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Tips:InvestmentOpenness to Foreign Investment Despite internal political tensions and severe flooding in 2011, Thailand conti

Openness to Foreign Investment    

Despite internal political tensions and severe flooding in 2011, Thailand continues to

maintain an open, market-oriented economy and encourages foreign direct investment

as a means of promoting economic development, employment, and technology transfer.

In recent decades, Thailand has been a major destination for foreign direct investment,

and hundreds of U.S. companies have invested in Thailand successfully. Thailand

continues to welcome investment from all countries and seeks to avoid dependence on

any one country as a source of investment.  Following the significant impact of flooding

in 2011, investors are seeking development and implementation of an improved

government water management plan as a critical element to maintaining investor


The Thai economy remains resilient in the face of the severe domestic floods and

continuing global economic crises. GDP growth in 2010 was nearly 8 percent, and the

government anticipated 2011 growth at a rate of four to five percent pre-floods (year-onyear).  However, with flooding affecting 60 provinces of 77 provinces, a contraction

occurred in the fourth quarter following growth of 3.1 percent in the first three quarters. 

Annual GDP growth for 2011 is expected to be 1.1 percent for the year.

In the wake of the 1997-98 Asian Financial Crisis, Thailand embarked on an

International Monetary Fund (IMF)-sponsored economic reform program designed to

foster a more competitive and transparent climate for foreign investors. Legislation in

1999 established a new bankruptcy court, reformed bankruptcy and foreclosure 66

procedures, and allowed creditors to pursue payment from loan guarantors. Other 1999

reforms include amendments to the Land Code, Condominium Act, and the Property

Leasing Act, all of which liberalized restrictions on property ownership by non-Thais. The

Foreign Business Act (FBA) of 1999 continues to govern most investment activity by

non-Thai nationals.  The FBA opened some additional business sectors to foreign

investment; however, foreign investment in most service sectors is limited to 49 percent

ownership.  Other key laws governing foreign investment are Alien Employment Act B.E.

2521 (1978) and Investment Promotion Act B.E. 2520 (1977).  

Business Registration: Any entity wishing to do business in Thailand must register with

the Department of Business Development at the Ministry of Commerce, generally taking

from three to six months to complete. Firms engaging in production activities need to

register with the Ministries of Industry and Labor and Social Welfare. If the entity falls

under the definition of non-Thai national as defined by the Foreign Business Act, they

have to obtain a 'foreign business license' (or a certificate for US investors as mentioned

above), which must be approved by the Council of Ministers (Cabinet) or DirectorGeneral of Department of Business Development at the Ministry of Commerce

depending on types of restricted businesses.


Corporate Income Tax

All business establishments must have a taxpayer identification card within sixty days of incorporation. The corporate income tax rate is 30% of net profit. Corporate taxes are due semi-annually. Financial statements must be prepared annually by a company auditor. The Revenue Department requires that accounts be in the Thai language. The books must be kept at a place of business for ten years.

For more information on corporation income tax, please refer to the Revenue Department Click here

Value Added Tax

Created in 1992, the VAT is applied to each stage of the production process, and is paid on a monthly basis. The VAT rate is 7%. Exports, domestic transportation and certain other sales are exempted from VAT.

Personal Income Tax

Every person, resident or non-resident, who derives assessable income from employment or business in Thailand, or has assets located in Thailand, is subject to personal income tax, whether such income is paid in or outside of Thailand. Personal income tax rate is 30% if the net annual income is between 1,000,001 – 4,000,000 Baht, and 37% if the net annual income is over 4,000,001 Baht.

For more information on tax structures, please refer to the Revenue Department Click here

Treaties to avoid double taxation

Thailand has treaty agreements to eliminate double taxation with Canada and United States. The treaties generally place taxpayers in a more favorable position for Thai income than they would be under the Revenue Code, as profits will only be taxable if the taxpayer has a permanent establishment in Thailand.

Keyword: Indonesia Investment

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