Bangkok--24 May--Ministry of Finance
“Thailand has to move quickly and decisively if it wants to maintain an important role in this region, and if it wants to protect its position as a hub country.” — Pradit Phataraprasit, Deputy Minister of Finance
Deputy Minister of Finance Pradit Phataraprasit, today, on the first working day after the crisis, organized an Open Forum attended by around 300 members of the business community at which he announced a package of tax and treasury benefits to encourage companies to run some of their regional operations from Thailand.
The package, which will become effective as of Tuesday 1st June, aims to help these companies operate more competitively, through lower taxation, and with greater convenience by eliminating or reducing paperwork and other regulatory requirements.
The event was held at the Queen Sirikit National Convention Centre and was also attended by the Permanent Secretary of the Ministry of Finance, the Directors-General of the Revenue Department and the Fiscal Policy Office, as well as senior representatives of the Bank of Thailand and the Board of Investment.
Deputy Minister Pradit said, “Despite the enormous political challenges of the last few months, we want to show the international business community that Thailand’s government can still stay focused on the needs of the business community. The proof of that is the rapid delivery of a complicated package such as this, which required the coordination and cooperation of multiple ministries and other independent authorities, including the Bank of Thailand.”
Mr. Pradit said, “Regional operating headquarters based in Thailand are offered a 15-year corporate income tax holiday. They will pay no income tax on their earnings from the services that they provide to overseas companies, and they will pay only ten percent corporate income tax for income they receive on services that they provide to entities inside of Thailand.”
“In addition, for up to eight years, expatriate employees will pay only 15% personal income tax” he said.
Mr. Pradit noted that “Thailand’s offer is the most competitive incentive package in the region for such regional operating headquarters.”
“We want to attract these regional operating headquarters because they bring a lot of economic benefit.
“We are making it easier for a company to qualify as a regional operating headquarters by giving them up to five years to provide these services in at least three countries outside of Thailand. We are making it easier for these companies to operate by reducing bureaucratic and regulatory encumbrances. And we are making it more attractive with tax incentives,” he said.
Typical services that can be provided by such regional operating headquarters include general management of business and administration, sourcing of raw materials, parts and finished products, research and development, marketing and sales promotion, regional human resources training, business advisory services, investment feasibility studies and analyses, credit management and control, as well as other services approved on a case-by-case basis.
Mr. Sathit Limpongpan, the Permanent Secretary of the Ministry of Finance said that the Bank of Thailand is also supporting the programme by making foreign currency dealings of regional operating headquarters easier.
“The conditions governing the operations of a Treasury Center will be relaxed, including permission for them to transfer, lend or borrow from affiliated companies in foreign currency rather than being compelled to convert into Thai baht which increases costs,” he said.
He said that the BOI was also reducing a lot paperwork required from such companies as well as reducing the amount of time required to turn around requests and considerations.
Mr. Pradit said, “The establishment of a regional headquarters in Thailand by giant foreign companies generates huge benefits because they bring in high-salaried expatriate managers who boost the demand for housing, and who spend money on shopping and other taxable goods. It also helps our hotels, restaurants and travel sector as a greater number of international events are organized in Thailand and as staff travel in and out of their regional headquarters”.
He added that the most important benefit was that “Thai staff would gain more opportunities to become regional managers with much higher salaries and responsibilities by being close to regional bosses.”
Mr. Pradit said, “Our actions must meet the real needs of businesses, and we have to make this happen fast which is why this initiative is a collaborative effort with the private sector as well as multiple government agencies, including the Board of Investment, the Bank of Thailand, the Revenue Department, the Fiscal Policy Office, as well as the Federation of Thai Industries, and the Thai Chamber of Commerce.
“The elimination of most trade barriers in the ASEAN region within the next five years makes it easier for companies to operate from any country of their choosing. Thailand has to move quickly and decisively if we want to maintain an important role in this region, and if we want to protect our country’s position as a hub country,” he said.
For further information please contact:
Tel: 02-271 2759, Ministry of Finance / Khun Pairoj