Newsletter Nr. 172 DE

 

 

 

 

Der Hong Konger Haushalt 2014/2015

 

Auswirkungen auf Hong Kong

 

 

 

März 2014

 

 

 

A l l r i g h t s r es er v ed © L o r en z & P ar t n er s 2 0 1 4

 

 

Obwohl Lorenz & Partners große Sorgfalt darauf verwenden, die in diesen Newslettern bereitgestellten Informationen auf aktuellem Stand für Sie zur Verfügung zu stellen, möchten wir Sie darauf hinweisen, dass diese eine individuelle Beratung nicht ersetzen können. Lorenz & Partners übernimmt keinerlei Gewähr für die Aktualität, Korrektheit oder Vollständigkeit der bereitgestellten Informationen. Haftungsansprüche gegen Lorenz & Partners, welche sich auf Schäden materieller oder ideeller Art beziehen, die durch die Nutzung oder Nichtnutzung der dargebotenen Informationen bzw. durch die Nutzung fehlerhafter und unvollständiger Informationen verursacht wurden, sind grundsätzlich ausgeschlossen, sofern seitens Lorenz & Partners kein vorsätzliches oder grob fahrlässiges Verschulden vorliegt.

 

 

 

  1. Einleitung

Am 26. Februar hielt der Hong Konger Financial Secretary John Tsang seine jährliche Rede zum Hong Konger Haus-halt 2014/2015.

 

Wie jedes Jahr wurde mit Spannung erwartet, ob es Hong Kong auch in 2013/2014 gelingt, anstatt des prognos-tizierten Defizits von ca. 5 Milliarden HKD (ca. 500 Millionen Euro) einen Überschuss zu erwirtschaften.

 

  1. Die wichtigsten Eckdaten
  2. Haushaltsjahr 2013/2014

Aller Voraussicht nach wird Hong Kong das Wirtschaftsjahr 2013/2014 mit einem Überschuss von ca. 12 Milliarden HKD (1,2 Milliarden Euro) abschließen. Haupt-einnahmequellen waren die Einkommens-steuer (salaries tax), die Körperschafts-steuer (profits tax) und Einnahmen aus dem Verkauf von Landflächen. Die gesamten Einnahmen beliefen sich auf ca. 448 Milliarden HKD (ca. 45 Milliarden Euro), welchen Ausgaben in Höhe von ca. 436 Milliarden HKD (43,7 Milliarden Euro) entgegenstehen.

 

Die gesamten Finanzreserven werden sich dann zum 31. März 2014 auf ca. 746 Milliarden HKD (75 Milliarden Euro) belaufen.

 

 

 

 

Das Wirtschaftswachstum im vergange-nen Finanzjahr lag bei ca. 3 % (entgegen 1,5 % in 2012) bei einer immer noch recht hohen Inflation von 4,3 %. Allerdings sank die Arbeitslosenquote weiter auf durchschnittlich 3,2 %, sodass in Hong Kong von Vollbeschäftigung ausgegangen werden kann, was sich auch an den Gehaltsvorstellungen von Bewerbern widerspiegelt.

 

Weiterhin wurde Hong Kong in 2013 zum zwanzigsten Mal hintereinander zur freiesten Wirtschaft der Welt gewählt und hat inzwischen (Stand 01. Januar 2014) mit insgesamt 29 Nationen Dop-pelbesteuerungsabkommen abgeschlos-sen.

 

 

  1. Ausblick auf 2014/2015
  2. a) Genereller Ausblick

 

Für das kommende Haushaltsjahr, wel-ches am 01. April 2014 beginnt und am 31. März 2015 endet, rechnet Hong Kong mit einem Erstarken der Wirt-schaft und einem entsprechend stärke-rem Wachstum. Hong Kong geht von ei-nem Wirtschaftswachstum von 3 % bis 4 % aus, bei einer leicht ansteigenden Inflation auf 4,6 %.

 

Die Einnahmen sollen sich auf ca. 430 Milliarden HKD (ca. 43 Milliarden Euro) belaufen Diesem Planansatz stehen geplante Ausgaben von 411 Milliarden HKD (ca. 41 Milliarden Euro) entgegen, sodass Tsang für das kommende Wirt-schaftsjahr mit einem Überschuss von 9 Milliarden HKD (900 Millionen Euro rechnet), wobei bereits eine Reserve für eventuell sinkende Einnahmen einkalku-liert ist. Es ist eher ungewöhnlich, dass Tsang bereits bei der Vorschau für ein kommendes Wirtschaftsjahr von einem Überschuss ausgeht. In den letzten Jah-ren wurde immer mit einem Defizit kalkuliert, was sich dann aber regelmäßig nicht bewahrheitete. Der Grund für den bereits jetzt in Aussicht gestellten Über-schuss sind sinkende Ausgaben vor allem im Bereich von Förderungsmaßnahmen. So wird unter anderem die Übernahme der Stromkosten für jeden Hong Konger Haushalt in Höhe von bis zu 1.800 HKD (180 Euro) gestoppt und die Übernahme von Mietkosten für den sozialen Wohnungsbau (goverment housing) wurde von drei auf einen Monat redu-ziert. Begründet werden diese Kürzungen mit einem Wiedererstarken der Wirt-schaft, sodass die Unterstützungsleistun-gen der Regierung (welche auch inflationsfördernd seien) reduziert wer-den konnten.

 

 

  1. b) Konkrete Einzelmaßnahmen

 

Nachdem der Hong Konger Regierungs-chef (Chief Executive) Leung Chun Ying bereits in seiner jährlichen Rede Anfang Januar 2014 neue Maßnahmen verkün-dete, um Personen, welche in Hong Kong an oder unter der Armutsgrenze le-ben (grassroot people), wurde nun von Tsang erwartet, dass er Maßnahmen ver-kündet, welche die Mittelschicht in Hong Kong unterstützen und entlasten. Diesem kam er allerdings nur teilweise nach, da lediglich die Unterstützungen, welche in den letzten Jahren bereits

 

eingeführt wurden, aufrecht erhalten werden, oder leicht erhöht werden. Dies sind im Einzelnen:

 

Erlassen der persönlichen Ein-kommenssteuer (salaries tax) in Höhe von 75 % maximal jedoch 10.000 HKD (1.000 Euro).

 

Erlassen der Körperschaftssteuer (profits tax) in Höhe von 75 % maximal jedoch 10.000 HKD (1.000 Euro).

 

Erhöhung  des  Freibetrags  für

 

pflegebedürftige Eltern um ca. 5 %. Die Höhe der jeweiligen Freibeträge richtet sich danach, ob die Eltern alleine oder zusam-men mit dem Steuerzahler leben oder in einem Heim unterge-bracht sind.

 

 

Erhöhung der Abzugsfähigkeit von MPF (gesetzliche Renten-versicherung) auf 17.500 HKD (1.750 Euro) pro Jahr.

 

Erlass der KFZ Steuer für elektri-sche KFZ im ersten Jahr der Zulassung.

 

Erlass der Grundsteuer in Höhe von max. 1.500 HKD (150 Euro) pro Quartal für die ersten beiden Quartale in 2014.

 

Übernahme einer Monatsmiete für Bewohner von Sozialwohnun-gen (2013: drei Monate).

 

Extrazahlung in Höhe eines Mo-natsbetrags für Bezieher von Sozialhilfe. Arzt- und Medikamentenzuschuss für Ältere und Bedürftige in Höhe von 2.000 HKD (200 Euro). Ausgabe von ”i Bonds”

 

Wie in den Jahren zuvor, wird Hong Kong sogenannte „i Bonds“ begeben, welche eine Laufzeit von drei Jahren mit einer halbjährlichen Verzinsung haben, wobei sich die Höhe der Verzinsung an der Höhe der Inflation der vorangegange-nen sechs Monate bemisst.

 

Diese können von Personen, welche Inhaber einer Hong Kong ID Karte sind, erworben werden und sollen zum Inflationsausgleich dienen. Da allerdings lediglich die durchschnittliche Inflation ausgeglichen wird und keine höheren Zinsen gezahlt werden, sank die Popu-larität der i Bonds in den letzten Jahren.

 

  1. Erhöhung der Einnahmen

Im Vorfeld der Haushaltsrede hatten viele Experten darauf gedrängt, die Steuerbasis in Hong Kong zu verbreitern, da zurzeit die drei Einnahmequellen Ver-kauf von Land, salaries tax und profits tax die Haupteinnahmequellen sind. Seit Jahren wird darauf hingewiesen, dass zusätzlich weitere Steuern einzuführen sind, um die Steuerbasis zu verbreitern und die Abhängigkeit von den drei beste-henden Einnahmequellen zu verringern. Im Gegenzug zu neuen Steuern sollten die bestehenden Steuern verringert wer-den, sodass die Steuerbelastung im Dur-chschnitt gleich bliebe, was allerdings bis-her nicht geschah.

 

Die Regierung hat lediglich angekündigt, die Eintrittspreise zu 200 staatlichen Veranstaltungen wie zum Beispiel Mu-

 

seen zu überprüfen und gegebenenfalls zu erhöhen. Weiterhin soll der Wasserpreis erhöht werden, welcher seit 19 Jahren unverändert ist. Diese Maßnahmen sollen insgesamt Mehreinnahmen von ca. 60 Millionen HKD (ca. 6 Millionen Euro) bringen.

 

Darüber hinaus wird die Steuer auf Zigaretten um 0,20 HKD (ca. 2 Cent) pro Zigarette erhöht, sodass hierdurch die Steuern auf Zigaretten nun 70 % des Zigarrettenpreises ausmachen, was dem von der WHO vorgeschlagenen Mindest-verhältnis entspricht.

 

  1. Weitere Maßnahmen

Neben den bereits beschriebenen Maß-nahmen sollen folgende weitere Maß-nahmen ergriffen werden, um die Wettbe-werbsfähigkeit von Hong Kong in den nächsten Jahren zu garantieren und zu stärken:

 

Es sollen 20.000 kostenlose WLAN hot spots eingerichtet werden.

 

 

Die Einführung von „e-Schecks“ soll Zahlungen vereinfachen und beschleunigen.

 

Der Ausbau der dritten Start- und Landebahn des Flughafens soll schnell vorangetrieben werden.

 

Sämtliche KFZ, die die Abgas-norm Euro IV nicht erfuellen, sol-len bis 2020 still gelegt werden.

 

Es soll ca. 1 Milliarde HKD (100 Millionen Euro) investiert werden, um die Lebensbedingungen von älteren Personen zu verbessern. Eine Vielzahl von einzelnen Förderprogrammen für verschie-dene Industriezweige (R&D, Re-tail, Gesundheit) wird aufgelegt.

 

In seiner Rede warnte Tsang auch davor, dass Hong Kong in den nächsten 10 bis 15 Jahren vor dem Problem einer immer äl-ter werden Bevölkerung steht und gleichzeitig die Anzahl der Beschäftigten (und damit der Steuerzahler) schrumpfen wird. Um diesem drohenden strukturel-len Defizit zu begegnen, schlug Tsang die Einrichtung eines „future funds“ vor, in welchem ein Teil der Überschüsse gesam-melt werden und dann in Zukunft für zweckgerichtete Maßnahmen verwendet werden sollen.

 

III. Zusammenfassung

Die jährliche Rede von Tsang brachte keine nennenswerten Überraschungen. Die Ausgaben werden etwas gekürzt. Viele der Fördermaßnahmen bleiben bestehen und es wird ein Teil der Über-schüsse für den Aufbau von Infrastruktur verwendet. John Tsang weicht damit nicht von seiner Linie der letzten Jahre ab, in denen er eine vorsichtige Finanz-politik propagierte, um für die Herausfor-derungen der Zukunft gerüstet zu sein. Diejenigen, die gehofft hatten, dass eine umfangreiche Finanzreform angekündigt wird, sahen sich wieder einmal enttäuscht und Hong Kong wird es mit an Sicherheit grenzender Wahrscheinlichkeit schaffen, auch in 2014/2015 den angekündigten Überschuss zu übertreffen.

 

 

 

 

 

Newsletter No. 1  (EN)

 

 

 

 

Who Requires a

 

Foreign Business Operating License?

 

 

 

October 2015

 

 

 

All rights reserved © Lorenz & Partners 2015

 

Although Lorenz & Partners always pays great attention on updating information provided in newsletters and brochures, we cannot take responsibility for the completeness, correctness or quality of the information provided. None of the information contained in this newsletter is meant to replace a personal consultation with a qualified lawyer. Liability claims regarding damage caused by the use or disuse of any information provided, including any kind of information which is incomplete or incorrect, will therefore be rejected, if not generated deliberately or grossly negligent.

 

 

  1. Introduction

 

For conducting business in Thailand it is mandatory for foreigners to be in the pos-session of a Foreign Business Operating Li-cense issued by the competent Thai authori-ties according to the provisions of the For-eign Business Act B.E. 2542 (A.D. 1999) (“FBA”).

 

  1. Definitions under the FBA

 

According to Sec.4 FBA “Foreigner” means:

 

Natural person who does not have Thai nation-ality;

Juristic person not registered in Thailand;

Juristic person registered in Thailand having the following characteristics:

Having half or more of its capital shares held by persons under (1) or (2) or a juristic person hav-ing the persons under (1) or (2) investing with a value of half or more of the total capital of the juristic person

Limited partnership or registered ordinary part-nership having the person under (1) as the managing partner or manager;

Juristic person registered in Thailand having half or more of its capital shares held by the per-son under (1), (2) or (3) investing with the value of half or more of its total capital.

 

For the purpose of the definitions, the shares of a limited company represented by share certifi-cates that are issued to bearers shall be deemed as the shares of foreigners unless otherwise pro-vided by ministerial regulations.


The definition of “Foreigner”, as specified in Sec. 4 FBA, reveals that the law separates foreign juristic persons into 2 different cate-gories:

 

Juristic person not registered in Thailand

 

Juristic person registered in Thailand having the characteristics as follows:

 

Limited company or public limited com-pany with over 50% of its capital shares owned by foreigner(s),

 

Limited partnership or registered ordi-nary partnership with over 50% of its capital invested by foreigner(s), or

 

Limited partnership or registered ordi-nary partnership with a foreigner as the managing partner or manager.

 

Sec. 4 FBA also specifies the meaning of “Capital” concerning the 3 different kinds of a juristic person registered in Thailand as follows:

 

“Capital” means the registered capital of a lim-ited company or paid-up capital of a public lim-ited company or the money invested in a partner-ship or juristic person by its partner(s) or its member(s).

 

III. Relevant Clauses

 

The relevant clauses are annexed to the FBA.

 

 

Annex 1 – Businesses Not Permitted to Foreigners

 

Foreigners shall be prohibited from operat-ing a business as prescribed in Annex 1 due to special reasons (Sec. 8 (1) FBA).

 

 

For example:

 

Newspaper publication, radio broad-casting or television station businesses

Land trading

 

Trading and auctioning of Thai antiques or national historical objects

 

These kinds of businesses are exclusively re-served to Thai companies. It is not possible to obtain the Foreign Business Operating Li-cense.

 

 

Annex 2 – Businesses Permitted to Foreigners under certain Conditions

 

Annex 2 contains businesses related to the national safety or security or affecting arts, culture, traditions, folk handicrafts, natural resources or the environment (Sec. 8 (2) FBA). Businesses in this Annex are divided into 3 categories:

 

Category 1: Businesses related to na-tional safety or security

 

For example:

 

Production, selling, repairing of firearms, gun powder and explosives

 

Production, selling, repairing of ships, aircrafts or military vehicles

 

Domestic land, waterway or air transpor-tation, including domestic airline busi-ness, etc.

 

Category 2: Businesses affecting arts and culture, traditional and folk handicrafts

 

For example:

 

Trading of antiques or handicrafts

Production of Thai musical instruments

 

Production of goldware, silverware, niel-loware, bronzeware or lacquerware

 

 

 

Category 3: Businesses affecting natural resources or the environment

 

For example:

 

Manufacturing of sugar from sugarcane

 

Mining, including stone blasting or crushing

 

Wood fabrication for furniture and uten-sil production.

 

A foreign juristic person may be allowed to operate a business as described above in the following cases:

 

Juristic person with over 40% of its capi-tal held by Thai (natural or juristic per-son)

 

The Minister (with the approval of the Cabinet) grants permission that the juris-tic person, having less than 40% of the capital held by Thai, may operate the above businesses. However, the propor-tion of foreign and Thai shareholders shall not be more than 75% to 25% and the number of Thai directors shall not be less than 2/5 of the total number of directors.

 

 

Annex 3 – Businesses not yet Permit-ted to Foreigners

 

Foreigners shall be prohibited from operat-ing the businesses prescribed in Annex 3 in which Thai nationals are not yet ready to compete with foreigners (Sec.8 (3) FBA).

 

For example:

 

Production of plywood, veneer board, chipboard or hardboard

Production of lime

 

Engineering service business

Architecture service business

 

Legal and accounting service business

Tour agency

 

Selling food or beverages

 

All other service businesses, except those prescribed in the Ministerial Regu-lations (Annex 3 (21)).

 

The service businesses that do not require a Foreign Business Operating License as pre-scribed in the Ministerial Regulations B.E. 2556 (A.D.2013) are divided into 3 catego-ries:

 

(1) Category 1: Securities business and other businesses under the law on securities and securities exchange

 

For example:

 

Securities trading

 

Acting as an investment or financial con-sultant

 

Mutual or private fund management

Granting loans for a securities business

 

Acting as private fund custodian

 

(2) Category 2: Derivatives business under the law on derivatives

 

For example:

 

Acting as derivatives dealer, advisor or fund management

 

(3) Category 3: Acting as a trustee under the law on trust for transactions in the capital market

 

According to the FBA, the aforementioned service businesses do not require application for a Foreign Business Operating License, however, it is still required to comply with the criteria of other relevant laws.

 

So far, foreigners may operate the businesses prescribed in Annex 3 in the case of receiv-ing permission by the Director-General of the Department of Business Development with the approval of the Committee.

 

This means that foreigners who want to op-erate a business which has been prescribed

 

in Annex 2 or 3 in Thailand need to seek permission from the Minister with the ap-proval of the Cabinet or from the Director-General with the approval of the Commit-tee, as the case may be.

 

  1. How to Get a Foreign Business Op-erating License

 

Foreigners operating businesses in Thailand can be divided into 4 groups as follows:

 

Group 1: Foreigners operating a busi-ness in Thailand with a temporary per-mission granted by the Government

 

Group 2: Foreigners operating a busi-ness under a treaty to which Thailand is a party or by which Thailand is obligated to abide, such as the Thai-US Treaty of Amity and Commerce

 

Group 3: Foreigners operating a busi-ness that is promoted under the Invest-ment Promotion Act B.E. 2520 (A.D. 1988) or permitted in writing to operate the industry or trade for export under the law governing the Industrial Estate Authority of Thailand or under other laws

 

Group 4: Foreigners operating busi-nesses in all other cases

 

In case a foreigner under Group 1-3 desires to operate a business under Annex 2 or 3, such foreigner shall apply for a Foreign Business Operating Certificate to the Direc-tor-General in accordance with the rules and procedures as prescribed in the Ministerial Regulations.

 

In case a foreigner under Group 4 desires to operate a business under Annex 2 or 3, such foreigner must apply for a Foreign Business Operating License in accordance with the rules and procedures as prescribed in the Ministerial Regulations.

 

 

 

 

 

Newsletter Nr. 6 (DE)

 

 

 

 

 

 

Problematik der Dividendenausschüttung beim „Cross-Shareholding“

 

 

 

März 2014

 

 

 

 

 

All rights reserved © Lorenz & Partners 2014

 

Obwohl Lorenz & Partners große Sorgfalt darauf verwenden, die in diesen Newslettern bereitgestellten Informa-tionen auf aktuellem Stand für Sie zur Verfügung zu stellen, möchten wir Sie darauf hinweisen, dass diese eine individuelle Beratung nicht ersetzen können. Lorenz & Partners übernimmt keinerlei Gewähr für die Aktualität, Korrektheit oder Vollständigkeit der bereitgestellten Informationen. Haftungsansprüche gegen Lorenz & Part-ners, welche sich auf Schäden materieller oder ideeller Art beziehen, die durch die Nutzung oder Nichtnutzung der dargebotenen Informationen bzw. durch die Nutzung fehlerhafter und unvollständiger Informationen verur-sacht wurden, sind grundsätzlich ausgeschlossen, sofern seitens Lorenz & Partners kein vorsätzliches oder grob fahrlässiges Verschulden vorliegt.

 

 

  1. Einleitung

 

„Cross-Shareholding“ stellt eine Personen-gesellschaft dar. Es bezeichnet das Halten von Beteiligungen zwischen zwei oder meh-reren Gesellschaften, die sich gegenseitig Kapitalbeteiligungen zukommen lassen. Ab-hängig von der Größe der Beteiligung erge-ben sich Unterschiede in der Besteuerung der Dividenden, die sich vor allem aus der Section 65 Abs. 10 des Revenue Codes („RC“) ableiten. Im Folgenden sollen diese Auswirkungen dargestellt werden.

  1. Basics

 

Zunächst ist die vom Gewinn ausschüttbare Dividende zu berechnen. Dafür sind 20 % (seit Januar 2013, ursprünglich 23 %) Kör-perschaftssteuer vom Bruttogewinn abzu-ziehen. Danach sind vom sich hieraus erge-benden Nettogewinn 5 % bis zu einem Höchstbetrag von 10 % des registrierten Kapitals als Mindestreserve einzustellen. Der sich hieraus ergebende Restbetrag unterliegt sodann bei Ausschüttung 10 % Withholding Tax.

III. Section 65 bis Abs. 10 RC

  1. Beteiligung unter 25% (Sec. 65 bis Abs. 10 RC)

 

Der Anteilsbesitz unter 25 % stellt nach Sec. 65 bis Abs. 10 S.1 RC den Grundfall der Be-rechnung der ausschüttbaren Dividende dar. In diesem Grundfall hat das empfangende Unternehmen, die unter 1. berechnete aus-schüttbare Dividende in Hälfte als steuer-pflichtiges Einkommen einzustellen. Sollte das die Dividende empfangende Unterneh-

 

men einen Gewinn verbuchen, so können die 10 % Quellensteuer, die vom ausschüt-tenden Unternehmen bereits gezahlt wurden, als sog. „Tax Credit“ auf die zu zahlenden Körperschaftssteuer voll angerechnet wer-den.

  • Anteilsbesitz über 25 % (Stellt einen Sonderfall der Sec. 65 bis Abs. 10 S.2 RC dar)

 

Für den Fall, dass ein thailändisches Unter-nehmen an einem anderen ausschüttenden thailändischen Unternehmen mehr als 25 % der Anteile mit Stimmrecht hält und das aus-schüttende Unternehmen keine Anteile an dem Unternehmen hält, an das ausgeschüttet wird, kommt dem Unternehmen das Schach-telprivileg zugute. Die unter 1. berechnete ausschüttbare Dividende ist nicht vom emp-fangenden Unternehmen als steuerpflichti-ges Einkommen einzustellen.

 

Darüber hinaus hat das Unternehmen an das ausgeschüttet wird, ein Tax Credit in Höhe von 10 %, des ursprünglichen Anteils am Bruttogewinn.

  1. „Cross-Shareholding“

 

Die steuerrechtliche Problematik des „Cross-Shareholdings“ zeigt sich deutlich am Beispiel des Sec. 65 bis Abs. 10 RC. Fol-gende Voraussetzungen der Sec. 65 bis Abs. 10 S.2 RC müssen kumulativ vorliegen:

 

  • mehr als 25 % der Anteile am ausschüt-tenden Unternehmen

 

  • Anteile mit Stimmrecht

 

  • Keine Anteile am Unternehmen an das ausgeschüttet wird.

 

 Zumindest der dritte Punkt liegt bei einem „Cross-Shareholding“ naturgemäß gerade nicht vor. Dies hat zur Folge, dass der Grundfall der Sec. 65 bis Abs. 10 RC An-wendung findet.

  1. Ergebnis

 

Im Falle des „Cross-Shareholdings“ ist gem. Sec. 65 bis Abs. 10 S.1 RC von einer Besteu-erung des hälftigen Netto-Gewinns auszu-gehen. Hierbei ist jedoch eine Anrechnung der vom ausschüttenden Unternehmen ge-zahlten Quellensteuer möglich.

 

 

 

I.

Company A:

 

 

 

Income:

200,00

Expenses:

100,00

Gewinn vor Steuern:

100,00

– 20 % Corporate Tax:

20,00

Gewinn nach Steuern:

80,00

– 10 % Withholding Tax:

8,00

(bei Dividendenausschüttung)

 

Ausschüttbare Dividende:

72,00

A pays to B:

72,00


 

  1. Problematik

 

Dies führt zu einer Problematik, die in ei-nem Zirkelschluss endet:

 

  • A schüttet eine Dividende an B aus;

 

  • B zahlt Körperschaftssteuer auf die empfangene Dividende;

 

  • Nunmehr hat B anteilig die empfan-gene Dividende an A auszuschütten;

 

  • A hat wiederum Körperschaftssteuer auf die empfangene Dividende zu zahlen;

 

  • und so weiter (…)

 

Im folgenden Beispiel eine ausführliche Be-rechnung :

 

„Cross Shareholding“

 

 

 

 

 

Company A

 

 

 

 

 

 

 

 

 

 

 

100%

 

 

 

100%

Shares of

 

 

Shares of

B

 

 

 

A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company B

 

 

 

 

 

 

 

 

 

II.

Company B:

 

 

 

Income (nur Dividende):

72,00

Expenses:

0,00

Gewinn vor Steuern:

72,00

Gem. Sec. 65 bis Abs.10 RC

 

steuerpflichtig (50%):

36,00

– 20 % Corporate Tax:

7,20

+ Tax Credit:

7,70

+ steuerpflichtiger

 

Gewinn nach Steuern:

36,50

+ nicht steuerpflichtiger

 

Gewinn:

36,00

Gewinn nach Steuern:

72,50

d.h.:

 

 

Gewinn vor Steuern:

72,50

– Gewinn nach Steuern:

72,00

Steuerlast:

0,50

 

  • Rechenergebnis:

 

Gewinn Company A

 

vor Steuern:

100,00

Gewinn Company B

 

nach Steuern:

72,00

Steuerlast:

28,00 %

 

 

VII. Ergebnis

 

 

 

 

Zusammenfassend kann festgestellt werden,

 

 

 

 

dass das Vorgenannte einen interessanten

______________________

 

 

Denkansatz zur Unternehmensplanung dar-

 

 

 

 

 

 

stellt. Beim „Cross-Shareholding“ darf aller-

 

 

 

 

dings eine umfassende Steuerplanung nicht

 

 

 

 

außer Acht gelassen werden.

 

 

 

 

 

Requirements for Getting the For-eign Business Operating License

 

 

Minimum Capital

 

Sec. 14 FBA specifies that:

 

“The minimum capital used at the commencement of the business operation shall not be less than that pre-scribed 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 licenses under the Annex at-tached hereto, the minimum capital to be prescribed in the ministerial regulations for each of the busi-nesses shall in no case be less than three million Baht.

Ministerial regulations issued by virtue of this Sec-tion may also prescribe the time for the minimum capital to be brought or remitted into Thailand.

The provisions of this Section shall not apply in the events where the foreigners make the investment with the money or property derived from the business op-eration that has previously been in operation in Thailand in another business or use them as a share or an investment in other enterprises or juristic per-sons.”

 

Considering Sec. 14 FBA, the minimum capital can be calculated by dividing business operations into 2 categories:

 

The minimum capital for businesses which are not listed in an Annex shall comply with the Ministerial Regulations but it shall not be less than 2 million Baht.

 

The minimum capital for businesses which are listed in an Annex shall com-ply with the Ministerial Regulations but it shall not be less than 3 million Baht.

 

“Minimum Capital” in these terms means the foreign currencies that the foreigner brings in and uses for the commencement of business operations in Thailand (Sec. 4 FBA).

 

The Ministerial Regulation issued by virtue of Sec. 14 FBA prescribes the minimum capital that needs to be brought into Thai-land as follows:

 

For businesses which are not listed in an Annex: 2 million Baht.

 

For businesses which are listed in an An-nex: 25% of the average annual esti-mated expenditure for each business for a period of three years, but not less than 3 million Baht.

 

For example, the estimated expenditure of the company is 300 million Baht for 3 years; the average annual estimated ex-penditure for this company is 100 mil-lion Baht. Then, the minimum capital that this company needs to bring into Thailand is 25% of 100 million Baht, which is 25 million Baht.

 

However, in case that the period of busi-ness operation is less than 3 years, the minimum capital shall be averaged in ac-cordance with the actual period of busi-ness operation on a per annum basis, but shall not be less than 3 million Baht.

 

The estimated expenditure means the amount of money that the foreigner will spend in Thailand in order to carry out the business in Thailand. The list of esti-mated expenditure is required to be sub-mitted to the Department of Business Development together with the applica-tion for a Business Operating License.

 

The required minimum capital must be brought into Thailand from abroad within 3 years. This period starts either with the date of commencing the busi-ness or with the date the permission has been granted. The single stages of trans-ferring the capital are as follows:

 

25% of the minimum capital shall be brought into Thailand during the first 3 months.

 

Another 25% of the minimum capital shall be brought into Thailand within the first 12 months.

 

At least 25% of the minimum capital shall be brought into Thailand each following year (25% each in the 2nd year and 25% in the 3rd year).

 

In case the period of business operation is less than 3 years, the minimum capital must be brought into Thailand within 6 months after the date of commencing business or from the date of permission.

 

The transfer of the minimum capital must be proved to the Department of Business Development within 15 days from the date prescribed above. This is done by handing in a copy of the “Thor Thor 3” Form which is issued by the bank that has received the money.

 

 

  1. Transfer of “Know-How”

 

The application has to describe in which way the foreign company transfers “know-how” to Thai workers.

 

 

  1. Advantage for Thailand

 

The applicant has to expand on the advan-tage Thailand is going to gain from the en-gagement of the foreign company in Thai-land (i.e. improvement of Thai economy; improvement of environment).

 

 

  1. Employment of Foreign Staff

 

Every employee who is not of Thai national-ity needs a work permit to be able to legally work in Thailand. Generally, the ratio be-tween Thai and foreign employees has to be 4 :1.

 

 

  1. No Effect to other Thai Companies

 

There should be no effect on any Thai com-pany competing in the same field of opera-tion as the foreign company.

 

 

  1. The Establishment of a Representa-

tive Office

 

Although the FBA does not explicitly refer to Representative Offices (in contrast to the legislative instruments it replaced), such enti-ties can be established by lodging an applica-tion for an “Other Service Business” in ac-cordance with List 3, No. 21, FBA.

 

A Representative Office is permitted for only 5 business activities as follows:

 

Sourcing of goods or services in Thai-land for the head office

 

Checking and controlling the quality and quantity of goods purchased or hired to manufacture in Thailand by the head office

 

Giving advice concerning goods of the head office sold to agents or consumers

 

Providing information concerning new goods or services of the head office

 

Reporting on business trends in Thai-land to the head office.

 

However, it is quite obvious that there are many foreigners who have applied for a per-mission to operate a Representative Office and have been operating their businesses outside the scope of activities of a Represen-tative Office.

 

For example:

 

Purchasing, ordering or paying for goods on behalf of the head office or its affili-ated companies or any activities con-cerning the purchase

 

Exporting goods which have been bought by the head office or its affiliated companies

 

Rendering after-sales services in terms of installation and maintenance

 

Receiving purchase orders or services on behalf of the head office

 

Coordinating purchasing and selling on behalf of the head office, etc.

 

The Foreign Business Committee has formed an investigation team in order to check on foreign business operations whether they are operating as permitted by the Department of Business Development.

 

If the foreigners are found to be operating a business other than those permitted, the Di-rector-General may temporarily suspend or revoke the license, as the case may be.

 

 

 

 

 

 

 

 

Tor. 2 Form Page 2

Authorized

(1)

Mr./Mrs./Miss

 

 

Age….….………………………years old

person in

 

Nationality…….………………….………………..Occupation……………………………………………………….

charge of

 

Residing at

 

 

 

business op-

 

.

 

 

 

Postcode:

 

Tel. ………………………..……… Fax

 

eration in

 

 

 

 

 

 

 

 

Thailand

(2)

Mr./Mrs./Miss

 

 

Age….….………………………years old

 

 

 

 

 

Nationality…….………………….………………..Occupation……………………………………………………….

 

 

Residing at

 

 

 

 

 

.

 

 

 

Postcode:

 

 

Tel. ………………………..……… Fax

 

 

 

 

 

 

 

 

 

 

No.

 

Schedule

Section

Description of business

 

 

 

 

 

 

………………………………………………………………………………….

 

 

 

 

 

 

………………………………………………………………………………….

Type of business

 

 

 

 

 

………………………………………………………………………………….

 

 

 

 

 

………………………………………………………………………………….

applied for li-

 

 

 

 

 

cence

 

 

 

 

 

………………………………………………………………………………….

 

 

 

 

 

 

………………………………………………………………………………….

 

 

 

 

 

 

………………………………………………………………………………….

 

 

 

 

 

 

………………………………………………………………………………….

 

 

 

 

 

 

…………………………………………………………………………………

 

 

 

 

 

 

………………………………………………………………………………….

 

 

 

 

 

 

………………………………………………………………………………….

 

 

 

 

 

 

…………………………………………………………………………………..

 

 

 

 

 

 

…………………………………………………………………………………..

 

 

 

 

 

 

…………………………………………………………………………………..

 

 

 

 

 

 

………………………………………………………………………………….

 

 

 

 

 

 

………………………………………………………………………………….

 

 

 

 

 

 

………………………………………………………………………………….

 

 

 

 

 

 

………………………………………………………………………………….

 

 

 

 

 

 

………………………………………………………………………………….

 

 

 

 

 

 

 

(*) Applicant may provide business description in English but the Thai text shall prevail.

 

Lorenz & Partners

October 2015

Page 9 of 10

Tel.: +66 (0) 2-287 1822

 

E-Mail: [email protected]

 

Newsletter No. 1 (EN)

 

L&P

 

 

Legal, Tax and Business Consultants

 

 

 

 

 

Tor. 2 Form Page 3

List of Evidence and Supplementary Document

Ordinary person

 

Copy of passport or alien identification card

 

Copy of house registration, certificate of residence or evidence of permission to temporarily enter into the Kingdom pursuant to the law governing immigration

 

Affirmation of the applicant that he/she possesses qualification and does not possess any prohibited characteristics as provided in Section 16 of the Alien Business Act B.E.2542

 

Description of business type sought for licence

 

Map showing location of business place in Thailand

 

Power of attorney in case the attorney is appointed to act on behalf

 

Other evidence or document (if any)

 

 

 

Juristic person not registered in Thailand

 

Copy of letter of certification or evidence proving of juristic person showing name, capital, objective, location of place of business, list of directors and authorized person

 

Appointment letter of an agent signed by authorized person of a juristic person applying for licence to run business in Thailand on be-half of a juristic person

 

Copy of passport or alien identification card or citizen identification card of the authorized agent

 

Copy of house registration, certificate of residence or evidence of permission to temporarily enter into the Kingdom pursuant to the law governing immigration of the authorized agent

 

Affirmation of the applicant that he/she, director, manager or authorized agent possesses qualification and does not possess any prohibited characteristics as provided in Section 16 of the Alien Business Act B.E.2542

 

Description of business type sought for licence

 

Map showing location of business place in Thailand

 

Power of attorney in case the attorney is appointed to act on behalf

 

Other evidence or document (if any)

 

 

Juristic person registered in Thailand

 

Copy of letter of certification or evidence proving of juristic person showing name, capital, objective, location of place of business, list of directors and authorized person

 

Affirmation of the applicant that he/she, director or manager possesses qualification and does not possess any prohibited charac-teristics as provided in Section 16 of the Alien Business Act B.E.2542

 

Description of business type sought for licence

 

Letter notifying proportion of shareholding between Thai and foreign national, share amount, type or kind of share held by alien person

 

Map showing location of business place in Thailand

 

Power of attorney in case the attorney is appointed to act on behalf

 

Other evidence or document (if any)

 

 

Affirmation by the ap-

 

 

 

Certification by official

 

 

plicant

 

 

Certify that the above application for business licence has been re-

I, as a director, manager or person in charge of business operation

ceived.

 

 

of a juristic person hereby certify that the above are all true.

 

(Signature)

……………………………………………………….

 

(Signature) (1) ……………………………………………………..

 

 

(………………………………………………………….

)

 

(………………………………………

)

 

Date:…………………………………………..

(2) ………………………………………………………………….

 

 

 

 

 

 

(…………………………………………………………..

 

)

 

 

 

 

Date:…………………… …………………

 

 

 

 

 

 

 

 

 

 

Newsletter No. 3 (EN)

 

 

 

 

 

The Withholding Tax System in Thailand

 

 

 

 

March 2016

 

 

 

 

A l l r i g ht s r e s e r v e d ©  L o r e n z & P a r t ne r s 2 0 1 6

 

Although Lorenz & Partners always pays great attention on updating information provided in news-letters and brochures we cannot take any responsibility for the completeness, correctness or quality of the information provided. None of the information contained in this newsletter is meant to replace a personal consultation with a qualified lawyer. Liability claims regarding damage caused by the use or disuse of any information provided, including any kind of information which is incomplete or incorrect, will therefore be rejected, if not generated deliberately or grossly negligent.

 

 

  1. Introduction

 

A Thai Company which pays taxable income to individuals/companies is generally obliged to withhold income tax based on the provision of the Revenue Code of Thailand and remit the same to the Revenue Department. Details of this procedure subdivided by income tax categories are described as follows.

 

  1. Individual Taxpayer

 

Income from salary and wages: The withholding tax rate is progres-sive, depending on the amount of salary or wage paid (0-35%).

 

Income from services provided (e.g. fees, brokerages, meeting fees, and commission fees):

The withholding tax rate is progres-sive, depending on the amount of income (0-35%) or

 

15% if the recipient of income is a foreigner who does not stay in Thai-land over 180 days.

 

Income from interest: 15% of the payment

 

Income from dividends: 10% of the payment

 

Income from rent: 5% of the payment

 

Income from liberal profession (e.g. laws, arts of healing, engineering, and architecture):

 

3% of the payment or

15% of the payment if the recipient of income is a foreigner who does not stay in Thailand over 180 days

 

Income from a contract of work and labour, whereby the contractor pro-


vides essential material besides tools:

 

3% of the payment

 

Income from royalties:

The withholding tax rate is progres-sive, depending on the amount of royalty paid (0-35%) or

 

15% if the recipient of income is a foreigner who does not stay in Thai-land over 180 days.

 

At the end of the year, each taxpayer has to submit a tax computation to the Revenue Department. This tax compu-tation needs to contain all income gen-erated during the year. On this basis, the total personal income tax is calculated by the Revenue Department, consider-ing the tax already withheld during the year, which is deducted from the calcu-lation. Depending on how much tax was withheld, a payback or an additional payment might be possible.

 

However, if an individual taxpayer earns income in form of interest or divi-dend, he has the right to choose whether this payment is to be consid-ered in his tax computation.

 

III. Thai Corporate Taxpayer

 

A Thai Company submitting payments to another Thai Company is not re-quired to withhold income tax except the Revenue Code says so. The impor-tant exemptions are:

 

Income from services provided (e.g. fees, brokerages, meeting fees, and commission fees):

 

3% of the payment

 

Income from interest:

1% of the payment paid to a Thai Company;

 

 

0% of the payment paid to a Thai Bank

 

Income from dividends: 0% or 10 %

 

See our Newsletter No. 72.

 

Income from rent:

 

5% of all rental payments made; or

10% of rental payments made to as-sociations and foundations

 

Income from liberal profession (e.g. laws, arts of healing, engineering, and architecture):

 

3% of the payment

 

Income from payments to contrac-tors who provide essential materials besides tools:

 

3% of the payment

 

Income from royalties: 3% of the payment

 

Income paid by Government Agency:

 

1% of the payment

 

Income paid from the sale of goods: 0% of the payment

 

  1. Foreign Company – in case of

 

“not carrying on business in Thai-land”

 

A foreign company which does not carry on business in Thailand (by having a branch office, employment, a repre-sentative or go-between in Thailand) but derives income in Thailand is generally subject to Thai Income Tax (Revenue Code Sec. 40) and payers to such com-panies are thus required to withhold in-come tax. Important withholding tax rates are described below by categories of income:

 

Income from services provided (e.g. fees, brokerages, meeting fees, and commission fees):

 

15% of the payment

 

Income from interest: 15% of the payment

 

Income from dividends: 10% of the payment

 

Income from rent: 15% of the payment

 

Income from liberal profession (e.g. laws, arts of healing, engineering, and architecture):

 

15% of the payment

 

Income from royalties: 15% of the payment

 

However, the withholding tax rate might be lower due to a double taxation agreement between Thailand and a for-eign country (“DTA” – compare list of contracting states as annexed).

 

Compared to the other tax rates, the tax payable on dividends is with 10% rather low. The reason for this can be found in the tax policy of the Thai Government. Since the Corpo-rate Income Tax is already at the rate of 20%, dividends shall not be subject to a full taxation again.

 

If a foreign company rents property to a Thai Company, the Thai Com-pany is generally required to with-hold tax at the rate of 15% on rental payments.

 

On the other hand, if a foreign company is carrying on business in Thailand by renting property to a Thai Company, such Company has to withhold tax at the rate of 5% on the rent payment. Additionally, the foreign company has to pay corpo-rate income tax at the rate of 20% on its net profits from rental busi-ness.

 

Under most DTAs (e.g. between Thailand and Germany), the with-holding tax rate on interest is re-duced from 15% to 0% if the lender is a (German) bank. The rate on capital gains is also reduced to 0% if the seller of a Thai company’s stock is a German company.

 

  1. Foreign Company – in case of

 

“carrying on business in Thailand”

 

Foreign companies which are carrying on business in Thailand (by having a branch office, employment, representa-tive or go-between in Thailand and de-riving income in Thailand) are generally subject to Thai Income Tax (Revenue Code Sec. 40) and payers to such com-panies are thus required to withhold in-come tax. Important withholding tax rates are described below by categories of income:

 

Income from services provided (e.g. fees, brokerages, meeting fees, and commission fees):

 

5% of the payment

 

Income from interest: 1% of the payment

 

Income from dividends: 10% of the payment

 

Income from rent: 5% of the payment

 

Income from liberal profession (e.g. laws, arts of healing, engineering, and architecture):

 

3% of the payment

 

Income from payments to contrac-tors who provide essential materials besides tools:

 

5% of the payment;  or

 

3% of the payment if such foreign contractor has a permanent branch office in Thailand

 

According to Departmental Instruc-tion No. Paw 8/2528, the foreign contractor shall be treated as having a permanent branch office in Thai-

 

land only if:

 

He owns an office in Thailand, or

 

He carries on other business in Thailand besides engaging in contract works, e.g. purchase and sale of goods, or

 

He has a provident fund set up for the benefit of his employees in Thailand.

 

Generally, the provident fund is voluntarily set up by the em-ployees and the employer in or-der to promote savings, so that employees retired or dismissed from work would have a means of living without depending on state’s welfare or families. The provident fund can be estab-lished by at least one employer and one employee. The law re-quires the fund to be managed by a Fund Management Com-pany that is neither the em-ployee nor the employer. For the employee, the contribution is deducted from wages at the rate not less than 2% but not exceed-ing 15%. For the employer, the contribution is made at the rate not less than the contribution from the employee but not ex-ceeding 15% of wages.

 

 

Income from royalties: 3% of the payment

 

Repatriation of profits:

10% of the payment made from the branch in Thailand to the foreign company

 

Additionally, foreign companies which carry on business in Thailand are re-quired to pay corporate income tax at a rate of 20% on their net profit as a re-

 

 

Countries having a DTA with Thailand:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Albania

 

Greece

 

Oman

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Algeria

 

Grenada

 

Pakistan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Andorra

 

Guernsey

 

Paraguay

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anguilla

 

Hong Kong

 

Philippines

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Antigua and Barbuda

 

Hungary

 

Poland

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Argentina

 

Iceland

 

Portugal

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Armenia

 

India

 

Romania

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aruba

 

Indonesia

 

Russia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Australia

 

Iran

 

San Marino

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Austria

 

Ireland

 

Saudi Arabia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Azerbaijan

 

Isle of Man

 

Serbia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bahamas

 

Israel

 

Singapore

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bangladesh

 

Italy

 

Slovakia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Belarus

 

Jamaica

 

Slovenia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Belgium

 

Japan

 

South Africa

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bermuda

 

Jersey

 

South Korea

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bolivia

 

Kazakhstan

 

Spain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bosnia-Herzegovina

 

Kenya

 

Sri Lanka

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brazil

 

Kirgistan

 

St. Lucia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

British Virgin Islands

 

Kosovo

 

St. Vincent,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grenadines

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bulgaria

 

Kuwait

 

Sweden

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Caico Islands

 

Latvia

 

Switzerland

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cayman Islands

 

Liberia

 

Syria

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

Liechtenstein

 

Taiwan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chile

 

Lithuania

 

Tajikistan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

China

 

Luxembourg

 

Thailand

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Colombia

 

Macedonia

 

Trinidad and Tobago

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cook Islands

 

Malaysia

 

Tunisia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costa Rica

 

Malta

 

 

Turkey

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Côte d’Ivoire

 

Mauritius

 

Turkmenistan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Croatia

 

Mexico

 

Turks Islands

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cypress

 

Moldavia

 

 

Ukraine

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Czech Republic

 

Monaco

 

United Ar-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ab.Emirates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denmark

 

Mongolia

 

United Kingdom

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dominica

 

Montenegro

 

 

USA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ecuador

 

Montserrat

 

Uruguay

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Egypt

 

Morocco

 

Uzbekistan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estonia

 

Namibia

 

Venezuela

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finland

 

Netherlands

 

Vietnam

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

France

 

Netherlands Antilles

 

 

Yemen

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Georgia

 

New Zealand

 

 

Zambia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ghana

 

Norway

 

Zimbabwe

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gibraltar

 

Pakistan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Thai Withholding Tax System

 

  1. Thai company invoices to Thai company

gets invoice from

 

hire of

3% WHT

 

 

 

 

 

 

 

 

 

 

Sec. 69bis

 

 

 

 

 

for

service

(1% if payer is

 

 

 

 

RC

 

Thai

 

Thai

 

government authority)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

company

 

company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for

hire of

3% WHT

 

 

 

 

 

 

 

 

 

 

RD Reg. 4/2528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

clause 8 (2); Min.

 

 

 

 

 

 

work

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reg. No. 144 clause

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

——————————————————————————————————————————————————————–

2 (9)

 

 

 

 

 

 

 

 

 

 

 

 

 

2. Thai individual invoices to Thai company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

liberal profession

3% WHT

 

 

 

 

 

 

RD Reg. 4/2528 cl. 7(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

non-liberal profession

3% WHT

 

 

 

 

 

RD Reg. 4/2528 cl. 8(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

service

Sec. 40 (2) RC: PIT 0-35%

 

 

 

 

 

 

Sec. 50 (1) RC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

gets invoice from

 

resident in

Sec. 40 (8) RC: 2-5% WHT

 

 

 

 

 

 

 

 

 

Sec. 50 (1) RC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

who is

TH

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thai

 

 

work

–PIT0-35% 3% WHT

 

 

 

 

 

 

 

 

Sec. 50 (1) RC

 

 

 

individual

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

company

 

 

who is

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

non-resident

DTA

15% or PIT rate; 0% if paid by DTA country/company

 

 

 

 

Sec. 50 (1)+(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in TH

country

and present less than 183 days in TH

 

 

 

 

RC, Art. 14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DTA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

non-DTA

15% WHT

 

 

Sec. 50 (1)+(3) RC

country

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  1. Foreign company invoices to Thai company


 

 

 

 

Thai company gets invoice from foreign company DTA country which is registered in which is registered in non-DTA country


 

present less than 3/6 months in TH

service, work

0% WHT

 

 

 

 

 

 

Art. 7 DTA

business in TH through PE or

service, work

5% WHT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RD Reg. 4/2528 cl. 8 (3)

branch (also subject to CIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

business in TH through permanent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

service, work

3% WHT

 

 

 

 

 

 

 

 

 

 

 

 

 

RD Reg. 4/2528 cl. 8 (3)

office (PO) (also subject to CIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

carrying on business in TH, but no

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

service, work

0% WHT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Art. 7 DTA

PE and no branch

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

not carrying on business in TH

service, work

0% WHT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Art. 7 DTA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interest

15% WHT

 

Sec. 70 RC

 

 

 

 

 

 

 

 

 

max. 25% WHT

 

 

 

 

 

 

Art. 11 DTA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

dividends

10% WHT

 

RD Reg. 4/2528 cl. 5; Sec. 70 RC

 

 

 

 

 

 

 

 

max. 25% WHT

 

 

 

 

 

 

Art. 10 DTA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

royalties

15% WHT

 

Sec. 70 RC

 

 

 

 

 

 

 

 

 

max. 15% WHT

 

 

 

 

 

 

Art. 12 DTA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

rent

indiv.resident:

 

RD Reg. 4/2528 cl. 6 (2);

 

 

 

 

 

 

 

 

max. 15% WHT

 

 

 

 

 

 

Art. 6 DTA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0%;

 

Sec. 50 (3) RC; Sec. 70 RC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

indiv.non-res:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15%;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

co. not carry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

on bus. in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TH: 15%

service

5% WHT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Min. Reg. No. 144 cl. 2 (5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

carrying business in TH

 

 

with PO: 3% WHT

 

 

 

 

 

 

 

 

RD Reg. 4/2528 cl. 8 (3)

 

 

 

 

 

 

 

(also subject to CIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

work

no PO: 5% WHT

 

 

 

 

 

 

 

 

 

 

RD Reg. 4/2528 cl. 12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

not carrying on business in TH

service

15% WHT

 

 

 

 

 

 

 

 

 

 

 

Sec. 70 RC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

work

15% WHT

 

 

 

 

 

 

 

 

 

 

Sec. 70 RC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interest

15% WHT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sec. 70 RC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

dividends

10% WHT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RD Reg. 4/2528 cl. 5; Sec. 70 RC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

royalties

15% WHT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sec. 70 RC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

rent

indiv.resident: 5%; indiv.non-res: 15%;

 

 

 

RD Reg. 4/2528 cl. 6 (2); Sec. 50 (3) RC; Sec. 70 RC

 

 

 

 

co. carry on bus. in TH: 5%; not carry on bus. in TH: 15%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Newsletter Nr. 5 (GE)


 

 

 

Withholding Tax Certificate für Zinszahlungen von Thailand nach Deutschland Fremdwährungsrechnungen innerhalb Thailands

 

 

März 2014

 

 

 

All rights reserved © LORENZ & PARTNERS 2014

 

 

Obwohl Lorenz & Partners große Sorgfalt darauf verwenden, die in diesen Newslettern bereitgestellten Informationen auf aktuellem Stand für Sie zur Verfügung zu stellen, möchten wir Sie darauf hinweisen, dass diese eine individuelle Beratung nicht ersetzen können. Lorenz & Partners übernimmt keinerlei Gewähr für die Aktualität, Korrektheit oder Vollständigkeit der bereitgestellten Informationen. Haftungsansprüche gegen Lorenz & Partners, welche sich auf Schäden materieller oder ideeller Art beziehen, die durch die Nutzung oder Nichtnutzung der dargebotenen Informationen bzw. durch die Nutzung fehlerhafter und unvollständiger Informationen verursacht wurden, sind grundsätzlich ausgeschlossen, sofern seitens Lorenz & Partners kein vorsätzliches oder grob fahrlässiges Verschulden vorliegt.

 

 

 

 

Withholding Tax Certificates für Zinszahlungen von Thai-land nach Deutschland

 

Die Withholding Tax ist eine Quellensteuer auf das steuerbare Einkommen von Privatpersonen und Unternehmen, also Ein-kommen- und Körperschaftsteuer. Sie stellt insofern keine zusätzliche Steuer dar, son-dern lediglich eine Erhebungsform der Ein-kommensteuer. Der Zahlende muss die Steuer von dem Einkommen bzw. der Rech-nung direkt einbehalten und abführen (Sec. 50, 52, 53 RC).

 

Für ausländische Unternehmen gilt, dass bei geringerer Zugriffsmöglichkeit des thailändi-schen Staates eine höhere Quellensteuer ver-langt wird, z.B. wenn nur vorübergehend und ohne Niederlassung in Thailand Ge-schäfte gemacht werden.

 

Die einbehaltene Steuer kann mit der in Thailand zu zahlenden Einkommen- bzw. Körperschaftsteuer verrechnet werden (Sec. 60 RC). Dies geschieht über einen Tax Credit, der bei Zahlung der Withholding Tax eingeräumt wird. Zum Nachweis erhält der Zahlungsempfänger vom Zahlenden ein Tax Certificate über die einbehaltene Steuer. Diese Tax Certificates werden zusammen mit der Jahressteuererklärung beim Finanz-amt eingereicht.

 

Für den Fall, dass ein thailändisches Unternehmen an ein deutsches Unterneh-men Darlehenszinsen zahlt, sind von diesen Zinsen 15 % Quellensteuer in Thailand einzubehalten und abzuführen (siehe Section 70 Revenue Code und siehe Artikel 7 DBA (Doppelbesteuerungsabkommen).

 

 

 

 

Bezüglich dieser abgezogenen Quellensteuer ist von der Direktion des zuständigen Finanzamtes ein “Non Resident Withholding Tax Deduction Certification” (siehe Anlage) zu beantragen und auszufül-len.

 

Darin muss folgendes angegeben werden:

 

Der Name des Zinsempfängers

 

Name und Adresse des Abzugsberechtigten der Quellen-steuer sowie der Gross-Amount

Tag des Empfangs

 

Sowie Zinsbetrag und

Tag der Zahlung

 

Mit diesem Certificate kann nunmehr nachgewiesen werden, dass die Quellen-steuer ordnungsgemäß an das Finanzamt in Thailand abgeführt wurde.

 

Dieses Certificate ist notwendig, damit die deutsche Gesellschaft, als Empfängerin der Zinszahlungen, diese mit gegebenenfalls weiteren in Deutschland zu zahlenden Steu-ern verrechnen kann.

 

 

 

 

Fremdwährungsrechnungen innerhalb Thailands


 

Häufig wird behauptet, dass innerhalb Thai-lands Fremdwährungsrechnungen nicht zulässig sind. Dies ist nicht zutreffend. Genauso wie eine ausländische Gesellschaft an eine thailändische Gesellschaft eine Rech-nung in jeder Fremdwährung stellen kann, ist dies grundsätzlich auch innerhalb Thai-lands möglich.

 

Allerdings weist dies, was die Berechnung der Quellensteuer und VAT betrifft, Besonderheiten auf, die dadurch verkompli-ziert werden, dass die Wechselkursrate im Einzelnen davon abhängig ist, ob per Scheck oder per Überweisung gezahlt wird.

 

Im Standardfall stellt beispielsweise eine thailändische Gesellschaft einer anderen eine Rechnung über 100 US$ für Service.

 

Von diesem Rechnungsbetrag sind

 

3% Quellensteuer einzubehalten und abzuführen sowie weitere

 

7% VAT auf den Rechnungsbetrag von 100 auszuweisen

 

und an das zuständige Finanzamt zu zahlen (die VAT ist bis zum 15. eines jeden Monats und die Quellensteuer bis zum 07. eines je-den Monats fällig).

 

Da Zahlungen an das Finanzamt nur in Thai Baht zulässig sind, ist folgende Berechnung vorzunehmen:

 

Bezüglich der Hauptsumme ( in unserem Beispiel 100) ist die von der Bank of Thailand am Vortag bekanntgegebene Selling Rate in Anwendung zu bringen

 

Für die Berechnung der Quellen-steuer die Buying Rate

 

Für die Berechnung der VAT wiede-rum die Selling Rate

 

Die Berechnung des tatsächlichen Zahlbe-trags des Rechnungsempfängers (in unserem Beispiel hat der Rechnungsempfänger 100 – 3 + 7 = 104 zu zahlen) hängt davon ab, wie er die Zahlung ausführt. Für den in Thailand immer noch sehr häufigen Fall der Scheckzahlung ist die Cash Rate in Anwen-dung zu bringen, für den Fall, dass via Baht-Net respektive Überweisung gezahlt wird, ist die tt Rate, die Electronic Transfer Rate, an-zuwenden. Die tt Rate ist üblicherweise hö-her, allerdings können Überweisungen grundsätzlich am gleichen Tag durchgeführt werden.

 

 

Fremdwährungsrechnungen sind also auch innerhalb Thailands möglich und gerade bei größeren Projekten mit einem gewissen Importanteil auch sinnvoll.

 

 

 

Newsletter Nr. 6 (EN)

 

 

 

 

 

“Cross-Shareholding” and Taxation

of Dividends in Thailand

 

 

 

March 2014

 

 

 

 

 

All rights reserved © Lorenz & Partners 2014

 

Although Lorenz & Partners always pays great attention on updating information provided in newsletters and brochures we cannot take responsibility for the completeness, correctness or quality of the information provided. None of the information contained in this newsletter is meant to replace a personal consultation with a qualified lawyer. Liability claims regarding damage caused by the use or disuse of any information provided, including any kind of information which is incomplete or incorrect, will therefore be rejected, if not generated deliberately or grossly negligent.

 

 

  1. Introduction

 

“Cross-Shareholding” is a form of a business partnership which displays the holding of shares between two or more publicly listed companies that give each company involved an equity stake in the other. Due to the size of the stake there are differences in the taxation of the dividends which are mainly based on Section 65 (10) of the Revenue Code (“RC). In the following this influences shall be displayed.

 

company receiving the dividends whether directly or indirectly.[…]

 

Conditions:

 

  • more than 25 % of the shares with vot-ing rights in the other company paying the dividend

 

And

 

  • the company paying the dividend does not hold any share in the limited com-pany receiving the dividends.

 

 

  1. Section 65 (10) RC
  • Holding of less than 25% of the shares

 

“A limited company organized under the Thai law may include as revenue only half of divi-dends received from limited companies organized under the Thai law (…)

 

This is the Basic Case in Sec. 65 bis (10) Revenue Code (“RC”) which applies in all cases except the following situation:

 

  1. Consequence:

If one (or both) of these two conditions are not effective, the Basic Case (First sentence of Section 65 bis 10 RC) has to apply. (Namely, include as revenue only half of dividends)

  1. Result

 

Hence “Cross-Shareholding” will be the Ba-sic Case, since naturally two companies own each other’s shares.

 

 

  • Holding of more than 25% of the shares

 

“Provided that the following limited companies or-ganized under the Thai law are not required to in-clude any part of such dividends or share of profits as revenue:

 

(a) […]

 

(b)[…] any limited company […] that holds at least 25 percent of the total shares with voting rights in the limited company paying dividends provided that the limited company paying dividends does not hold any share in the limited


  1. Problem

 

If both “Cross-Shareholding” companies have to pay taxes on each of their dividends, it will go in circles:

 

A pays dividends to B; B has to pay divi-dends to A on that received income (divi-dends from A); Now A has to pay again divi-dends to B on the received income (divi-dends from B) and so on.

 

To fulfil the requirements of the exemption rule under sec.65 bis (10) RC, the paying company is not allowed to hold the shares, whether directly or indirectly, in the receiving company. The crucial question is what are the consequences if at the date of the dividend distribution, there is no “Cross-Shareholding” but there is “Cross-Shareholding” in the same fiscal year as the dividend distribution date?

 

The Revenue Department, normally, applies the fiscal year to disqualify the exemption dividend rule if the “Cross-Shareholding” happens in the same fiscal year as the divi-dend distribution.

 

The Supreme Court (Supreme Court Deci-sion No. 5733/2544), however, disagrees with the RD’s interpretation and rules that the “Cross-Shareholding” must happen at the date of the dividend distribution date, not in the same fiscal year as the dividend distribution.

  • Tax Exemption for Source Dividends

 

Normally, the dividend exemption rule is allowed only to a company set up under Thai law. The advantage from this rule is not given to a foreign paying company, even if it is carrying on business in Thailand via a branch office.

 

Presently, the Revenue Department issued the Royal Decree No. 442 in order to pro-vide an exemption on corporate income tax for source dividend to a Thai company that receive dividend income from the foreign company with certain conditions are as fol-lows:

 

  • A limited company or a public limited company established under Thai law must hold shares of at least 25% of the voting rights in the foreign company or juristic partnership.

 

  • A Thai company must hold such shares for a period of not less than six months from the date of obtain such shares until the date of receive a dividend.

 

Moreover, the RD issued further conditions regarding the features of dividend that could be exempted CIT as follows:

 

  • A dividend must derive from net profits that taxable in the country of the payer. Provided that such tax rate must be not less than 15% of net profit.

 

  • Regardless of whether the country of a dividend payer company shall have a legislation to reduce or exempt for the net profit.

 

The rationale according to the Royal Decree No. 442 is that to encourage the efficiency of Thai business to carry on business or in-vest in foreign country.

 

Moreover, the rationale that the law specify a dividend must derive from net profits that taxable in the country of the payer and such tax rate must not be less than 15% of net profit is that the Revenue Department do not want to encourage Thai investors to in-vesting in tax haven or low tax country.

 

The scenarios of such legislation could be described as follows:

 

 

 

 

 

 

Pay dividend

German

Thai

Company

Company

  1. Hold shares at least 25% with voting right

 

  1. Hold share for a period not less than 6 months from the date of obtain shares until the date of receive a dividend

 

  1. Dividend rate derive from net profits that taxable in the country of payer and such rate is not less than 15% of net profit

 

  1. Regardless where the country of payer have a legislation to reduce or exempt for the net profit

 

  1. Result

 

It is for sure, that the above displayed provides an interesting approach. Nevertheless, if “Cross-Shareholding” is given, an all embracing tax planning is may not be left out of consideration.