Investing in Asia Pacific 2015: Thailand

Transcription

1 Investing in Asia Pacific 2015: Thailand Australia China Hong Kong India Indonesia Japan Korea Malaysia Singapore Taiwan Thailand Vietnam Audit Tax Advisory

2 All lasting business is built on friendship. Alfred A. Montapert

3 TABLE OF CONTENTS Introduction About Crowe Horwath International Establishing the business entity Tax information IPO quick facts Human resource requirements Withdrawal procedures

4 Investing in Asia Pacific with Crowe Horwath International

5 INTRODUCTION Welcome to the Crowe Horwath International Investing in Asia Pacific 2015: Thailand guidebook. This guide forms a part of the Investing in Asia Pacific 2015 series and provides a quick reference for those interested in investing in Thailand. While it is not exhaustive, this guide aims to answer some of the key questions that may arise. When specific issues arise in practice, it will often be necessary to consider the relevant laws and regulations and to obtain appropriate professional advice. The guidebook will cover five main topics as follows: Establishing the business entity Tax information IPO quick facts Human resource requirements Withdrawal procedures 5

6 Business is in itself a power. Garet Garrett

7 ABOUT CROWE HORWATH INTERNATIONAL The Crowe Horwath network consists of more than 200 independent accounting and advisory services firms and in over 120 countries around the world. Crowe Horwath International member firms are known for their local knowledge, expertise, and experience balanced by an international reputation for the highest quality in audit, tax, advisory and risk services. They are unified through a shared commitment for impeccable quality service, highly integrated service delivery processes and a common set of core values and management philosophies that guide their decisions daily. This unique combination of talent provides Crowe Horwath International the worldwide capabilities of a highly integrated network to deliver value to multinational clients doing business across borders. 7

8 THAILAND Establishing the business entity Contact Atipong AtipongSakul AUDIT PARTNER Sathien Vongsnan AUDIT PARTNER ANS AUDIT CO., LTD. Bangkok Thanapat Pupat FIRM FOUNDER ATTORNEY-AT-LAW TAX ADVISOR MAGNUS & PARTNERS BANGKOK magnuspartners.com Nattanan Ploujinda SIAM CITY LAW OFFICES LIMITED BANGKOK siamcitylaw.com Formation and costs Company The Civil and Commercial Code governs private limited companies. The Code defines limited company as a company which has a capital divided into equal shares and the liability of the shareholder is limited to the amount of payment remains unpaid on the shareholder s shares. A company may be incorporated by at least three (3) promoters filing a memorandum of association, holding a statutory meeting, and registering the company with the Department of Business Development, and all incorporation / registration procedures may be completed in one (1) day. A company may be required to obtain a license to do business under a particular law, depending on the nature of the business. The Civil and Commercial Code requires a company to hold an annual general meeting of shareholders once a year and one (1) of the meeting agenda is to approve the audited financial statements. The government fee for registering a company is THB 5,000 for every one (1) million Baht registered capital with a maximum fee of THB 250,000. Other government fees are nominal. Branch There is no law which defines the term branch. A branch is commonly known as a branch office of a company incorporated in Thailand and / or a branch office of a foreign company incorporated outside Thailand (the parent company) and seeking to do business in Thailand in the form of a branch office. The first case is straight forward and only registering a branch office with the Department of Business Development under the Civil and Commercial Code is sufficient. The branch office of a foreign company may be established in Thailand in the form of a private limited company whose majority shares are held by the parent company, or alternatively, the parent company is present in Thailand and proceeds to apply / obtain a license to do business in its own name, and in such case, the parent company is considered by law as doing business in Thailand (however, such entity is commonly referred to as branch office). In both alternatives, the branch office is regarded as foreigner under the Foreign Business Act (ie. the law which governs foreigner doing business in Thailand); as a result, it may be required to obtain permission before it commences the business under the Foreign Business Act. The processing time to apply / obtain the license is 60 days. The license fee is calculated based on the amount of the applicant s registered capital and the fee is in the range between THB 20,000 to THB 250,000. Representative Office There is no law which defines the term representative office. A representative office (RO) is commonly referred to as a representative office of a foreign company registered outside Thailand and seeking to do business in Thailand in the form of a representative office. The Foreign Business Act (FBA) is the law which governs the establishment of a representative office. The FBA allows a representative office to carry on non-trading businesses only and the scope of businesses must be limited to those provided for the head office s benefit, not other persons, as follows: 1. reporting business movements in Thailand to the head office; 2. giving advice relating to the head office s goods to the head office s customer; 3. finding the source of the goods in Thailand for the head office; 4. performing quality control on the head office s goods; and 5. distributing information regarding the head office s goods to potential customers in Thailand. The services in these items one (1) to five (5) are considered as FBA regulated businesses; therefore, a representative office is required to apply / obtain a license to carry on these businesses from the Department of Business Development under the FBA. The processing time to obtain the license is 60 days. The license fee is calculated based on the amount of the applicant s registered capital and the fee is in the range of THB 20,000 to THB 250,000. 8

9 2. Investment incentives Company The Investment Promotion Act is the law which promotes local and/or foreign investments in Thailand. The Office of the Board of Investment (BOI) is the authority which administers the Investment Promotion Act. The Act provides tax and non-tax incentives to a successful applicant seeking to do business in Thailand. The non-tax incentives are; for example, permission to bring foreigner to stay and work in a project, permission for foreign investor to own land for use as the site of the business, permission to remit foreign currency out of Thailand, etc. Crowe Horwath International Investing in Asia Pacific 2015 THAILAND The tax incentives are; for example, corporate income tax exemption, import duty exemption or reduction on machinery or raw materials brought into the country for manufacturing, etc. The tax incentive period is varied, depending on the location of the business (referred to by the BOI as investment promotion zone ), and the maximum corporate income tax exemption may be up to eight (8) years. The BOI announces the lists of the businesses eligible for investment promotion from time to time. Interested applicants may apply for the investment promotion at the BOI, which will be reviewed and approved in about 45 days. Branch Representative Office Representative offices are not eligible to investment incentives under the Investment Promotion Act. 3. Foreign ownership restrictions Company The FBA is the main law which governs foreigner doing business in Thailand. The FBA defines foreigner as a person without Thai nationality, a company registered outside Thailand, and a company registered in Thailand and having the foreigner(s) holding the shares at 50% or more of the total shares of the company. The FBA provides the lists of businesses, known as List One, List Two, and List Three, in which the foreigner may not engage. List One Businesses are prohibited to foreigners without exceptions. A foreigner may carry on a List Two Business only if he has obtained permission from the Minister of Commerce with the approval of the Cabinet. A foreigner may carry on a List Three Business only if he has obtained permission from the Department of Business Development with the approval of the Foreign Business Committee whose members consist of the representatives from the public and private sectors. For the business which is not classified in Lists One, Two, or Three, it is permissible to foreigner; for example, manufacturing own products for local or export sales. A foreigner which receives an investment promotion to carry on a business under the Investment Promotion Act, but such business is a business restricted to the foreigner under the FBA, in such case, the foreigner must first proceed to obtain a written confirmation from the Department of Business Development confirming that he is allowed to carry on that business throughout the period of his investment promotion. Branch Representative Office 4. Work permits and visas Company The Foreigner Employment Act is the law which governs foreigner working in Thailand. The Act defines work as performing a work, whether by using knowledge or otherwise, in return for consideration. The Act requires foreigner to apply, obtain, and carry a work permit before he starts to work. The Act provides the list of work, which is not permissible to foreigner; for example, legal service, civil works engineering. A foreigner who wishes to apply for a work permit must file a work permit application with the Labor Department and it takes about 14 days to review and approve the application. A foreigner should be employed, not self-employed, and his employer (i.e., company) may sponsor a work permit application for him, and in such case, according to the practice of the Labor Department, the company (i.e., his employer) must have a registered and fully paid-up capital at THB 2 million in order to sponsor one work permit application. Branch Representative office 9

10 Crowe Horwath International Investing in Asia Pacific 2015 THAILAND 5. Accounting standards and audit requirements Company The local standards in compliance with IFRS has been announced in 2011 for all Publicly Accountable Entities (PAEs) except for some standards related to Financial instruments. However, the accounting standards for Non-Publicly Accountable Entities (NPAEs) are already effective in Hence, NPAEs can consider to transition their FS reporting to either accounting for NPAE or Thai Financial Reporting Standard (TFRS). Branch Can consider to transition their FS reporting to either accounting for NPAE or TFRS. Representative office Same as for branch. 6. Residential directors / promoters requirements Company The Civil and Commercial Code provides that a company must be managed by a board of directors. Only a shareholders meeting has a right to appoint and / or remove a director. A company may have a number of directors as wished. The director may be Thai or non-thai national, as wished. The day-to-day business operation is managed by a Managing Director, who is appointed by a shareholders meeting from time to time. A company must also have authorized director(s), i.e., the director(s) whose signature(s) binds the company. Only a shareholders meeting appoints the authorized director(s). The Civil and Commercial Code provides that at least one-third of the number of directors must retire at an annual general meeting of shareholders every year; however, these directors may be re-elected for another term. For the director s fee, it is only fixed by a shareholders meeting. Branch Representative office A person who manages a representative office is commonly referred to as representative. Such person is appointed by the representative office s parent company and his particulars must be lodged with the Department of Business Development. Representative offices are only allowed to have one representative. 7. Foreign ownership over tangible assets Company The Land Code prohibits foreigner from owning land. The Code defines foreigner as a person without Thai nationality or a company which has foreigner(s) holding the shares from 51% of the total shares in the company. A foreigner may receive exemption under a specific law to own land. For example, the Investment Promotion Act allows a foreigner who receives an investment promotion to own land for use as the site of the business. A foreigner is not only not allowed to own land, but also other property, such as building, house, vehicle, etc. Branch Representative office Representative offices are not allowed to own land. Tax information 1. Tax rates on corporate income For SME: The income tax reduction grants corporate which have paid-up share capital on the last date of accounting period not exceeding THB 5 million and revenue from sales of goods and rendering of services for the accounting period not exceeding THB 30 million by exemption corporate income tax for net profit not exceeding THB 300,000 and at the corporate income tax rate of 15% for net profit exceeding THB 300,000 but not exceeding THB 1 million and at the corporate income tax rate of 20% for net profit exceeding Baht 1 million for the accounting period beginning or after January 1, 2013 onwards. 10 For other entity: There is a reduction in the corporate income tax rate from 23% to 20% on net profit for the two consecutive accounting periods beginning on or after January 1, 2013 onwards.

11 2. Other taxes Crowe Horwath International Investing in Asia Pacific 2015 THAILAND Good and Services Tax (GST) Value Added Tax (VAT) Not applicable. Value Added Tax is collected from: a. sale of goods; and b. provision of services. Sale means to include hire purchase, delivery of the goods to the agent to sell, etc. Service means performing a service in return for consideration. Value Added Tax liability on a sale of goods arises on certain circumstances; for example, transfer of ownership in the goods, or receive the price of the goods, or issue a tax invoice. Value Added Tax on a provision of services arises on certain circumstances; for example, receive the service fee. Currently, the value added tax rate is 7%. A service provider who provides services to his employer abroad is not required to charge value added tax on the service fee, instead he is required to remit the value added tax on the service fee to the revenue office. Other taxes For example, specific business tax which is collected from certain transactions provided in the Revenue Code; such as money lending, buying and selling of land; or land and house taxes, etc. 3. Branch income The branch office of a foreign company which does business in Thailand must pay a corporate income tax on net profits at the rate of 20%. However, the representative office need not because it does not carry on (and is not allowed to carry on) trading business. 4. Income determination Capital gains and dividends are considered as assessable income under the Revenue Code; therefore, a tax payer must include these income items in his other assessable income so that the whole amount is taxed. For the capital gains and dividends which are remitted to investors abroad, it must be subjected to a deduction of withholding tax at the rate of 10%. 5. Deductions Deductions are allowed for all expenses which are for making a business's profit purpose. However, there are some deductions according to Thai Revenue Code which shall not allow to deduct as expense. 6. Group taxation policies Not applicable. 7. Tax incentives In Thailand, there are tax incentives for a company who carries a business in Thailand; for example, Regional Operation Headquarters (ROH). ROH incorporated in Thailand will enjoy tax privileges; for instance, reduction of corporate income tax rate from 20% to 10% or tax exemption on dividends received by ROHs from associated enterprises. 8. Withholding tax Remittance overseas are subjected to withholding tax at the following rate; however, the rate may be reduced according to a relevant Thai tax treaty. Dividends Interest Royalties Technical fee Branch profit 10% 15% 15% 15% 10%, if distributed to a parent company abroad. 9. Tax administration The tax payer must file a corporate income tax return every half year of each year, including filing another tax return within one month after approval of the audited financial statements in the following year. For VAT, it must be filed once a month, on every 15th day of the following month, regardless that there is VAT transaction in the preceding month. 10. Taxable incomes for non-residential companies and individuals Depending on the relevant tax treaty between Thailand and a particular country, income in the form of business profits; such as service fee, consulting fee, etc., is considered as business profits under the tax treaty; therefore, it may be exempted from a withholding tax if it is paid to a person not do business in Thailand in the form of a permanent establishment as defined in such tax treaty. Notwithstanding the tax treaty provisions, income in the form of dividends and royalty fees are subject to a withholding tax at the rate of 10% and 15%, respectively. 11

12 Crowe Horwath International Investing in Asia Pacific 2015 THAILAND IPO quick facts 1. Bourses in the country a. The Stock Exchange of Thailand (SET). b. Market for Alternative Investment (MAI). 2. Admission requirements The Stock Exchange of Thailand (SET) a. Company size (Paid-up Capital) THB 300 million after IPO. b. Trading record Must have been in operation for at least three (3) years; and the total value of ordinary shares based on market capitalization must not be less than THB 5,000 million. Must have the same company management for at least one (1) year prior to the application date; Must have had net profit all of the followings: i. Combined minimum net profits from operations of THB 50 million over the past two (2) or three (3) years; ii. Net profit from operations of THB 30 million for the latest full year, and iii. Net profits from operations in the year of filing the listing application, as shown by combining all quarterly results for that year. For a privatized state enterprise, operations prior to privatization will be considered as a continuation of operations. c. Public shareholding requirement 1. Number of minor shareholders / Non-strategic shareholders: 1,000 shareholders. 2. Strategic shareholders: Hold 25% of paid-up capital for companies with THB 300 million paid-up capital < THB 3,000 million. Hold 20% of paid-up capital for companies with paid-up > THB 3,000 million. 3. Number of shares cumulatively offered for sale: paid-up capital < THB 500 million. 15% of paid-up capital. paid-up capital THB 500 million. 10% of paid-up capital or THB 75 million in shares, whichever is higher. d. Qualitative requirements Have a stable and healthy financial condition and have sufficient working capital. Have a minimum total shareholders equity of THB 300 million. Qualifications for management and control persons should be in line with Securities and Exchange Commision (SEC) regulations and they should not possess any characteristics as prohibited by the SEC. Duties and responsibilities must be clearly defined as specified by the SEC. Have good corporate governance practices and a qualified audit committee as specified by the SET. Have effective auditing and internal control systems as specified by the SEC. Have no existing or potential conflicts of interest as defined by the SEC. Market for Alternative Investment (MAI) a. Company size THB 20 million but lower than THB 300 million. b. Trading record The operation under the management of most executives in the same group must have been continued for not less than one (1) year prior to the submission of an application. There shall be the shareholders equity not less than THB 20 million. The operational results must have existed for net profit in the latest year and there shall not be less than two (2) years prior to the submission of an application, and there shall be accumulated net profit in the period prior to the submission of an application; or The operational results must have existed for not less than one (1) year prior to the submission of an application, and the total value of ordinary shares based on market capitalization must not be less than THB 1,000 million. c. Public shareholding requirement 300 shareholders. The aggregate number must not be less than 20% of the paid-up capital, and each of must hold not less than one (1) board lot of shares as prescribed by the Exchange for the trading of ordinary shares. 12 Public offering: 1. The accumulated number of shares already offered for sale must not be less than 15% of the paid-up capital.

13 2. The shares must be offered for sale through underwriters. 3. For the shares to be offered for sale, application for approval must have been made and approval have already been granted by SEC except where the applicant is a juristic person established under a specific law. Crowe Horwath International Investing in Asia Pacific 2015 THAILAND d. Qualitative requirements The management and any person who has controlling power shall not possess any prohibited characteristics and violate any regulation. There shall be procured good corporate governance system by having qualified independent directors and members of the audit committee to supervise the application s operations in order to meet the standards and ensure pursuit of proper direction and there shall be an established internal control system under the rules prescribed by the Notification of the SEC. There shall be no conflict of interest according to the criteria specified in the Notifications of the Capital Market Supervisory Board. 3. Specific requirements for specific industries Criteria for companies engaged in infrastructure projects In its bid to encourage companies engaged in infrastructure projects, the SET has provided special listing requirements for securities in this category. The requirements which apply to such companies are the same as those that apply to a general company, except there is no requirement for a three-year track record. Furthermore, business operations and market capitalization are not required for these companies. The applicant must comply with any additional requirements as follows: Additional Requirements Nature of Business Sources of Finance Have a concession period of > 20 years with > 15 years remaining as of the application date, or obtain specific permission from a government agency / state enterprise, or possess a contract to sell products/services which can generate stable revenues. Possess confirmed and sufficient sources of finance. Criteria for holding companies i. The applicant must comply with all criteria for listed companies in general, except for the track record and market capitalization criteria. ii. The applicant must also hold shares in a core subsidiary in one of the following ways: At least 75% of the core subsidiary s paid-up capital; At least 51% of the core subsidiary s paid-up capital if the core subsidiary is involved in an infrastructure project; and At least the minimum percentage defined by the SEC if the core subsidiary s operation is in a foreign country. iii. The majority of the applicant s management team has also been management of the core subsidiary for at least one (1) year before the application date, except for an applicant that is a financial institution that is required by a government agency or the core company that engaged in infrastructure project. iv. The applicant must have control over the core subsidiary. v. Once listed, the applicant must maintain its shareholding in the core subsidiary for at least the three (3) following years during which any change of shareholding in the core subsidiary will be allowed only if a qualified substitute is provided. 4. Typical issuance size SET: No. of shares cumulatively offered for sale Paid-up cap < THB 500M: > 15% of paid-up capital Paid-up cap > THB 500M: > 10% of paid-up capital or THB 75 million, whichever is higher MAI: >15%of the paid-up capital. 5. Moratorium imposed A silent period is required for one year after listing. This means strategic shareholders, who hold at least 55% of the firm s paid-up capital after the IPO, are prohibited from selling their shares and securities during the first six (6) months after listing. They will be permitted to sell a maximum of 25% of the locked-up shares every six (6) months thereafter. Specific requirements and conditions for infrastructure will be difference from general conditions. Strategic shareholders are: Directors, managers, and executive management, including related persons and associated persons Shareholders who have a holding above 5%, including related persons. 6. Securities quoted allowed in foreign currency No. 7. Requirements for the appointment of a resident / local director and board composition Board of Directors must consist of at least five directors with at least 50% of the Board members having their residence in Thailand. 13

14 Crowe Horwath International Investing in Asia Pacific 2015 THAILAND To be listed on the Stock Exchange of Thailand, the issuer is required to set up an audit committee to monitor good corporate governance. The composition of the committee and qualifications of audit committee members are listed below. The committee must: Consist of at least three directors, with at least one member having financial and accounting knowledge; Be appointed by the board of directors and shareholders; Not have any non-executive director, executive officer, employee or advisor who receiving a regular salary from the applicant; Be free of any financial or other interest in the company s management and business; 8. Restrictions for foreigners No specific restriction. 9. Methods of offer and restrictions None. 10. Timeline Description Six (6) months before listing application filing Two (2) to five (5) months before listing application filing One (1) to two (2) months before listing application filing Study relevant rules and regulations such as the Public Company Act, SEC rules and regulations governing the issue and the offering of securities to the public, and SET listing rules and regulations. Appoint a financial advisor approved by the SEC. Discuss company information with a financial advisor in order to examine the applicant s qualifications and make appropriate adjustment as needed in accordance with relevant requirements. Plan for information preparation and make schedules. Restructure shareholding of the applicant and the other companies in the group, eliminate existing or potential conflict of interest, and establish a good corporate governance. Prepare financial statements and other accounting reports in line with acceptable accounting standards. Establish an audit committee and appoint independent directors. Transform into a public limited company. Prepare an initial public offering (IPO) application and relevant documents. Plan for and study pricing and distribution of securities. Prepare public relations plan. Establish provident fund. Appoint share registrar. Submit IPO application to the SEC. Prepare for company visit and management interview by the SEC. Prepare listing application and relevant documents. 11. Approving authorities The Stock Exchange of Thailand and the Securities and Exchange Commission of Thailand 12. Estimated cost involved Application Fee Initial Fee Annual Fee SET THB 50, % of paid-up capital Min. THB 100,000 Max. THB 3,000,000 Regressive rate varies by the level of paid-up capital as follows: (capital: million baht) rate < % 200 < capital < 1, % 1,000 < capital < 5, % 5,000 < capital < 10, % > 10, % Min. THB 50,000 Max. THB 3,000,000 MAI THB 25, % of paid-up capital Min. THB 50,000 Max. THB 1,500, % of paid-up capital Min. THB 25,000 Max. THB 1,500,000 Notes: 1. Annual fees will be calculated based on listing duration. 2. Paid-up capital includes all listed paid-up shares of common and preferred stocks 14

15 13. Restriction on secondary listing or dual listing None. Crowe Horwath International Investing in Asia Pacific 2015 THAILAND 14. Language required for: a. Prospectus: Thai b. Annual reports: Thai c. Audit reports: Thai 15. Audit opinion required for a. IPO Non qualified. b. After IPO Not specific. 16. Requirements of accounting auditors to be appointed Locally approved by SEC. 17. Delisting standards from bourses Ordinary shares may be delisted upon occurrence of any of the following events: a. The ordinary shares do not meet all the qualifications pursuant to the part of qualifications of listed securities in the regulations of the Exchange governing listing of securities. b. The listed company has paid-up capital specifically for the ordinary shares in an amount not less than 60 million baht (only for SET). c. The listed company violates or fails to comply with the laws governing securities and exchange, regulations of the Exchange, listing agreement executed with the Exchange as well as any circulars required by the Exchange for compliance, which may seriously and adversely affect the rights, interests or decision of the investors or the change of price of the securities. d. The listed company discloses false information in the application, financial statements or report submitted to the Exchange or revealed to the general public, which may seriously and adversely affect the rights, interests or decision of the investors or the change of price of the securities. e. The listed company fails to disclose material information or makes a mistake in disclosing material information, which may seriously and adversely affect the rights, interests or decision of the investors or the change of price of the securities. f. The listed company s operation or financial condition falls within any of the following cases: 1. The assets used in the operation of the listed company has significantly lessened or are going to significantly lessen as a result of the sale, disposition, letting, separation, operation suspension, abandonment, destruction, deterioration, seizure, expropriation or any other case resulting in the same effect; 2. The operation is halted entirely or almost entirely for any reason whatsoever, regardless of whether such halting of operation is due to the act of the listed company or any other person; 3. The auditor issues a disclaimer or an adverse opinion on the financial statements of the listed company for three (3) consecutive years; 4. The financial condition disclosed in the latest audited financial statements or consolidated financial statements shows that the shareholders equity is lower than zero (0). In case that the financial condition under the first paragraph (ie. from f.1 to f.4) does not show that the shareholders equity of the listed company is lower than zero (0), but the auditor has issued a qualified opinion, or a disclaimer, or an adverse opinion on the financial statements or consolidated financial statements, and the Exchange is of the opinion that it may substantially affect the financial condition of the listed company, the Exchange may consider the financial condition of the listed company by adjusting the condition from the report issued by the auditor and apply the rules prescribed in the first paragraph as it deems appropriate. Consideration of the financial statements or consolidated financial statements under the first paragraph and the above paragraph shall be made from the audited financial statements for the period ended June 30, 1998 onwards. g. The listed company enters into liquidation to dissolve its business. h. The listed company is under receivership by a court order or under any similar circumstances. i. The listed company does any act which may seriously damage the interests of the shareholders. j. The nature of business operation of the listed company is not suitable for it to remain a listed company. k. There is a change in the listed company s shareholding in its subsidiary companies or associated companies and such change in shareholding seriously and adversely affects the results of operations, financial condition and liquidity of the listed company. 15

16 Crowe Horwath International Investing in Asia Pacific 2015 THAILAND Human resource requirements 1. Special labour standards to take heed of The Act on Safety, Health, and Environment in Work 2011 is a new law which governs safety, health, and environment in a work place. The Act became effective in The purpose of the Act is to establish, manage, and control the safety standard, including health, and environment in a work place with intent to protect human resource. The Act is administered by the Ministry of Labor. The Act requires the employer to establish certain safety standard, health, and environment in his work place in order to ensure that there is no injury to the life, body, mental, and health of his employee; and likewise, his employee is required by the Act to co-operate and assist him in such arrangement. Safety standard is announced in a Ministerial Regulation from time to time and on a case-by-case basis, depending on the nature of the business. All expenses in making the safety standard available at the work place is borne by the employer. 2. Social welfare: insurance, pension, etc The Social Security Act 1990 is a law which governs the employee social security. The Act is administered by the Ministry of Interior. The Act considers the employee as insured person whereby he (or his heir) receives certain compensation in the case of his disability, death, or others during his employment. The Act requires the employer to deduct a sum of money from the employee s wage at each payment and remit it to a social security funds account, including for the employer to remit another funds from the employer s own account to such social security funds accounts. The Act also requires the government to remit another fund to such account. These funds are intended for use as the employee s expenses in the case of his disability, giving birth (for women employee), child support, or death during his employment or termination of employment. The social security funds account is established by the Act and monitored by the Office of the Social Security, Ministry of Interior. The amount of the contribution is fixed from time to time by a Ministerial Regulation on a case-by-case basis, depending on the nature of the business. For the employee pension and/or insurance, there is no law which requires the employer to make them available for the employee. 3. Requirements for retirement benefits The Provident Funds Act 1987 is a law which intends to provide savings money to the employee when his employment is terminated for any reason. The Act is administered by the Ministry of Finance. The Act provides an option to both the employer and the employee to agree whether or not they wish to enter into a provident funds; that is to say: the provident fund is optional, not legal mandatory. In the event that there is such agreement, the employer is required to deduct a sum of money from the employee s wage at each payment and remit to a provident funds account, including to contribute another funds from the employer s own account and remit to such provident account where the total funds may not be withdraw by either the employer or the employee throughout the period of employment. The provident fund account is administered by a licensed provident fund company approved by the Ministry of Finance. When the employee s employment is terminated for any reason, the employer is required to instruct such provident fund company to return the provident funds in full amount to the employee. 4. Legal annual leave and public holidays The Labor Protection Act 1998 is a law which provides legal annual leave and public holidays. The Act is administered by the Ministry of Labor. The Act requires the employer to fix the national / traditional holidays of not be less than thirteen (13) days including the Labor Day and announce them to the employee for information in advance. The Act also provides that the employee who has worked for one (1) year is entitled to an annual leave of not less than six (6) days. For the employee who has worked for more than one (1) year, he is entitled to an annual leave holiday which may be more than six (6) days as may be agreed with his employer in advance. In addition, the Act allows the employee to take personal leave, or military training leave, or motherhood leave for the number of days as may be agreed with his (her) employer in advance. These leave days are in addition to the statutory national traditional holidays. 5. Brief information on labour unions The Labor Relation Act 1975 is a law which governs a labor union. The Act is administered by the Ministry of Interior. The Act provides that a labor union may be established solely by the provisions of the Act. A labor union may be established by at least ten (10) employees acting as the promoters and it must be registered so that it is valid by law. The purpose of the labor union is to enhance the benefits of both the employer and the employee and promote their relations. 16 The labor union is required to take actions for the benefits of the employees, as follows: demand, negotiate, and agree on the employment terms with the employer; manage and proceed to obtain benefits for the employees;

17 provide information on employment recruitment to the employees; provide consultation when there is a labor dispute; provide fringe benefits to the employees; and collect the membership fee in the amount provided in the labor union s regulation. The business of the labor union is managed by a Chairman of the Labor Union appointed by a General Meeting of the labor union from time to time. The labor union must prepare, maintain, and keep its financial accounts and books and have them audited once a year by auditor. Crowe Horwath International Investing in Asia Pacific 2015 THAILAND Withdrawal procedures 1. Company: legal procedures required for liquidation The Civil and Commercial Code provides that a company may only be dissolved by a resolution of a shareholders meeting. The shareholders meeting also appoints liquidator(s), who may be the company s existing director(s) or anybody else to liquidate the company. The liquidator has a duty to collect the company s assets in order to pay the company s debts, including to hold a shareholders meeting to report the facts of the liquidation to the shareholders from time to time. During the liquidation, the company is allowed to continue pending business transactions and complete them only, but not to start new business transactions, and these pending businesses must be carried-out by the liquidator. The liquidator may return capital to the shareholders only if and after he has paid the company s debts. The Civil and Commercial Code provides that during the liquidation process, if the liquidator finds that the company s assets are not sufficient to cover the company s debts, the liquidator must (i.e., mandatory, not optional) apply to the court for an order declaring the company bankrupted. When the liquidation is completed, the liquidator is required to file an application with the Department of Business Development in order to confirm such completion. The liquidator must also inform the Revenue Department, which will inspect the company s tax returns to see whether or not all taxes were paid correctly, before the company is allowed to close the business. 2. Company: tax requirements While the company is still under liquidation, the liquidator is still required to file a corporate income tax return, including value added tax return, if any, and when the liquidation process is completed, the liquidator must also file a corporate income tax return as of the date of completion of the liquidation with the Revenue Department. 3. Branch: legal procedures required for closing branch 4. Branch: tax requirements 5. Representative office: legal procedures required for closing office 6. Representative office: any tax requirements Not applicable. 17

18 Crowe Horwath International is a leading international network of separate and independent accounting and consulting firms that may be licensed to use Crowe Horwath or Horwath in connection with the provision of accounting, auditing, tax, consulting or other professional services to their clients. Crowe Horwath International itself is a nonpracticing entity and does not provide professional services in its own right. Neither Crowe Horwath International nor any member is liable or responsible for the professional services performed by any other member.