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New legislation on regional operating headquarters attracts multinationals - International Law Office

International Law Office

Company & Commercial - Thailand

New legislation on regional operating headquarters attracts multinationals

May 16 2011

Basic requirements
Tax benefits
Incentives for foreigners


On November 6 2010 the Thai government amended the legislation on regional operating headquarters (ROH) to encourage multinational corporations to establish their ROHs in Thailand. The newly established ROHs will provide supporting services - such as research and development, technical support, business planning and HR management - to their subsidiaries and branches both in Thailand and elsewhere. An ROH must be established as a company with the Ministry of Commerce and registered as an ROH by November 5 2015 with the Revenue Department.

Basic requirements

An ROH must have a paid-up registered capital of not less than Bt10 million and provide supporting services to:

  • at least one overseas affiliate in the first and second years;
  • two overseas affiliates in the third and fourth years; and
  • three overseas affiliates in the fifth year.

The ROH must spend not less than Bt15 million per year as operating expenses or not less than Bt30 million per year as capital expenditure. The affiliates or branches of the ROH must have annual business operations and actual staff members.

To gain the full tax exemptions and reductions listed below, the ROH must receive at least 50% of its total income from overseas services charges or royalty fees, except for the first three years (from both the ROH business and the non-ROH business), but not lower than 33.33% of its total annual income.

From the third accounting year onwards, at least 75% of the ROH's employees must work on ROH business if the ROH operates both non-ROH business and ROH business, and at least five employees working for the ROH must have earned remuneration of at least Bt2.5 million per person each year.

Tax benefits

The ROH is given the following tax exemptions and reductions for 10 years:

  • exemption from the 30% corporate income tax on income from services provided to overseas affiliates and branches;
  • reduction of the corporate income tax to 10% on income from services provided to local affiliates and branches;
  • exemption from the 10% withholding tax on dividends paid by the ROH to its shareholders;
  • reduction of the corporate income tax to 10% on interests on loans borrowed by the ROH for further lending; and
  • reduction of the corporate income tax to 10% for royalty fees from research and development services provided in Thailand.

The above-mentioned tax incentives can be extended for a further five years if, in the first 10 years, the ROH incurs accumulated operation expenses of at least Bt150 million.

If the ROH has income from overseas services and overseas royalty fees that equals less than 50% of its ROH services income, it will receive the tax incentives only under the first two exemptions.

Incentives for foreigners

Non-Thai staff of the ROH will receive the following tax benefits:

  • exemption from personal income tax at the maximum of 37% for four years for those who have been working overseas for the ROH;
  • reduction of personal income tax to 15% for eight years for the top management level or top experts that have been working for the ROH in Thailand; and
  • reduction of personal income tax to 15% for four years for non-management non-Thai employees of the ROH who have been working in Thailand.

For further information on this topic please contact Kowit Somwaiya or Naddaporn Suwanvajukkasikij at LawPlus Ltd by telephone (+66 2 636 0662), fax (+66 2 636 0663) or email (kowit.somwaiya@lawplusltd.com or naddaporn.suwanvajukkasikij@lawplusltd.com).


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