:: Import and Export Regulations

While regulations govern the import and export of most goods into and out of Thailand, trade in certain items is restricted through outright prohibition, the imposition of duties or licensing requirements. Thus, the export of unmilled rice and rice bran is expressly prohibited. Other goods, such as rubber, timber, rice, hides and skins, silk yarn, and iron scrap may be sold to foreign buyers, but duties must be paid on them. To export certain items, such as gold, cattle, or sugar, one must secure a license from the relevant government authorities.



Import controls

The Ministry of Commerce designates classes of goods that are subject to import controls, which usually take the form of permission and licensing. Although these controls are being liberalised, many classes of goods require import licenses from the Ministry of Commerce. These categories are frequently changed through notifications from the ministry. Application for the license must be accompanied by a supplier's order, confirmation, invoice, and other pertinent documents.

In addition to the Act imposing the above controls, a number of goods are subject to import controls under other laws. These include:

  • The import of modern drugs requires prior licensing from the Food and Drug Administration under the Ministry of Health
  • The Minerals Act stipulates that without appropriate permission, an importer is prohibited from importing tungsten oxide and tin ores and metallic tin in quantities exceeding two kilograms
  • The Ancient Monuments, Antiques, Objects of Art and National Museum Act provides that antiques or objects of art, whether registered or not, must not be delivered without permission from the Director General of Fine Arts
  • The Armation, Ammunition, Explosives, Fireworks and Imitation Firearms Act bars people from producing, buying, using, ordering or importing armations or ammunition or explosive devices unless they gave the appropriate license from the Ministry of Interior
  • The Cosmetics Act stipulates that for the purpose of protection of public health, any importer of controlled cosmetics must provide the name and location of the office and the place of manufacture or storage of the cosmetics, the name, category, or kind of cosmetics to be imported, and the major components of the cosmetics.

:: Export controls

Thailand maintains few restrictions on exports, except when related to national security, environmental protection and cultural concerns, or pursuant to trade agreements (such as international commodity agreements, agreements governing the textile and apparel trade, agreements on subsidies and dumping, etc.). The Ministry of Commerce is authorized to subject products to export control.

Certain goods require export licenses under other laws, such as seeds, trees, and leaves of tobacco. Certain goods, such as sugar and rice, are subject to export licenses under the Export Standards Act, which aims to ensure that such exports are of a set quality.

Exporters of agricultural commodities may find that membership in trade associations is mandatory, and they may impose their own regulations for membership.

The Department of Foreign Trade under the Ministry of Commerce administers Thailand's quota program for the export of textiles and apparel.

:: Procedures for establishing a company

Forming 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 Business Development Office 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 Business Development Office 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 authorised 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 50 baht per 100,000 baht of registered capital. The minimum fee is 500 baht, the maximum 25,000 baht.

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 percent 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 500 baht per 100,000 baht of registered capital. The minimum fee is 5,000 baht; the maximum is 250,000 baht. 

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 600,000 baht per annum must register for VAT within 30 days of the date they reach 600,000 baht in sales.

 


2.
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:
 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."

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 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.

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 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.

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 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.

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, recognised and practiced by authorised auditors in Thailand.