|Ongoing Compliance Requirements for a Limited Liability Company in Thailand
|The ongoing administration of a limited liability company registered in Thailand requires compliance with various laws and regulations. Following is a summary of the more important compliance requirements after registration of a company.
I. Immediately After Formation
The following matters should be considered immediately after formation of a limited liability company in Thailand. Where necessary or appropriate, specific steps should be taken as described.
|1. Tax Registrations
|(A) Taxpayer identification card: All companies must apply for a taxpayer identification card within sixty days of formation. This is true even if the company does not immediately begin operations.
(B) Value Added Tax (VAT) registration: A company is not required to register under the Thai VAT system until its revenues reach an annual level of Baht 1,200,000. In many cases, however, it is recommended that a company register under the VAT immediately after formation. A company registered under VAT is entitled to a tax credit for all Thai VAT charges incurred when purchasing goods or services. This credit can be used to offset against the remittance to the Revenue Department of VAT received by the company from its customers. A company not registered under the VAT is not entitled to this credit. A company registered under the VAT must register each individual branch office or place of business separately, unless permission has been granted for the filing of a consolidated return.
|2. Bank Accounts
The specific requirements for opening a corporate account vary from one bank to another, but virtually all banks will at a minimum require a certified copy of a resolution of the company's board of directors authorizing the opening of the account and designating who is empowered to sign on the account. The board resolution should:
|(A) Identify the bank branch's name and address.
(B) Specify the types of accounts to be opened (savings, current (checking), etc.).
(C) Identify the authorized signatories.
(D) Specify whether the signatory is authorized to incur a debt by way of overdraft.
|Often, the bank will require that the board of directors issue a power of attorney for the persons authorized to sign on the account, especially when an authorized signatory is not an authorized director of the company. Most banks require that all authorized signatories appear in person at the bank in order to sign a specimen signature.
3. Shareholder Register
Section 1138 of the Thai Civil and Commercial Code (TCCC) requires a limited company to maintain a register of shareholders. It must contain the following particulars.
|(A) The names, addresses and occupations of the shareholders, a statement of the shares held by each shareholder, distinguishing each share by its share number, and the amount paid or deemed paid on each share.
(B) The date on which each shareholder was entered into the register as a shareholder.
(C) The date on which a person ceased to be shareholder.
(D) The numbers and dates of certificates issued to bearer.
(E) The date of cancellation of any name or bearer certificate.
|The register of shareholders should not be confused with the List of Shareholders filed with the Department of Business Development (formerly the Commercial Registration Department). The register identifies the actual legal shareholders on an ongoing basis. The List of Shareholders is merely a "snapshot" of the share ownership at a particular point in time. Because under the law the List of Shareholders need only be updated once each year, it should not be relied upon as proof of the current ownership of the company.
The register of shareholders must be maintained at the registered head office of the shares of the company and must be made available for inspection by shareholders during normal business hours.
4. Share Certificates
Section 1127 of the TCCC requires that a company issue share certificates to each shareholder after the share value has been paid in full. The share certificate must, at a minimum, contain the following particulars.
|(A) A director's signature.
(B) The seal of the company.
(C) The company name.
(D) Number of shares to which it applies.
(E) The amount of each share.
(F) The amount paid on each share (if not fully paid).
(G) The shareholder's name or a statement that it is a bearer certificate.
|5. Documentation Of Capital Received On Shares
The process of registering a limited liability company in Thailand does not require proof that capital has been paid on shares. However, whether or not capital in fact has been paid becomes apparent when the company is audited at the end of its first fiscal year. This frequently results in frantic efforts by companies to document past amounts paid into the company. Company officials are well advised to meet with their auditors immediately after formation of the company to assure that proper documentation and record keeping is in place. This is especially true with regard to funds transferred into Thailand from abroad, for which one should always request a Tor Tor 3 form from the receiving bank. The Tor Tor 3 form may be necessary when repatriating funds abroad, and is often required for proof of receipt of funds from abroad when dealing with government agencies, such as the Board of Investment or the Land Department.
II. Corporate Administrative Requirements
1. Annual General Meeting of Shareholders
A general meeting of the shareholders must be held within six months of the initial registration of the company, and thereafter annually, within four months of the close of the company's fiscal year. The meeting's agenda must include at least the following items:
|(A) Election of directors.
(B) Adoption of the company's audited balance sheet and profit and loss statements for the previous fiscal year.
(C) Allocation of statutory reserve and declaration of dividends (if any).
(D) Appointment of auditor for the following year.
|Within one month after the annual general meeting, the balance sheet must be filed with the Department of Business Development (see III(5) below).
2. Annual Filing of List of Shareholders
Within fourteen days following the close of a company's annual general meeting, a revised list of shareholders must be filed with the Corporate Registration Department. This is normally done at the time of filing the company's balance sheet as described under Sec. II(1).
3. Company Changes
Various government registrations must be amended when a company makes a change in its organization. For instance, when a company changes its head office address, registrations with the following government agencies are required.
|(A) Department of Business Development
(B) Revenue Department
(C) Social Security Administration (if registered)
(D) Labor Department (if an alien work permit has been issued)
|Company officials should be especially alert to notify the Department of Business Development and the Revenue Department (regarding VAT registration) when any change is made, including for example a change of directors or a capital increase. In some cases, such as a change of address, the Revenue Department must be advised about the change of address before as well as after the registration of the change with the Department of Business Development
III. Ongoing Accounting and Taxation Requirements
Putting in place an accounting system and compliance with various tax and other financial filing requirements are critical to the administration of a limited company in Thailand. A company is well advised to consult a qualified accountant immediately after, preferably even before, formation of the company. Following are some of the basic filing requirements for companies in Thailand.
1. Monthly Personal Income Tax Withholding
Personal income tax must be withheld from the salary or wage of each employee at rates depending upon the amount of wage or salary and the tax status of the employee. The amount withheld must be remitted to the Revenue Department with the filing of a Por Ngor Dor 1 return by the 7th day of the following month.
2. Withholding on Payment to Third Persons
The Thai Revenue Code usually requires a company making payments to third parties to withhold and remit to the Revenue Department a portion of such payments. The rate of withholding varies depending on the classification of the income, the identity of the payer and payee, and whether the payment is made in Thailand or is remitted abroad. For payments remitted abroad, the withholding requirements vary depending upon the nature of the income and whether a double taxation treaty might apply to the payment.
3. VAT Compliance
VAT compliance requirements include:
|(A) Registration (see Sec. I- 1(b) above)
(B) Collection of VAT on revenues received
(C) Issuance of valid VAT taxes invoices
(D) Maintenance of input and output tax journals
(E) Maintenance of goods and raw materials records (for persons engaged in the sale of goods)
(F) Filing of Por Por 30 return and remittance of taxes owing (if any) by the 15th day of the following month. Note, this is required even in months in which no transaction takes place.
(G) Filing of Por Por 09 change of registration whenever there is a change in the business, including company registration (see Sec. II- 3)
|4. Half-Yearly Corporate Income Tax Return
A form Por Ngor Dor 51 must be filed within two months following the close of the first six months of the company's fiscal year. Payment of estimated tax must accompany the filing.
5. End-of-Year Audit and Annual Corporate Income Tax Return
A balance sheet and a profit and loss statement for the company must be prepared annually by a Thai Certified Public Accountant. The balance sheet and statement of income and expenses must be presented for the approval of the company's shareholders at the annual general meeting. (Sec. II- 1)
The company's annual corporate income tax return and tax remittance (if any) must be filed within 150 days of the close of the company's fiscal year.
6. Workers Compensation and Social Security Registrations
Any company having ten or more employees must register and comply with the requirements of the Workers Compensation and the Thai Social Security Act. Presently, an employer subject to the Social Security Law must monthly pay an amount equaling 4.0% of the first Baht 15,000 of an employee's monthly wage or salary. This amount is matched by the employee and the government of Thailand.
IV. Client Checklist
_____ Taxpayer I.D. and VAT registrations
_____ Bank account information
_____ Share certificates
_____ Share registry
_____ Documentation of capital
_____ Annual general meeting of shareholders
_____ Annual revised list of shareholders
_____ Company changes
_____ Personal income tax withholding
_____ Withholding on payments to third persons
_____ VAT compliance
_____ Worker compensation and social security registration
_____ Half-yearly corporate income tax return
_____ End-of-year audit and annual corporate income tax return