A Case for Relocating American Businesses in Asia to Thailand

admin — Thu, 21 Nov 2019 16:19:08 +0000

As the US-China trade tensions continue (notwithstanding some hope that a trade deal may soon be reached) many foreign businesses in China are looking to relocate to other jurisdictions. For example, in a recent article is was noted that German businesses in China are seeking alternatives to China for certain types of manufacturing. Meanwhile, American businesses, which are presumably the most impacted by the trade war, are also taking steps to alter their supply chains in order to optimize their business structures under current circumstances.

While there are many jurisdictions in Asia which may appear accommodating to American business, this blogger would argue that Thailand is the best jurisdiction for American business in Asia. First, Thailand boasts a long history of friendly relations with the United States. As America’s oldest ally in Asia Thailand has been conducting business with the United States for years. Concurrently, the United States and Thailand share a multitude of bilateral agreements which can operate to the benefit of American businesses in the Kingdom. Most notably, the US-Thai Treaty of Amity provides “national treatment” to American businesses in Thailand. This allows American business to be treated in the same manner as Thai businesses operating in Thailand. As a practical matter this can provide substantial benefits to American businesses in Thailand. For example, such enterprises are not subject to the provisions of the Foreign Business Act in Thailand as such operations are treated as Thai. Therefore, those companies do not need to have the same type of Thai majority shareholding structure that other similar operations need that are of different nationality.

Another substantial benefit of conducting business in Thailand under a Thai Amity Treaty Company is an interpretation of relevant American law which argues that Thai Amity Treaty companies are not “controlled foreign corporations” and therefore not subject to the new tax liabilities created under the legislation colloquially referred to as Trump Tax. Due to the domestic nature of American Treaty laws, the organization and certification of an American company under the Amity Treaty in Thailand could be construed as a the creation of a domestic corporation thereby negating the enforcement of laws creating liabilities for Americans owning foreign corporations.

If an Amity company is deemed to be “domestic” rather than “foreign” this, in and of itself, could be very beneficial for an American company in Thailand. This benefit could be compounded by the exemptions regarding taxation created under the Double tax agreement between the United States and Thailand. Furthermore, those companies operating in Thailand that receive benefits, including tax holidays, from the Thai Board of Investment (BOI) could see themselves in a very advantageous position overall. In summation, for the reasons noted above and many more it should be noted that Thailand is a jurisdiction which should not be overlooked when making a decision as to which jurisdiction a corporation should shift to for logistical and operational purposes.

TO COMPLY WITH U.S. TREASURY REGULATIONS, WE ADVISE YOU THAT ANY U.S. FEDERAL TAX ADVICE INCLUDED IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, TO AVOID ANY U.S. FEDERAL TAX PENALTIES OR TO PROMOTE, MARKET, OR RECOMMEND TO ANOTHER PARTY ANY TRANSACTION OR MATTER.

THE ABOVE INFORMATION SHOULD NOT BE CONSTRUED AS SPECIFIC LEGAL ADVICE NOR RELIED UPON AS SUCH. THOSE INTERESTED IN THIS TOPIC SHOULD OBTAIN PROFESSIONAL ADVICE REGARDING THEIR SPECIFIC SITUATION.

Reuters Reports G.E. CEO Says China To Be “Biggest Economy In the World”

admin — Tue, 25 Jan 2011 10:28:48 +0000

The administration of this blog recently noticed an article from the Reuters news agency in which the Chief Executive Officer of General Electric was commenting upon the economic situation in China and how this impacts the relationship between the United States of America and Peoples’ Republic of China in both the economic and political spheres. To quote directly from the Reuters News Service:

(Reuters) – For Jeff Immelt, the CEO of General Electric (GE.N), the 130 year-old American industrial behemoth, the financial crisis marked the end of the age of America’s economic dominance.

This blogger has noticed that there seems to be a level of pessimism regarding the American economy. Although it is currently going through economic turbulence, and has been for a while, the US economy, in this blogger’s opinion; remains one of best countries in the world for trade and economic activity. Those doing business in the USA may enjoy the benefits that come from the American financial, economic, and physical infrastructure. Hopefully, the optimism for which America has, in the past, been noted for will return once the economy returns to an “even keel”. Reuters continues:

But Mr. Immelt said the future will be different. For the next 25 years, he said, the American consumer “is not going to be the engine of global growth. It is going to be the billion people joining the middle class in Asia, it is going to be what the resource-rich countries do with their newfound wealth of high oil prices. That’s the game.”

A lot of that game will be played in China. At a moment when it is compulsory on the American right to pay homage to the exceptionalism of the United States, Mr. Immelt, a lifelong Republican, is matter-of-fact about China’s inevitable rise.

The interesting piece of information that this blogger noted in the aforementioned article was the fact that the G.E. CEO took notice of the fact that the middle class is growing rapidly in Asia. The thought of an Asian middle class numbering 1 billion or more is truly staggering when one takes into account the economic impact of such growth. As Asians in general become more affluent the side effects will likely be increased trade and economic activity as these newly minted members of the middle class use their new found wealth to make purchases of property, goods, and services (in Asia, the EU, UK, and the United States). The most poignant line of this Reuters article, in this blogger’s opinion was:

“It is going to be the biggest economy in the world,” Mr. Immelt said of China. “The only question is when.”

There is little doubt that China has an incredible capacity for growth and those looking international investment or business opportunities are well advised to research the Chinese market. That said, China does not represent the only country in Asia which has economic opportunities that are becoming more readily available to investors and entrepreneurs due to globalization. The Kingdom of Thailand, a member of the Association of Southeast Asian Nations (ASEAN), has investment opportunities in the form of Thai Property, Thai Real Estate, and Thai businesses. Furthermore, for Americans conducting business in Thailand can prove profitable especially since the US-Thai Treaty of Amity allows Americans to own virtually 100% of a Thai Company with Amity Treaty certification (sometimes referred to as an Amity Company).

Meanwhile, the landlocked country of Laos recently opened a Lao Securities Exchange in an effort to raise capital through equity investment. The Kingdom of Cambodia recently announced that a Cambodian Stock Exchange is to be unveiled in mid-2011 while recent reports have noted that Burmese officials hope to be in the process of creating a Myanmar Stock Exchange as well. Such developments remain to be fully realized, but such examples clearly indicate that Mainland China is not the only “game in town” when it comes to investment opportunities and economic growth in Asia.

For related information please see: US Company Registration.

Integrity Legal Blog » US Amity Treaty Thailand

A Case for Relocating American Businesses in Asia to Thailand

Reuters Reports G.E. CEO Says China To Be “Biggest Economy In the World”