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ResourcesCorporate and Tax AdvisoryThailand Tax LawThe Importance Of Audited Financial Statements And Balance Sheets In Thailand

The Importance Of Audited Financial Statements And Balance Sheets In Thailand

Transcript of the above video:

In this video, we're going to briefly discuss the importance of audited financial statements and balance sheets as it pertains to corporations operating here in Thailand, Thai limited company specifically. Basically, what we're talking about here and I am not an accountant, we have accounting staff. We have Thai legal staff here, they’re counterparts of mine. They deal specifically with Thai legal and accounting matters.

In matters pertaining to say things like the U.S.-Thai Treaty of Amity, I oftentimes insist and things like certification of a Thai company pursuant to the terms of the treaty. But that being said, as far as Thai legal services and Thai accounting services, we have Thai professionals here to be able to handle these things. But sort of a brief overview of audited financial statements, it's a formality here in Thailand that it has some translation in like U.S. corporate law going back a couple of decades. You know incorporated entities, INCs as you call them, things that were sort of precursors to the modern day LLCs with respect to how they need to be dealt with.

It should be noted audited financial statements are basically it's an overall accounting of the company's business activities throughout the year, profits and losses, assets liabilities etc. Those matters are going to go through either an internal accountant within a company or like we have, we provide corporate services here or we do month to month accounting to maintain an individual company’s say VAT filings, withholding tax filings, personal income tax filings for our individual clients as well as corporate income tax filings for the corporations themselves. At the end of each given year and once accounting here may differ from company to company.

Most the time, the default is going to be on the calendar year but some people choose to have it at a different time of the year or just through in some cases sort of randomness of the situation you may have it at a different time of the year. Basically, the corporation needs to file what's called an audited financial statement and under that circumstance, you go ahead and take the company's books and the year’s worth of accounting filings. You hand this stuff over to an outside CPA. These individuals are not part of our firm. They are independent by the definition that's why they're providing the audit and their independence needs to be maintained in order to provide said audit. Those folks go ahead audit the books of the company and audit the financial situation of the overall company and go ahead and after the audit is complete, all of that will be filed with the Department of Revenue and that will be maintained.

Now it needs to be understood, this is one of those situations where Thailand is a little bit different than say the United States because failure to maintain audited financial statements may first of all result in fines which is not like other jurisdictions the United States included. But also could result in criminal liability if the company directors for a prolonged period of time do not go ahead and get that documentation adequately and accurately and properly filed. So it should be noted that audited financial statements are not only important for the purposes of maintenance of the company's books but they're important because there are penalties associated with lack of filing or in some cases improperly filing but lack of filing is especially important.

It should also be noted for those who are interested in this topic generally and for those who are interested in this topic because they're a foreign national who are in business here in Thailand maintaining a work permit on a company here in Thailand, audited financial statements are one of the major components that are going to be looked at with respect to visa renewal and work permit renewal. So failure to keep up one's audited financial statements especially in the context of a small business being utilized for a foreign to enjoy a visa and the work permit here in the country it's want to keep up you're audited financial statements that's extremely important as failure to do so could result in loss of status as far as an immigration or Labor Department certification standpoint.