Any problems with "dormant" Thai ltd. company?

[bamboozled]

Hi folks,

Sure I have searched the forum and read various things about my question but there seems to be a lot of ambiguous info. I have a Thai ltd. company with two Thai partners. I am American and hold the majority. The company was incorporated 6 years ago and has never made a profit. In fact, after the first year or two it became dormant…meaning I do yearly accounting on it but have no receipts either incoming or outgoing. My accountant is always telling me to close it since I don't need it (at least for now) and says that maybe I could have some problems with the powers that be since it doesn't turn a profit. That is the murky area…what problems might I encounter? Has anyone ever had a problem from the government because they keep a dormant company. Again, I am doing the yearly accounting… Since it is somewhat costly and involved to open a company I am adverse to closing it…might I need it in the future to renew my business endeavors or to buy property or….? I have heard anecdotal evidence it has become harder to open a company for a farang but is that true? I am also married now to a Thai which changes some of the reasons for opening a company, such as, a business venture can be in her name with a lot less hassles.

So, my main question is: does anyone have a first hand experience of any problems in having a Thai ltd. company that just does yearly accounting but turns no profit nor has any invoicing?

Thanks all, cheer, Bamboozled (in Chiang Mai).

[IMA_FARANG]

I am not saying it will....but there have been reports before of the Thai money laundering people investing dormant foreign companies of being involved in money laundering into and out of Thailand.

[bamboozled]

Well I suppose any investigation is not something one desires. My footprint is so small with this company I can't imagine they could ever truly think that but if someone wants to make a stink I suppose it is an entry point. Thanks for your reply.

[fletchsmile]

If it's dormant then shouldn't really be a problem as long as you're filing any returns that need doing. Just the cost and admin of doing so are the negatives.

The idea of having a problem because of not turning a profit is more from a tax/VAT perspective, and not unique to Thailand. Where you run into problems is when you are claiming expenses/ input tax/ VAT on purchases but not actually running any sort of business and no real chance of a profit. People try and do this sometimes with hobbies or for general purposes so they can claim back input VAT on purchases, which individuals not running a business can't do. If dormant though and the company doesn't do anything and you aren't claiming anything then unlikely you'll have an issue

Cheers

Fletch

[dotpoom]

I have owned 3 companies (have 2 now) which cost between 15,000 and 25,000 to make so not sure why that would be considered expensive. I just close them when they have served their purpose if it has not been disposed of in another manner.

Could you not have asked your accountant what the lightly snags might be in keeping it open seeing as it was he who warned you about this?

Edited December 18, 2015 by dotpoom

[bamboozled]

Thanks all. Yes, I have asked multiple times what the risk is but he rather speaks in riddles. I've never figured out if this is because his English is not perfect or because he doesn't have all the answers or because he is bluffing. I suppose I'm asking here because although he keeps advising me to close it I have never gotten a clear answer as to why I need to do so.

It cost upwards of 30,000 to open it 6 years ago plus the time and hassle. Sure, not a huge amount of money but I have zero money to burn/lose.

If there really isn't a big risk, I may keep it open just to be able to pay only 10,000 for the yearly accounting instead of the 30,000 he wants to close it.

Dotpoom, have you opened a company lately? Did it seem to be more difficult?

[Guitar God]

How do you close them? One lawyer said it would cost ฿50k, the accountant said ฿30k, I've read you need to place ads in newspapers for anywhere from one month to one year.

What's the accounting cost for a ltd company with no revenue or expenses other than an annual report of zero. My accountant wants ฿13k a year and says we need to make quarterly payment to the government.

I have owned 3 companies (have 2 now) which cost between 15,000 and 25,000 to make so not sure why that would be considered expensive. I just close them when they have served their purpose if it has not been disposed of in another manner.

Could you not have asked your accountant what the lightly snags might be in keeping it open seeing as it was he who warned you about this?

[Postmaster]

None

[UKJASE]

i have a company, which used to own land and house, but we have just sold the house. rather than close it for 30,000 baht, i offered it on the local facebook buy and sell group, for 3,000 baht and quickly had two offers. the other day a lady gave me the 3,000 baht, and she is going to pay 5000 baht in the new year to transfer the directors into her name, once i have paid the taxes and produced the balance sheet for 2015.

she is happy that she got a company for cheap, and i am happy that i have saved some money in not closing it. Plus she will probably stay with our same accountant, so they are happy too

[bamboozled]

UK Jase,

Who are the directors or rather how do they feel about the transfer of the company? I have thought of selling it or giving it to someone but I'm unclear about what to do with the other partners. They are two Thai friends of mine, rather distant now, who have no interest in the company and signed on as a gesture of friendship to me.

[UKJASE]

UK Jase,

Who are the directors or rather how do they feel about the transfer of the company? I have thought of selling it or giving it to someone but I'm unclear about what to do with the other partners. They are two Thai friends of mine, rather distant now, who have no interest in the company and signed on as a gesture of friendship to me.

the two other partners are my wife and her mate

they are both happy to proceed with a sale

the company is now asset less, so keeping it open is pointless unless we want to do further business