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1st August 2013

Joint Ventures In Thailand

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In the Kingdom of Thailand there are many different types of business structures which can be utilized in order to legally operate pursuant to Thai law. In previous postings on this blog Thai limited partnerships as well as Thai ordinary partnerships and registered ordinary partnerships were discussed. Another type of business structure which is similar to a Thai partnership is known as a Joint Venture.

In the eyes of Thai jurisprudence the term “joint venture” has two meanings. The first definition of a joint venture is similar to an ordinary  partnership (also sometimes referred to as an unregistered ordinary partnership). However, a joint venture of this type must include at least one juristic person although the type of juristic person included in a joint venture may differ depending upon the unique circumstances of a given situation. Therefore, a joint venture could be the combination of a limited company and a natural person, a natural person and a limited partnership, two limited companies, or a limited partnership and a limited company. However, the aforementioned combinations are not an exhaustive list of all the combinations which could be devised to create a joint venture. Aside from requiring that this type of joint venture include a juristic person, the joint venture should also keep joint accounts and share profits (the division of profits is generally dictated in the terms of the jont venture agreement). Management responsibilities within a Thai joint venture are generally dictated by the terms of the joint venture agreement. The type of joint venture described above is taxed at the same rate as a juristic person, meaning that as of 2013 a Thai joint venture would be taxed at a rate of 20%. However, the profits gained from a joint venture by a juristic person domiciled in Thailand are not subject to further taxation. Those participants in a joint venture which are not domiciled in Thailand and therefore receive their profits outside of the country are subject to a 10% witholding tax on their portion of the profits.

The other type of joint venture which may be utilized by those wishing to jointly undertake business in the Kingdom of Thailand looks more like a Thai Limited Company. Essentially, this type of joint venture is created when two (or more) companies decide to create a third Thai company which would act as the vehicle for the joint venture in Thailand. These types of structures may vary widely in terms of management, percentage of ownership, and taxation depending upon the unique circumstances of the parties involved and the agreements made with regard to the aforementioned issues. Therefore, those seeking further information on this type of structure are well advised to contact a legal professional in Thailand in order to ascertain details about a prospective joint venture.

For related information please see: Tax Registration Thailand.

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