Open a Holding Company in Thailand
Updated on Saturday 09th July 2016
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A holding company is outlined as a company with no substantial activities of its own, however whose business operations consist primarily of holding shares in other active firms (domestic and/or foreign) and accomplishing its earnings from these types of investments. A holding company represents also a company created to buy and own the shares of other companies, which it then controls.
The main advantages of a holding company in Thailand
Opening a holding company in Thailand has increased its popularity because of the following two main reasons:
• When an entity opens a holding company in Thailand, it enables business progress and expansion into new companies through domestic and/or foreign subsidiaries, which may be connected or not to the current activity;
• An increasing number of affiliated firms with different organizations wish to have their stocks listed on the Exchange. In order to avoid problems which could arise because of contradiction among the lines of business of various companies from within a group, the Exchange has set special listing criteria for companies that have company-like structures and that invest on the local markets or abroad. These companies are able to apply for listing without having to issue a three-year track record, however certain criteria must be met. Our Thai company registration advisers can provide more information on what these criteria are.
Characteristics of holding companies in Thailand
Upon opening a holding company in Thailand, the establishment of such an organization has the characteristics listed below:
• It benefits of advanced rulings: In practice, the shortest time for a private letter ruling is six months, which could extend up to two years. An APA (Administrative Procedure Act) could also take maximum two years. In reality, the Revenue Department does not respond to requirements for advance rulings but only to requirements for rulings on historic operations and pricing pronouncements;
• There are restrictions on its activities: There are certain restricted business activities which are regulated by the Foreign Investment Act that does not take into account ownership in national and alien organizations. These restrictions should be verified and confirmed through suitable local legal counseling;
• There are no substance requests: Public firms should have minimum 15 shareholders and at least 50% of the board of directors have to be Thai residents. A limited corporation is obliged to have at least three shareholders all the time. In case the shareholders are fewer than three, the limited corporation could be dissolved by order of the court. Our company formation professionals in Thailand can provide more details on this subject;
• The capital duty: It is established at 0.025% of the authorized capital;
• There are no special tax rules for holding companies in Thailand:
o For local shareholdings, a Thai limited corporation or a listed firm is exempted from corporate income tax on dividends acquired from another limited organization, if it has held minimum 25% of voting stocks for minimum three months before and three months after the date of dividend payment without cross-shareholding.
o For shareholding in alien subsidiaries, the Thai holding corporation is exempt from corporate income tax on dividends paid from the net profit, which is taxed with 15% in the country where the foreign subsidiary is localized. The Thai holding corporation is obliged to have held minimum 25% of the voting stocks for minimum six months prior to obtaining the overseas dividends.
If you need to know more, please contact our Thai company formation advisors.