Regional Operating Headquarters or ROH is a company registered in Thailand providing managerial, administrative and technical services as well as other supporting services to ROH’s foreign branches or its associated enterprises. Such supporting services include as follows:
- General administration, business planning and coordination
- Procurement of raw materials and components
- Research and development of products
- Technical support
- Marketing and sales promotion planning
- Personnel management and regional training
- Financial advisory services
- Economic or investment research and analysis
- Credit control and administration
- Any other activities stipulated by the Director-General of the Revenue Department.
The above services are qualified for such tax privileges. However, in order to receive tax benefits, an ROH has to choose between the old scheme and the new scheme. The ROH will then receive the tax benefits from the selected tax incentive scheme.
I. Tax privileges for ROH (old scheme)
Under the previous scheme, ROH incorporated in Thailand can receive the following tax privileges:
- Corporate income tax at the rate of 10 percent of net profits for income derived from services provided to ROH’s foreign branches or associated enterprises;
- Corporate income tax at the rate of 10 percent of net profits for royalties derived from ROH’s foreign branches or associated enterprises for the use of Research and Development (R&D) done in Thailand by ROH. This benefit is also extended to royalties received from a third party providing services to ROH’s branches or associated enterprises using ROH’s R&D;
- Corporate income tax at the rate of 10 percent of net profits on interest received from ROH’s foreign branches or associated enterprises for loans granted, provided that such loans are made from other sources and extended to ROH’s branches or associated enterprises;
- Tax exemption for dividends paid out of ROH’s concessionary profits to its shareholders not carrying on business in Thailand;
- Accelerated depreciation for buildings at the rate of 25 percent on the date of acquisition. The residual value can be depreciated within 20 years.
Expatriates working for ROH
- Expatriate may opt to be taxed at 15 percent of gross income. By doing so, the income received must not be calculated together with other income and cannot claim for refunds. This privilege is available only to expatriates employed by ROH and are limited to their first four years of employment in Thailand. It does not matter how extensively the beneficiaries have to travel abroad during the employment period. To be entitled for the benefits once again, expatriates have to discontinue employment with any ROH in Thailand for more than 365 days.
- Expatriates who are sent to work in another country by ROH will receive a tax exemption in Thailand on their income paid by the foreign company for services rendered abroad, provided that such income is not directly or indirectly deducted as ROH’s nor its associated enterprise’s expenses in Thailand.
II. Tax privileges for ROH (new scheme)
An ROH that will operate under the new scheme will receive the following tax privileges:
- Corporate income tax exemption on qualifying income derived from the services provided to branches or associated enterprises outside Thailand for 10 consecutive accounting years.
- 10% corporate income tax on qualifying income derived from the services provided to associated enterprises in Thailand for 10 years consecutive accounting years.
- 10% corporate income tax on interest income and royalty income for the use of R&D products developed by the ROH in Thailand received by the ROH from Thai and/or overseas associated enterprises for 10 consecutive accounting years.
- Corporate income tax exemption on dividends received from Thai and/or overseas associated enterprises for 10 consecutive accounting years.
- Withholding tax exemption on certain dividends of the qualified ROH distributed to overseas corporate shareholders
The tax privileges under items 1, 2, 3 and 4 will be extendible to 15 consecutive accounting years if the qualified ROH is continuously entitled to corporate income tax exemption/reduction for 10 accounting years and at the end of the tenth accounting year, it has accumulated operating expenses paid in Thailand of more than THB 150 million.
Expatriates working or ROH
- Only 15% personal income tax imposition for 8 consecutive years for qualified expatriates registered with the Revenue Department as top executives or specialized professionals
- Personal income tax exemption for qualified expatriates assigned to work overseas
Please read the previous post on the criteria of ROH to qualify for tax privileges.
Interested in having a Regional Operating Headquarters in Thailand, contact ThaiLawyers for ROH and company registration.