Path is there for foreign investors wanting to transfer funds abroad for loans

[webfact]

Path is there for foreign investors wanting to transfer funds abroad for loans
By SPECIAL TO THE NATION

 

RUJISAYA

 

BANGKOK: -- MANY foreign companies enter Thailand to take advantage of low operating and overhead costs. They may want to transpose these benefits to foreign affiliates that are financially unstable or have expensive expansion plans.

 

That is, they want to use the benefits gained from operating in Thailand to benefit their group companies as a whole, especially if a group company is ailing. 

 

Inter-company loans are the most common way to transfer funds among group companies. Interest rates can be kept low and the repayment plan can be more flexible than for bank loans.

 

However, in Thailand, companies must understand that lending is a restricted business for foreigners and requires special approval. 

 

The Commerce Ministry does allow foreign companies in Thailand to provide loans to affiliated companies. 

 

However, over the past few years, it has begun rejecting requests to do this, especially when it involves affiliates outside Thailand that are struggling financially. 

 

The ministry is concerned that the loans won’t be repaid based on the financial statements of the borrower showing its low financial capacity. 

 

Another important reason is that the ministry views that there will be an evasion of the 10 per cent tax on dividend payments, in the case of loans to parent companies or major shareholders. 

 

If this happens the Revenue Department will lose lots of revenue. 

 

Options

 

While many foreign investors think that lending falls within the Board of Investment’s scope as a treasury centre and that they have to go through a time-consuming and extremely difficult process with the Bank of Thailand to obtain a treasury centre licence before they can apply for investment privileges from the BoI, inter-company lending may be eligible for the BoI’s promotion in the service and public utilities category. 

 

This is because the lending activity is actually treated as a business service that may qualify for B0I approval if the loans to affiliated and group companies are denominated in baht.

 

What foreign investors need to know are the general and specific criteria prescribed by the BoI for this service activity. 

 

For example, annual selling and administrative expenses or paid-up registered capital must be at least Bt10 million, depending on the activity they apply for promotion. 

 

If the criteria are satisfied, the chance of getting BoI approval is quite promising.

 

If you, as a foreign investor, are approved by the BoI to engage in lending activities with the aforementioned characteristics and loans are transferred to an affiliate abroad, the funds must be converted into a foreign currency as required by the central bank and must not exceed the limit specified under the central bank’s exchange control regulations.

 

Although this might sound complicated and troublesome, a well-planned strategy and thorough understanding of the BoI’s regulations will help foreign investors overcome these problems and difficulties in transferring funds overseas.

 

RUJISAYA BUBPAPROHM is the tax and legal manager at PwC Thailand.

 

Source: http://www.nationmultimedia.com/news/business/EconomyAndTourism/30312408

 

-- © Copyright The Nation 2017-04-17

[wakeupplease]

complicated and troublesome

 

yep everything is here, best just give them your money as once you invest it thats the last you will see of it for sure

[SOUTHERNSTAR]

3 hours ago, wakeupplease said:

complicated and troublesome

 

yep everything is here, best just give them your money as once you invest it thats the last you will see of it for sure

Why do you say this? If you buy a property or invest in a business and you do it legaly it is a simple process to get your capital out. As for companies there are laws governming repatriation of profits, but many countries have similar laws. 

[Thechook]

Trust us we are thai. 

[NCC1701A]

RUJISAYA is sort of hot. Maybe I will go fill out some unnecessary paper work with her.

[Thechook]

14 minutes ago, NCC1701A said:

RUJISAYA is sort of hot. Maybe I will go fill out some unnecessary paper work with her.

She is the bait or as thais refer the lure.

[Srikcir]

8 hours ago, webfact said:

especially if a group company is ailing

If a foreign group company is ailing (or failing) it makes no sense to invest in Thailand that is still a developing medium risk country with tenuous and unpredictable political stability, government nepotism and an arbitrary, sometimes very unpredictable judicial system. A group company that is ailing is in financial trouble - why compound its survivability in a country where the principal investor is an unaccountable government that operates through absolute power?

[bander]

4 hours ago, SOUTHERNSTAR said:

Why do you say this? If you buy a property or invest in a business and you do it legaly it is a simple process to get your capital out. As for companies there are laws governming repatriation of profits, but many countries have similar laws. 

Buy property in who's name? A company with 51% thai shareholders? Or your thai wife's name?  Farewell to your investment....lol

[bander]

2 hours ago, NCC1701A said:

RUJISAYA is sort of hot. Maybe I will go fill out some unnecessary paper work with her.

Most scammers I have met are hot, be careful :-)