approval certificate. Your BOI benefits commence on the day that this
certificate is issued.

If your company is approved by the BOI to be majority foreign owned (which is routine), you
must still apply to the Ministry of Commerce for a Foreign Business Certificate, without
which you cannot apply for any permits, including work permits or Immigration entry permit
extensions.

If you intend to employ any foreign experts which may be employed without consideration
of companys amount of registered capital, or Thai employee head count, then there is a
three-step process for obtaining BOI work permits:

1. You must apply for approval of each expert job position justifying the position, and
detailing the necessary qualifications (and why the work cannot be accomplished by a
Thai employee).
2. Once a position is approved, if you have a candidate for that position, you must apply
to the BOI to validate that candidates qualifications against the approved position. To
do this, you must submit that individuals credentials (resume, educational transcripts),
plus certification of employment by each employer for whom that individual has worked
for the most recent five years.
3. Once the BOI Expert Section validates a candidate, you then bring the candidate to the
BOI One-stop processing center, and they obtain their work permit and extended entry
permit that same day.

Once a foreigner has an extended entry permit, if that individual departs Thailand without a
re-entry permit, then their extended permit is cancelled. So if any foreign worker will travel
outside Thailand during the year, then that individual must obtain a re-entry permit before
they leave Thailand. This re-entry permit keeps the long-term extension alive.

As noted, a feasibility study is always advised to extract necessary information from client,
and to then informally run the project past contacts that our Thailand affiliates have at BOI
who will advise us concerning sensitive issues that may relate to the full spectrum of
sensitive issues in question. We also develop a specific action sequence and timeline for
that particular project. Experience has shown that if a client does NOT engage us to
carefully sequence the project steps via a feasibility study they invariably end up
spending several months in getting the clearances and consequently paying additional fees,
premises rental while simply waiting for some critical action (or several actions) to unfold. I
conservatively figure that a good feasibility study returns twenty or more times its cost in
ultimate savings, by minimising costly downtime.

Our Recommendations/Views
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There are two potential ways of structuring your entry into Thailand jurisdiction for carrying
on business as mentioned below, and we recommend the first method as it involves
minimum Red Tape and Investment

1. Thai Owned / Foreign Controlled

2. BOI Foreign Owned

All company's doing business in Thailand are required to register the amount of capital they
intend to invest.

After registration of the company, 25% of the investment capital is required to be paid up by
the shareholders. Note such capital can be used immediately to pay company start up
expenses, make loans, pay salaries, etc. and is not required to be left in the company's
bank account.

The remaining capital is not required to be paid up unless called by the company or
required by a condition of a Thailand government agency for purposes of granting a
business license or special privileges.

The minimum capital requirement for a foreigner to receive a 1 year work permit / visa in
Thailand is 2,000,000 Baht and must be fully paid up. Note a ratio of 4 to 1 Thai employees
to foreign employee is also required for a foreigner to receive a 1 year work permit / visa.

The corporate income tax rate in Thailand is generally 20 - 30% depending on the amount
of income generated by the company. Note that company's in Thailand are generally
allowed to take losses for the first 5 years of operation as a general practice of the Revenue
Department.

All Thai companies are required by law to keep monthly accounting records and have an
independent audit at the end of each fiscal year.

Labor laws in Thailand are very protective in favor of the employees and significant
severance payments are required even if you want to terminate employees after a period of
over 1 year. Note that Thailand labor laws should be considered before significant
workforce is hired for your business in Thailand.

Thai Owned / Foreign Controlled
A Thai owned company limited is the most common form of doing business in Thailand, but
requires that the company have a Thai majority shareholder and Thai director.
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Thailand has a law called the Foreign Business Act (FBA), which basically restricts majority
foreign owned companies from performing certain kinds of manufacturing/trading
businesses or service type businesses in Thailand without first going through a costly and
time consuming application process (BOI Approval) to obtain a foreign business license.

Thai majority owned companies are exempt from the provisions of the FBA and allowed to
perform all types of businesses in Thailand.

In order to avoid application of the FBA, it has been a common practice for foreigners in
Thailand to establish a Thai majority owned / foreign controlled company.

A Thai majority owned company is considered any company that has Thai person holding
51% or more of any class of shares in the company.

A Thai owned / foreign controlled company is structured so a Thai person holds 51% of the
shares and a foreigner to hold 49%.

The 51% shares owned by the Thai citizen would be categorized as a special class of
shares (preference shares), which have minimal to no voting or dividend rights in the
company.

The 49% shares owned by the foreigner would be categorized in a separate class of shares
(common shares), which have 100% of the voting and dividend rights in the company.

The result of this type of company register is the foreigner would only own 49% of the
company on paper, yet legally have 100% control over the company's business & funds
while avoiding the application of the FBA.

We have ways to ensure a minority foreign shareholders ability to maintain operational and
financial control of the company.

BOI Foreign Owned
The Thailand Board of Investment (BOI) has the power under Thailand laws to grant special
privileges allowing foreigners to own 100% of a company limited.

The Thailand BOI has the power to grant the following privileges depending on the specifics
of the investment plan
Exemption from rules restricting foreign ownership of companies;
Exemption from corporate income tax for up to 8 years;
Exemption of import duties on machinery and raw materials;
Exemption from rules restricting foreign ownership of land;
Exemption from work permit and visa rules; and
Exemption from rules restricting overseas remittances.

The amount and type of privileges you can receive depend on your business activities and
location of your business in Thailand. However, not all business activities are eligible to
receive BOI privileges.
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Thailand BOI applications can be made before or after the establishment of a company in
Thailand.

The minimum level of investment capital required to obtain BOI privileges is 1,000,000 Baht
(excluding cost of land and working capital).

The Thailand BOI requires a lengthy application and business plan be submitted in order to
apply for BOI privileges, which takes at least 2 months or more to complete.

Types of Business Organisations
Thailand recognizes three types of business organisations:

Partnerships
Thai and Western concepts of partnership are broadly similar. Thailand provides for three
general types of partnerships:
Unregistered ordinary partnerships, in which all partners are jointly and wholly liable for
all obligations of the partnership
Registered ordinary partnerships. If registered, the partnership becomes a legal entity,
separate and distinct from the individual partners
Limited partnerships. Individual partner liability is restricted to the amount of capital
contributed to the partnership. Limited partnerships must be registered.

Limited Companies
There are two types of limited companies, i.e., private or closely held companies, which is
governed by the Civil and Commercial Code; and public companies, which is governed by
the Public Company Act. Private Limited Companies in Thailand have basic characteristics
similar to those of Western corporations. A private limited company is formed through a
process which leads to the registration of a Memorandum of Association (Articles of
Incorporation) and Articles of Association (By-laws), as its constitutive documents.

Shareholders enjoy limited liability, i.e., limited to the remaining unpaid amount, if any, of
the par values of their shares. The liability of the directors, however, may be unlimited if so
provided in the company's memorandum of association or the articles of incorporation. The
limited company is managed by a board of directors according to the company's charter
and by-laws.

All shares must be subscribed to, and at least 25 percent of the subscribed shares must be
paid up. Both common and preferred shares of stock may be issued, but all shares must
have voting rights. Thai law prohibits the issuance of shares with no par value. It also
stipulates that only shares with par value of five baht or above may be issued. Treasury
shares are prohibited.

Joint Ventures
A joint venture may be described in accordance with general practice as a group of persons
(natural and/or juristic) entering into an agreement in order to carry on a business together.
It has not yet been recognized as a legal entity under the Civil and Commercial Code.
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However, income from the joint venture is subject to corporate taxation under the Revenue
Code, which classifies it as a single entity.

Other Forms of Corporate Presence
Branches of foreign companies there is no special requirement for foreign companies to
register their branches in order to do business in Thailand. However, most business
activities fall within the scope of one or more laws or regulations which require special
registration, either before or after the commencement of activities. Foreign business
establishments must, therefore, follow generally accepted procedures. It is important to
clarify beforehand what constitutes income subject to Thai tax because the Revenue
Department may consider revenues directly earned by the foreign head office from sources
within Thailand as subject to Thai taxes.

As a condition for approval of an Alien Business License to a branch of a foreign
corporation, working capital amounting to a total of five million baht in foreign exchange
must be brought into Thailand within certain intervals over a four-year period.

The branch may be allowed to operate for a period of five years, unless a shorter period is
indicated in the application as a result of a contract to be performed in Thailand. Extension
of the original duration of the license to operate may be granted, provided the working
capital required to be brought into Thailand is met.

A representative office of foreign corporations may also be established to engage in limited
non-trading activities, such as sourcing of goods or services in Thailand for its head office
or inspecting and controlling quality of goods which its head office purchases in Thailand.
Other activities can cover disseminating information about new products and services of its
head office, and reporting to its head office on local business development and activities.

Company Setting Up
Thailand offers a lot of opportunities to local and foreign investors. Compared with other
countries in the region, its stability in social and economic situation, politics, and
government support, good work ethics and attitude of the people are its key advantages.
The Royal Thai Government (RTG) has long maintained an open, market-oriented
economy and encouraged foreign direct investment as a means of promoting economic
development, employment, and technology transfer.

Forming a company in Thailand involves creating a new business, or registering an existing
overseas company for foreigners. It is an important part of the entrepreneurial process. One
can handle the registration process but it is time-consuming and seeking professional
services will make you go through smoothly in shorter time. Opportunity for incorporation is
also available here in the country. Incorporation happens when there is a union or merger
of existing corporations to form new or another corporation. The decision to incorporate you
or your business is the first step in providing effective protection from personal liability,
excessive taxation, and provides the investor with an effective and powerful tool to assist in
managing and growing their business ventures.

Some reasons for incorporating is that you are forming a separate, distinct legal entity that
can be utilised to safeguard your personal property and assets by separating you,
personally, from business liability, lawsuits, creditors and excessive taxation. By
incorporation, you are forming a separate "person or identity", a legal entity that can own
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property, pay taxes, enter contracts and create income that is separate from yours. A
corporation can sue and be sued on its own, thereby safeguarding the personal assets of
the shareholders. This separation and safeguarding of personal assets and property is
known as limited liability. Other advantages include continuity of the business, as the
business is not affected by the changing of the shareholders due to death, transfer of
shares, sales, acquisitions, etc.

Before you engage in a business or an investment in Thailand, you must plan deeply and
focus on the risks and challenges that you and your business will encounter before and
after you have started. We can make these things easier for you as our team provides
assistance to our clients in terms of setting up their business or investment in Thailand. We
provide advices and guidance to our clients to make them comfortable in investing their
money, time and effort into company setup, leasing and forming an office, rent, and staff
recruitment. We also help them in finding a good office location, their own employees, and
other matters. We make sure that we perform our responsibilities in accordance with the
government regulations and policies specifically the Board of Investment.

Planning your business
A business plan should be made to serve as a guide in forming your business. It contains a
set of business goals and objectives, the reasons why they are believed attainable, and the
plan for reaching those goals. It may also contain background information about the
organisation or team aiming to reach those goals. You must plan carefully all the details
about your business specifically in terms of:
Type of business
Type of business structure
Type of activities or services
Target date
Target location
Name of business
Financing business

Creating your business structure
Forming a business and creating its structure or type can be a complicated process. Our
services can simplify that process by providing comprehensive descriptions of the various
types of businesses, and even allowing you to compare them side by side. In this way you
can be sure to choose the type which can be most suitable for you in achieving your goals.
This includes forming a business organization according to its structure such as: sole
proprietorship, partnership, corporation or joint venture. As in most countries, there are
three kinds of business organizations in Thailand: Sole proprietorships, partnerships, and
limited companies. The most popular form of business organization among foreign
investors is the private limited company.

Private limited companies require a minimum of seven promoters and must file a
memorandum of association, convene a statutory meeting, register the company, and
obtain a company income tax identity card. They must also follow accounting procedures
specified in the Civil and Commercial code, the Revenue Code and the Accounts Act. A
balance sheet must be prepared once a year and filed with the Department of Revenue and
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Commercial Registration. In addition, companies are required to withhold income tax from
the salary of all regular employees.

Getting business license
It is important for the person(s) forming companies or business to provide acceptable
proposed name in advance of submission of documents for registration to the Ministry of
Commerce. We then check if the name proposed is not similar to one already registered.
Business registration is essential in order to be legal in a certain location. We will assist you
not only in business registration but also in getting your business license or permit. This will
authorise or permit your business to operate or perform its activities and services and be
recognised as an entity in a certain location.

Hiring employees
We, through our Thailand affiliates provide secretarial services for you to assist your
business in hiring personnel for your operation. We can assist you in professional
recruitment of highly qualified employees for your company.

Visa and Working Permit
Any entity wishing to do business in Thailand must register with the Department of
Business Development at the Ministry of Commerce. Firms engaging in production activities
need to register with the Ministries of Industry and Labor and Social Welfare. Our
specialised team provides the assistance in obtaining a necessary visa and working permit
for our foreign clients. This authorises a foreign individual to stay, work, and render
business activities and services here in Thailand.

Tax Registration
Businesses liable for income tax must obtain a tax I. D. card and number for the company
from the Revenue Department within 60 days of incorporation or the start of operations.

Reporting Requirements
Firms must keep books and follow accounting procedures specified in the Civil and
Commercial Code, the Revenue Code and the Accounts Act. Documents may be prepared
in any language, provided that a Thai translation is attached. All accounting entries should
be written in ink, typewritten, or printed.

Specifically, Section 1206 of the Civil and Commercial Code provides rules on the accounts
that should be maintained as follows: "The directors must cause true accounts to be kept: of
the sums received and expended by the company and of the matters in respect of which
each receipt or expenditure takes place; of the assets and liabilities of the company."

Imposition of Taxes
Companies are required to withhold income tax from the salary of all regular employees.

A value-added tax of seven percent is levied on the value added at each stage of the
production process, and is applicable to most firms. The VAT must be paid on a monthly
basis.

A specific business tax is levied on firms engaged in several categories of businesses not
subject to VAT, based on gross receipts, at a variable rate ranging from 0.1 3.0 percent.
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Corporate income tax is due twice each fiscal year. A mid-year profit forecast entails
advance payment of corporate taxes.

Annual Accounts
A newly-established company or partnership should close accounts within 12 months from
the date of its registration. Thereafter, the accounts should be closed every 12 months. The
performance record is to be certified by the company auditor, approved by shareholders,
and filed with the Business Development Office, Ministry of Commerce, within five months
of the end of the fiscal year, and with the Revenue Department, Ministry of Finance, within
150 days of the end of the fiscal year.

If a company wishes to change its accounting period, it must obtain written approval from
the Director General of the Revenue Department.

Accounting Principles
In general, the basic accounting principles practiced in the United States are accepted in
Thailand, as are accounting methods and conventions as sanctioned by law. The Institute
of Certified Accountants and Auditors of Thailand is the authoritative group promoting the
application of generally accepted accounting principles.

Any accounting method adopted by a company must be used consistently and may be
changed only with approval of the Revenue Department.

Certain accounting practices of note include:
Depreciation The Revenue Code permits the use of varying depreciation rates
according to the nature of the classes of assets which have the effect of depreciating the
assets over periods that may be shorter than their estimated useful lives. These
maximum depreciation rates are not mandatory; a company may use lower rates that
approximate the estimated useful lives of the assets. But if a lower rate is used in the
books of the accounts, the same rate must be used in the income tax return.
Accounting for Pension Plans Contributions to a pension or provident fund are not
deductible for tax purposes unless these are actually paid out to the employees, or the
fund is approved as a qualified fund by the Revenue Department and is managed by a
licensed fund manager.
Consolidation Local companies with either foreign or local subsidiaries are not
required to consolidate their financial statements for tax and other government reporting
purposes, except for listed companies which must submit consolidated financial
statements to the Securities and Exchange Commission of Thailand.

Statutory Reserve A statutory reserve of at least five percent of the annual net profits
arising from the business must be appropriated by the company at each distribution of
dividends until the reserve reaches at least 10 percent of the company's authorized
capital.
Stock Dividends Stock dividends are taxable as ordinary dividends and may be
declared only if there is an approved increase in authorised capital. The law requires the
authorised capital to be subscribed in full by the shareholders.
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Auditing Requirements and Standards
Audited financial statements of juristic entities (that is, a limited company, a registered
partnership, a branch, or representative office, or a regional office of a foreign corporation,
or a joint venture) must be certified by an authorised auditor and submitted to the Revenue
Department and (except for joint ventures) to the Commercial Registrar for each accounting
year.

Auditing standards conforming to international auditing standards are, to the greater extent,
recognised and practiced by authorised auditors in Thailand.

The ROH (Regional Operating Headquarters) Option (Summarised)

Particulars New ROH Tax Regime
1. Criteria Paid-up capital of at least 10 million baht
Establishment of 3 associated companies/ branches in the 1 country
within the 1st year, at least 2 countries within the 3rd year, and at least
3 countries within the 5th year
Having staff working for ROH services and running business operation.
Having operation expenses 15 MB/year or investment appending 30
MB/year
By the end of 3rd year, having skilled staff of at least 75% of
employees, & at least 5 employees, that receive remuneration of al
least 2.5 MB/year
2. Corporate Income Tax
Overseas Income
Loan Income
Exempt for 10 years
10% for 10 years
3. Dividends Exempt for 10 years
(If Income generated from overseas services 50% of total company
income)
4. Interest 10% for 10 years
income)
5. Royalties 10% for 10 years
income)
6. Personal Income Tax for
each foreign employee
Flat rate of 15% for a period not more than 8 years
income)
7. Accelerated Depreciation ---
8. Notification Period Within 5 years from the date the relevant Law becomes effective

Conclusion

In the conclusion we can summarise that Thailand offer a host of attractive opportunities
along with a conducive business environment besides being a vibrant and resourceful
economy. To summarise, we can provide the following arguments

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1. Gateway to Asia Thailand enjoys a strategic location and serves as a gateway into
the heart of Asia and ASEAN countries home to what is today the largest growing
economic market.
2. Socio-Political Stability Thailand is a foreigner friendly and welcoming Buddhist
country. The country's form of government is a constitutional monarchy, with a high
reverence for the Thai Monarchy, and devotion to the teachings of Buddhism.
3. Growing & Vibrant Economy Economically, this country of 67 million people is
characterized by steady growth, strong exports and a vibrant domestic consumer
market. Abundant natural resources and a skilled and cost-effective work force help
attract foreign investors, and enable them to prosper and develop industry in Thailand.
4. Ample Infrastructure Thailand has good infrastructure with modernized transportation
facilities, as well as upgraded communications and IT networks that ensure optimum
business and living conditions besides having ample 28 Airports, 122 Seaports, 3.90
lakh km Road Network, 4044 km Railway Lines and 42.90 km Mass Transit Systems.
World-class industrial estates boast sophisticated facilities and support services to
meet the needs of multinationals and SMEs alike.
5. Proactive FDI Policies The country's well-defined investment policies focus on
liberalization and encourage free trade. Thailand consistently ranks among the most
attractive investment locations in international surveys, and the World Banks 2010
Ease of Doing Business report places Thailand as the 12th easiest country in the
world in which to do business.
6. Govt. Support & Incentives Numerous government agencies support investors.
Through the Board of Investment, the government offers a range of tax incentives,
support services and import duty exemptions or reductions to an extensive list of
promoted activities (discussed in detail above).
7. Friendly & Rich Culture Thailand has gained a well-deserved reputation throughout
the world for its gracious hospitality. The friendliness of its people and the diverse
nature of Thai culture make visitors feel safe and at home in Thailand.
8. Education & Healthcare The education standards in Thailand are accepted by many
international examining bodies, and a great number of international schools and
colleges offer world-class education, while its universities are outstanding. In terms of
healthcare, the country has developed an excellent reputation globally, due to its
internationally-certified doctors and medical staff, and modern facilities and equipment.
It is so good that one of the fastest-rising tourism sectors is medical tourism, with
international patients visiting Thailand to take advantage of Thailand's world-class and
extremely affordable health care system.

*******
End of Section Two
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