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Thailand Tax Incentives under International Headquarters (IHQ) and International Trading Center (ICT)

STLO Asia > News & Publications  > Thailand Tax Incentives under International Headquarters (IHQ) and International Trading Center (ICT)

Thailand Tax Incentives under International Headquarters (IHQ) and International Trading Center (ICT)

The Thai Government has passed the regulations in order to grant corporate income tax to IHQ or ICT and personal income tax to expatriates working in IHQ or ITC.   IHQ or ITC are available not only to new companies but also existing companies.In case of existing companies, the companies need to separate financial documents and records of IHQ or ITC businesses from their general businesses.  The benefits of IHQ and ITC is that foreign companies can use Thailand as a hub in providing services to their subsidiaries and other companies; meanwhile, they can enjoy the tax incentives.  The followings are brief details of IHQ and ICT conditions and their tax incentives.

IHQ

IHQ Conditions: The conditions to receive the tax incentives are as follows:

  1. Provides support services to at least one subsidiary or affiliate abroad.
  1. Support services must be the services stipulated according to the IHQ regulations e.g. general administrative services, business planning, business coordination, raw materials and parts procurements, R & D, technical supports, marketing and sale support, financial advisory, financial management, loan services (in THB) and other supporting services as specified by the Revenue Department.
  1. A subsidiary or an affiliate must be a subsidiary or an affiliate according to the meanings as specified by the regulations.
  1. has at least THB 10 million paid up capital as at the last date of each accounting period
  1. has at least THB 15 million expenses relating to the IHQ businesses and paid to recipients in Thailand for each of its accounting period
  1. obtains the approval from the Revenue Department

IHQ Tax Incentives: The IHQ major tax incentives are as follows:

  1. 15% personal income tax on the income of the expatriates who worked for the IHQ subjected to certain conditions
  2. 10% corporate income tax on the profit (including royalty fee) generated from the support services to a subsidiary or an affiliate in Thailand for 15 accounting periods
  3. Exemption from a corporate income tax on profit (including royalty fee) generated from supporting services to a subsidiary or an affiliate abroad for 15 accounting periods
  4. Exemption from a corporate income tax on the dividend which the IHQ receives from its subsidiaries or affiliates for 15 accounting periods
  5. Exemption from a tax on the income generated from transfers of shares of IHQ’s subsidiary or affiliate located abroad for 15 accounting periods
  6. Exemption from a corporate income tax (withholding tax) when the IHQ remits dividend to juristic persons abroad only on the dividends incurred from the support services
  7. exemption from a corporate income tax (withholding tax) when IHQ remits interests to juristic persons abroad only on the interests on the money that the IHQ borrows for the purpose of grating loan to its subsidiary or affiliate in connection with financial management

ITC

ITC is different from IHQ.  ITC can provide services to both its foreign subsidiaries or affiliates and other foreign entities.  The ITC’s services are different from those of the IHQ. The ITC’s services mainly relate to goods.

ITC Conditions: The conditions to receive the tax incentives are as follows:

  1. Provides the services relating to international trade such as procurements of goods, storing of goods before delivery, packaging, transportation of goods, insurance, providing advice and services relating to technic and training of goods, other services as specified by the Revenue Department
  1. Has at least THB 10 million paid-up capital as at the last date of each accounting period
  1. Has at least THB 15 million expenses relating to the ITC businesses and paid to recipients in Thailand for each accounting period
  1. Obtains the approval from the Revenue Department

ITC Tax Incentives: the major tax incentives are as follows:

  1. 15% personal income tax of the expatriates who work for ITC subjected to certain conditions
  1. Exemption from a corporate income tax on the profit generated from the income on procurement and sell of goods abroad, provided that the goods are not import to Thailand or import to Thailand as in transit or transshipment goods
  1. Exemption from a corporate income tax on the profit generated from the income of providing the ITC services received from foreign juristic persons for 15 accounting periods

 

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The Thai Government has passed the regulations in order to grant corporate income tax to IHQ or ICT and personal income tax to expatriates working in IHQ or ITC.

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