Own Company Vs Employment In Los

[JOCK67]

Currently examining the pros & cons of setting up a Thai Company and applying for WP through the company, principally in order to minimise tax exposure. I will be on a Class 'O' Dependants Visa for the purpose of WP applic and Visa Extensions.

As a potential one-man (+ Thai wife) Consulting business, the initial calculations after taking account of Corporate Tax plus Income Tax on the salaries I will pay myself & my wife through the company, I figure on paying approx. 15% tax on average over a calendar year on known potential revenue. This is in comparison to approx 25% Income Tax I would be liable for Personal Income Tax if on an Employer's payroll & WP. At first this seems the way to go.

My query relates to the situation where I wish to take some of the profits and use them personally in Thailand and/or repatriate funds to an offshore account to take care of other personal expenses in the UK. If I do this I understand that I will be liable for further tax as this would be classified as receiving a Dividend (taxable at 10%). This would then narrow the gap substantially between total tax payable using my own Company and Personal Income Tax payable through an Employer.

So therefore the tax benefit of operating my own company seems less clear cut than previously envisaged. The only other benefit is the ability to purchase property (with the correct company shareholding structure in place).

Are there other legal ways to take a regular profit (e.g. quarterly) and also how costly and complicated is it to close a company down at a later date.

Thanks for any suggestions or advice.

Edited May 23, 2006 by JOCK67

[MattFS218]

Currently examining the pros & cons of setting up a Thai Company and applying for WP through the company, principally in order to minimise tax exposure. I will be on a Class 'O' Dependants Visa for the purpose of WP applic and Visa Extensions.

As a potential one-man (+ Thai wife) Consulting business, the initial calculations after taking account of Corporate Tax plus Income Tax on the salaries I will pay myself & my wife through the company, I figure on paying approx. 15% tax on average over a calendar year on known potential revenue. This is in comparison to approx 25% Income Tax I would be liable for Personal Income Tax if on an Employer's payroll & WP. At first this seems the way to go.

My query relates to the situation where I wish to take some of the profits and use them personally in Thailand and/or repatriate funds to an offshore account to take care of other personal expenses in the UK. If I do this I understand that I will be liable for further tax as this would be classified as receiving a Dividend (taxable at 10%). This would then narrow the gap substantially between total tax payable using my own Company and Personal Income Tax payable through an Employer.

So therefore the tax benefit of operating my own company seems less clear cut than previously envisaged. The only other benefit is the ability to purchase property (with the correct company shareholding structure in place).

Are there other legal ways to take a regular profit (e.g. quarterly) and also how costly and complicated is it to close a company down at a later date.

Thanks for any suggestions or advice.

it is extremely costly to close a company in thailand (correctly) at a later date. most people just dump it and leave.

Thailand isn't really the best off-shore destination for setting up a company because they do tax corporate profits (both domestic and international) at 15%. You would not be able to use any of the profits in Thailand without also paying the personal income tax (10% minium, but scaled upwards).

Your better off at looking at a different tax heaven.

--matt

[MattFS218]

Currently examining the pros & cons of setting up a Thai Company and applying for WP through the company, principally in order to minimise tax exposure. I will be on a Class 'O' Dependants Visa for the purpose of WP applic and Visa Extensions.

As a potential one-man (+ Thai wife) Consulting business, the initial calculations after taking account of Corporate Tax plus Income Tax on the salaries I will pay myself & my wife through the company, I figure on paying approx. 15% tax on average over a calendar year on known potential revenue. This is in comparison to approx 25% Income Tax I would be liable for Personal Income Tax if on an Employer's payroll & WP. At first this seems the way to go.

My query relates to the situation where I wish to take some of the profits and use them personally in Thailand and/or repatriate funds to an offshore account to take care of other personal expenses in the UK. If I do this I understand that I will be liable for further tax as this would be classified as receiving a Dividend (taxable at 10%). This would then narrow the gap substantially between total tax payable using my own Company and Personal Income Tax payable through an Employer.

So therefore the tax benefit of operating my own company seems less clear cut than previously envisaged. The only other benefit is the ability to purchase property (with the correct company shareholding structure in place).

Are there other legal ways to take a regular profit (e.g. quarterly) and also how costly and complicated is it to close a company down at a later date.

Thanks for any suggestions or advice.

it is extremely costly to close a company in thailand (correctly) at a later date. most people just dump it and leave.

Thailand isn't really the best off-shore destination for setting up a company because they do tax corporate profits (both domestic and international) at 15%. You would not be able to use any of the profits in Thailand without also paying the personal income tax (10% minium, but scaled upwards).

Your better off at looking at a different tax heaven.

--matt

Oh yah, in order to keep the WP (well, actually the visa extensions that come along with a WP) you will need to declare at least 40,000 baht/mo as salary which is taxed at the Personal Income Tax rate.

You might come out ahead, but there's lots of accounting($$$) ...and I wouldn't want to be end up in a Thai jail on tax evasion charges...the risk/benefit isn't worth it.

[JOCK67]

MattFS218 thanks for your replies. However, need to clarify that I have been resident in Thailand for 14 years and am looking to set up a company as a means of obtaining a WP and taking a salary from my own company, not as a Tax Haven. By doing this I hope to avoid and minimise (not evade) Thai taxation. I have an offshore account purely for my personal transactions and to take advantage of higher interest rates for savings I can remit there.

I am aware of the normal rules and regs for normal Corp Tax for Company Business and also for Personal Income Tax on the monthly salary I will take from the company but my query relates to taking futher money out of the company after the normal Corporate Tax and Personal Income Tax liabilities have been accounted for.

Is there an alternative legal way to do this without having to incur a further 10% for Dividend Tax?

Any other Forum Members with enlightened ideas or past experience on this?

Anyone with actual experience of closing a business down after say 3 or 4 years?

Thanks,

Jock

Edited May 24, 2006 by JOCK67

[~G~]

Is there an alternative legal way to do this without having to incur a further 10% for Dividend Tax?

Not that I know of. In addition, dividends may be tricky with minimum 7 shareholders.

From your numbers I gather that your income is not that large; take into consideration that the overhead of maintainng a company may be also significant.

[JOCK67]

I made a comparison between normal personal income tax as a salaried employee of another company against operating my own company and taking account of estimated revenue offset by all known normal running expenses (office rent, accountants, lawyers, bills, etc.) then applying Corp Tax at 25% (as I'll be in the THB 1m to 3m taxable per annum category) and then adjusted for personal income tax on the salary I would take from my company too. I save approx 10% tax. The profit after tax then will be in the company accounts. I can leave it there and it accumulates but I can't make use of it. I guess I may just have to take a company loan and then pay it back it when it comes time for the yearly audit. It seems though that unless I find myself without work and the company is making no revenue as a result and I have only expenses (incl. my salary) there is no other way to use the profit and avoid paying an extra 10% in tax which I would be liable for if I can legally take a dividend.

Edited May 24, 2006 by JOCK67

[~G~]

I made a comparison between normal personal income tax as a salaried employee of another company against operating my own company and taking account of estimated revenue offset by all known normal running expenses (office rent, accountants, lawyers, bills, etc.)

Would you mind saying what is your estimate for those monthly or yearly running expenses?

[JOCK67]

Estimated based on:

Office Rental: THB 15,000/MTH x 12

Utilities/Bills: THB 10,000/MTH x 12

Accts/Lawyers: THB 4,000/MTH x 12

Audit: THB 10,000/YR x 1

Visa/WP: THB 10,000/YR x 1

Misc Expenses: THB 5,000/MTH x 12

Depreciable Assets: 15,000/MTH x 12

Salary (1): THB 95,000/MTH x 12

Salary (2): THB 25,000/MTH x 12

Salary (3): THB 5,000/MTH x 12

[Bredbury Blue]

It’s a balancing act and a dilemma isn’t it, keeping your salaries low to minimize tax but getting money out to pay your bills.

Put some of the obvious bills through the company when doing well and don’t when not much company income. When doing well give all the employees’ bonus or bonuses – which are taxable – but it is a quick and convenient way of getting money out when you need it.

I also would appreciate anybody advising what are the steps in closing down a company here – any of our lawyer types fancy advising us?

[JOCK67]

It is a dilemma. I have Pension Payments overseas plus other sizeable one off personal expenses each year which I need to make but would like not to have to pay tax again on money taken out of the company. Bonuses are taxable at Personal Income Tax Rates (again the minimum is going to be 10%) which is the same rate as the Div Tax.