Indo-Siam

Actually the detailed correct answer is:

Thai Annual Corporate Income Tax for company will less than 5,000,000 baht registered capital:  

First 150,000 baht in annual profit:                       0%
150,000 to 1,000,000 baht in annual profit:               15%
1,000,001 to 3,000,000 baht in annual profit:             25%
Annual profit in excess of 3,000,000 baht:                30%

The 0% rate on the first 150,000 baht in annual profit, just like the 0% personal income tax rate on the first 150,000 baht in taxable income, are two initiatives put in place by the currently seated Thai government - but for which they never get any credit.  These initiatives don't do much for wealthy people or companies -  but they significantly help small businesses and modest earners.

Combine with the 99,000 baht in standard personal deductions and standard personal exemptions that apply to most wage-earners, it means that anyone who earns 20,750 baht or less per month pays ZERO personal income taxes in Thailand.    

There is only one corporate tax rate of 20% that exist in Thailand - and that is for public companies that are listed in something called the Market for Alternate Investment (MAI).  So - I suggest that you not use anyone who cites that rate to do your company bookeeping!

Cheers!
Steve
Indo-Siam

1.  For company with registered capital of less than 5,000,000 baht, tax rate on the first 1,000,000 baht in annual profit is 15%, not 20%.  Reference: Section 3 at Thai Corporate Income Tax

2.  Amity Treaty status has no affect on work permit requirement, for you.  So - just two Thai employees.

3.  Nothing in "the system" currently prevents you from paying up company's registered capital in cash, then loaning some large portion of that cash back out to yourself - listing this "loan to related party" as an asset of the company.  In the event your company becomes insolvent, and a creditor has claims against the company, it is (theoretically) possible for the creditor to petition via court action to collect the obligation due to that creditor DIRECTLY from the entity  that owes the debt to the company.

You did not detail the nature of your business, but just for background knowledge, an internet-based business that is involved solely with export of Thai-sourced goods is not eligible to apply for Amity Treaty approval - because that particular activity may be routinely pursued by any company with majority foreign share ownership.

Good Luck!

Cheers!
Steve
Indo-Siam

Here is the correct information:

If a company has majority foreign shareholders, the Labor Ministry will only allow it to sponsor a work permit if the requirements of the Foreign Business Act (FBA) are satisfied.

There are three possibilities:

1.  The FBA does not restrict the declared business activity of the company.  Example:  Manufacturing
2.  The Company has a Foreign Business License - in which case, under Section 14 of the FBA, the company must have registered capital of at least 3,000,000 baht.
3.  The company has a Foreign Business Certificate - in which case, the 'default' criteria of Section 14 of the FBA applies - that being that the company must have registered capital of at least 2,000,000 baht.

The exact wording of Section 14 is:

"Section 14. The minimum capital used at the commencement of the business operation shall not be less than that prescribed by ministerial regulations and shall in no case be less than two million Baht.
     In the case where the businesses in the preceding paragraph require the license under the Lists attached hereto, the minimum capital to be prescribed in the ministerial regulations for each of the businesses shall in no case be less than three million Baht."

The first sentence states the default condition.  The second sentence states the condition if a Foreign Business License is required.

Amity Treaty companies fall under Section 10 of the FBA:

"The foreigners operating the business classified in the attached Lists under a treaty to which Thailand is a party or is obligated to abide "

and are therefore covered under Section 11 of the FBA:

"the foreigners qualified under Section 10 wishing to operate the business under the attached Lists shall notify the Director-General under the rules and procedures prescribed in the ministerial regulations in order to obtain a Certificate.  

So - it is the fact that an Amity Treaty Company satisfies the FBA requirement with 2,000,000 baht - because it operates under a Foreign Business Certificate -- that allows the Amity Treaty company to sponsor a work permit with just 2,000,000 baht registered capital.

This is not a "new" rule - the current version of the FBA was published in 1999 (countersigned by Prime Minister Chuan Leekpai).

I think that the reason that there is a lot of confusion is that many/most people are not aware that there are two distinct categories of authorization to operate a "foreign business" - under a Foreign Business Certificate, or under a Foreign Business License.

There is another operational distinction between these two forms of authorization - that being in the government approval fees.  The approval fee for a Foreign Business Certificate is a flat 20,000 baht.  The approval fee for a Foreign Business License is based on which "list" of restricted activities the activity of an applying company appears, and on the registered capital of the company.

By the way, the other category of companies that operate under a Foreign Business Certificate is companies that are approved for BOI promotional benefits, and which have majority foreign share ownership.

An English version of the FBA is available at Foreign Business Act of 1999  

The details of the differences in government approval fees are provided in Sections 2 and 3 at: Fee Schedule - FBA

Cheers!
Steve
Indo-Siam

I can confirm that it is completely routine to obtain Amity Treaty approval for a company established with 2,000,000 baht registered capitalization.

No Thai employees are required to establish a company - they are only required in order for the company to be eligible to sponsor a work permit. In most locations OUTSIDE of Bangkok, four Thai employees are required, per work permit.  Within Bangkok, we routinely get work permits for new companies with just two Thai employees, initially.

In Bangkok, to sponsor a work permit, the company form Bor Or Jor 5 must show that 100% of registered capital has been paid up - as certified by a director's signature on the form.  There is no requirement for a company to even a bank account opened, to apply for a work permit.

For the latest company for which we obtained Amity approval, key dates were:

Company incorporated 25 March
US Commercial Service endorsement obtained 31 March
Applied to Ministry of Commerce for Foreign Business Certificate 5 April
Received Foreign Business Certificate 20 April

Presumably, the MOC process was delayed somewhat by Songkran holiday.

Cheers!
Steve
Indo-Siam

Anyone considering purchase of this company should have someone who reads Thai brief them on
the content of these postings at the website of the Job-Seeker Protection Division of the Department of Employment of the Labor Ministry:

http://www.ipd-doe.c...r.asp?GID=10349

http://www.ipd-doe.c...er.asp?GID=6836

http://www.ipd-doe.c...er.asp?GID=4827

http://www.ipd-doe.c...er.asp?GID=7412