To encourage more business in Thailand, Thai government has launched another instrument that provides benefits to investors who have established a regional headquarters in Thailand while performing “qualifying services” to branches or associated companies located inside or outside Thailand. It is the Regional Operating Headquarters (ROH).
Regional Operating Headquarters (ROH)
In 2002, the first ROH incentives, both tax and non-tax, were introduced to investors with the aims of attracting more investment in Thailand. The benefits provided by the Revenue Department, in term of tax incentives, are as follows:
- Corporate Income Tax reduction from 30% to 10% on net profit deriving from offshore branches and associated companies.
- Tax exemption for dividends received from ROH’s domestic or foreign subsidiaries.
- Withholding tax exemption for dividends paid out from ROH to foreign companies that do not carry on business in Thailand.
- Personal income tax reduction on salaries for expatriates working with ROH at the rate of 15% instead of progressive tax rate 5-37%.
- Initial allowance for buildings at the rate of 25% on the date of acquisition.
Board of Investment Option
For the investors who also wish to be granted non-tax incentives, they must apply directly to the Board of Investment (BOI). The incentives which the applicants may gain from BOI are as follows:
- Permission to own land by foreign investors.
- Permission to bring in foreign experts and technicians.
- Work permit and visa facilitation.
Again in 2010, the Thai government considered looking for ways to expedite Thailand’s competitiveness among the regions by providing new incentives to attract foreign investment into Thailand.
Incentives from the Board of Investment:
In order for an ROH to be qualified for foregoing tax incentives, the following criteria must be fulfilled:
- The company must apply to the Revenue Department for confirmation as ROH.
- ROH must be a juristic company or partnership incorporated under Thai law.
- ROH must have a paid-up capitalization of not less than 10 million baht.
- ROH must provide services to its branches or companies in at least 3 countries.
- ROH must earn half of its income from qualifying services provided to their branches or associated companies outside Thailand.
Definition of Services:
“Qualifying services” stated above means activities that Regional Operating Headquarters, located their business in Thailand, must operate to be eligible for investment promotion under ROH. Those qualifying services include:
- Organizational administration and management business planning
- Sourcing of raw materials, parts and finished products
- Research and development activities
- Technical support
- Marketing and sales promotion
- Regional human resources training and development
- Business advisory services ( financial management, marketing, accounting etc.)
- Investment feasibility studies and economic and investment analysis
- Credit management and control
- Other services shall be as approved by the BOI on a case by case basis.
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