starting a business in paradise city ...
For many expats in Hua Hin, life is easy, but some feel they need the extra involvement in some sort of business to pass the time. In the following sections, we have outlined the proceedure you should follow if you want to set up a business over here.
It should be stressed that you will need to liase with a professional lawyer and the following is for guidance purposes only.
In the first instance, you must decide on a name for the business and this should not be the same, or close to, an existing one. For this purpose, registration should be made at The Commercial Registration Department of The Ministry of Commerce. Once a name is agreed, it is reserved for 30 days. No extension is given.
The next step is to file a Memorandum of Association, also with the Commercial Registration Department. This must include the reserved name, the province in which business will be carried out, the business objectives, the amount of capital that will be registered and the names of seven promoters. Capital information should include the number of shares to be issued and their par value. All the authorised capital must be issued at formation, even if not fully paid up and whilst there is no minimum capital requirement, the amount should be adequate for the business intentions. Fees are 50 Baht per 100,000 Baht of registered capital, with a minimum of 500 and a maximum of 25,000 Baht.
It is then necessary to convene a statutory meeting during which directors and an auditor are appointed and articles of incorporation and by-laws approved. Within three months of this meeting, the directors must submit the application to establish the company. The fees are 500 Baht per 100,000 Baht of share capital, with a minimum of 5,000 and a maximum of 250,000 Baht.
If a business is liable for income tax, it must obtain a tax ID card and number from the Revenue Department within 60 days of incorporation or the start of business. Businesses earning more than 1,200,000 per year must register for VAT within 30 days of reaching the figure.
The Civil and Commercial Code, the Revenue Code and the Accounts Act all specify the accounting proceedures and books that must be kept. Documents can be kept in any language, as long as a Thai translation is attached.
Companies are required to withhold income tax from all regular employees. VAT is at a rate of 7% and levied at each stage of the production process. It is applicable to most companies. There are other taxes, including corporate income tax, that are levied on particular types of businesses and you should consult with your lawyer to see if you are liable.
Generally speaking Thailand has adopted western practices. The main requirement is that any system used should be consistent and can only be changed with the approval of The Revenue Department.
Types of Business Organisations
There are three main types in Thailand - partnerships, limited companies and joint ventures. No matter which type you set up, be aware that foreigners, whether individuals or juristic entities, must comply the The Alien Business Act 1999. This may restrict the type of business you want to carry out, for a list of restricted occupations please see the jobs in Hua Hin page.
It should be stressed again that the above is really only designed as a quick guide to setting a business up. The services of a competent lawyer are essential.
If you have general questions in this field, visit our Legal forum to ask them.