JIN LAW

05/10/2019

How is Thailand's Transfer Pricing in 2019?

I previously shared about the amendments to Thai Revenue Code regarding transfer pricing which was announced on 27 September 2018. Now these new amendments have become effective since beginning of this year (1 January 2019) introducing transfer pricing provisions into income tax.

What is Transfer Pricing?
Transfer Pricing refers to a price of goods or services set when it is exchanged/provided between affiliated companies within a single corporate structure. It can be intangible assets and intellectual property. It is the accounting practice which is set in order to realize tax savings as for adjusting the price of goods and services can have significant effects on a company’s tax liability.

Highlights of the new transfer pricing provisions:
- Affiliated companies are required to submit required documents detailing instance of transfer pricing and other information as requested by Revenue Department within a specific deadline. The deadline is specified for 180 days for the first year after the enforcement of the amendments and is shorten to 60 days in sequence years, with extension availability to 120 days.

- Affiliated companies are required to prepare reports detailing the transactions made between group companies for each accounting period using the format provided by the Revenue Department. This is to be given to assessment officers alongside their tax return submissions.

- If a company has been found or suspected of committing misconduct with regard to transfer pricing, Revenue officers are entitled to reduce the company’s revenue and expenses to arm’s-length price. If by engaging in this misconduct the company finds itself in a tax shortfall, it will be subject to a secondary adjustment.

Penalties
Failure to disclose those required documents will result in penalties not exceeding THB 200,000.

The sub-regulations are expected to be issued by the Ministry of Finance to specify required documents for transfer pricing documentation as well as the criteria for exemptions from disclosure requirements.

28/09/2019

The Personal Data Protection Act 2019 (PDPA) has been in forced since May 2019. Here are some key points :

1. Definition of Personal Data
Any data of an alive person which could identify of such person directly or indirectly. For example, any personal data of an individual handled by a company, including customer data, employee data, data of directors, shareholders, contractors, suppliers, seminar and market survey participants, and data involving customer complaints and inquiries would be subject to the PDPA.

2. Officer/Sub-Regulations
The Personal Data Protection Committee will be established to set out further sub-regulations and protect the rights of the data subjects. Any companies/organizations collecting, using, disclosing and/or transferring personal data could be deemed as a “data controller and/or data processor” which will be required to comply with such sub-regulations (which have different roles and obligations). The data controller and the data processor could be required to appoint a data protection officer and a representative in Thailand.

3. Applicability
The PDPA has extraterritorial applicability. Thus, data controllers and data processors both in and outside of Thailand could be subject to the PDPA.

4. Legal Concept
The PDPA is based on “consent” concept. In order to collect, use, disclose and/or transfer personal data, the data controller has to rely on this concept, except for other exemptions (e.g., vital interest, public interest, legal obligations, and legitimate interest).

5. Penalties
The PDPA imposes penalties for non-compliance. It is punishable with administrative fines (up to THB 5 million), criminal penalties (imprisonment up to one year and/or fines up to THB 1 million), and punitive damages up to twice the amount of the actual damages. Furthermore, civil damages under the PDPA can be multiplied as Thailand now allows data subjects to bring a class action lawsuit. The director of a company could also be subject to penalties under the PDPA.

6. Timeline
The Act has been published in the Government Gazette on May 27, 2019. The provisions related to the collection, use, or disclosure of personal data will come into effect with the full force of law on May 28, 2020.

7. Recommendation for Compliance
To avoid risk, company should collect only necessary data. The collected data should be categorized and company should ensure that the “personal data” is tightly controlled and used only for the purposes clearly given upon consent. The consent should be given in writing or via e-mail in clear plain language. The information on specific purposes/objectives should be provided.

22/09/2019

How to Draft Contract of Selling and Buying a Business in Thailand?

This can be a complicated issue. But here are my initial advices:

There are many different approaches for buying and selling a business in Thailand. One common channel is where a foreign investor purchase majority of the shares of existing Thai company. In this case, the purchasing investor has power to control over the management as well as assets owned by the company. Here are some significant issues which should be considered and addressed in the contract of selling and buying a business :

- Authorization and power to vote in shareholders’ meeting
Basically, when it comes to calculating the votes, one share is equal to one vote. However, the law allows the parties to agree differently, in case of preference shares for example. So it is better to make sure and have this clause specified clearly in the contract. This will also affect the control over management and directorship of company.

- Liabilities occurred before gaining the shares
According to Civil Code of Thailand, the new shareholder of a limited company shall be responsible for the liabilities (such as tax liability, loan, etc.) occurred before he/she becomes a shareholder for the amount which such shares remain fully unpaid. This section is to protect the third party outside the company, so it is recommended to ensure you have this issue mutually and properly agreed between internal parties.

- Licensing
When the shares are gained by a foreign investor, the company is likely turning to be a “foreign owned company” since then. In this case, you should make sure that all required licensing is taken care, depending on business type, including immigration matters if you want to have an availability for visa and work permit under the company. This issue can be addressed in the contract for further actions.

18/09/2019

Thailand Smart Visa

Smart Visa is a visa program supported by Board of Investment (BOI) to attract highly skilled manpower. It has been launched since 2018 and later more targeted industries and privileges has been added.

As you may know, while a regular immigration benefit for BOI companies is 1 or 2 years permission to stay with requirement of work permit, the Smart Visa is a new type of visa which non-BOI companies can even apply for. It is a benefit for individuals who invest or work in the "targeted industries" and are "eligible" under the Smart Visa Program which grants maximum 4 years permission to stay, exemption of work permit and additional privileges.

What are Targeted Industries?
- Next Generation Automotive
- Smart Electronics
- Affluent, Medical and Wellness Tourism
- Agriculture and Biotechnology
- Food for the Future
- Automation and Robotics
- Aviation and Logistics
- Biofuels and Biochemicals
- Digital
- Medical Hub
- Alternative Dispute Resolution
- Human Resource Development in Science and Technology
- Environmental Management and Renewable Energy

Who are eligible?
Investors, executives, startup entrepreneurs who invest or work in targeted industries in Thailand and considered as qualified under BOI's requirements.

10/09/2019

Hotel Business in Thailand

Thailand is the land of smiles and tourism! It is a growing business and a strength of the country. Most of the time, starting a hotel business in Thailand is a very attractive profitable undertaking; however it is subject to quite a significant amount of regulation. Here are what you should know about the laws:

Step 1: Formation of Business and Registration
A Thai national may register any form of business entity, while the Foreign Business Act limits the rights of foreigners to own and operate a hotel business. Foreigners must obtain a Foreign Business License (“FBL”) from the Department of Business Development before the business operation can get started. Hotels with big investment such as 100 rooms or more are also eligible to apply for certain privileges granted by the Board of Investment. Moreover, under the Thai-U.S. Treaty of Amity, United States nationals (including companies) are permitted to hold a majority share in Thai companies carrying on a hotel business.

Step 2: Licensing
Licensing is a separate issue from business registration. Once you obtain your business registration, next step is to obtain certain licenses as required by laws. The number of required licenses that should be obtained prior to commencement of business operation depends on the facilities and services provided by hotel.

Any hotel that has more than 4 rooms or may accommodate more than 20 guests must obtain a license to operate a hotel business (“Hotel License”) from the Department of Provincial Administration for hotels located in Bangkok, or from the Provincial Governor’s Office for other areas.

Hotels that provide restaurant services are required to obtain a “Permit for Selling Food, Liquors and Cigarettes” while an entertainment permit is required for conference room services or entertainment services, such as pubs, clubs, bars and spas.

01/09/2019

Thai immigration applications may be very well known as “complicated procedures”. This is why I always have been asked to provide consulting on “Permanent Residency” application in Thailand (PR), as a way to avoid the immigration headache. However, there are factors to be considered before your decision. And here are some of the Q&A I have just provided to clients recently:

• Is it worth applying for Thai PR or are there other better alternatives?
It depends on your purpose and there are many factors taking into consideration. I would recommend you start from knowing about benefits of obtaining Thai PR first. It makes easier to decide if you want to go with it.

Benefits of Thai PR:
- You can live permanently in Thailand without visa and 90 days notification process, however, you are still required to do "re-entry" every year in case you want to go overseas.
- You can buy a condominium without bank transfer from aboard.
- You are eligible to become a director for a Thai public company.
- You are eligible to apply for Thai citizen.
- You are eligible to have your name in registration book.
- You will obtain Alien Registration Certificate.
- Your children born in Thailand can be granted Thai nationality.
- Your dependents can also apply for extension of stay and PR based on your Thai PR.

• How difficult is it to get Thai PR?
From my experience, I would say it is quite difficult, as because it is a "quota basis" process and it requires very detailed information and many documents to be submitted. It also takes a long time for approval.

• I would like to apply for Thai PR under marriage reason, would you advice this or are the other alternative reasons worth looking at?
It depends on your conditions and status. There are many reasons which allow you to apply for PR such as; family relationship, investment, working, expert, etc.

• How long does the entire process take?
From my experience, it takes very long, it is normally more than 2 years.

• Any other information you can provide me that you think would be helpful, would be greatly appreciated.
In my opinion there is not really a great benefit from obtaining Thai PR except you aim to avoid the visa extension application and plan to become a Thai citizen. However, I should be able to give you more accurate information and best solutions for you if I know more about your conditions and status.

So yes, best is to let your immigration expert knows your background, your conditions, your status and what you aim for and he/she can chose the solution that fits you most.

29/08/2019

Owning a property in Thailand can be a valuable investment for foreigners. However, you need to take into account the limitations on foreign land ownership and tax law.

The easiest way to buy a property in Thailand is to buy a condominium. Thai law allows foreigners to purchase condominium units in a development project that has not more than 49% of the foreign owners in total in such unit. Foreigners are also required to finance the purchase using foreign currency unless those who hold a Thai Permanent Residence Certificate.

If foreigners wish to own land, the easiest way is to handle through a corporation, either as a minority shareholder in a Thai company or as a majority shareholder in a foreign company granted landholding privileges by the “Board of Investment” (BOI).

And "What are tax liabilities for property owners in Thailand?"

Owning real property in Thailand definitely has tax consequences. All rental properties in Thailand are subject to a House and Land Tax, which is 12.5% of the annual rental income. On top of that, the rental income is taxable. The income tax is calculated using a progressive rate, while withholding tax rule also impact cash flow from rental properties. If you rent out a property to a company, that company is required to deduct 5% of their rent and pay it directly to the government as prepayment of your income tax.

25/08/2018

The revised DTA between Thailand and Philippines will become effective on 1 January 2019.

Check out the amendment and the expansion of “PE” in the revised DTA as linked below.

Resource : KPMG

A revised double taxation agreement (Revised DTA) between Thailand and the Philippines....

10/05/2018

What do you think about the 10 years old draft of data protection law in Thailand?

Experts call for quick action amid growing ecommerce, data breach fears and upcoming tough new EU legislation

09/05/2018

DBD has just announced the reducing of business registration fees. The flat rate has been applied instead of the former progressive rate based on the capital. It is even much cheaper for the online registration. Check out the samples below:

25/03/2018

E-Commerce Laws in Thailand

None of you would refuse that he/she has never bought something online, wouldn't you? However, if you are at the side of business operators and If your online transactions are ever done by the customers in Thailand, here are main relevant laws you should be concerned regrading your e-commerce business in Thailand:

1. Commercial Registration Act B.E. 2522 (1979)
“CRA” and its relevant notifications require registrations and other compliance requirements on all e-commerce business. Under this law, it covers many kinds of online transactions, such as; buying or selling goods/services via the Internet, providing Internet services, leasing space in a computer hosting device, and acting as a marketplace for the sale or purchase of goods and services via the Internet. An application for the e-commerce license can be submitted once the website is operational.

2. Direct Sales and Direct Marketing Act B.E. 2545 (2002)
“DSA” partly controls the marketing of goods or services at a distance (which could be web portal, e-marketplace and e-commerce) and the consumers can respond through such distance. Certain e-commerce operators are required to register their business with the Office of the Consumer Protection Board (OCPB).

3 Electronic Transactions Act B.E. 2544 (2001)
"ETA" is the law to deal with legal issues for business transacted via electronic means as a supportive method of commercial transactions under the Civil and Commercial Code. The E-Transactions Act combines the Electronic Transactions Law and the Electronic Signatures Law into one.

4. Computer Crime Act B.E. 2550 (2007)
This focuses on the computer-related crimes and the give so much power to the authorities investigating the crimes. The main crimes under this law are the following examples:
- hacking into a computer system of another person
- disclosing information on prevention measures and
- illegitimately compiling computer data of another person
Also, the Penal Code in relation to electronic payments should be considered.

5. Data Protection
At the moment, there is the absence of specific legislation on data privacy in Thailand. But here are some areas of business which are covered by the data protection requirements in particularly;
- Official Information Act B.E. 2540 (1997)
- Telecommunications Business Act B.E. 2543 (2000)
- Act on the Undertaking of a Credit Data Business B.E. 2545 (2002)
However, theoretically, any violation of that results in damage to others may be considered a wrongful act (a tort) under Civil and Commercial Code.

18/01/2018

New minimum wages in Thailand as effective from 1 April 2018

Resource: Bangkok Post

The national wage committee with the authority to approve minimum daily wage hikes agreed on Wednesday night to an increase in the minimum wage.