What is ROH?
Regional Operating Headquarters or ROH is a juristic company incorporated in Thailand providing managerial, administrative and technical services as well as other supporting services to ROHs foreign branches or its associated enterprises.
What are the tax privileges for ROH?
ROH incorporated in Thailand will enjoy the following privileges:
1. Corporate income tax at the rate of 10 percent on net profits for income derived from services provided to ROHs foreign branches or associated enterprises;
2. Corporate income tax at the rate of 10 percent on net profits for royalties derived from ROHs foreign branches or associated enterprises for the use of Research and Development (R&D) done by ROH in Thailand. This benefit is also extended to royalties received from a third party providing services to ROHs branches or associated enterprises using ROHs R&D;
3. Corporate income tax at the rate of 10 percent on net profits and interest received from ROHs foreign branches or associated enterprises for loans granted, provided that such loans are made from other sources and extended to ROHs branches or associated enterprises;
4. Tax exemption for dividends received by ROHs from associated enterprises;
5. Tax exemption for dividends paid out of ROHs concessionary profits to its shareholders not carrying on business in Thailand;
6. Accelerated depreciation for buildings at the rate of 25 percent on the date of acquisition. The residual value can be depreciated within 20 years.
What are the criteria required for ROH for tax privileges?
To qualify for the privileges, ROH must meet the following criteria:
1. Its paid-up capital must not be less than 10 Million Baht at the end of each accounting period;
2. Provide services to its branches or associated enterprises in at least 3 countries;
3. Half of its total income is derived from administrative, technical and other supporting services provided to its branches or associated enterprises in other countries and royalties received outside Thailand for the use of ROHs R&D. This criteria can be mitigated to one-third of the total income in the first three accounting periods of its operation as ROH. In the case of force majeure, the Director-General of the Revenue Department may lower the income threshold for one accounting period; and
4. To notify the Revenue Department about the incorporation as ROH. Benefits will be given once the accounting period has been notified.
What does Associated enterprise mean?
The Revenue Department has two criteria in determining whether a company can be considered as ROHs associated enterprise :
1. Shareholding basis. A company shall be regarded as ROHs associated enterprise if :
i. ROH holds at least 25 percent of that companys issued capital; or
ii. The company holds at least 25 percent of ROHs issued capital; or
iii. The company holds at least 25 percent of ROH and other companys issued capital. In this case, ROH and the other company are regarded as associated enterprises.
ROH and Co. B are associated enterprises.
2. Control basis. A company shall be regarded as ROHs associated enterprise if :
i. ROH has control over that company; or
ii. The company has control over ROH; or
iii. The company has control over ROH and the other company. In this case, ROH and the other company are regarded as associated enterprises.
Control in this context is understood according to General Accepted Accounting Principles.
Which services provided by ROH to its associated enterprises or its branches would qualify for tax privileges?
Services that ROH provides to its branches or associated enterprises that qualify for tax privileges are : Managerial and administrative, technical services, and supporting services. Supporting services include:
1. General administration, business planning and coordination
2. Procurement of raw materials and components
3. Research and development of products
4. Technical support
5. Marketing and sales promotion planning
6. Personnel management and regional training
7. Financial advisory services
8. Economic or investment research and analysis
9. Credit control and administration
10. Any other activities stipulated by the Director-General of the Revenue Department
Which companies are qualified for ROH privileges?
Companies that are eligible for ROH privileges are:
1. Company incorporated in Thailand, currently operating and intending to become ROH; or
2. New company specifically incorporated in Thailand for ROH purposes.
How can an existing company become ROH?
An existing Thai incorporated company that wishes to become ROH and enjoy tax privileges must notify the Revenue Department by submitting the notification form at the Large Taxpayer Office (LTO). Tax privileges will be granted to ROH starting from the notified accounting period onwards.
In the case where a Thai incorporated company that is subject to Foreign Business Act (FBA) 1999 wishes to become ROH, the company must request for its scope of business amendment to ensure that it cover the activities of ROH at the Department of Commercial Registration, Ministry of Commerce. The request will be considered within 60 days from the date of submission. The company will start its operation as ROH once the approval is given and will gain the privilege after notify the Revenue Department.
Under the FBA, foreigner means:
(1) natural person not of Thai nationality;
(2) juristic person not registered in Thailand;
(3) juristic person registered in Thailand having the following characteristics :
(a) having half or more of the juristic persons capital shares held by persons in 1. or 2.; or
(b) having half or more of the capital or fund derived from persons in 1. or 2.; or
(c) being a limited partnership or a registered ordinary partnership whose managing partner or manager is not of Thai nationality;
(4) Juristic person registered in Thailand having half or more of its capital shares held by persons in 1., 2. or 3. or a juristic person having the persons in 1., 2., or 3. above investing with a value of half or more of the total capital.
Shares of a limited company represented by bearer share certificates are treated as shares of foreigners, unless the Ministry of Commerce provides otherwise in the Ministerial Regulations.
What does a new company that wishes to enjoy ROH tax privileges has to do?
The company must incorporate under the Civil and Commercial Code at the Ministry of Commerce, then apply for Tax Identification Number (TIN), register for VAT and notify to be ROH at the Revenue Department.
In the case where a Thai newly incorporated company wishes to become ROH is subject to Foreign Business Act (FBA) 1999, the company must request for an approval from the Department of Commercial Registration, Ministry of Commerce, before starting its operation.
What shall foreign companies that wish to enjoy non-tax privileges as ROH in Thailand have to do?
Foreign companies that wish to apply for non-tax privileges given under Promotion Investment Act in addition to tax privileges given by the Revenue Department must apply for investment promotion privileges from the Board of Investment (BOI) BEFORE notifying the Revenue Department of their intention to become ROH.
Non-tax privileges that will be granted include:
- Land ownership;
- Majority or total foreign ownership;
- Hiring of expatriates; and
- Repatriation of foreign currency.
Foreign companies interested in applying for investment promotion privileges, please contact the Board of Investment.
How shall a ROH calculate its Corporate Income Tax if it also has income that is not entitled to tax privileges under the scheme?
When calculating Corporate Income Tax, ROH has to separate non-qualified tax privileges income and expenses from the qualified income and its related expenses. If the expenses can not be separated, ROH must apportion non-qualified and qualified expenses by the ratio of the income received . However, if such method of apportion does not reflect the reality of business, ROH may seek for the Director-General of the Revenue Departments approval to use other more accurate and realistic way of calculation.
How should ROH file its tax return?
ROH has to file Corporate Income Tax by using the normal CIT 50 Form for the annual filing and CIT 51 Form for the half-yearly filing. Nevertheless, if ROH has other income that is subject to normal tax rate of 30 % or special rates granted by BOI, it has to file 2 returns for each form:
1st return - for income that has been granted reduction/exemption under ROH scheme,
2st return - for income that is subject to normal tax rate of 30% or special rates granted by BOI.
ROH only have to prepare only one Balance sheet and 2 income statements, one for each return, and file everything at the same time to the District Revenue Office where ROH is situated.
What are the tax privileges for expatriates working for ROH?
The privileges for expatriates working for ROH are as follows:
1. Expatriate may opt to be taxed at 15 percent of gross income. By doing so, the income received must not be calculated together with other income and cannot claimed for refunds. This privilege is available only to expatriates employed by ROH and are limited to their first four years of employment in Thailand. It does not matter how extensively the beneficiaries have to travel abroad during the employment period. To be entitled for the benefits once again, expatriates have to discontinue employment with any ROH in Thailand for more than 365 days.
2. Expatriates who are being sent to work in another country by ROH will receive a tax exemption in Thailand on their income paid by the foreign company for services rendered abroad, provided that such income is not directly or indirectly deducted as ROH nor its associated enterprises expenses in Thailand.
What does the term "expatriate" mean?
The term expatriate means a person who is not a Thai national and is employed by ROH.
If an expatriate has a contract with ROH for more than four years, will he/she still continue receiving the privileges?
An expatriate will receive tax privileges only during the first four years of employment in Thailand. He/she will need to pay regular Personal Income Tax, according to the Revenue Code, for income received after four-years. However, if he/she discontinues working for ROH in Thailand for more than 365 days, he/she will receive tax privileges for another four consecutive years. For this purpose, year means a calendar year.
What are the procedures in applying for visa and work permit for expatriates working in ROH?
ROH which has been granted investment promotion privileges may employ expatriates, together with their spouse and other persons under their care, in Thailand. These expatriates can work only in the approved positions and only for approved company. There are 3 steps in applying for visa and work permit:
| Step 1 | Step 2 | Step 3 | 1.1 Responsible agency approves positions of expatriates ;
1.2 Approval is given to the positions requested | Immigration Bureau give approval to expatriates who can work in Thailand during the period requested by specific company. | Department of Employment approves the work permit for expatriates valid for the period requested by specific company. |
The 3-step process can be done at :
- Foreign Expert Service Unit (Step 1)
- Visa and Work permit Unit (Step 2, 3)
As for ROH which does not wish to apply for promotion investment privileges from BOI, ROH must apply for work permit at Work Permit Unit, One Stop Service Center for Visa and Work Permit, and then apply for visa at the Immigration Bureau, Royal Thai Police.
How should an expatriate file the Personal Income Tax return ?
All expatriates may choose to file annual Personal Income Tax return using PIT 95 Form for income derived from salary and income in section 40(4) and (8) or PIT 90 Form for salary and other income or PIT 91 Form for salary only.
For more information, please contact:
Revenue Department
90 Phaholyothin 7 RoadSamsen Nai, PhayathaiBangkok 10400
Tel : 66 (0) 2272 8000 , 66 (0) 2272-9000
Fax : 66 (0) 2617-3632
www.rd.go.th
Email : roh@rd.go.th
Board of Investment
555 Vibhavadi-Rangsit Road
Chatuchak, Bangkok 10900
Tel : 66 (0) 2537-8111-55
Fax : 66 (0) 2537-8117
www.boi.go.th
Department of Commercial Registration
Nonthaburi 1 Road
Muang District, Nonthaburi 11000
www.thairegistration.com
Bureau of Business Registration
Tel : 66 (0) 2547-4431-2
Fax : 66 (0) 2547-4441
Email : regis@thairegistration.com
Secretary Office of the Foreign Business Committee>
Tel : 66 (0) 2547-4419-20, 2547-4426
Fax : 66 (0) 2547-4428
Email : foreign@thairegistration.com
Immigration Bureau, Royal Thai Police
507 Soi Suan Plu South Sathorn Road Bangkok 10120
Tel : 66 (0) 2287-3101-9
Fax : 66 (0) 2205-1288
www.imm.police.go.th
Email : imm@police.go.th
Visa and work permit Unit
3rd Floor, Krissada Plaza
207 Rachadapisek Road, Dindaeng, Bangkok 10310
Foreign Expert Service Unit
Tel : 66 (0) 2693-9333-9 ext. 106-111
Fax : 66 (0) 2693-9340
Work Permit Unit
Tel : 66 (0) 2693-9333-9 ext. 305-310
Fax : 66 (0) 2693-9348
Visa Unit
Tel : 66 (0) 2693-9333-9 ext. 210
Fax : 66 (0) 2693-9340
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