Key Money For Shophouse In Lamai

[Mark Wolfe]

According to the Amity an american can own a company 100%, of course they first have to be registered in the US as a sole proprietorship, or the branch office of an existing company.

Gosh, isn't this what I said before:

Mark Wolfe wrote:

(By the way, the Treaty of Amity has everything to do with established American companies setting up shop in Thailand and nothing to do with Americans coming to start a fresh business in Thailand.)

And then got raked over the coals for it?

[simey]

Give him chance Mark, I'm sure I'll be wrong somehow. Although my information came from the US Embassy pdf document and Sunbelt. Anyway, thats the way I understand this - the treaty allows US companies to open branches here (and vice versa) but not simply that any US citizen can own a Thai company outright. Not a problem if joey already has a sole proprietory company in the US I suppose.

[joeyb]

Simey and Mark Wolfe,

Wrong and Wrong,

OK, let me help you guys out as this has dragged on way too long. I know English is not some people's 1st or 2nd language here. This is either a case of selective comprehension or full-blown denial. Anyway, here goes:

WHO IS ELIGIBLE to receive rights under the treaty of amity? The applying person(s) or business organization must be registered and established as an American sole proprietorship, partnership, representative office, branch office, joint venture or limited company.

For a person wishing to receive protection under the Treaty as a sole proprietorship, he or she must be an U.S. citizen either by birth or naturalization.

OK, when is says "must be registered and established as an..." IT MEANS IN THAILAND!!!! NOT THE USA. Where and why would anyone register anything like this in the States??

Stay with me now as this is the part NO ONE wants to recognize. All you have do to receive protection under the Treaty as a sole proprietorship IS BE A U.S. CITIZEN by birth or naturalization!! What is so hard to understand. It's a very simple, very plainly worded explaination.

Maybe this is why some people find it so hard to run a profitable business in Samui.

[ozzydom]

Amity Treaty Quote>Sunbelt legal advisors

If you are a US Citizen, you can own a Thai company 100% under the US Treaty of Amity.

Working hand in hand with the US commercial department, Sunbelt will handle the complete application process for you. We are extremely experienced in setting up companies under the Amity Treaty. In fact, Sunbelt has performed more amity set-ups than all other firms in Thailand combined.

WHAT IS THE TREATY AND WHOM DOES IT BENEFIT?

The Treaty of Amity and Economic Relations between the United States of America and the Kingdom of Thailand was signed on May 29, 1966. This treaty allows U.S. citizens and businesses to establish a company or branch office in Thailand . Under the treaty, is permitted to do almost anything a Thai company does.

The major benefits of the Treaty are that it allows American companies to own a majority of the shares of its company, branch office located in Thailand and to receive national treatment. That is, they may engage in business on the same basis as Thais, and are exempted from most of the restrictions on foreign investment imposed by the Alien Business Decree of 1972. In return, Thais are extended reciprocal rights to invest in the U.S. , and Thai businesspersons are eligible to receive U.S. visas as "treaty traders" and "treaty investors".

Under the Treaty, Thailand is permitted to apply the following restrictions to American and other foreign investment: owning land; engaging in the business of inland communications; inland transportation; fiduciary functions; banking involving depository functions; engaging in domestic trade in indigenous agricultural products; and exploiting land or other natural resources.

WHO IS ELIGIBLE to receive rights under the treaty of amity? The applying person(s) or business organization must be registered and established as an American sole proprietorship, partnership, representative office, branch office, joint venture or limited company.

For a person wishing to receive protection under the Treaty as a sole proprietorship, he or she must be an U.S. citizen either by birth or naturalization.

For an applying business organization wishing to receive protection under the Treaty as a partnership, branch office, joint venture, or limited company, a majority of the shareholders and directors must be U.S. citizens either by birth or naturalization.

For an applying U.S. company that is a subsidiary to a larger, parent company, the parent or holding company also must have U.S. citizen majority ownership and management.

For an applying U.S. company wishing to invest directly in a Thai company to obtain a majority of the Thai company's shares, the majority of the owners and stockholders of both the applying company and the company to be incorporated must be (or will be, as in the case of the company to be incorporated) U.S. citizens either by birth or naturalization.

Please allow at least four to five weeks to complete the entire process. It usually takes less than one week for certification from the Commercial Service office, but registration by the Thai government can take anywhere from a few weeks to a few months.

[simey]

"WHO IS ELIGIBLE to receive rights under the treaty of amity? The applying person(s) or business organization must be registered and established as an American sole proprietorship, partnership, representative office, branch office, joint venture or limited company."

So to apply (as in, fill out the application papers to set up the company in Thailand) you must be registered (i.e. currently registered) and established (not in the process of being registered, but registration having been completed) as an American sole proprietorship. English being both my first and second language, I think that it is pretty clear that it would be difficult to be registered and established in Thailand before actually applying to be registered and established in Thailand. To me this seems clear - you need to be both regsitered and established in America before applying to recieve rights under the treaty.

I've extracted the single sentence to give joey better chance a getting through it.

[Mark Wolfe]

Where and why would anyone register anything like this in the States??

Of course there are company registrations in the US.

As for the "why," taxes come to mind....

So you have 10 years' experience in some sort of business, but don't know about business registration?

Good thing there are companies who can help you with this in Thailand.

Sunbelt seems a good place to begin your quest.

Maybe this is why some people find it so hard to run a profitable business in Samui.

I think setting up a business is quite unrelated to actually running one (and making a profit).

It does sound, on the surface, that Americans might have some advantages in the ease of setting up a business in Thailand; however, that has nothing to do with being successful in one's endeavor.

May I ask why the original poster wishes to open a business in Samui, and not say, Phangan or Guam? This goes to the location concept.

By the way, I agree with the above poster. I am not sure, but it seems to be what is being said. It's a simple question of asking Sunbelt this question. They would know. No point arguing facts; someone ring them up.

Edited April 17, 2008 by Mark Wolfe

[Pilchard]

Amity Treaty Quote>Sunbelt legal advisors

For a person wishing to receive protection under the Treaty as a sole proprietorship, he or she must be an U.S. citizen either by birth or naturalization.

It would be good to get clarification on this point , can a US citizen do business as a Thai person would with no Limited company protection but just as a sole trader.

How do work permits and the 4 Thai staff requirement fit into this scenario ?

[MSingh]

Oh, and don't forget...

God Bless America!!

What has that got to do with anything ??

[joeyb]

Treaty of Amity Registration Procedures1. File documents - To begin the process, documents listed below must be filed with the U.S. Commercial Service (CS) Diethelm Tower on Wireless Road. Blank application forms may be obtained from the Department of Registration in the Thai Ministry of Commerce.Type of Organization:Documents Required:Sole ProprietorshipNotarized copy of owner's passport or birth certificate to prove U.S. citizenship. Notarization services can be obtained at the U.S. Embassy's American Citizen Services.Partnership, Rep office, Branch office, Joint Venture, or Limited CompanyA. Articles of Incorporation

B. Bylaws of the Company

C. An affidavit of the Manager or Corporate Officer, stating the following:

• Name of the Company, registration number, and date of registration.
  
• Address of registered office.
  
• Jurisdiction under which the corporation is registered.
  
• Name, address, nationality, age and race of each director, number of shares held by each, and identification of the director(s) with the power to bind the company.
  
• Authorized capital of the Company, number of shares and par value of each and amount of paid up capital.
  
• Total number of shareholders, their nationalities, and number of shares owned or held by them.
  

D. Certificate of Good Standing

U.S. subsidiarysame as above for both subsidiary and parent companyU.S. company acquiring Thai companyFor an applying US company wishing to invest directly in a Thai company so as to obtain a majority of the Thai company's shares, the applying company must show notarized proof that the majority of owners and directors of both the applying company and the company to be incorporated are (or will be) US citizens either by birth or naturalization.2. Certification by the Commercial Service - Upon receipt of the preceding required documents the US&FCS office then will certify to the Thai Department of Commercial Registration in the Ministry of Commerce that the applying business organization is an American owned and managed company and is therefore entitled to national treatment under the provisions of the Treaty.

3. Application to Ministry of Commerce - After certification by the CS , original copies of all the above-mentioned required documents, along with a completed application form must be given to the Thai Department of Commercial Registration in the Ministry of Commerce in order to fully register under the Treaty.

Rarely have I ever seen this level of stubborn ignorance to the plain and simple facts. Maybe this isn't good enough for you guys still. Perhaps walking you thru the entire "complicated" process in person would clear up all "your confusion." As satisfying as this might be, I'm not sure several of you could make as my directions would be in the similar, yet somehow confusing, plain and straightforward manner.

Do you now see that the ENTIRE PROCESS TAKES PLACE IN THAILAND! THERE IS NO REGISTRATION OF ANY KIND IN THE USA! They do not care. Yes, you still have to file a tax return, but you would have to do that anywhere in the world as a US citizen. There is no "I want to do business in Thailand and I now need to be REGISTERED" gov't office anywhere in the US. Did you notice that all of the offices where located IN THAILAND!

This is the important part as I know some of you are still either "confused and/or not convinced". This is what you need to bring with you to start up a Sole Proprietorship in Thailand:

1. Notarized copy of owner's passport or birth certificate to prove U.S. citizenship

2. Since you are already in Thailand, you simply take these documents to the U.S. Commercial Service (CS) Diethelm Tower on Wireless Road.

If you can't understand this, then no 20+ yrs of experience in asia or Business/Journalism degree can help you now.

[SamuiJens]

I CAN'T understand that an American using the "Treaty of Amity," hasn't written in and confirmed these things, or is it because they don't want to be harassed by the non-Americans living or writing here? Since there MUST be one or more. But maybe they have better things to use their time on?

PS; HAPPY BIRTHDAY TO ANYONE THAT HAS ONE!!!

Edited April 17, 2008 by SamuiJens

[Pilchard]

This is the important part as I know some of you are still either "confused and/or not convinced". This is what you need to bring with you to start up a Sole Proprietorship in Thailand:

1. Notarized copy of owner's passport or birth certificate to prove U.S. citizenship

2. Since you are already in Thailand, you simply take these documents to the U.S. Commercial Service (CS) Diethelm Tower on Wireless Road.

If you can't understand this, then no 20+ yrs of experience in asia or Business/Journalism degree can help you now.

Ok Joey, thanks for that info, personally I was already aware of this but as you say it's good to make it clear for the un convinced.

These are still questions I am curious about as the available information on the web gets a bit vague about these

1. can a US citizen do business as a Thai person would with no Limited company protection but just as a sole trader.

2.How do work permits and the 4 Thai staff requirement fit into this scenario ?

If you know please share, If you don't then lets flip this over to the business forum and ask there.

Thanks

[Mark Wolfe]

I CAN'T understand that an American using the "Treaty of Amity," hasn't written in and confirmed these things,

This occurred to me as well.

[longtom]

Forgive for going off-topic but could we talk a bit more about the key money issue?

ClaudeFeller e.g. advised to negotiate heavily for a lower key money and wait for june as the low season is apparently better for that purpose. Unfortunately, in my (limited) experience, people (shop-owner or previous lessee) are not ready to negotiate much, at least at reasonable good locations, because they always seem to find someone to pay the crazy price (normally Thais from the mainland)! They rather let the shop empty for a few months (or let Mama live there and do some insignificant business) than negotiate! Any more advice how to proceed in such situations would be greatly appreciated.

[simey]

1. can a US citizen do business as a Thai person would with no Limited company protection but just as a sole trader.

2.How do work permits and the 4 Thai staff requirement fit into this scenario ?

If you know please share, If you don't then lets flip this over to the business forum and ask there.

Thanks

This may be helpful :

Work permits and visas Although Americans have the right to manage their businesses, the Treaty does not grant Americans unrestricted freedom to work in Thailand, or the absolute right to stay in Thailand if they own a business entitled to Treaty protection. Americans are thus obligated to apply for work permits or visas, in the same way as the nationals of any other country (see further, Chapter 19 Work Permits and Chapter 20 Immigration).

http://www.bia.co.th/006.html

[breezein]

Back to the topic!!!

Key Money For Shophouse In Lamai, Do they all require it?

YOU WOULD HAVE TO BE NUTTY

[Pilchard]

1. can a US citizen do business as a Thai person would with no Limited company protection but just as a sole trader.

2.How do work permits and the 4 Thai staff requirement fit into this scenario ?

If you know please share, If you don't then lets flip this over to the business forum and ask there.

Thanks

This may be helpful :

Work permits and visas Although Americans have the right to manage their businesses, the Treaty does not grant Americans unrestricted freedom to work in Thailand, or the absolute right to stay in Thailand if they own a business entitled to Treaty protection. Americans are thus obligated to apply for work permits or visas, in the same way as the nationals of any other country (see further, Chapter 19 Work Permits and Chapter 20 Immigration).

http://www.bia.co.th/006.html

Great link , thanks Simey

Longtom, market forces , supply and demand ect. Off the beach road, or the roads leading into and out of Lamai you can get reasonable deals.

On the main beach road Lamai look at paying key money and rent combined per month to a value of 40-70K upwards(2 floor 5m x 12 aprox )

(High key money low rent, No key money high rent)

Shop front alone may be cheaper

[Khun Jean]

In Lamai ONLY the main beach road has enough foot traffic (if that is what you need). Even going 50 meters from this will result in having only 1% traffic compared to the beach road.

If you need people, pay the keymoney, pay the high rent but do try to get a long transferable lease!!!. If the product is good you will sell it. If not you still have the lease to sell and recoup most of the keymoney.

My opinion Chawaeng will be much better. (And more expensive to setup shop).

[Mark Wolfe]

Joey's last post was probably grounds for suspension.

Uh, as the original poster, what part of that post dealt with key money? Looks like an intentional flame to me.

From the rules:

...flaming will not be tolerated. 'Flaming' is best defined as posting or responding to a message in a way clearly intended to incite useless arguments, rants, and/or for launching personal attacks, insulting, being hateful, useless criticism, name calling, swearing and other bad behavior or comments meant to incite anger.

Do not post inflammatory messages on the forum, or any attempt to disrupt discussions to upset its participants.

As for key money, a friend of mine who is English said that he recalled this term from his youth. It seems weirdly extortionate to me, but I guess it's legal.

I wonder what the key money if for the empty shop on the corner across from the Outback in Lamai. It was a tailor shop for years and is probably the best location to come available in a long time. A decent lounge/restaurant would do well there, imo.

Speaking of money, the restaurant next to the used book shop on the beach road in Lamai -- I think now it's a vegetarian place -- the guy was asking originally something like 70,000 baht a month rent and that was not including key money. I thought it was insane, but there you go.

[Sir Burr]

Firstly, I wish you luck Joey.

Please remember that Thailand is not a country of enforced laws. If you become successful, this will bring it's own problems from other Thais and you won't have recourse to the law unless you are willing to pay big money.

The Thais will either copy you, or, intimidate you. How will your business plan deal with having a gun pointed to your head and being told to leave town? That option is in many Thai "business plans".

[ClaudeFeller]

Come on, Sir Burr!

Tell us some examples of this Thai business plan.

And: If they want to copy they must be able to copy.

[Sir Burr]

Phuket 1992 - Eric, the developer of Soi Eric was run out of town.

Phuket - About four years ago. The Canadian owner of the Shark Disco was forced to flee the country. His disco was taken over by a high up police official.

These are only two examples that I know of. Countless examples of foreigners have boats for business reasons having sugar poured into the fuel tanks.

This is in a place where there is not really an established Thai mafia (unless you count the police and tuk-tuk drivers). Common knowledge that the Surat Thani Mafia are very active in Ko Samui.

[Sunbelt Asia]

It would be good to get clarification on this point , can a US citizen do business as a Thai person would with no Limited company protection but just as a sole trader.

Yes you can register as a sole proprietorship( British English: sole trader) for the Amity Treaty. We have register 100’s of these types of Amity Treaty companies for clients. I myself am register as a sole proprietorship and own two branches of Sunrise Tacos. The limitations are you can only hire a maximum of three foreigners while a Thai limited Company you can hire 10 foreigners. Because of this limitation, I formed another Thai limited company which owns the other branches of Sunrise Tacos. I own 99.994% of the shares. The other 6 shareholders par value of shares is 5 Baht each. In July of this year when the new law goes in effect, I will only have to have 2 other shareholders for a Thai limited company instead of the current 7 required shareholders( including myself) for a Thai Limited Company.

What is the advantage of a sole proprietorship over a Thai Limited Company?

No corporate taxes, only the personal income taxes on the profits made. As a sole trader, you are only required to report gross income, you have the option of using the Thai governments predetermined deductions for that type of business or using your receipts as the deduction to calculate net profits. You are not required to register for Vat until you reach 1.8 million Baht in sales.

What is the disadvantage? Limitation of employing foreign workers. Unlimited liability (all debts of the business are the debts of the owner)… that’s why we strongly advocating having insurance in case of any accidents in the business. Immigration does not reconize a sole proprietorship for the extension of stay based on business. ( You would need to do a visa run every three months with a non immigrant visa unless you are married to a Thai or you have another extension of stay on another Thai Limited company)

How do work permits and the 4 Thai staff requirement fit into this scenario ?

Up to Feb of this year, you did not need 4 Thai empoyees to get a work permit with a Limited company or Limited Partnership. You only needed 4 Thai employees if you were applying for the extension of stay permit based on business.

You however did need 4 Thai employees( unless the applicant was married to a Thai than it was 2 Thai employees) to get a work permit if you were a sole proprietorship or working for a sole proprietorship.

This has changed now in Bangkok with the Labor Dept since Feb. No matter if you are Amity treaty registered or non amity treaty registered Thai limited company, Thai limited partnership or sole proprietorship , the requirements are the same. Four Thai employees are required to get a work permit. One exception, the applicant is a sole proprietorship or working for a sole proprietorship and also married to a Thai, than it is 2 Thai employees.

www.sunbeltasiagroup.com

[simey]

The whole mafia thing is present, but it's not that you don't stand a chance here. Plenty of farangs make a living here, some very good, and the tea money is sometimes just an extra tax that has top be paid. You tend to get in trouble if you are loud, show off with the proceeds too much, don't show respect, or appear arrogant to the thais....

[sbk]

Joey's last post was probably grounds for suspension.

Uh, as the original poster, what part of that post dealt with key money? Looks like an intentional flame to me.

From the rules:

...flaming will not be tolerated. 'Flaming' is best defined as posting or responding to a message in a way clearly intended to incite useless arguments, rants, and/or for launching personal attacks, insulting, being hateful, useless criticism, name calling, swearing and other bad behavior or comments meant to incite anger.

Do not post inflammatory messages on the forum, or any attempt to disrupt discussions to upset its participants.

As for key money, a friend of mine who is English said that he recalled this term from his youth. It seems weirdly extortionate to me, but I guess it's legal.

I wonder what the key money if for the empty shop on the corner across from the Outback in Lamai. It was a tailor shop for years and is probably the best location to come available in a long time. A decent lounge/restaurant would do well there, imo.

Speaking of money, the restaurant next to the used book shop on the beach road in Lamai -- I think now it's a vegetarian place -- the guy was asking originally something like 70,000 baht a month rent and that was not including key money. I thought it was insane, but there you go.

Yes, thank you Mark. Unfortunately I am not able to moderate at all times so in the future please use the report button to alert a moderator on duty when a post is offensive, thanks

[sbk]

As stated please use the report button to report offensive posts as moderators cannot be in all places at all times

[Mark Wolfe]

...please use the report button to report offensive posts

Thanks, I totally forgot about that.

^^

O

[joeyb]

I hope the answers provided recently will FINALLY allow some on this board to accept the FACTS concerning the Amity Treaty. Thanks to the few who questioned its existence and the other facets of which you didn't believe either.

I guess this means you were wrong Mark W, the Treaty does benefit Americans and you DON'T need to do anything until you form your company in Thailand. As I already knew the answers and the outcome, the question remains, why didn't you do a simple web search instead of all that false speculation? Hoping you're right and proving you're right are very different paths.

Anyway, now that THAT is settled.

Has anyone actually paid Key Money in Lamai? Is this a "cash transaction" off the books so to speak or is it part of a legal documented transaction? or does it matter? What's to prevent this mafia type people from coming to you the next month and saying that "now" you owe more "key money"? Legally you would want everything in writing I assume.

Also, is this "mafia" better/worse in Lamai/Chaweng?

[PoorSucker]

You pay keymoney for the contract.

The contract is a legal document telling you rent a place for xxx years and the rent per month.

[Sunbelt Asia]

Every where in the World, key money has a different meaning

http://en.wikipedia.org/wiki/Key_money

In Thailand, it is a gift, given as an inducement for the landlord to rent to you. Key money is illegal in Thailand only if you pay cash and the landlord doesn't report it as income, then you could be charged as an accessory to money laundering and tax evasion.

Most lawyers will advise against paying key money if it will be paid in cash and the landlord does not want it to be mentioned in the rental agreement.

Why does the landlord want his rent upfront? Reasons he will give…

1. Household tax is 12.5% on the rental amt for the year. By him getting this money as a gift no household tax will need to be paid on it. Many landlords will require you to pay the household tax, its part of the negotiations.

2. Thailand does not have a credit bureau like the West so they need extra protection if you leave the country.

In reality, for a prime space his logic is its valuable and he wants money upfront to invest in something else.

Be aware, in most all cases, you will not get your key money back if a fire takes place.

Also if the Landlord does not give you a receipt you cannot write it off. Let’s say you have a five million Baht Thai Limited Company, you are in the tax bracket of 30% of net profits. Your net profit was one million and your key money for that year was one million baht. You don’t have anyway to show the cash payment to the landlord so that deduction is disallowed. You will then pay 300,000 Baht in tax versus if you gotten a receipt, your tax payment would be zero.

www.sunbeltasiagroup.com

[MSingh]

Also, is this "mafia" better/worse in Lamai/Chaweng?

Sorry Joey, you didn't learn that in your textbooks & your years in Retail, or whatever it was you done in the US, that set your Business Grounding at a much further advanced stage than others who have set up Companies here ??

Someone might aswell give Joey his answer with Full names & also Licence Plate numbers of the Cars they drive too..

Bwaaaahhhhh

Edited April 20, 2008 by MSingh