Day: January 6, 2025

US-Thai Treaty of Amity

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The US – Thailand Treaty of Amity allows American citizens and businesses incorporated in the US or majority-owned by Americans to enjoy privileges when doing business in Thailand. Some of these include being exempt from import duties and remitting profits, dividends and royalties without restrictions.

However, it’s important to understand the limitations of the US-Thai Treaty of Amity. GPS Legal has extensive experience helping clients obtain certification under this treaty.

Benefits

The US-Thai Treaty of Amity provides distinct registration advantages to American companies operating in Thailand. The benefits include:

National Treatment: American businesses incorporated under the treaty are treated as Thai entities, providing a competitive advantage and greater flexibility for business operations. The treaty also protects investments and intellectual property rights.

Streamlined Process: Applying for the treaty is a quick and simple process that can be completed in 90 days or less from submission of your application to approval. This is a significant advantage over the Foreign Business License (FBL) process, which typically takes up to six months.

Exemptions and Incentives: The treaty allows US citizens to establish sole proprietorships, partnerships, representative offices or branch offices in Thailand without having to comply with the Foreign Business Act (FBA). The treaty also exempts companies registered under it from the requirement of having a Thai partner to sponsor Non B visas or work permits for foreign employees.

Limitations: A company registering under the treaty must have at least 51% of its shares owned by Americans. Additionally, a company cannot directly buy land in Thailand unless it has a Thai subsidiary that owns the land. This can be circumvented by establishing a leasehold arrangement with the landowner, however this has legal and tax implications that should be discussed in detail with your advisors.

Requirements

While companies registered under the Amity Treaty do have a lot of advantages, it does come with some requirements that should be considered carefully. First and foremost, the majority of shares and decision-making power must be held by US citizens. This is not a requirement for most businesses, but it may be required for certain investment promotion programs. Additionally, the company cannot directly own land in Thailand, which can be a drawback for some sectors like agriculture or inland transportation. Fortunately, there are alternatives like leasehold arrangements and setting up a Thai subsidiary to purchase land.

To qualify for the Amity Treaty, a company must be an American sole proprietorship, partnership, representative office, branch office, joint venture or Thai limited company. A minimum of 50% of the shareholders must be American citizens, and the majority of directors must also be Americans. The company must submit a variety of documents, including corporate bylaws, lists of shareholders with their nationalities and articles of incorporation. The company must also submit notarized copies of the shareholders’ and directors’ passports.

In addition, an Amity Treaty company must hire four Thai workers to one foreign worker and comply with work permit rules. This can be a challenge for some companies, but it is a necessary requirement for those looking to maximize the benefits of the Amity Treaty. The registration process contains many legal complexities and it is best to consult with Emerhub’s advisors to ensure your business is compliant.

Procedures

The US-Thai Treaty of Amity allows American companies to maintain a majority shareholding in or wholly own a business in Thailand and engage in the same business activities as Thai companies with few restrictions. It also grants them national treatment, removing the need to obtain an alien business license (FBA).

To be eligible for the benefits of the US-Thai Treaty of Amity, a company must have American shareholders with over 50% ownership. In addition, the company must have authorized American directors. It must also be incorporated in the United States and registered with the Department of Business Development, Ministry of Commerce. The application process requires a number of documents, including the company’s articles of incorporation, lists of shareholders with their passport numbers, and notarized copies of all shareholder and director passports.

In addition to the US-Thai Treaty of amity, the US and Thailand have bilateral trade and investment framework agreements called Trade and Investment Framework Agreements (TIFA) and a Generalized System of Preferences program that provides duty-free entry for certain products. Despite these advantages, it is important to note that Amity treaty companies are still subject to the same foreign investment laws as non-Amity treaty companies. They are also not allowed to own land and must comply with work permit rules. These requirements can add time and cost to the registration process.

Limitations

The US-Thai Treaty of Amity has facilitated billions in trade and investment between the two nations, establishing strong economic collaboration. While the treaty offers American companies substantial privileges, it also restricts their activities in certain sectors. Understanding these limitations and staying updated on Thai legal changes is key to ensuring compliance.

The treaty allows Americans and American companies to maintain majority ownership of their businesses in Thailand and receive national treatment, exempting them from restrictions set out by the Foreign Business Act. In order to qualify, a company must present evidence that it is registered in the United States and that the majority of shareholders are American citizens.

Additionally, the company must have a minimum of 51 percent of ordinary shares to be considered as a treaty-protected entity in Thailand. A minimum of 51 percent of voting rights must also be held by the company’s American shareholders. If the company has directors of a third nation, they must co-sign documents with their American counterparts.

Companies that are protected under the US-Thai treaty can still face restrictions in other sectors, such as land ownership and taxation. In these cases, alternative solutions like leasehold arrangements or a Thai subsidiary can be used to gain the advantages of a fully owned treaty-protected company in Thailand without the restrictions. This option can be complicated, and professional guidance is recommended.

Registering a Company Under the Thailand Board of Investment

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Registering a company under the Thailand Board of Investment (BOI) opens up a whole host of fiscal and non-fiscal incentives for foreign investors. However, achieving BOI status takes time and care.

Documents like a memorandum of association, details about shareholders, and copies of passports or IDs are required. Other files include a business plan and forecasts for investments and profits.

Requirements

If you are planning to register a company under the Thailand Board of Investment, it is advisable to seek guidance from legal and business professionals to ensure that your application meets all requirements. These requirements include the preparation of a detailed business plan. This document will be scrutinized by the reviewing BOI official, so it must be exhaustive and accurate. It should cover every aspect of the company’s business in Thailand, including management, ownership, processes, financing, human resources, investment, technology, and profitability.

It should also include a detailed inventory of all equipment and materials used by the company, as well as a list of all employees and their job titles. The company should also prepare financial statements and projections for the first three years of operation. Lastly, the company must submit a list of directors and their nationalities. At least one of these must reside in Thailand to sign documents on behalf of the company.

Several incentives are available for companies registered under the Thailand Board of Investment. These incentives are based on the type of industry and region. For example, a five-year corporate income tax exemption is provided for high-technology activities that are vital to the development of Thailand. Incentives are also available for activities that contribute to the production of goods for export. Other benefits include a removal of the foreign worker quota and a reduction in value-added tax (VAT) registration fees for certain products.

Procedures

Before applying for a BOI certificate, investors must first prepare a business plan. This document should address every aspect of the business, including management, ownership, processes, finances, investments, and technology. The plan will be reviewed by a BOI official, and any shortcomings could result in the rejection of an application. Working with a professional to assist with this process is highly recommended.

After preparing a comprehensive business plan, investors must deposit a minimum of 1 million baht as capital. They must also open a bank account and choose an original name for their company. In addition, they must obtain a tax ID number and register for VAT if their revenue is above 1.2 million baht. They must also submit copies of the directors’ passports or IDs and the company’s registered address.

Once approved, the BOI will issue a business registration certificate that must be displayed in a prominent location. Additionally, companies must report any changes to the BOI within 30 days of those changes. Furthermore, BOI-promoted companies are required to make a tax prepayment of 50% of their estimated tax liability within two months after the end of their accounting period. In addition, these companies must display a business name board in both Thai and English on the front of their main office and any branch offices.

Taxes

The BOI is an agency under the Prime Minister’s Office that safeguards foreign investment in the country. It offers both fiscal and non-fiscal incentives to companies registered with it. For example, it waives corporate taxes for up to thirteen years. Incentives are based on a variety of criteria, including the company’s potential impact on Thailand’s economy and industry. However, a company must adhere to strict guidelines and ensure that its work doesn’t harm the environment.

The first step is to create a comprehensive business plan that meets the BOI’s requirements. This is essential, as an inadequate plan will likely get rejected. It should include details of all aspects of the company’s operations in Thailand, including management, ownership, production processes, financing, human resources, and technology.

Once the application is complete, it must be submitted to a BOI officer. The approval process can take between 40 working days for investments equal to or less than 200 million baht, and 90 working days for those exceeding 2,000 million baht. In some cases, the project must also be approved by the Ministry of Commerce, the National Economic Development Board (NEDB), or the Industrial Promotion Centers. It is best to consult with experts on the matter before submitting an application. They can help you navigate the process and avoid unnecessary delays.

Incentives

Incentives are available for registering businesses under the BOI, but they are dependent on the project’s location. Special economic zones (SEZs) are established in ten provinces bordering neighboring countries, where the government offers tax and non-tax incentives for logistical activities such as warehouses near the borders; distribution; services; manufacturers that use raw materials from nearby markets; and knowledge-based industries, like R&D centers.

Companies may also receive incentives for establishing regional operating headquarters and research and development centers in Thailand. To qualify, the company must meet certain minimum requirements for capital investment and debt-to-equity ratios. The company must also establish a technical and personnel management center in Thailand, or provide support, service, or training for its associated enterprises. The company must also have paid-up capital of at least THB 10 million on the last day of each accounting period, and at least ten knowledgeable and skilled employees working full time for its international business centre (IBC).

Generally, foreigners may not own majority stakes in most businesses under the FBA, but U.S. nationals are exempt from these restrictions under the U.S.-Thailand Treaty of Amity and Economic Relations. In addition, the Thai government has taken steps to become a leader on Responsible Business Conduct (RBC).

State-owned enterprise (SOE) investors can enjoy the same tax benefits as private enterprises. However, SOE senior managers report to a cabinet minister or SEPO and corporate board seats are typically given to politically affiliated individuals.

Representative Office in Thailand

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Setting up a Representative Office in Thailand is the fastest and easiest way for a foreign company to establish a business presence in Thailand. This type of entity doesn’t require a Foreign Business License.

However, it does have some restrictions like not being allowed to invoice in Thailand. It also has to pay tax on remitted funds according to the revenue code.

Regulatory Requirements

While a Representative Office is permitted to conduct non-revenue-generating activities, it’s also subject to regulations. For instance, it must report on business trends and product advice to its parent company. It is also required to have a manager who has power of attorney and must reside in the country. In addition, it must submit monthly accounting records and annual financial statements. Additionally, it must register with the Thai Revenue Department. It must also abide by labor protections, including the minimum wage and work permit requirements for foreign employees.

A Representative Office can perform a variety of activities, including collecting market information and negotiating contracts. However, it cannot earn income or make sales on behalf of its parent company in Thailand. This makes it an attractive option for companies who want to test the market without making a commitment.

In addition, a Representative Office must remit at least 3 million baht in working capital to Thailand. This capital must be transferred in stages: 25% within the first three months, 50% within the first year, and the remainder within three years. Moreover, it must avoid obtaining loans from local banks to cover operational costs, as this will violate the conditions of its license. Lastly, a Representative Office must file taxes in accordance with the Revenue Code. This includes submitting corporate income tax documents and paying withholding taxes for its staff.

Tax Benefits

As a non-revenue-generating entity, Representative Offices are exempt from corporate income tax in Thailand. This makes them a popular choice for foreign companies exploring the Thai market, as well as for those seeking to conduct market research in Thailand.

However, it is important to understand the limitations of a Representative Office before setting one up. The office is only allowed to perform a limited number of permitted activities, and must report back to its head office on any relevant business trends. It is also prohibited from engaging in sales or negotiations with natural or legal persons in Thailand.

Additionally, Representative Offices must maintain sufficient capital funds to cover operational expenses. In most cases, this is achieved by annually transferring a specified amount of funds from the parent company into a local bank account. The office must also maintain a physical office space in Thailand, and must employ at least one Thai employee who is registered for social security contributions.

The establishment of a Representative Office in Thailand can take as little as a week, but it is crucial to follow the proper procedures to ensure that the office is approved by the Department of Business Development. This includes assembling the required documents, including a letter of appointment signed by the director of the main business and an outline of intended operations.

Legal Requirements

As the name implies, a Representative Office manages service businesses on behalf of its head office or affiliated company in other countries. It is an ideal structure for companies exploring the Thai market, as it does not require a foreign business license and can operate with limited scope of activities, including conducting research or market exploration. However, there are a number of legal requirements that must be met to set up a Representative Office in Thailand.

First, the parent company must file an affidavit detailing important information about the company, its shareholders, and directors, and submit the corresponding documents to the authorities. The company must also submit its financial records for the last three years and provide a list of expected staff members.

The company must also remit a minimum of 3 million baht as initial capital. It must transfer this capital into its corporate bank account annually and show proof of funds remitted. Furthermore, the representative office must not engage in profit-making activities, and any loans that it receives must not exceed seven times the amount of capital remitted. In addition, a legal representative must be appointed to manage the Representative Office and submit a copy of his or her passport and household registration. This manager must have a broad power of attorney that allows him or her to perform the outlined functions.

Cost

As a foreign entity, setting up a representative office in Thailand isn’t cheap. The cost largely depends on the number of employees hired. In general, the rep office can only be employed by a maximum of three staff members (two Thai and one foreign).

In addition to the required influx of capital, the representative office is responsible for paying government fees. Registration fees are based on the company’s registered capital, so a larger registered capital leads to higher registration fees. Representative offices are also required to pay taxes on remitted funds from the headquarters, which can vary depending on the type of fund and amount of money remitted.

Other costs include a lease for an office space, equipment, and any other expenses related to the running of the office. Additionally, the representative office must pay for any staff employed by it who require work permits and visas. These are separate costs that can add up quickly, but they are necessary to maintain the legality of the office in the eyes of the Thai authorities.

Overall, the advantages of a Representative Office in Thailand are numerous and far-reaching. They can be a useful tool for a foreign company that wants to explore the Thai market without making an expensive investment. They can promote products, provide information to local distributors and customers, report trends back to the headquarters and affiliate companies, and more.

Thai Limited Company Registration

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A limited company is the most commonly preferred business type in Thailand. It offers the benefit of limited liability, shielding shareholders from extensive financial exposure.

Registration of a Thai limited company involves filing a Memorandum of Association with the Department of Business Development (DBD). It requires providing details of the proposed business objectives, registered office address and identification documents of the shareholders, directors or promoters.

Company Name

This is the most common type of business in Thailand as it is easy to set-up and it offers limited liability for shareholders. It is similar to an LLC in the US or a Pte Ltd in Singapore or GmbH in Germany. It is also a very popular choice for foreign entrepreneurs as it provides a sense of comfort that they might not feel when establishing another type of business structure.

To establish a Limited Company, you will first need to reserve the company name with the Department of Business Development (DBD). The company name must not be identical or too similar to existing registered companies in Thailand and must end in ‘Limited’.

After reserving the company name, you will need to prepare and file the Memorandum of Association with the DBD. This document must include the company name, the province where the company will be located, the company’s objectives, the declaration that the liability of the shareholders is limited, and the names and details of three promoters. The promoters can be either Thai or foreign nationals and must own a minimum of 50% of the shares in the company.

Once the documents have been filed, you will need to obtain an official company stamp which must be applied on all legal documents and bank transactions. It also serves as a proof of the company’s authenticity and authority. The company must also comply with accounting and auditing regulations and submit annual balance sheets to the DBD.

Shareholders

The main advantage of this business structure is that it offers limited liability to the shareholders, which is defined by their share capital contributions. This makes it a popular choice for foreign entrepreneurs who wish to start a business in Thailand. Other structures, such as partnerships and sole proprietorships, do not offer the same level of protection.

In a private limited company, the promoters (shareholders) must be natural persons and may be Thai or foreign. The number of shareholders must be at least three and the maximum percentage of shares that can be held by foreign investors is 49%, depending on the type of entity.

ATA Services can help you to register a private limited company that allows you to maintain full control whilst maintaining a maximum of 49% foreign ownership. There are various ways of doing this, including setting up a nominee director or providing the nominee with Thai bank statements that show they have enough funding to pay for their shares.

The Articles of Association can include provisions for determining the voting rights of the shareholders and other matters affecting the company’s internal affairs such as weighted voting, restrictions on foreign directors and minimum shareholding requirements in order to qualify for certain business licenses. The company must also prepare share certificates and the shareholders’ register book. Annual shareholder meetings must be held within six months of the date of registration and at least once every 12 months thereafter.

Directors

A Thai Limited Company is a legal structure for business ownership that gives the shareholders a clear separation between their assets and debts and also makes it easy for foreigners to gain work permits for employees. As a result, a registered Thai company can seem more professional and credible to potential clients and partners. Depending on the intended business activities, the new company may need to obtain certain licenses or permits in order to operate. These are generally subject to restrictions in terms of foreign share ownership and directorship and minimum capital requirements.

The director of a Thai company is a key decision maker for the business. They are responsible for preparing and filing company documents with the commercial registry in Thailand, attending meetings of the Board of Directors and holding general assemblies. Directors are also obligated to keep records of the company and ensure that all shares have been paid for.

In addition, the law requires that at least one authorized director be chosen to sign documents on behalf of the company. This is akin to a legal representative and can be of any nationality residing in any country but it is recommended that a number of directors be appointed who reside in the country. This is especially important when the company is to apply for a work permit on behalf of a foreigner as the authorities need proof that the company has the financial capacity to support this process.

Registered Office

To register a business, it’s necessary to designate a registered office. This must be located in Thailand and must have permission from the property owner if it’s a rented location. It also needs to be a place that is readily accessible for authorities and stakeholders to visit. The company’s directors must be available to answer questions in person. If a director is a foreign national, he or she must have a valid passport and work visa for the country.

There are several different kinds of business structures in Thailand. The most popular option is a limited company, which offers liability protection for shareholders. This is a good choice for small businesses, as it doesn’t require a minimum capital amount and has a flexible management structure. It’s also easy to establish, and the minimum share requirement is low.

Once a company is registered, it must apply for and receive a tax identity card. It’s also required to follow accounting procedures specified in the Civil and Commercial Code, the Revenue Code, and the Accounting Act. In addition, the company must conduct an audit of its accounts and file a report with the Department of Business Development. A company bank account is also required to handle financial transactions. Choosing which bank and branch, what type of accounts, and who will sign are some of the important considerations.

Wills and Succession in Thailand

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If you die without a legal Will, your family will have to hire a lawyer in Thailand to complete court probate proceedings. This is time consuming and expensive.

If the deceased had no Will, his property will be distributed according to statutory inheritance laws. This article will cover the basic rules of succession in Thailand.

A Will is a legal document that outlines your wishes for the disposal of your property after death.

The process of inheritance and succession in Thailand is complex. It requires a thorough understanding of both statutory and testamentary succession. The latter, governed by specific sections of the civil code, allows individuals to dispose of their assets according to their desires, bypassing statutory provisions otherwise applicable in cases of intestate succession. In order for a Will to be deemed valid, it must clearly express the testator’s intentions and must be drafted in accordance with Thai law.

Heirs and beneficiaries must be carefully selected to ensure that the testator’s wishes are carried out. In addition, heirs must be prepared to work together and cooperate in the distribution of estate assets. If there is disagreement among heirs, the process can be prolonged. A knowledgeable lawyer can help facilitate the process and resolve disputes.

For foreigners with assets in Thailand, a Will is essential to safeguard their interests. However, the execution of a foreign Will in Thailand may be difficult. This is because the court must determine whether or not the document complies with Thai laws. It is therefore important to consult with a lawyer who understands the intricacies of Thai inheritance law. Our legal team can assist you with drafting and executing a Will that is legally compliant with Thai law and reflects your wishes for the disposition of your assets after death.

It is a good idea to make a Will if you own property in Thailand.

The main reason why a person should make a Will is to ensure that their last wishes are respected after death and to prevent family disputes. Having a properly drafted Will also makes the succession process much easier to settle.

It is important that a foreign national makes a Thai Will in order to protect their assets in Thailand, especially if they have children or if they own shares in a company. A lawyer should be consulted in order to draft the Will and make sure that it meets the requirements of Thai law.

A Will must be made in the presence of a district officer or at least two witnesses in order to be valid. There are three types of Wills: a private document, a public document, and a secret document. The latter is the most difficult to contest, but it must be signed and sealed in the presence of a district officer and two witnesses.

In the absence of a Will, inheritance law determines how property is distributed amongst heirs. The process can be complicated and time consuming, as well as being subject to disputes from heirs. A Will enables people to select their heirs and skips the statutory provisions that would otherwise apply in cases of intestate inheritance. Moreover, it can save on taxes as the Will is a clear indication of what should be passed on.

It is a good idea to make a Will if you have children.

For parents, one of the most important reasons to make a Will is to designate guardians for your children. Without a Will, the courts will decide who is responsible for taking care of your children after your death. Choosing guardians who share your values and are familiar with the needs of your children can help ensure that your children are well-cared for after you’re gone.

A Will also allows you to name an executor who will manage the court process for wrapping up your estate and making sure all of your assets are distributed according to your wishes. The person you choose to serve as executor will have a big job and will have to make many decisions, both large and small, about how to distribute your estate. Using your will to state your preferences will minimize family conflict and allow your executor to focus on making sure that everything is done right.

Your Will can also include a no-contest clause paired with at least some nominal gift to create a disincentive for one of your children from challenging your will in court. Often times, challenges to a Will are made because a child believes that you have been under undue influence and expressed wishes that weren’t really what you wanted.

Having a Will is especially important for foreigners who are close to or settled in Thailand because Thai law requires that heirs be designated based on the laws of Thailand and not the laws of your home country. This means that your family could face complicated legal proceedings and delay the distribution of your estate assets to your loved ones.

It is a good idea to make a Will if you have a spouse.

When it comes to succession, a well-drafted Will allows you to choose your heirs and structure the distribution of your assets according to your wishes. It also helps avoid family disputes and conflicts and ensures that your estate is properly managed and settled. In the absence of a Will, inheritance matters are left to the Thai courts who will decide how your estate should be distributed based on inheritance law.

This may lead to the outcome that is different from your expectations. It can also result in a delay in settling your estate. In addition, a court’s decision may be subject to appeal, which can further complicate the process and result in delays and unintended consequences.

Another benefit of a will is that it will prevent unnecessary taxation. The Thai government requires that all foreigners whose estates are in excess of 1 million Baht must file for estate taxation. The preparation of a will allows you to save on taxes and minimize your legal fees.

A will can include all of your property, including physical and financial assets. This includes your house, cars and other personal belongings, as well as retirement plans, life insurance policies, bank accounts, investment funds, and even digital assets such as logins and passwords to online accounts. In addition to a Will, it is important to make a Living Will which outlines your end-of-life wishes. This is a separate document that should be handed to your Health Care Representative so that they can act on your wishes if you are terminally ill or in a vegetative state.

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