Regional Operating Headquarters or ROH is a juristic company incorporated in Thailand providing managerial, administrative and technical services as well as other supporting services to ROH’s foreign branches or associated enterprises.
The criteria for ROH (previous scheme) in order to qualify for tax privileges are the following:
- Minimum paid-up capital must not be less than 10 Million Baht at the end of each accounting period;
- Provide services to its branches or associated enterprises in at least 3 countries;
- Half of its total income is derived from administrative, technical and other supporting services provided to its branches or associated enterprises in other countries and royalties received from outside of Thailand for the use of ROH’s R&D. The criteria can be mitigated to one-third of the total revenue in the first three accounting periods of its operation as ROH. In the case of force majeur, the Director-General of the Revenue Department may lower the income threshold for one accounting period; and
- Notify the Revenue Department of its incorporation as ROH. The benefits will be given starting from the notified accounting period onwards.
The criteria for ROH (new scheme) in order to qualify for tax privileges are as the detailed below:
- Paid-up capital at the end of each accounting period of a company operating as ROH must be at least 10 Million Baht.
- Provide services to associated enterprises in foreign countries:
- At least one country in the first and the second accounting periods;
- At least two countries in the third and the fourth accounting period starting from the first accounting period the company wishes to receive tax benefits;
- At least three countries from the fifth accounting period onwards.
- Have total business spending of at least 15 Million Baht per year (The business spending refers to total operating costs which are paid to individuals or companies in Thailand, but exclude royalties and know-how fees paid overseas, raw materials, components and packaging) or have investment spending (actual payment) of at least 30 Million Baht per annum paid in Thailand which is directly related to ROH.
- Foreign associated enterprises must have executive or senior manager and employees working for ROH services and have actual business operation.
- Maintain at least 75 percent of skilled staff from total employees by the end of the third accounting period (Skilled staff shall be in accordance with the criteria set by the Director-General of the Revenue Department)
- Remuneration per worker of at least 2.5 Million Baht per annum for at least 5 employees by the end of the third accounting period.
- Notify the Revenue Department about ROH’s incorporation within 5 years from the date the law becomes effective.
- If ROH company meets all 7 required criteria from (1-7) in every accounting periods and if accumulated business spending exceeds 150 Million Baht by the tenth accounting period, the company may apply for ROH privilege extension for another 5 accounting periods.
- If ROH fails to meet required criteria in certain accounting period, ROH will disqualify for tax privilege from the date it was incorporated as ROH with the Revenue Department.
Read the next post for Regional Operating Headquarters tax privileges.
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