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ResourcesCorporate and Tax AdvisoryUS Corporate LawUS-Thai Amity Treaty Company: Optimal Solution to Manufacturing in Asia?

US-Thai Amity Treaty Company: Optimal Solution to Manufacturing in Asia?

Transcript of the above video:

As the title of this video suggests, we are discussing Amity Treaty Companies. That is a Thai Company which has been certified pursuant to the provisions of the US-Thai Treaty of Amity and how that may be a really optimal solution especially for manufacturing companies that may be relocating from China and are looking for someplace to resume operations in the aftermath of both COVID-19 as well as amidst this kind of for lack of better term, Trade War between the United States and China. 

I have done extensive analysis on the tax implications of Amity treaties and I do not believe that they should be considered Controlled Foreign Corporations pursuant to US tax law; I will go ahead and put a link to my analysis to that in the description below. One of the other things to keep in mind with respect to Amity Treaty Companies is physical proximity to China and the fact that they can be 100% American-owned. So, unlike many other jurisdictions out here in Asia, a US-Thai Treaty of Amity Company can provide the benefit to the American Corporation or the American individuals involved; they can own their operation out right. Depending on what they are doing, there are certain restrictions under the Treaty, but an Amity Treaty Company can be 100% American owned notwithstanding the provisions of the Thai Foreign Business Act, so that is a major benefit. 

Another thing, again to sort of provide a little bit of insight into my analysis regarding the tax situation, if an Amity Company is not a Controlled Foreign Corporation then the same analysis done under the amendments to the tax code which were inherent in the so-called Trump Tax legislation which created, in my opinion a more onerous analysis for tax purposes or so-called Controlled Foreign Corporations, I don't think that applies to Amity Companies. As a result, you could see a situation where an Amity Company in Thailand could also receive promotion under the Board of Investment or BOI wherein they might be granted a major tax holiday. On top of that, the benefits accrued to an Amity Company insofar as they are not considered a Controlled Foreign Corporation, could lead to almost and I hesitate to say this and understand I am saying this with qualification and those watching this should seek specific legal advice when discussing tax matters, this is just sort of a general exposition on taxes generally, The Amity Treaty, Thai Law and the Board of Investment, but you could in theory see a situation where a BOI Company with Amity Certification could have zero tax liability to either jurisdiction; either the United States or Thailand, while still manufacturing and sending products to the United States or elsewhere around the world for that matter. This could be out there. This could be a possibility.

Again it is sort of like a lock, all the tumblers have to fall correctly for that to occur and again you need to seek personalized legal advice regarding this for specific circumstances, but I could see a situation where there could be major tax benefits to manufacturing in Thailand and doing business in the Kingdom of Thailand pursuant to the US-Thai Treaty of Amity.