Dividend tax from own company?

[Asheron]

Howdy!

 

Looong time since i was here and i have a few things on my mind, especially regarding Thai company and taxation.

 

Let us say i have a company setup in Thailand in the name of a Thai national (like daughter/son). This company then has income from various IT work it has done. No salaries are paid out but instead dividends are used for paying for the staff/work (in this case daughter/son alt. me with working visa).

 

My questions are:

1) is this legal to do? (very important)

2) What kind of taxation is there on dividends in the above example. Is it fixed rate tax or variable depending how much?

3) How much in dividends can you give to share holders of a company before Thai IRS says no or some very high tax (30%+) rate kick in?

4) What if daughter/son own the company but i do all the work (online IT), with appropriate visa of course. Can i get "compensation" for my work by monthly/quarterly/yearly dividend instead of outright "salary"?

[timendres]

1) I am not sure.

 

2) Your dividends will look like income, thus requiring income tax be paid.

 

3) In the US, the IRS complained when my salary was more than 50% below the industry average. Here, I am not sure if they have any such thresholds. And, if the dividends are taxed like income, it does not matter. BUT, the government will have issues with workers not registered and not paying into social security.

 

4) I suspect the issue you are going to have is having a company that has no salaries and yet produces an income. Again, dividends are normal and I believe can be any size, but the government is going to be more interested in any attempts to dodge social security contributions, which you might appear to be doing.

 

It sounds as if you have outside work that generates revenue, and you are trying to "wrap" a Thai company "around that" income for some reason that escapes me. I suspect you will find there is no real advantage to doing that, and a lot of costs and pitfalls.

[Asheron]

Maybe i should be more detailed by the salary/dividend.

 

Let's say that the company is in my daughter/son name and i am employed by that company but the company, that is new, has "no" capital for now and will not have any income until maybe even 1 year after company started and i work for the company on a "profit basis", meaning, if i do not make any income/profit for the company i will not get any money.

 

This isn't really trying to avoid social security contributions or anything of that sorts. In my own country, inside the EU, you do not have to pay any taxes at all if the company doesn't have any income. If the company does have income then it is 22% corporate tax for the profit. And you only have to pay social security etc etc etc taxes if you actually take out a salary in your name from the company. Dividends are capped at about 15-17K USD per year to 20% tax. Any dividends above that is taxed as income but still not viewed as salary.

My questions are not sinister in nature even though i think that taxation is legalized theft ????

I am just very very tired of living in my own country and want to think of alternatives for working in for instance Thailand but still have income without being tied physically to some office.

[nigelforbes]

It doesn't matter whether you take salary or dividend, the rate of taxation is the same.

 

In your example, if the company doesn't have any income for a year, it can't pay you a salary and you can't take a dividend hence tax is not an issue because you didn't earn anything.

 

Reading between the lines and forgive me if I've read this wrong: you appear to want to set up a Thai company using your children and family as Directors. That Thai company then offers you a job and provides you with a work permit. In order to do that you would need to capitalize the company and probably show that the job could not be filled by Thai nationals and that only specialized expatriates can.

 

I don't know for absolute certain but for me that scenario doesn't pass the sniff test and I doubt it will pass anybody else's test. Perhaps think of a plan B?

 

 

[LukKrueng]

If you're trying to get a work permit as was suggested above then the company hiring you must employ a minimum of 4 Thai people (or 2 - depends on your type of visa) and pay you a minimum salary as defined by the labor department. Although you don't have to actually take the salary in full, you still have to pay tax and social security according to the defined minimum salary.

[K2938]

You are asking very detailed, complex questions you are unlikely to get a sensible answer to from people here, with many guessing, though not necessarily saying so.  Better to spend the money to talk to a professional tax consultant who actually knows what he is talking about.

[kingstonkid]

If you have employees they have to be paid 

 

Taxes and SS have to be paid to the government.  

 

If you are paid be it wage dividend housing car it makes no diffy the Thai government wants it's share.

 

Also if you are in country and doing work then you need a permit.

 

If not you are an outside contractor and your kids have to take payment for the job then pay you the agreed co tract price.

 

As has been suggested recommend talking to a lawyer.

[Srikcir]

Check benefits of a 10-year Long Term Resident Visa offered by the Thailand Board of Investment.

https://ltr.boi.th/page/ltr-brochure.hmtl

 

[khunPer]

16 hours ago, Asheron said:

My questions are:

1) is this legal to do? (very important)

2) What kind of taxation is there on dividends in the above example. Is it fixed rate tax or variable depending how much?

3) How much in dividends can you give to share holders of a company before Thai IRS says no or some very high tax (30%+) rate kick in?

4) What if daughter/son own the company but i do all the work (online IT), with appropriate visa of course. Can i get "compensation" for my work by monthly/quarterly/yearly dividend instead of outright "salary"?

To my knowledge:

1) Both yes and no, for foreign workers a work permit is needed plus 2-4 thai employees that gets a salary and preferably pays into Social Security.

2) 10 percent fixed rate.

3) If you don't add the dividend on the annual tax return form, the final rate is the already withheld fixed 10 percent dividend tax.

4) As foreigner with a work permit and extension of stay based on workpermit, you need to show an income and pay income tax of that income, typically 50,000 baht per month, but salary rate is depending of your home country.