Non Profit Organisations

[tau8]

To be advertising ones self as a Non Profit organisation in Thailand, the registration of the said company needs to be registered with the appropriate Thai Government Agency. This means that any contribution made by a person is then used as a means of Taxation declaration when submitting their annual Taxation return.

Given that some of these organisations receive donations or receive weekly, monthly or annual payments for their services - there are regulations that require annual statements and reports of the said organisations financial activities to the Thai Taxation Department.

Why do I bring this topic up as a thread - all to often web sites professing to provide a not for profit operation here in Thailand - (a quick and simple internet search for registered organisations will reveal said companies) - are infact operating a profit making organisation and the deposit of the said receipt for your payments at tax time is as worthless as the paper it is written on.

A registered NPO has a registered number - this number can be confirmed as valid confirmation of their registration in Thailand. I work here in Thailand and pay tax, so I want to make sure any contributions I make are being directed in the right manner for which they operate. Overseas operations providing NPO work here in Thailand should be as responsible for registration in Thailand as any business or company wishing to set up a business here.

I have a company here in Thailand and I worked hard and spent good money to legitimise its operation and meet the Legal obligations of Thailand - so too should any outsiders coming in to make a profit at the expense of operating their business without contribution their dues to Thailand.

[earlofwindermere]

I have to agree with tau8. I am involved in this industry and was quite surprised to learn how many organization mislead donors with regards to their legal status. Many groups or organizations are either unregistered or registered in a foreign country, not in Thailand.

Based on what I know, the only tax-exempt classifications is if the organization is registered as a THAI FOUNDATION or THAI COOPERATIVE (foreigners cannot be members of a cooperative). Both of these will have a number (or documents) which you can ask to see. (The only legal exceptions are multi-national organizations like the UNDP).

Many countries have a classification called "Non-Profit Organization" (NPO) but I don't believe that Thailand has this. So, if an organization claims to be an NPO but not a Thai foundation, I would question their legality to conduct their activities here.

[Loaded]

The British Council language teaching centres in Thailand have 'charitable' status. However, they advertise everywhere for customers, compete with Thai-owned schools for customers and their staff do not pay tax!!! Amazing.

I'm associated with a Thai foundation. There has to be a minimum cash balance in the foundation's bank account which I think is 200K baht. The interest earned is taxable. Accounts have to be submitted and the activities of the foundation are regularly inspected. If a Thai-based operation is advertising itself as non-profit or something similar, just report them to the changwat (provincial) office as all foundations are supervised by the provincial governor. In Chiang Mai that means, if you wish to make a complaint, you don't need to go through the ampur office which is supervised by the lovely lady mayor who was elected because of her promise to improve the environment but is supporting a plan to widen around 20 roads in the city!

Edited December 31, 2008 by Loaded

[earlofwindermere]

I did hear that the government turns a blind eye to the British Council because it has been around so long.

Loaded is correct - certain activities are taxable so all organizations (including foundations) pay at least some amount of tax.

Another interesting note is that while foundations have to submit their financial statements each year to the Amphur, they do not have to be audited. So there's plenty of room for cheats even if they are registered.

[tau8]

I did hear that the government turns a blind eye to the British Council because it has been around so long.

Loaded is correct - certain activities are taxable so all organizations (including foundations) pay at least some amount of tax.

Another interesting note is that while foundations have to submit their financial statements each year to the Amphur, they do not have to be audited. So there's plenty of room for cheats even if they are registered.

Thank you for the information regarding the reporting of said companies who identify themselves as Non Profit organisitations - without mentioning any one in particular it has and continues to be interesting to note some web sites who profess to be Non Profit....and yet receive money to provide services. Possibly the wording in their web sites is the misleading factor, using an expression familiar to people and yet not being legitimate in their practices - It will be interesting to see just what happens if these sites are reported, again thanks for the follow up advice. Where someone pays for a service to an organisation on a regular basis I am not so sure that the Non Profit aspect is the correct profile they are advertising - as it is a fee for service.

[earlofwindermere]

Tau8

I'm not sure if this is the best forum to discuss this but I want to clarify as few things because it seems like there are two issues going on that you are discussing...

1. Legal Issues

I agree that registered agencies are probably better because there is some level of accountability. However; as I mentioned, it is still pretty easy for a registered agency to be corrupt. I also am not saying that all unregistered agencies are corrupt. It just makes sense to me that if you plan to have activities in a country, you should abide by its rules....

2. Non-profit.

I think that there is some confusion here. In most countries, a Non-Profit agency is a legal structure. Based on what you said above, you seem to assume that this means that it does not accept fees for services. This is not true. It is very common for charities to accept fees for services. In my opinion, they should. Here are some examples....

A. The Red Cross rents wheelchairs and crutches. The revenue allows the Red Cross to buy additional items as the old ones are worn out.

B. A foundation owns an apartment building for low-income housing. They charge rent for the poor families to live there (usually subsidized). The rent allows the foundation to upkeep the property and even to expand their operations to help more people.

I think the trend in the development/charity/non-profit world is to charge fees for services. Major organizations (like the Gates Foundation and Clinton Foundation) are promoting this concept. It allows charities/non-profits to become sustainable and not reliant on a continuous stream of donations. The key thing is to ensure that the charities use their revenue to expand, or maintain, their own programs rather than for the managers to pocket it. Being a registered organization helps minimize this risk.

If you google "Social Entrepreneur," you will see a lot of info written on this subject. There are many registered organizations in Thailand who follow this concept.

Note: Edited formatting

Edited December 31, 2008 by earlofwindermere

[tau8]

Tau8

I'm not sure if this is the best forum to discuss this but I want to clarify as few things because it seems like there are two issues going on that you are discussing...

1. Legal Issues

I agree that registered agencies are probably better because there is some level of accountability. However; as I mentioned, it is still pretty easy for a registered agency to be corrupt. I also am not saying that all unregistered agencies are corrupt. It just makes sense to me that if you plan to have activities in a country, you should abide by its rules....

2. Non-profit.

I think that there is some confusion here. In most countries, a Non-Profit agency is a legal structure. Based on what you said above, you seem to assume that this means that it does not accept fees for services. This is not true. It is very common for charities to accept fees for services. In my opinion, they should. Here are some examples....

A. The Red Cross rents wheelchairs and crutches. The revenue allows the Red Cross to buy additional items as the old ones are worn out.

B. A foundation owns an apartment building for low-income housing. They charge rent for the poor families to live there (usually subsidized). The rent allows the foundation to upkeep the property and even to expand their operations to help more people.

I think the trend in the development/charity/non-profit world is to charge fees for services. Major organizations (like the Gates Foundation and Clinton Foundation) are promoting this concept. It allows charities/non-profits to become sustainable and not reliant on a continuous stream of donations. The key thing is to ensure that the charities use their revenue to expand, or maintain, their own programs rather than for the managers to pocket it. Being a registered organization helps minimize this risk.

If you google "Social Entrepreneur," you will see a lot of info written on this subject. There are many registered organizations in Thailand who follow this concept.

Note: Edited formatting

Your comments are appreciated - lets just be more socially conscious and now as I indicated above more aware of reporting such agencies.

[IonaBong]

Tax exemption is not an automatic benefit of registering as a Thai foundation. There is a separate, complex, interminable process for that as well.

[paddypower]

Tau8, thanks for setting up this thread. If I may ask, has anyone else been solicited for a donation by bangkok police officers-volunteers, to buy a wheelchair for police/army/citizens in the South?

Genuine or scam? I could not get a definitive answer from any of my local Thai friends.

This is the 2nd year they have visited my home (Khanom Beach). last year, they acted quite forcefully in asking my wife for a donation. Scared her, actually. thanks, paddypower.