International Consulting - When Do We Need To Setup In .th

[kikker]

I'm thinking of setting up an international sourcing/consulting bizz. We would have a head office setup in HK where all admin and invoicing would originate from (for obvious tax beneficial purposes). Suppliers would do work for the HK office and the HK office would sell it to clients directly with all profits accumulating in HK.

If we do (frequent) business with Thai Clients do we need to setup a company in Thailand for this and have the money flowing through the Thai company or could this be avoided?

Thai clients would be subject to 15% withholding tax on top of their invoice if they pay a HK supplier, but I think most would prefer to pay this amount than an extra tax charge on top of our normal charges to allow for taxation through Thailand.

As I will be based in Thailand, I will need to setup a thai private ltd business anyway, but I'm wondering what the best way is to ensure we generate income in HK rather than TH.

Anyone any suggestions?

[~G~]

I don't see how a company in Thailand will give you an advantage here. Once you get yourself into the Thai system, you add another level of complexity, which does not seem to be neccessary in your case.

Thai clients would be subject to 15% withholding tax on top of their invoice if they pay a HK supplier, but I think most would prefer to pay this amount than an extra tax charge on top of our normal charges to allow for taxation through Thailand.

If you will set a Thai company and want to move the revenues to HK, your local company will be subject to exactly the same tax, plus you will have the overhead of that company (address, taxation on manager salary, accounting, audits, administration, visits of the Revenue Department, etc...). In addition, it seems like it needs to be a Thai majority company - let's not even get into the tricky issue.

Anyway, this w/h tax is only required while paying for a foreign service provider. If you SELL the products to them directly from HK, they don't need to pay any w/h tax.

As I will be based in Thailand, I will need to setup a thai private ltd business anyway

What for?

[kikker]

I don't see how a company in Thailand will give you an advantage here. Once you get yourself into the Thai system, you add another level of complexity, which does not seem to be neccessary in your case.

Agree that it's absolutely useless except for the fact that I require a work permit for even thinking about doing any work (I'm based in TH and not planning on leaving)

Just trying to figure out why it would be necessary further to have a business here, and also trying to understand what the best ways are to organize funds etc to be able to remain here whilst minimizing oweable taxes. I was of the understanding that it's not that easy for businesses to work in Thailand, get regular contracts from client without an official presence here. If that's not true than all the better of course.. anyone can confirm?

If you will set a Thai company and want to move the revenues to HK, your local company will be subject to exactly the same tax, plus you will have the overhead of that company (address, taxation on manager salary, accounting, audits, administration, visits of the Revenue Department, etc...). In addition, it seems like it needs to be a Thai majority company - let's not even get into the tricky issue.

The Thai company is purely for my work permit.. If possible I would like to ensure all funds for contracts I close to go to HK - Rep offices are not allowed to close contracts from what I understand so the only alternative is a private ltd. Not sure though if it will become a problem if the private limited doesn't make much income..

Anyway, this w/h tax is only required while paying for a foreign service provider. If you SELL the products to them directly from HK, they don't need to pay any w/h tax.

what's the difference?

As I will be based in Thailand, I will need to setup a thai private ltd business anyway

What for?

To be able to live and work legally here..

Edited August 2, 2006 by kikker

[kikker]

No one else any additions?

[~G~]

No one else any additions?

Kikker, have a look in recent threads and you will see that starting a Thai majority company in Thailand seem to have become a bit more complex than in the past.

[Sunbelt Asia]

No one else any additions?

One possible strategy but lets see if you would qualify first:

Will you have offshore affiliates in at least three other countries?

Can you have registered capital of at least 10 million Baht in Thailand?

Will you receive income from offshore affiliates that is at least 1/3 of the total income in Thailand?

www.sunbeltasiagroup.com

[kiakaha]

I'm thinking of setting up an international sourcing/consulting bizz. We would have a head office setup in HK where all admin and invoicing would originate from (for obvious tax beneficial purposes). Suppliers would do work for the HK office and the HK office would sell it to clients directly with all profits accumulating in HK.

If we do (frequent) business with Thai Clients do we need to setup a company in Thailand for this and have the money flowing through the Thai company or could this be avoided?

Thai clients would be subject to 15% withholding tax on top of their invoice if they pay a HK supplier, but I think most would prefer to pay this amount than an extra tax charge on top of our normal charges to allow for taxation through Thailand.

As I will be based in Thailand, I will need to setup a thai private ltd business anyway, but I'm wondering what the best way is to ensure we generate income in HK rather than TH.

Anyone any suggestions?

if you are to be based in thailand, i presume you are going to perform work in thailand...you'll need a work permit.

[kontkikker]

hmm the new nominee structure might complicate things indeed.

Ok the idea was originally to set up as follows:

we have an offshore setup in HK through which we would like to sell our consulting services in various countries in Asia; VN, MY and TH. Our representatives work for HK and are basically freelancers running their own market. They act as local contacts for our clients in the different countries and are quite independent in the way they run their markets. All billings go from clients directly through to HK and In return HK would pay the consultants for services rendered through individual companies they have established themselves. We would like to avoid accumulating profits in local markets directly as income taxes would be much higher. Consultants are basically self employed freelancers who are responsible for their own retirement savings, insurance fees etc etc.

This would provide for the simplest structure and avoid us from having to setup fully incorporated companies in all countries that we offer services in.

Because I'm a foreigner and live in Thailand I'll need to comply with local laws and get a work permit and visa.

Two questions to keep things simple:

- is the structure as described above ok, or does anyone foresee anything wrong with it?

- what needs to be done to obtain a workpermit and visa to work and live in TH?

[Sunbelt Asia]

hmm the new nominee structure might complicate things indeed.

Ok the idea was originally to set up as follows:

we have an offshore setup in HK through which we would like to sell our consulting services in various countries in Asia; VN, MY and TH. Our representatives work for HK and are basically freelancers running their own market. They act as local contacts for our clients in the different countries and are quite independent in the way they run their markets. All billings go from clients directly through to HK and In return HK would pay the consultants for services rendered through individual companies they have established themselves. We would like to avoid accumulating profits in local markets directly as income taxes would be much higher. Consultants are basically self employed freelancers who are responsible for their own retirement savings, insurance fees etc etc.

This would provide for the simplest structure and avoid us from having to setup fully incorporated companies in all countries that we offer services in.

Because I'm a foreigner and live in Thailand I'll need to comply with local laws and get a work permit and visa.

Two questions to keep things simple:

- is the structure as described above ok, or does anyone foresee anything wrong with it?

- what needs to be done to obtain a workpermit and visa to work and live in TH?

The strategy of being a Regional Operating Headquarters won’t work in your case, as the independents are not an associate enterprise.

What nationality are you? If you are an American you could apply for the Amity treaty.( expires on Sept 15 2006 and may be extended for an additional 90 days)

You could apply for BOI promotion. If you wanted to own land for the office or the residence of your company, you may be granted the right to do so as well under the promoted company's name.

You could apply as a branch of your Hong Kong office.

You could apply for a Foreign Business License for a Thai Limited Company.

You could set up a Thai Limited Company with a Thai JV Partner who would invest capital and be legal under the terms of the Foreign Business Act. You however are allowed to be an authorized Director protecting your minor shareholdings.

Work permit requires a 2 million Baht registered company and a non immigrant visa.

Extension of the visa which is called a extension of stay based on business requires 4 Thai employees and a minimum salary for your nationality (1 Thai employee if your companies objective is consultant or agent)

Extension of stay based on marriage to a Thai national requires 400K in the bank or minimum salary( or pension) of 45K per month.

If these conditions can not be met for the extension of stay permit. You can get a one year multi entry visa from a Thai Embassy/Consulate and do 90 day visa runs while maintaining your work permit.

www.sunbeltasiagroup.com

[kontkikker]

Thanks for this.. lot of good info

Work is Consulting work for clients, but having read a bit about things It seemed the private ltd was the most common way to go. Fine with the 90 day visa run.. wp extended every year..

work will involve selling design work, but unsure if this would then fall under the prohibited companies as advertising companies are prohibited, its a little different, but how is it defined under thai law?

main question I guess still is how do we structure income between TH and HK office? The preference is for HK to accumulate all income. My main role would be to setup meetings and secure contracts whilst all work is sold from HK?

[Sunbelt Asia]

work will involve selling design work, but unsure if this would then fall under the prohibited companies as advertising companies are prohibited, its a little different, but how is it defined under thai law?

Any of the strategies listed above would not make it prohibited.

main question I guess still is how do we structure income between TH and HK office? The preference is for HK to accumulate all income. My main role would be to setup meetings and secure contracts whilst all work is sold from HK?

Paul Ashburn at http://www.bdo-thai.com is a good contact on Hong Kong/ Thailand. He charges 14,000 Baht per hour of consultation but is well recommended.

www.sunbeltasiagroup.com

[kontkikker]

Paul Ashburn at http://www.bdo-thai.com is a good contact on Hong Kong/ Thailand. He charges 14,000 Baht per hour of consultation but is well recommended.

anyone on the forum maybe with consulting business in Thailand managed fr HK or Sing with any experiences on this?

[kontkikker]

double post

Edited August 7, 2006 by kontkikker

[kontkikker]

triple post even

Edited August 7, 2006 by kontkikker

[Erwin1011]

My company manages and invoices through Malaysia. As there is a double taxation agreement between the 2, no issues. Charge the VAT, the Client transfer the Vat for you.