There are several different business structures, which you can choose in operating your business. TPL will advice on the most suitable form of the local company to be incorporated and register such company with the Ministry of Commerce and the Revenue Department of the Ministry of Finance, as described in the applicable laws. If required, TPL can also help in finding partners and shareholders and assist in all legal matters pertaining to the company's incorporation. TPL can offer managerial services on behalf of absentee directors and is prepared to be responsible to perform various duties on behalf of a director as may be required. Visa and Work Permit matters are serviced by our associates.

Legal services:		Professional Services:
	Establishing a company		Accounting
	Reporting Requirements		Audit services
	Alien Business Law		Tax services
			Secretarial services
			Business consultancy
			Acting as trustees on behalf of absentee directors

ESTABLISHING A COMPANY In order to set up a limited company in Thailand, the following procedures should be followed:

A. Corporate Name Reservation
The name to be reserved must not be the same or close to that of other companies. Certain names are not allowed and therefore the name reservation guidelines of the Commercial Registration Department in the Ministry of Commerce should be observed. The approved corporate name is valid for 30 days. No extension is allowed.

B. File a Memorandum of Association
A Memorandum of Association to be filed with the Commercial Registration Department must include the name of the company that has been successfully reserved, the province where the company will be located, its business objectives, the capital to be registered, and the names of the seven promoters. The capital information must include the number of shares and the par value. At the formation step, the authorized capital, although partly paid, must all be issued.

Although there are no minimum capital requirements, the amount of the capital should be respectable enough and adequate for the intended business operation.

The Memorandum registration fee is Thai Baht 50.-per Thai Baht 100,000.- of registered capital. The minimum fee is Thai Baht 500.-, the maximum Thai Baht 25,000.-.

C. Convene a Statutory Meeting
Once the share structure has been defined, a statutory meeting is called during which the articles of incorporation and bylaws are approved, the Board of Directors is elected and an auditor appointed. A minimum of 25 % of the par value of each subscribed share must be paid.

D. Registration
Within three months of the date of the Statutory Meeting, the directors must submit the application to establish the company. Company registration fees are Thai Baht 500.- baht per Thai Baht 100,000.- of registered capital. The minimum fee is Thai Baht 5,000.-, the maximum Thai Baht 250,000.-. 

E. 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. Business operators earning more than Thai Baht 600,000.- per annum must register for VAT within 30 days of the date they reach Thai Baht 600,000.- in sales.

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."

A. 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 %.

Corporate income tax is 30 % of net profits and is due twice each fiscal year. A mid-year profit forecast entails advance payment of corporate taxes.

B. 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 Commercial Registration Department, 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.

C.  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 % 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 authorized capital. The law requires the authorized capital to be subscribed in full by the shareholders.

D.  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 authorized 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, recognized and practiced by authorized auditors in Thailand.

 © 2000 Trade Partners Limited
 86/1 Sukhumvit Soi 23, Sukhumvit Road, Bangkok 10110, Thailand
 Tel.:+66-2-258-4086, 259-1601, Fax: +66-2-259-6217
E-mail: info@thailand-accounting.com