Thailand – Relocation of Headquarters to Thailand Comes with Tax, Immigration Incentives

Thailand – Relocation of Headquarters to Thailand Comes

This GMS Flash Alert reports on the introduction last year a new program to increase Thailand’s competitiveness and encourage the location of headquarters in Thailand.

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The Thai Government introduced last year a new program to increase Thailand’s competitiveness and encourage the location of headquarters in Thailand.  

The Board of Investment (BOI) released its new investment promotion policy which became effective from 1 January 2015.  Subsequently, Royal Decrees no. 586 and no. 587 established in law a new international headquarters (IHQ) and international trading center (ITC) regime, effective from 2 May 2015. 

WHY THIS MATTERS

With the reduced personal income tax rates for eligible expatriate employees of qualifying companies under this regime, the tax burdens of individual taxpayers will be lessened and companies could experience lower international assignment costs.  Cost projections and assignment budgets involving expatriate employees to IHQs and ITCs should account for the lower tax rates as compared to other locations in Thailand.

In addition, entry rules for foreign workers in the IHQs and ITCs are more liberal as compared with other work locations, thus easing the administrative burden on employers and their inbound foreign workers.  Further, those workers should manage to get to their ITC and IHQ work assignments more swiftly.

Advantages of the New IHQ and ITC Regimes

The eligible expatriate employees of qualifying companies may enjoy a reduced personal income tax rate of 15 percent on their income (instead of the usual progressive rates up to 35 percent) for a period of 15 years.1  The reduced rate is applicable from the date the IHQ is approved for tax benefits under the IHQ regime until the individual’s final day of employment at the IHQ, or until the IHQ’s tax benefits under the regime expire.

Some of the regime’s other measures that concern foreign nationals, include:

  • The qualifying company’s ability to bring in skilled foreign nationals (and their spouses and dependents) -- with a more liberal application of the usual rules relating to the Thai-to-foreigner employment ratio and minimum share capital requirements to support the employment of expatriates;
  • A “one-stop-shop” benefit at BOI for visas and work permits;
  • Permission for foreign nationals to enter Thailand for purposes of looking into investment opportunities; and 
  • Permission for the IHQ/ITC to be majority or wholly owned by foreign nationals.   

Among other incentives are provisions providing relief from corporate income tax (0 percent on non-Thai source income from services, royalties, and dividends, and 10 percent on certain Thai source income), as well as 0 percent withholding tax rates on qualifying dividends and interest.

FOOTNOTE

1  A foreign employee must spend at least 180 days in an income year in Thailand and must have a minimum salary requirement of THB 200,000 per month.

RELATED RESOURCE

For additional information, see: “Thailand’s Investment Promotion: International Headquarters” (2015), published by the KPMG International member firm in Thailand.

CONTACTS

For further information or assistance, please contact your local GMS or People Services professional, or the following professionals with the KPMG International member firm in Thailand:

 

Lynn Tastan

+66 2677 2477

ltastan@kpmg.co.th

 

Panisa Srihera (tax)

+66 2677 2544

panisa@kpmg.co.th

 

Sa-angluk Sarobol (tax)

+66 2677 2542

Saangluk@kpmg.co.th

 

Tanittha Cha-Um (immigration)

+66 2677 2466

Tanittha@kpmg.co.th

 

Wanpratueng Ramgomut (immigration)

+66 2677 2565

Wanpratueng@kpmg.co.th

The information contained in this newsletter was submitted by the KPMG International member firm in Thailand.

© 2016 KPMG Phoomchai Tax Ltd., a Thailand limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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