Thailand

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Business Practices

General information: Thailand Business practices
Business culture Thailand
This site provides general information about Thailand, including Thai society and culture, etiquette, customs, and business etiquette.
Opening hours and days: Usual business hours are 8.00am to 5.00pm, Monday to Friday.
Banks are open between 9.30am to 3.30pm, Monday to Friday. Foreign exchange counters are generally open between 7.00am to 8.00pm. Banks in department stores follow the opening hours of the stores which are usually 10.00am to 8.00pm. In some limited locations there are currency converting machines which convert foreign bank notes. These are open 24 hours.
Government offices are usually open between 8.30am to midday and 1.00pm to 4.30pm, Monday to Friday.

Public holidays

New Year's Day	1 January
Makha Bucha Day	21 February
Chakri Day	6 April
Substitution for Chakri Day	7 April
Songkran Days	13-15 April (12-16-17 in some areas)
Labour Day	1 May
Coronation Day	5 May
Ploughing Day	9 May
Visakha Bucha Day	19 May
Asarnha Bucha Day	17 July
Buddhist Lent Day	18 July
H.M. The Queen's Birthday	12 August
Chulalongkorn Memorial Day	23 October
H.M. The King's Birthday	5 December
Constitution Day	10 December
New Year'sEve	31 December

Periods when companies usually close

Labor Day	1 May
H. M. The Queen's Birthday	12 August
H. M. The King's Birthday	5 December
Constitution day	10 December

Accounting Rules

Tax year: The Thailand year of assessment runs from 1 January to 31 December.
Accounting standards: The accounting standards are described in this link. The Thai Accounting Standards (TAS) are issued by the Federation of Accounting Professions (FAP), which was formed in 2004.
Accounting regulation bodies: Federation of accounting professions
Accounting reports: 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: 1. Of the sums received and expended by the company and of the matters in respect of which each receipt or expenditure takes place; 2. Of the assets and liabilities of the company.” - On 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. Corporate income tax is 30 percent of net profits and is due twice each fiscal year. A mid-year profit forecast entails advance payment of corporate taxes. - On Annual Accounts, any 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.

-On accounting, the basic accounting principles practiced, for example, in the United States or Europe, are accepted in Thailand, as are the various 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. On 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. Regarding auditing, requirements and Standards Audited financial statements of any juristic entities (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. Each company has to produce a balance sheet and a profit and loss account for each accounting year. The external control of accounts must be given to a body of auditors chosen by the company and by the commercial department of the ministry of Treasury.
Publication requirements: Each company has to produce a balance sheet and a profit and loss account for each accounting year.
Professional accountancy bodies: The Institute of Certified Accountants and Auditors of Thailand
Federation of accounting Profession
Certification and auditing: The external control of accounts must be given to a body of auditors chosen by the company and by the commercial department of the ministry of Treasury.
Accounting news: Asian Corporate governance association portal

Tax Rates

Consumption taxes

Nature of the tax: Value Added Tax (VAT) has been implemented in Thailand since 1992 replacing Business Tax (BT). VAT is an indirect tax imposed on the value added of each stage of production and distribution.
Tax rate: The rate is currently 7%
Reduced tax rate: Certain activities are liable to VAT at the rate of zero percent:
- export of goods;
- services rendered in Thailand and utilized outside Thailand in accordance with rule, procedure and condition prescribed by the Director-General;
- aircraft or sea-vessels engaging in international transportation;
- supply of goods and services to government agencies or state-owned enterprises;
- supply of goods and services to the United Nations and its agencies as well as embassies, consulate-general and consulates;
- supply of goods and services between bonded warehouses or between enterprises located in EPZs.
Other consumption taxes: None.

Corporate taxes

Company tax: 30%. For more details, see Thailand tax rate.
Tax rate for foreign companies: Non residents have to pay the VAT.
Capital gains taxation: All earned income from capital gains is taxed the same as regular income.
Main allowable deductions and tax credit: Certain exemptions from corporate income tax are provided under the Revenue Code, Royal Decrees issued under the Revenue Code, and the Investment Promotion Act :

-Dividends paid by a limited company, registered under Thai law, to another Thai limited company or to a company registered under the law governing the Stock Exchange of Thailand may be exempt from corporate income tax, if the holding of the shares in the payer company is in compliance with conditions prescribed in the Revenue Code.

- A reduction or exemption from tax may be granted to juristic entities in accordance with tax treaties between Thailand and foreign countries.

- A corporate income tax exemption for a period of 3 to 8 years may be granted to promoted businesses under the Investment Promotion Act.
In addition, dividends, fees for goodwill, copyright or other rights received from the promoted businesses may also be exempt from income tax in the hands of the recipient. Regarding Deductible Expenses and Allowance:
Generally, expenses incurred exclusively for the purpose of generating income or for the purpose of business, are tax deductible. However, the deduction of some expenses and allowances must comply with the rules prescribed in the Revenue Code like:
- Depreciation Allowance: Any accounting method of depreciation which is generally accepted can be used, but the depreciation rates cannot exceed the rates specified in the Royal Decree issued under the Revenue Code. Accelerated depreciation may be allowed for cash registering machines and machinery and/or accessories used in research and technological development. - Reserves set aside from premiums of an insurance business as well as reserves set aside as provision for bad or doubtful debts from credit extension by banks or finance and securities or credit foncier companies are allowed as deductions. Other reserves are not allowed. - Contribution to a provident fund for employees, established in accordance with Ministerial Regulations, is deductible. - For tax purposes, bad debts may be written off only in accordance with the procedures and conditions prescribed by Ministerial Regulations. - Operating losses may be carried forward for five accounting periods to offset against future profits.
Other corporate taxes: In lieu of tax on net profits, foreign corporations engaged in the business of international transportation are subject to tax at the rate of 3% of gross ticket receipts collected in Thailand for transportation of passengers and 3% of gross freight charges collected anywhere for transportation of goods from Thailand.

Withholding taxes apply to various categories of income paid to juristic entities. The amount of tax to be withheld depends on the category of income and the tax status of the recipient. The withholding tax rates on some important categories of income are as follows:
(1) Rates on Dividends - 10% on dividends paid to domestic and foreign corporations (2) Rates on Interest - 1% on interest paid by financial institutions (banks, finance or credit foncier companies) to domestic companies that are not financial institutions - 10% on interest paid by financial institutions to associations and foundations - 15% on interest paid to foreign corporations (final tax payment) (3) Rates on Royalties - 3% on royalties paid to domestic companies and partnerships (juristic partnerships) - 10% on royalties paid to associations and foundations - 15% on royalties paid to foreign corporations (final tax payment) (4) Others - 15% on capital gains, service fees, professional fees and rent paid to foreign corporations (final tax payment) - 3% on service fees and professional fees paid to domestic corporations or permanent branch offices of foreign corporations - 5% on service fees and professional fees paid to non-permanent branch offices of foreign corporations The withholding tax rates applied to foreign corporations may be reduced or exempted under tax treaties.

Individual taxes

Tax rate

Individual income tax	Progressive rate from 0 to 37%
From THB 0 to 150,000	0%
From THB 150,001 to 500,000	10%
From THB 500,001 to 1,000,000	20%
From THB 1,000,001 to 4,000,000	30%
From THB 4,000,001 and over	37%

Allowable deductions and tax credit: Income which is exempt from personal income tax concerns in particular:

- transport expenses spent in good faith by an employee or a holder of office exclusively, and wholly for carrying out his/her duties;
- medical expenses paid by an employer for an employee and his/her family;
- share of profits obtained from a non-registered ordinary partnership or a group of persons;

- income from sale of securities on the Stock Exchange of Thailand

Some deductions are also in place and are detailed on the Revenue Depatment web site.
Special expatriate tax regime: Expatriates working for qualifying regional operating headquarters in Thailand may opt to be taxed at the final withholding tax rate of 15% instead of the normal progressive tax rates for a maximum period of 4 consecutive years, whether or not he or she has occasionally been travelling out of Thailand during that period.

Double taxation treaties

Countries with whom a double taxation treaty have been signed: See the list of the convention signed on the website of the Board of Investment.
Whithholding taxes: Dividends: 10%, Interest: 15%, Royalties: 15%

Sources of fiscal information

Tax Authorities: Thai Customs
Revenue Department of Thailand
Other domestic resources: Thailand tax overview

Intellectual Property

National organizations: Thailand is part of the Convention leading to the establishment of the World of Intellectual Property Organisation (OMPI/WIPO) and is the latest signatory of the Paris Convention for the Protection of Industrial Property (August 2008). It has also sign the Patent Cooperation Treaty in January 2008. The country has passed a huge number of bilateral agreements on the protection of industrial property.
In order to be protected in Thailand, patents must be registered in the country itself: the Patent Act no. 2 of 1992 protects letters patents over a period of 20 years and industrial design patents over a period of 10 years. Trademarks are protected by the Trademark Act of 1991. Protection can be renewed for additional 10 years. The institution responsible for the registration and protection of industrial property is the Trade Department in the Ministry of Commerce. Information on the regulation body, the Department of Intellectual Property, can be found its website.
Regional organizations: Thailand has signed the ASEAN Framework Agreement on Intellectual Property Cooperation.
International membership: Signatory to the Paris Convention for the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)

National regulation and international agreements

Type of property and law	Validity	International agreements signed
Patent Patent Act (No.3) B.E.2542 (1999)	20 years	Patent Cooperation Treaty (PCT)
Trademark Trademark Act B.E. 2534 (1991)	10 years renewable	Nice agreement
Design Patent Act B.E. 2522 (1979), as amended by Patent Act (No. 2) B.E. 2535 (1992) and Patent Act (No. 3) B.E. 2542 (1999)	10 years.
Copyright Copyright Act B.E.2537 (1994)	50 years.
Industrial Models Patent Act BE 2522	10 years.

Legal Framework

Independence of justice: When under civilian rule, judiciary is generally regarded as independent though it is subject to corruption and heavy backlog of cases.
Equal treatment of nationals and foreigners: Foreign nationals can normally expect impartial trial from the country’s judicial system.
The language of justice: Thai is the judicial language used in Thailand, though English is widely used.
Recourse to an interpreter: It is possible to have access to a transleter.
Sources of the law and legal similarities: The main source of law in the country is the new constitution of October 1997. The legal system is based on civil law system. Thailand has not accepted compulsory ICJ jurisdiction. Thailand's legal system blends principles of traditional Thai and Western laws. Under the constitution, the Constitutional Court is the highest court of appeals, though its jurisdiction is limited to clearly defined constitutional issues. Its members are nominated by a committee of judges, leaders in Parliament, and senior independent officials, whose nominees are confirmed by the Senate and appointed by the King. The Courts of Justice have jurisdiction over criminal and civil cases and are organized in three tiers: Courts of First Instance, the Court of Appeals, and the Supreme Court of Justice. Administrative courts have jurisdiction over suits between private parties and the government, and cases in which one government entity is suing another. In Thailand's southern border provinces, where Muslims constitute the majority of the population, Provincial Islamic Committees have limited jurisdiction over probate, family, marriage, and divorce cases. Only Thai-qualified lawyers have rights of audience in the country’s courts so many domestic firms focus on litigation, although international firms often retain significant Thai expertise. The country recently introduced specialised courts for bankruptcy and IP cases.
Checking national laws online: SCM International Law Office

Standards

National standards organizations: Thailand Industrial Standards Institute (TISI).
Integration in the international standards network: Thailand Industrial Standard Institute (TISI) manages and controls the technical norms as well as the programme of national certification in Thailand. It issues the right to use the TISI symbol on National products. In order to obtain further information, you can contact TISI. Thailand is a member of the PASC - Pacific Area Standards Congress and the ACCSQ - ASEAN Consultative Committee for Standards and Quality .
Classification of standards: The government of Thailand requires a compulsory certification of sixty products in ten sectors including: agriculture, construction materials, consumer goods, electrical appliances and accessories, PVC pipe, medical, LPG gas containers, surface coatings, and vehicles. Certification of other products is on a voluntary basis. Industrial products that have TISI’s certification are generally regarded as having high standards and good quality.
Online consultation of standards: The Thailand Industrial Standards Institute (TISI) website has a library which list online the Thai standards.
Certification organizations: The National Accreditation Council (NAC) of Thailand

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