Investment Promotion for International Headquarters (IHQ)
and International Trading Centers (ITC)
IHQ’s Scope of Activities
International Headquarters (IHQ) provide the following
services to Associated Enterprises (in Thailand/Overseas)
Treasury Center(in accordance with
The Exchange Control Law)
Procurement of raw materials and parts, including services
related to International Trading Centers
Supporting services including• General management, business planning
and business coordination• Research and development of products• Technical support• Marketing and sales promotion• Human resource management and training• Financial advisory services• Economic and investment analysis and
research• Credit management and control• Any Other supporting services as specified
IHQ (Sourcing of raw materials and parts)
IHQ
Thailand
Associated Enterpriseslocated overseas
Manufacturer/Trading Partner located overseas
Raw materialsand parts
Purchase of goodsPayment for goods/services
Out-Out
Associated Enterpriseslocated in ThailandManufacturer/Trading Partner
Located in Thailand Raw materialsand parts
(wholesale only)
In-InPurchase of goods Payment for
goods/services
Overseas
Out-In Raw materialsand parts
(wholesale only)In-Out Raw materials
and parts
(1)
(2)
(3)
(4) servicesservices
Tax Incentives
• Exemption of import duty on
machinery (only for R&D
and training activities)
• Exemption of import duty on
raw materials and parts used
in the production for export
Incentives offered by the BOI
Non-Tax Incentives
• Permission for majority or
total foreign ownership
• Permission to own land
• Permission to bring in
skilled personnel and experts
into the Kingdom to work in
investment promoted
activities
Conditions to apply for BOI
• Paid-up capital must be at least THB 10 million
• Must supervise branch or associated enterprise that are
located overseas, of more than in 1 country
International Trading Center (ITC)
A company incorporated under Thai laws that
purchases and sells goods, raw materials and parts or
that provides international trading related to juristic
persons incorporated under foreign laws
ITC Activities
Remark: Scope of ITC includes Procurement of raw materials and parts and services related to International Trading Centers
ITC
Thailand
Associated Enterpriseslocated overseas Manufacturers/Trading Partners
located overseasGoods
Payment ofgoods
Out-Out
Associated Enterpriseslocated in ThailandManufacturers/Trading Partners
located in Thailand Goods(wholesale only)
In-InPurchase of
goods
Overseas
Out-In Goods(wholesale only)
In-Out Goods
(1)
(2)
(3)
(4)
Payment ofgoods
Purchase ofgoods
Incentives offered by the BOI
Tax Incentives
• Exemption of import duty on
machinery
• Exemption of import duty on
raw materials and parts used
in the production for export
Non-Tax Incentives
• Permission for majority or
total foreign ownership
• Permission to own land
• Permission to bring in
skilled personnel and experts
into the Kingdom to work in
investment promoted
activities
Condition to apply for BOI
• Paid-up capital must be at least THB 10 million
The difference between ITC and IPO
ITC IPO
Procurement of goods
(from Thailand/overseas)
- Raw materials, parts and semi-
finished goods- Finished goods
- Raw materials, parts and semi-
finished goods
Sale of goods in Thailand
- Sell to manufacturers to further assemble/produce into other products
(In-In / Out-In)- is not retail sale/direct sale to end-users
Export goods overseas
- Export goods that were sourced in Thailand (In-Out)
- Purchase and sell goods outside
Thailand without importing into Thailand (Out-Out)
- Export raw materials, parts and
semi-finished goods that were purchased in Thailand (In-Out)
Paid-up capital At least THB 10 million
Other conditions for investment promotion
None
- Procurement domestically in
Thailand
- Inspection and packaging
Remarks 1) An ITC activity covers the former International Procurement Office (IPO) activity
2) BOI-promoted IPO projects can apply for ITC activity either as a new project or amendment of the existing project from IPO to ITC
Address: 18th Floor, Chamchuri Square Building, 319 Phayathai Road,
Pathumwan, Bangkok
Domestic Call: 0 2209 1100, Inter. Call: (66 2) 209 1100
Email: [email protected]
One Start One Stop Investment Center
INTERNATIONAL HEADQUARTERS & INTERNATIONAL TRADING CENTER
Mrs. Patricia MongkhonvanitDirector, Bureau of Tax Policy and Planning
The Revenue Department
CONTENTS
• IHQ : International Headquarters• Activities
• Qualifications
• Tax Benefits
• ITC : International Trading Center• Qualifications
• Tax Benefits
• Application Procedures
• Contacts
INTERNATIONAL HEADQUARTERS
IHQ : INTERNATIONAL HEADQUARTERS
A company incorporated under Thai law which :
Provides managerial, technical, supporting services to its associated enterprises
Provides financial management service to its associated enterprises
Performs offshore trading activities
IHQ : INTERNATIONAL HEADQUARTERS
Managerial or technical services
• General management, business planning and business coordination
• Procurement of raw materials and parts
• Research and development of products
• Supporting technical assistance
• Marketing and sale promotion
• Financial advisory services
• Economic and investment analysis and research
• Credit management and control
Supporting services
IHQ : INTERNATIONAL HEADQUARTERS
• Corporate Treasury Centers under BOT regulations
• Borrowing and lending in Thai Baht
Financial management service
IHQ : INTERNATIONAL HEADQUARTERS
• Purchases and sales of goods overseas (Out-Out)
• Provides international trading related services
Offshore trading activities
IHQ : ASSOCIATED ENTERPRISES
A company which holds shares directly or indirectly in IHQ
not less than 25% of the total capital
A company which has the power to control or
supervise IHQ
A company in which IHQ is directly or
indirectly a shareholder not less than 25% of
total capital
A company in which IHQ has the power to control or supervise
A company in which the company in Box 1 is directly or indirectly a shareholder not less
than 25% of total capital
A company in which the company in Box 4
has the power to control or supervise
IHQ
B Co.
A Co.
D Co.
C Co.
A1 Co. A2 Co.
B1 Co.B2 Co.
S Co.
25%/Control
25%/Control
25%/Control
25%/Control
IHQ :QUALIFICATIONS
Must provide managerial, technical, supporting services or financial management to at least one offshore associated enterprise
Minimum paid-up capital = THB10 million
Minimum operating expenses paid to recipients in Thailand = THB15 million
* If the IHQ fails to meet the above qualifications in any accounting period, the IHQ will disqualify for all tax benefits in such accounting period including tax benefit for its expats
IHQ’S TAX BENEFITS
IHQ :CIT EXEMPTION
• Income from managerial or technical or supporting or financial management services.
• Royalties
• Dividends
• Capital gains
Income from offshore associated enterprises
• Income from out-out trading including transshipment or transitunder Thai Customs Law
• Income from providing international trading related services to foreign companies
Income from offshore trading & related services
IHQ :CIT RATE REDUCTION FROM 20% TO 10%
• Income from managerial, technical, supporting orfinancial management
• Royalties
Income from associated enterprises in Thailand
IHQ :SBT EXEMPTION
Gross receipts from lending to associated enterprises
IHQ :CIT EXEMPTION ON OUTBOUND PAYMENT
Dividends paid out ofCIT exemption income
Interests on loan made for onlending toassociated enterprises
IHQ :PERSONAL INCOME TAX FOR EXPATRIATES
15%on gross income and all benefits derived from employment
INTERNATIONAL TRADING CENTER
ITC :QUALIFICATIONS
Minimum paid-up capital = THB10 million
Minimum operating expenses paid to recipients in Thailand= THB15 million
* If the ITC fails to meet the above qualifications in any accounting period, the ITC will disqualify for all tax benefits in such accounting period including tax benefit for its expats
ITC’S TAX BENEFITS
ITC :CIT EXEMPTION
• Income from out-out trading including transshipment or transitunder Thai Customs Law
• Income from providing international trading related services to foreign companies
Income from offshore trading & related services
ITC :CIT EXEMPTION ON OUTBOUND PAYMENT
Dividends paid out ofCIT exemption income
ITC :PERSONAL INCOME TAX FOR EXPATRIATES
15%on gross income and all benefits derived from employment
APPLICATION PROCEDURESwww.rd.go.th
APPLICATION PROCEDURES
IHQ and ITCRules & Regulations
APPLICATION PROCEDURES
Receive the result from the Director-General of the Revenue Department
Approved Partially approved Not Approved
Track your application process online
Submit the form along with electronic file of business plan to LTO at 11th floor, RD Building
Print out the form and signed by authorized director with company’s seal
Attach XML files
Thai associated enterprises of IHQ
Foreign associated enterprises of IHQ
Expats who work in IHQ or ITC that desire to receive PIT benefit
Register and login to file SorYorKor1 form
Login
APPLICATION FORM (ส.ญ.ค.1)
Application form requirement
• Company’s profile
• Activities to apply
• Company’s accounting period
• Other information
• Number of pages of business plan
• Number of IHQ’s Thai associated enterprises
• Number of IHQ’s foreign associated enterprises
• Number of expatriates working in IHQ/ITC entitled to PIT benefit
• Signature of authorized director and company’s seal
RD CONTACTS (IHQ-ITC ISSUES)
Bureau of Tax Policy and Planning 02-272-8033
Bureau of Legal Affairs 02-272-8390
Bureau of Information Technology 02-272-8735, 02-272-8871
Thank you
Corporate Treasury Center
Agenda
• Definition of Treasury Center• Benefits of establishing TC in Thailand • Scope of business of Treasury Center in Thailand• Conditions and regulations in operating a Treasury Center in
Thailand • TC licensing application• Contact point for applying establishment of Treasury Center
2
Agenda
• Definition of Treasury Center• Benefits of establishing TC in Thailand • Scope of business of Treasury Center in Thailand• Conditions and regulations in operating a Treasury Center in
Thailand • TC licensing application• Contact point for applying establishment of Treasury Center
3
4
Thailand
TC
Group company
Definition of Treasury Center (TC)Treasury Center is a Thai juristic person not engaging in financial business which
manages foreign currency funds for its Group Companies both in Thailand and overseas
Holding company is allowed as a Group Company. Regulatory Relaxation on April 30,2015
Group company
Group company
Group company
Group company
Group company
Group company
Group company
Agenda
• Definition of Treasury Center• Benefits of establishing TC in Thailand • Scope of business of Treasury Center in Thailand• Conditions and regulations in operating a Treasury Center in
Thailand • TC licensing application• Contact point for applying establishment of Treasury Center
5
6
• Reduce transaction costs and help increase companies’
efficiency and competitiveness through cash pooling and
netting.
• Entitle to benefits under International Headquarter (IHQ) if
TC choose to apply for IHQ license
• Facilitate MNCs, either their parent companies abroad or in
Thailand, to centralize all treasury management in Thailand
Benefits of establishing TC in Thailand
Agenda
• Definition of Treasury Center• Benefits of establishing TC in Thailand • Scope of business of Treasury Center in Thailand• Conditions and regulations in operating a Treasury Center in
Thailand • TC licensing application• Contact point for applying establishment of Treasury Center
7
8
Scope of business of Treasury Center in Thailand
Payment & Collection
FX Transactions & Risk Management
Liquidity Management
Netting of FX Transactions
$ €
¥ £
Agenda
• Definition of Treasury Center• Benefits of establishing TC in Thailand • Scope of business of Treasury Center in Thailand• Conditions and regulations in operating a Treasury Center in
Thailand • TC licensing application• Contact point for applying establishment of Treasury Center
9
10
I. Payment and Collection
Group Company in Thailand and abroad TC Counterparty
Re-Invoice
Re-invoicing
Agent
TCTHB / FX
Goods/Services/Dividend/Interest
Re-Invoice
Goods/Services
THB / FX
THB / FX THB / FX
Group Company in Thailand and abroad
e.g. Importer, Exporter
Counterparty
Regulatory Relaxation on April 30,2015
II. Netting of FX Transactions
11
TC can net FX transactions and pay to Group Companies in Thailand and abroad or counterparties abroad on
the net basis.
*including dividend and interest
TC
GC A
Importer/
Exporter
GC B
Exporter
GC 1Producer /
Importer
GC 2Producer / Importer / Exporter
GC 3Exporter
e.g. Multi - netting
International trade and services* of Group Companies in Thailand and abroad
TC’s FX transactions under its scope of business e.g.FX lending and borrowing
Regulatory Relaxation on April 30,2015
III. FX Transactions and Risk Management
12
Domestic FIs TC
TC submits a copy of treasury center license.
Purchase /Sale/ Hedging
Group Company
TC checks underlying transactions of the Group Companies in Thailand e.g. invoices for goods and services, loan agreement.
TC may let Group Companies keep their own documents of underlying transactions.
Purchase /Sale/Hedging
Regulatory Relaxation on April 30,2015
13
III. FX Transactions and Risk Management (2)
TC can purchase FX up to an aggregate amount of USD 500 million per year for the following purposes:
Deposit into the FCD opened with domestic FIs without having documents of underlying transactions
Deposit with FIs abroad
Debt securities investment abroad
Allow TC to open one type of FCD Account (foreign sources). For payment of goods, services and other purposes such as loans, TC can purchase FX up to the amount of the underlying transactions.
Outstanding : up to USD 500 mil.
Regulatory Relaxation on April 30,2015
14
IV. Liquidity Management
TC
Company 1
Company A
GC :Cash Surplus
Company B
Company 2
Company 3
Company C
GC :Cash shortage
Company D
Company 4
Borrow from domestic FIs/ FIs abroad
TC :Cash shortage
Borrow from FIs, Group Companies, affiliate companies or other juristic persons abroad
Deposit into domestic FCD
TC :Cash Surplus
Deposit with FIs abroad
Debt securities investment abroad
TC can lend to its Group Companies more than 1 year. Regulatory Relaxation on April 30,2015
Agenda
• Definition of Treasury Center• Benefits of establishing TC in Thailand • Scope of business of Treasury Center in Thailand• Conditions and regulations in operating a Treasury Center in
Thailand • TC licensing application• Contact point for applying establishment of Treasury Center
15
16
TC Licensing application
Juristic persons must register with MOC to carry out Treasury Center Business
A company submits application & related documents
BOT processess application(30 working days)
MOF approves and grants the license(30 working days)
TC receives the license from BOT togetherwith BOT’s letter indicating list of Group Companies (7 days)
Additional Procedures
If TC is a foreigner,It is subject to the Foreign Business ACT, B.E. 1999
and must apply for Foreign Business License / Certificate
TC licensing application
Agenda
• Definition of Treasury Center• Scope of business of Treasury Center in Thailand• Conditions and regulations in operating a Treasury Center in
Thailand • TC licensing application• Contact point for applying establishment of Treasury Center
17
18
Website: www.bot.or.th >> Foreign Exchange Regulations >>Treasury Center
E-mail : [email protected] [email protected]
Tel : 02 356 7345, 02 356 7858, 02 283 5135
Contact point for applying establishment of Treasury Center
Department of Business DevelopmentForeign Business Administration Division
IHQ - ITCand
FOREIGN BUSINESS ACT (1999)
1. Legal Mechanism
2. Definition of Foreigner & Regulated Businesses
3. IHQ – ITC and FBA
4. Foreign Business Permitting
5. Department’s Facilitating
6. Contacting Points
Outline
2
What are regulated businesses ?
Who are foreigner?Definition
“Foreigner”Regulated Businesses
Licensing & Certificate Granting
Foreign Business License
Foreign Business Certificate
3
a natural person not of Thai nationality1
a juristic person not registered in Thailand2
2. Definition of Foreigner & Regulated Businesses
4
Registered aboard
3 a juristic person registered in Thailand,having 50 % or more of the capital shares held by following persons ;
Natural Person not of Thai nationality or Juristic Person
Registered aboard
Juristic Personregistered in
Thailand
≥ 50%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Foreign Shareholding
Thai Shareholding ≤ 4 9 . 9 9 %
5
2. Definition of Foreigner & Regulated Businesses
Businesses Related To National Safety Or Security Or Having Impacts On Arts, Culture, Traditions,Customs And Folklore Handicrafts Or Natural Resources And The Environment
Business Activities Reserved For THAI Only
Businesses Which Thai Nationals Are Not Ready To Compete With Foreigners
List 1
List 2
List 3
Business means ? Lists Annexed to FBA
Operating Of Undertaking In Activities For The Purpose Of Trade
: In the Field of
AgricultureIndustry
HandicraftCommerceServicesOthers
6
2. Definition of Foreigner & Regulated Businesses
• Managerial or Technical Services• Financial Management• Supporting Services:
- General Management- Research and Development of Product- Financial Advisory Service
Regarded As Service Businesses Under List 3 (21)
Foreign Shareholding Up to 100 %
Business Activities Under IHQ
7
• Purchasing And Selling Goods, Raw Materials Parts or Providing International Trading Related Services
Regarded As Wholesaling Business Under List 3 (15)
Foreign Shareholding Up to 100 %
Business Activities Under ITC
8
: Selling in Domestic Market
: Selling in International Market Regarded As Exporting Business Permission is not Required
9
Section 1130 Days
30 Days
60 Days
Section 12
Section 17
Non Tax Incentive Measures
Shortening Licensing Process•Certificate Granting •Licensing
10
Filing Application
Examining Application
Considering Application
Notifying In Writing
Filing Application
Examining Validity of Investment Promotion
Certificate
Notifying In Writing
within30 Days
within15 Days
• Section 17
• Section 12
Licensing Procedures for IHQ - ITC
11
Foreign Business Administration Bureau
Dept. of Business Development
0-2547-4425-6
Walk-in
1
2
34
6. Contacting Points
12
“Working of Alien Act, B.E. 2551” has stipulated that Alien shall engage in any work when being granted permit fromregistrar which means the Director-General of the Department of Employment and the competent official appoint by the Minister upon recommendation of the Director-General
Work Engaging in work by exerting energy or using knowledge whether or not in consideration of wages or other benefits
Section 9 and 11 (Skilled and profession)- An alien who has residence in the Kingdom- An alien who has permission to stay in the
Kingdom temporarily (Non-Immigrant B), not a tourist/transit.
Foreign Classification
Qualification of an alien
2. Having the knowledge and/or skills to perform the work as stated in the application for a work permit
3. Not being insane or mentally sick, suffering from Leprosy, Tuberculosis, Drug Addiction, Alcoholism, Elephantitus and Tertiary Syphilis.
4. Have never been imprisoned for violation of the Immigration Law or the Working of Alien Act at least one year prior to the date of application.
1. Having residence in the Kingdom or having permission to stay in the Kingdom temporarily (Non-Immigrant B), not being tourist/transit
Criteria for Granting Work Permit1. (International Headquarters: IHQ)
A company incorporated under Thai laws that provide services to its associated enterprises or branches, whether located in Thailand or overseas. The work permit will be granted to a maximum10 workers.
In case, an IHQ needs to employ more foreigners than the stipulated ratio (10 workers), in which the IHQ have paid personal income tax of not less than 3 million baht during the previous year, work permits will be granted as deemed necessary and appropriate.
Criteria for Granting Work Permit 2. International Trading Centers: ITC
A company incorporated under Thai laws that purchases and sells goods, raw materials and parts or that provideinternational trading-related to juristic persons under foreign laws. The work permit will be granted to 10 workers for maximum.
In case, an ITC needs to employ more aliens than the stipulated ratio (10 workers). An ITC have paid personal income tax of not less than 3 million baht during the previous year, work permit will be granted as deemed necessary and appropriate
Applying for Work Permit
As necessary and appropriate
According to the employment certified
letter or employment contract
Not exceeding 2 years/time
Duration of the Work Permit
Bangkok- Office of Foreign Workers Administration,
Department of Employment, Ministry of Labor Mit-Maitree Road, Dindaeng Bangkok 10400
Other provinces- Provincial Department of Employment
For further Information: System management group on foreign workers for skilled labor, Professional
Tel: 0 2245 2745, 0 2248 7202 Website: wp.doe.go.th
Applications must be submitted to the local authority where the applicant’s office is located
Contacts