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Doing Business In Thailand: The Importance of Accounting Services

Transcription of the above video:

This video is going to briefly discuss accounting. It's an overview. There will not be specific information about how the rules of accounting operate with respect to businesses and individuals in Thailand. It's just basically some sort of explanation of some issues to watch out for.

Accounting is a major issue in Thailand especially since in a lot of ways, Thailand is much more paper-intensive with respect to its bookkeeping and accounting procedures when compared to basically any Western country. For various reasons, that use of paper is I think pretty much from a policy perspective has been deemed a positive as the records are sort of always right there. They are currently upgrading certain things to make accounting, taxpaying and revenue collection here easier, basically more digitized. I'm not going into great detail about that.

Simply what this video is here to basically say is when one sets up a company in Thailand, it's very different than say the United States where essentially you can set up something, you can do an LLC. Depending on the type of company you're operating, you may have to keep monthly books, you may have to do certain periodic tax filings but if it's just a one-man band sort of operation, oftentimes you know once a year dealing with one's taxes is usually about the extent of it.

Over here in Thailand, if one is setting up a company that is not the case. Thailand has, especially for foreigners doing business here, many tax filings to be done. Most have to be done on a monthly basis. You got things like withholding tax, VAT, corporate income tax, personal income tax. For those companies that have a foreign national with work permit on it, presumably that company is going to have a requisite for Thai employees who need to be working there in order for that company to secure a work permit. Those Thai employees are going to be making contributions in the Social Security system because that documentation is going to be necessary to go ahead and get a work permit. As a result, that's another filing that one is going to have to deal with every month.

So again, just sort of an overview, nothing particularly specific in this video but it should be noted that those looking to do business in Thailand and looking to set up a company in Thailand for whatever purpose should be aware that once a company is set up, especially if a company where foreign nationals are going to have a work permit on that company, there's going to be monthly filings of various taxes and government contributions. As a result of that, you need an accounting firm.

We do accounting. We have accountants in the house, in our operation here in our firm. That's not particularly the main thrust of what we do. We primarily focus on legal services but we just found over the years that it was rather necessary, it's rather nice from a facilitation of an efficiency standpoint to have accountants and lawyers that are in-house because on one hand, the lawyers need many of the accountants filings on a yearly basis to go ahead extend things like visas, work permits and we've just found it's a much smoother situation when all of that is, sort of, under one roof. Basically it's just a matter of members of the staff crossing from one end of the office to the other basically saying "hey you have such and such" for this particular company, for this particular case.

It also should be noted there are minimum salary requirements for foreign nationals who are working in Thailand with a work permit. Those minimum salary requirements are oftentimes based on nationality and it should be noted that that minimum salary requirement is generally going to result in the requirement of paying an income tax here in Thailand. That's another thing to think of. Again, with clients that are doing things with us in a corporate capacity, we can assist with personal income tax issues. Again, I am not an account, I am an attorney. I am licensed in the United States tax court and I do handle all issues with our clients having to do with the American tax system but with respect to Thailand, we have registered accountants in house.

The other thing to keep in mind is once a year, a company has to do an audited financial statement, balance sheet, these kinds of things, tax returns, all of this and a lot of this stuff has to be overseen by a CPA over here who's independent of any operations that pertain to the company on a daily basis. Basically, they want a neutral party going ahead and reviewing those issues. We can help facilitate that, we have independent CPAs in the Bangkok metro area. But that being said, as far as sort of the month to month ongoing issues, we'd be definitely consistent with that.

Just bringing this up because this is something that I find that many foreigners first coming to Thailand don't really think of because it really isn't in our paradigm to think of this, you know "I'm going to keep up all these filings and stuff on a monthly basis." But here in Thailand, it is a requirement and failure to file certain tax documentation can result in stiff penalties not very frequently but it can happen with criminal penalties could be attached to failure to file and failure to pay relevant taxes. So it's important to sort of keep up with this stuff and those who are again looking at possibly setting up a business here should be aware of the ongoing obligations that doing business in Thailand would probably entail.