International Headquarters or IHQ is described as a company incorporated under Thai laws that provides any of the following activities to its branches or “associated enterprises”, whether located in Thailand or abroad:
- Managerial services or technical services
- Supporting services engaged in:General management, business planning and business coordination
2.1 General management, business planning and business coordination
2.2 Procurement of raw materials and parts
2.3 Research and development of products
2.4 Technical support
2.5 Marketing and sales promotion
2.6 Human resource management and training
2.7 Financial advisory services
2.8 Economic and investment analysis of research
2.9 Credit management and control
2.10 Any other supporting services stipulated by the Director General of the Revenue Department
3. Financial management, including:
3.1 Financial management by corporate treasure centers approved under the Exchange Control Law.
3.2 Borrowing and lending in Thai Baht for the following cases:
3.2.1 Borrowing in Thai Baht from financial institutions or associated enterprises in Thailand
3.2.2 Managing Thai Baht obtained from 3.1 or 3.2.1 by lending in Thai Baht to associated enterprises in Thailand.
4. An International Trading Center (ITC)
5. An associated enterprise
International Headquarters (IHQ) receive the following incentives:
- Incentives offered by the Board of Investment (BOI)
- Permission to bring in skilled personnel and experts into the Kingdom to work in investment promoted activities
- Permission to own land
- Exemption of import duty on machinery (only machinery for R&D and training activities)
- Exemption of import duty on raw materials and parts used in the production for export
Conditions to apply for privileges offered by the BOI
- Must supervise at least one branch or associated enterprise outside Thailand
- Paid up capital must be at least THB 10 million
2. Incentives offered by the Revenue Department (RD)
Corporate Income Tax (CIT) for 15 accounting periods from the date of approval by the Director General of the Revenue Department.
A. Corporate Income Tax
- Revenue entitled to corporate income tax exemption:
1.1 Income derived from managerial services or technical services, supporting services, or financial management services to associated enterprises incorporated under foreign laws.
1.2 Royalties received from associated enterprises incorporated under foreign laws.
1.3 Dividends received from associated enterprises incorporated under foreign laws.
1.4 Capital gains received from the sales of shares in associated enterprises incorporated under foreign laws.
1.5 Income derived from the purchase and sales of goods overseas on the condition that such goods must not be imported into Thailand, except for the purpose of transit or transshipment under Thai customs law, and income derived from providing international trading related services to juristic persons incorporated under foreign laws on the condition that such income must be received from or in foreign country.
2. Revenue entitled to 10% of corporate income tax rate*
2.1 Income derived from managerial services or technical services, supporting services or financial management services to associated enterprises established under Thai laws.
2.2 Royalties received from associated enterprises established under Thai laws.
Note: *The amount of revenue entitled to corporate income tax reduction must not be greater than revenue entitled to corporate income tax exemption according to item 1.1 and 1.2
B. Personal Income Tax
The personal income tax rate for expatriates working in an IHQ is reduced to 15% on gross income and benefits derived from employment.
C. Specific Business Tax
Exemption for the gross receipts from lending to associated enterprises.
D. Final Tax. Exemption for the following revenue:
- Dividends paid by the IHQ (dividends paid from revenue entitled to corporate income tax exemption) to a company or juristic partnership incorporated under foreign laws and has no operation in Thailand.
- Interest paid by the IHQ (interest from loans taken out by an IHQ to relend to associated enterprises under financial management) to a company or juristic partnership incorporated under foreign laws and has no operation in Thailand.
Conditions to apply for privileges offered by the Revenue Department:
- Must provide managerial services or technical services or supporting services or financial management to its associated enterprises incorporated under foreign laws.
- Paid-up capital must be at least THB 10 million on the last day of each accounting period.
- Total operating expenses which are paid to recipients in Thailand (sales and administration expenses) must be at least THB 15 million per accounting period.
Note: If the IHQ is unable to meet any of the specified conditions within an accounting period, the tax incentives in that accounting period will not be granted.
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