Investment Promotion for International Headquarters (IHQ ... for IHQ and ITC (English).pdf · Group company Definition of Treasury Center (TC) Treasury Center is a Thai juristic person

Investment Promotion for International Headquarters (IHQ)

and International Trading Centers (ITC)

IHQ’s Scope of Activities

International Headquarters (IHQ) provide the following

services to Associated Enterprises (in Thailand/Overseas)

Treasury Center(in accordance with

The Exchange Control Law)

Procurement of raw materials and parts, including services

related to International Trading Centers

Supporting services including• General management, business planning

and business coordination• Research and development of products• Technical support• Marketing and sales promotion• Human resource management and training• Financial advisory services• Economic and investment analysis and

research• Credit management and control• Any Other supporting services as specified

IHQ (Sourcing of raw materials and parts)

IHQ

Thailand

Associated Enterpriseslocated overseas

Manufacturer/Trading Partner located overseas

Raw materialsand parts

Purchase of goodsPayment for goods/services

Out-Out

Associated Enterpriseslocated in ThailandManufacturer/Trading Partner

Located in Thailand Raw materialsand parts

(wholesale only)

In-InPurchase of goods Payment for

goods/services

Overseas

Out-In Raw materialsand parts

(wholesale only)In-Out Raw materials

and parts

(1)

(2)

(3)

(4) servicesservices

Tax Incentives

• Exemption of import duty on

machinery (only for R&D

and training activities)


raw materials and parts used

in the production for export

Incentives offered by the BOI

Non-Tax Incentives

• Permission for majority or

total foreign ownership

• Permission to own land

• Permission to bring in

skilled personnel and experts

into the Kingdom to work in

investment promoted

activities

Conditions to apply for BOI

• Paid-up capital must be at least THB 10 million

• Must supervise branch or associated enterprise that are

located overseas, of more than in 1 country

International Trading Center (ITC)

A company incorporated under Thai laws that

purchases and sells goods, raw materials and parts or

that provides international trading related to juristic

persons incorporated under foreign laws

ITC Activities

Remark: Scope of ITC includes Procurement of raw materials and parts and services related to International Trading Centers

ITC

Thailand

Associated Enterpriseslocated overseas Manufacturers/Trading Partners

located overseasGoods

Payment ofgoods

Out-Out

Associated Enterpriseslocated in ThailandManufacturers/Trading Partners

located in Thailand Goods(wholesale only)

In-InPurchase of

goods

Overseas

Out-In Goods(wholesale only)

In-Out Goods

(1)

(2)

(3)

(4)

Payment ofgoods

Purchase ofgoods

Incentives offered by the BOI

Tax Incentives


machinery


raw materials and parts used

in the production for export

Non-Tax Incentives

• Permission for majority or

total foreign ownership

• Permission to own land

• Permission to bring in

skilled personnel and experts

into the Kingdom to work in

investment promoted

activities

Condition to apply for BOI

• Paid-up capital must be at least THB 10 million

The difference between ITC and IPO

ITC IPO

Procurement of goods

(from Thailand/overseas)

- Raw materials, parts and semi-

finished goods- Finished goods

- Raw materials, parts and semi-

finished goods

Sale of goods in Thailand

- Sell to manufacturers to further assemble/produce into other products

(In-In / Out-In)- is not retail sale/direct sale to end-users

Export goods overseas

- Export goods that were sourced in Thailand (In-Out)

- Purchase and sell goods outside

Thailand without importing into Thailand (Out-Out)

- Export raw materials, parts and

semi-finished goods that were purchased in Thailand (In-Out)

Paid-up capital At least THB 10 million

Other conditions for investment promotion

None

- Procurement domestically in

Thailand

- Inspection and packaging

Remarks 1) An ITC activity covers the former International Procurement Office (IPO) activity

2) BOI-promoted IPO projects can apply for ITC activity either as a new project or amendment of the existing project from IPO to ITC

Address: 18th Floor, Chamchuri Square Building, 319 Phayathai Road,

Pathumwan, Bangkok

Domestic Call: 0 2209 1100, Inter. Call: (66 2) 209 1100

Email: [email protected]

One Start One Stop Investment Center

INTERNATIONAL HEADQUARTERS & INTERNATIONAL TRADING CENTER

Mrs. Patricia MongkhonvanitDirector, Bureau of Tax Policy and Planning

The Revenue Department

CONTENTS

• IHQ : International Headquarters• Activities

• Qualifications

• Tax Benefits

• ITC : International Trading Center• Qualifications

• Tax Benefits

• Application Procedures

• Contacts

INTERNATIONAL HEADQUARTERS

IHQ : INTERNATIONAL HEADQUARTERS

A company incorporated under Thai law which :

Provides managerial, technical, supporting services to its associated enterprises

Provides financial management service to its associated enterprises

Performs offshore trading activities


Managerial or technical services

• General management, business planning and business coordination

• Procurement of raw materials and parts

• Research and development of products

• Supporting technical assistance

• Marketing and sale promotion

• Financial advisory services

• Economic and investment analysis and research

• Credit management and control

Supporting services


• Corporate Treasury Centers under BOT regulations

• Borrowing and lending in Thai Baht

Financial management service


• Purchases and sales of goods overseas (Out-Out)

• Provides international trading related services

Offshore trading activities

IHQ : ASSOCIATED ENTERPRISES

A company which holds shares directly or indirectly in IHQ

not less than 25% of the total capital

A company which has the power to control or

supervise IHQ

A company in which IHQ is directly or

indirectly a shareholder not less than 25% of

total capital

A company in which IHQ has the power to control or supervise

A company in which the company in Box 1 is directly or indirectly a shareholder not less

than 25% of total capital

A company in which the company in Box 4

has the power to control or supervise

IHQ

B Co.

A Co.

D Co.

C Co.

A1 Co. A2 Co.

B1 Co.B2 Co.

S Co.

25%/Control

25%/Control

25%/Control

25%/Control

IHQ :QUALIFICATIONS

Must provide managerial, technical, supporting services or financial management to at least one offshore associated enterprise

Minimum paid-up capital = THB10 million

Minimum operating expenses paid to recipients in Thailand = THB15 million

* If the IHQ fails to meet the above qualifications in any accounting period, the IHQ will disqualify for all tax benefits in such accounting period including tax benefit for its expats

IHQ’S TAX BENEFITS

IHQ :CIT EXEMPTION

• Income from managerial or technical or supporting or financial management services.

• Royalties

• Dividends

• Capital gains

Income from offshore associated enterprises

• Income from out-out trading including transshipment or transitunder Thai Customs Law

• Income from providing international trading related services to foreign companies

Income from offshore trading & related services

IHQ :CIT RATE REDUCTION FROM 20% TO 10%

• Income from managerial, technical, supporting orfinancial management

• Royalties

Income from associated enterprises in Thailand

IHQ :SBT EXEMPTION

Gross receipts from lending to associated enterprises

IHQ :CIT EXEMPTION ON OUTBOUND PAYMENT

Dividends paid out ofCIT exemption income

Interests on loan made for onlending toassociated enterprises

IHQ :PERSONAL INCOME TAX FOR EXPATRIATES

15%on gross income and all benefits derived from employment

INTERNATIONAL TRADING CENTER

ITC :QUALIFICATIONS

Minimum paid-up capital = THB10 million

Minimum operating expenses paid to recipients in Thailand= THB15 million

* If the ITC fails to meet the above qualifications in any accounting period, the ITC will disqualify for all tax benefits in such accounting period including tax benefit for its expats

ITC’S TAX BENEFITS

ITC :CIT EXEMPTION

• Income from out-out trading including transshipment or transitunder Thai Customs Law

• Income from providing international trading related services to foreign companies

Income from offshore trading & related services

ITC :CIT EXEMPTION ON OUTBOUND PAYMENT

Dividends paid out ofCIT exemption income

ITC :PERSONAL INCOME TAX FOR EXPATRIATES

15%on gross income and all benefits derived from employment

APPLICATION PROCEDURESwww.rd.go.th

APPLICATION PROCEDURES

IHQ and ITCRules & Regulations

APPLICATION PROCEDURES

Receive the result from the Director-General of the Revenue Department

Approved Partially approved Not Approved

Track your application process online

Submit the form along with electronic file of business plan to LTO at 11th floor, RD Building

Print out the form and signed by authorized director with company’s seal

Attach XML files

Thai associated enterprises of IHQ

Foreign associated enterprises of IHQ

Expats who work in IHQ or ITC that desire to receive PIT benefit

Register and login to file SorYorKor1 form

Login

APPLICATION FORM (ส.ญ.ค.1)

Application form requirement

• Company’s profile

• Activities to apply

• Company’s accounting period

• Other information

• Number of pages of business plan

• Number of IHQ’s Thai associated enterprises

• Number of IHQ’s foreign associated enterprises

• Number of expatriates working in IHQ/ITC entitled to PIT benefit

• Signature of authorized director and company’s seal

RD CONTACTS (IHQ-ITC ISSUES)

Bureau of Tax Policy and Planning 02-272-8033

Bureau of Legal Affairs 02-272-8390

Bureau of Information Technology 02-272-8735, 02-272-8871

Thank you

Corporate Treasury Center

Agenda

• Definition of Treasury Center• Benefits of establishing TC in Thailand • Scope of business of Treasury Center in Thailand• Conditions and regulations in operating a Treasury Center in

Thailand • TC licensing application• Contact point for applying establishment of Treasury Center

2

Agenda



3

4

Thailand

TC

Group company

Definition of Treasury Center (TC)Treasury Center is a Thai juristic person not engaging in financial business which

manages foreign currency funds for its Group Companies both in Thailand and overseas

Holding company is allowed as a Group Company. Regulatory Relaxation on April 30,2015

Group company

Group company

Group company

Group company

Group company

Group company

Group company

Agenda



5

6

• Reduce transaction costs and help increase companies’

efficiency and competitiveness through cash pooling and

netting.

• Entitle to benefits under International Headquarter (IHQ) if

TC choose to apply for IHQ license

• Facilitate MNCs, either their parent companies abroad or in

Thailand, to centralize all treasury management in Thailand

Benefits of establishing TC in Thailand

Agenda



7

8

Scope of business of Treasury Center in Thailand

Payment & Collection

FX Transactions & Risk Management

Liquidity Management

Netting of FX Transactions

$ €

¥ £

Agenda



9

10

I. Payment and Collection

Group Company in Thailand and abroad TC Counterparty

Re-Invoice

Re-invoicing

Agent

TCTHB / FX

Goods/Services/Dividend/Interest

Re-Invoice

Goods/Services

THB / FX

THB / FX THB / FX

Group Company in Thailand and abroad

e.g. Importer, Exporter

Counterparty

Regulatory Relaxation on April 30,2015

II. Netting of FX Transactions

11

TC can net FX transactions and pay to Group Companies in Thailand and abroad or counterparties abroad on

the net basis.

*including dividend and interest

TC

GC A

Importer/

Exporter

GC B

Exporter

GC 1Producer /

Importer

GC 2Producer / Importer / Exporter

GC 3Exporter

e.g. Multi - netting

International trade and services* of Group Companies in Thailand and abroad

TC’s FX transactions under its scope of business e.g.FX lending and borrowing


III. FX Transactions and Risk Management

12

Domestic FIs TC

TC submits a copy of treasury center license.

Purchase /Sale/ Hedging

Group Company

TC checks underlying transactions of the Group Companies in Thailand e.g. invoices for goods and services, loan agreement.

TC may let Group Companies keep their own documents of underlying transactions.

Purchase /Sale/Hedging


13

III. FX Transactions and Risk Management (2)

TC can purchase FX up to an aggregate amount of USD 500 million per year for the following purposes:

Deposit into the FCD opened with domestic FIs without having documents of underlying transactions

Deposit with FIs abroad

Debt securities investment abroad

Allow TC to open one type of FCD Account (foreign sources). For payment of goods, services and other purposes such as loans, TC can purchase FX up to the amount of the underlying transactions.

Outstanding : up to USD 500 mil.


14

IV. Liquidity Management

TC

Company 1

Company A

GC :Cash Surplus

Company B

Company 2

Company 3

Company C

GC :Cash shortage

Company D

Company 4

Borrow from domestic FIs/ FIs abroad

TC :Cash shortage

Borrow from FIs, Group Companies, affiliate companies or other juristic persons abroad

Deposit into domestic FCD

TC :Cash Surplus

Deposit with FIs abroad

Debt securities investment abroad

TC can lend to its Group Companies more than 1 year. Regulatory Relaxation on April 30,2015

Agenda



15

16

TC Licensing application

Juristic persons must register with MOC to carry out Treasury Center Business

A company submits application & related documents

BOT processess application(30 working days)

MOF approves and grants the license(30 working days)

TC receives the license from BOT togetherwith BOT’s letter indicating list of Group Companies (7 days)

Additional Procedures

If TC is a foreigner,It is subject to the Foreign Business ACT, B.E. 1999

and must apply for Foreign Business License / Certificate

TC licensing application

Agenda

• Definition of Treasury Center• Scope of business of Treasury Center in Thailand• Conditions and regulations in operating a Treasury Center in


17

18

Website: www.bot.or.th >> Foreign Exchange Regulations >>Treasury Center

E-mail : [email protected] [email protected]

Tel : 02 356 7345, 02 356 7858, 02 283 5135

Contact point for applying establishment of Treasury Center

Department of Business DevelopmentForeign Business Administration Division

IHQ - ITCand

FOREIGN BUSINESS ACT (1999)

1. Legal Mechanism

2. Definition of Foreigner & Regulated Businesses

3. IHQ – ITC and FBA

4. Foreign Business Permitting

5. Department’s Facilitating

6. Contacting Points

Outline

2

What are regulated businesses ?

Who are foreigner?Definition

“Foreigner”Regulated Businesses

Licensing & Certificate Granting

Foreign Business License

Foreign Business Certificate

3

a natural person not of Thai nationality1

a juristic person not registered in Thailand2


4

Registered aboard

3 a juristic person registered in Thailand,having 50 % or more of the capital shares held by following persons ;

Natural Person not of Thai nationality or Juristic Person

Registered aboard

Juristic Personregistered in

Thailand

≥ 50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Foreign Shareholding

Thai Shareholding ≤ 4 9 . 9 9 %

5


Businesses Related To National Safety Or Security Or Having Impacts On Arts, Culture, Traditions,Customs And Folklore Handicrafts Or Natural Resources And The Environment

Business Activities Reserved For THAI Only

Businesses Which Thai Nationals Are Not Ready To Compete With Foreigners

List 1

List 2

List 3

Business means ? Lists Annexed to FBA

Operating Of Undertaking In Activities For The Purpose Of Trade

: In the Field of

AgricultureIndustry

HandicraftCommerceServicesOthers

6


• Managerial or Technical Services• Financial Management• Supporting Services:

- General Management- Research and Development of Product- Financial Advisory Service

Regarded As Service Businesses Under List 3 (21)

Foreign Shareholding Up to 100 %

Business Activities Under IHQ

7

• Purchasing And Selling Goods, Raw Materials Parts or Providing International Trading Related Services

Regarded As Wholesaling Business Under List 3 (15)

Foreign Shareholding Up to 100 %

Business Activities Under ITC

8

: Selling in Domestic Market

: Selling in International Market Regarded As Exporting Business Permission is not Required

9

Section 1130 Days

30 Days

60 Days

Section 12

Section 17

Non Tax Incentive Measures

Shortening Licensing Process•Certificate Granting •Licensing

10

Filing Application

Examining Application

Considering Application

Notifying In Writing

Filing Application

Examining Validity of Investment Promotion

Certificate

Notifying In Writing

within30 Days

within15 Days

• Section 17

• Section 12

Licensing Procedures for IHQ - ITC

11

[email protected]

Foreign Business Administration Bureau

Dept. of Business Development

0-2547-4425-6

Walk-in

1

2

34

6. Contacting Points

12

“Working of Alien Act, B.E. 2551” has stipulated that Alien shall engage in any work when being granted permit fromregistrar which means the Director-General of the Department of Employment and the competent official appoint by the Minister upon recommendation of the Director-General

Work Engaging in work by exerting energy or using knowledge whether or not in consideration of wages or other benefits

Section 9 and 11 (Skilled and profession)- An alien who has residence in the Kingdom- An alien who has permission to stay in the

Kingdom temporarily (Non-Immigrant B), not a tourist/transit.

Foreign Classification

Qualification of an alien

2. Having the knowledge and/or skills to perform the work as stated in the application for a work permit

3. Not being insane or mentally sick, suffering from Leprosy, Tuberculosis, Drug Addiction, Alcoholism, Elephantitus and Tertiary Syphilis.

4. Have never been imprisoned for violation of the Immigration Law or the Working of Alien Act at least one year prior to the date of application.

1. Having residence in the Kingdom or having permission to stay in the Kingdom temporarily (Non-Immigrant B), not being tourist/transit

Criteria for Granting Work Permit1. (International Headquarters: IHQ)

A company incorporated under Thai laws that provide services to its associated enterprises or branches, whether located in Thailand or overseas. The work permit will be granted to a maximum10 workers.

In case, an IHQ needs to employ more foreigners than the stipulated ratio (10 workers), in which the IHQ have paid personal income tax of not less than 3 million baht during the previous year, work permits will be granted as deemed necessary and appropriate.

Criteria for Granting Work Permit 2. International Trading Centers: ITC

A company incorporated under Thai laws that purchases and sells goods, raw materials and parts or that provideinternational trading-related to juristic persons under foreign laws. The work permit will be granted to 10 workers for maximum.

In case, an ITC needs to employ more aliens than the stipulated ratio (10 workers). An ITC have paid personal income tax of not less than 3 million baht during the previous year, work permit will be granted as deemed necessary and appropriate

Applying for Work Permit

As necessary and appropriate

According to the employment certified

letter or employment contract

Not exceeding 2 years/time

Duration of the Work Permit

Bangkok- Office of Foreign Workers Administration,

Department of Employment, Ministry of Labor Mit-Maitree Road, Dindaeng Bangkok 10400

Other provinces- Provincial Department of Employment

For further Information: System management group on foreign workers for skilled labor, Professional

Tel: 0 2245 2745, 0 2248 7202 Website: wp.doe.go.th

Applications must be submitted to the local authority where the applicant’s office is located

Contacts

Documents

Investment Promotion for International Headquarters (IHQ ... for IHQ and ITC (English).pdf · Group company Definition of Treasury Center (TC) Treasury Center is a Thai juristic person