Registering a company under the Thailand Board of Investment offers many tax and non-tax privileges. These benefits include an exemption of corporate income tax, a reduction of import duties for raw materials and a waiver of the requirement to hire four Thai employees per one foreign employee.
In addition, BOI companies have the right to own land in Thailand and are protected against nationalization. Consequently, it is important for investors to seek legal advice before applying for the BOI.
What is a company?
A company is a legal entity endowed with the capacity to conduct business. It can be a public or private entity. It is formed when a group of people decide to work together and pool resources, such as money and labour, in the name of the entity.
There are different types of companies in Thailand, such as the private limited company, which requires at least three stockholders and one director. Its liability is capped at the par value of the shares registered. This type of company is the most popular among foreign investors.
A public company, on the other hand, can issue shares that are traded on the Stock Exchange of Thailand. Its minimum capital requirement is 1 million baht. In addition to this, the company must have a corporate bank account and submit a company chop, which is a seal used to certify official documents. It can be obtained from a specialist company chop maker.
How to register a company in Thailand
The most common business structure that foreign investors choose to register is a private limited company in Thailand. This allows for greater flexibility in terms of operations and provides for a host of tax benefits.
In order to establish a Thai private limited company, the founder must submit a Memorandum of Association which specifies the company name, business objectives, registered office address, share capital, and the names of promoters (there must be at least three). This document is filed with the Registrar of Companies.
The company name must not be identical or resemble any existing companies or partnership in Thailand. It also has to be easy to pronounce in both English and Thai. A statutory meeting must be conducted to draft the company by-laws and articles of incorporation. The founder must also arrange for annual general meetings. The company must follow accounting procedures, and submit a yearly audit report to the Department of Revenue within four months of the end of the fiscal year.
Taxes on companies in Thailand
The Thailand Board of Investment encourages foreign investors to establish and conduct businesses in specific economic sectors by providing a set of tax and non-tax incentives. For instance, the BOI allows a foreign company that has been granted an investment promotion certificate to enjoy a corporate income tax (CIT) exemption for three up to eight years and an exemption from import duties.
For companies carrying on business in Thailand, the CIT is calculated based on the net profit a company earns during an accounting period, taking into account all revenue and subtracting therefrom all expenses. Additionally, a company may exclude one-half of the dividends it receives from other Thai companies from its taxable income.
The BOI also eases restrictions on foreign ownership in certain sectors and provides express visa processing for workers. Furthermore, the BOI grants non-tax incentives such as a reduction in transfer tax and an exemption of excise taxes on raw materials for research and development.
Registration with the BOI
Getting an investment promotion from the BOI can significantly cut down on costs and time to set up a company in Thailand. This is because a BOI promotion grants tax exemptions, reduced requirements for supporting work permits, infrastructure support and other benefits.
To get a BOI promotion, you must complete forms that cover various aspects of your business. These forms can be found on the BOI’s e-investment platform. They typically consist of about eight to ten pages. It is recommended that you hire a lawyer to help with the process, especially if you’re unfamiliar with Thai laws and how government offices operate in Thailand.
Some of the most important advantages of registering a company with the BOI include its skilled and cost-effective personnel, extensive and modern infrastructural facilities and its strategic location. In addition, a company that’s registered with the BOI can be trusted by your partners and clients. The entire process can take anywhere from three to six months.