Meanwhile, other recent measures have taken effect throughout 2017 which is changing the way revenue collection and tax enforcement is conducted. First, it appears that there will be an increase in VAT (Value Added Tax) placed upon items purchased online in Thailand. It appears Thai officials are keen to increase revenues from the digital economy. In the past, the revenue collection system of Thailand was geared to deal with tax collection in a manner more suitable to the pre-internet online economy. Where once there were a number of exemptions for online purchases now those exemptions are being phased out as revenue authorities are coming to grips with the fact that more economic transactions are occurring online.

Finally, it is worth noting that so-called e-filing of certain corporate tax documentation is now mandatory in Thailand. Paperwork such as the audited financial statement are required to be filed online. To those with experience dealing with tax matters in other jurisdictions this new requirement may seem long past due as many other jurisdictions have conducted such matters online for years (in some cases decades). However this development has only come to pass in Thailand in 2017. In the future it appears likely that many corporate tax filings will be perfected online.

In conclusion, all of the above information, when taken together, illustrates a trend which has been progressing for a few years now. Namely, an drive to increase the efficiency and improve the methodology by which taxes are assessed and collected in Thailand. It seems logical to infer that this trend will culminate in the full transformation of the Thai tax system and that said system will be thereafter much more similar to internal revenue services in countries in the more developed world. This will likely occur before the back drop of an increasingly dynamic Thai economic and it seems sensible to expect that revenue to Thai state coffers will increase thereby.

Up to 35 laws concerning judicial affairs have been amended over the past two years…Of the 35 laws amended in the past two years, 11 have come into effect, he said. They are the land transport act; the bankruptcy act, the act on prevention and suppression of terrorism financing; the the anti-money laundering act; the justice fund act; the ministerial, departmental, and divisional improvement act; the act on amendments of the Civil Procedure Code. Also on the list are the act on the procedure of suspect detentions under the 1963 and the 2016 versions of the Criminal Code…

The reforms noted above have only been implemented relatively recently so it may take some time before the effects of these measures can be readily ascertained. At the same time, measures have been put in place in an attempt to thwart transnational criminals in the form of protocol changes regarding the sharing of information regarding criminal matters arising in Thailand. It also appears that new measures have been promulgated in an effort to curb corruption. Apparently, the Public Sector Anti-Corruption Commission is poised to begin more assiduous corruption suppression initiatives.

The judiciary is not the only sector seeing reform initiatives recently. The tax authorities appear to be taking measures to make the Thai tax system more equitable, especially for those employed by Thai companies operating outside of Thailand. To quote from an article from the aforementioned website from May 23rd:

The Finance Ministry is poised to adjust the personal income tax system for Thais working abroad and foreigners who work here to create fairness and attract foreign direct investment…According to the Revenue Code, employees working for companies incorporated in Thailand are subject to personal income tax regardless of where they work…The way Thailand charges personal income tax is based on where employers have been set up rather than the source of income as in other countries…Thailand’s taxation of personal income is not fair and needs to be adjusted…

It appears that the Permanent Secretary plans to propose an amendment to the Revenue code to address the currently perceived unfairness in the Revenue Code. How such a proposed amendment will ultimately fare remains to be seen, but should the amendment be adopted it would be beneficial for some employees of corporations incorporated in Thailand.

In light of these stories it is interesting that the Deputy Prime Minister of Thailand has noted Thailand’s readiness to join the Trans-Pacific Partnership (also known as the TPP). For those unaware, the TPP is a trade agreement composed of 12 countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam). Other nations have expressed interest in joining the TPP in recent years. To quote the Bangkok Post article on this issue from June 1st:

Mr Somkid said Prime Minister Prayut Chan-o-cha has confirmed the country’s readiness to join the TPP, and a committee chaired by Commerce Minister Apiradi Tantraporn has been set up to prepare for the move…”Thailand cannot afford to be complacent. We can take lessons from other member countries. At this point, we are ready to join the TPP. It depends on when they will accept us…”

Clearly, officials in the Thai government seem enthusiastic about the prospect of joining the TPP. However, the article goes on to note that measures are being taken to assess the ramifications of Thailand becoming a TPP member. It was also noted that Thailand would monitor the effect the TPP has had on other countries prior to making firm commitments to join the TPP. It seems likely that analysis of the experiences of Vietnam, Malaysia, and Singapore within the TPP framework will be utilized in order to better determine Thailand’s official petition to join the trade bloc and the timing thereof.

Thailand is clearly taking steps on many fronts to bring governance and regulations into line with global standards. When and how these efforts will bear fruit remains to be seen, but it is definitely an interesting time for students of Thai legal and regulatory matters.

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.