Investment Promotion for International Headquarters (IHQ) and International Trading Centers (ITC)

IHQ s Scope of Activities International Headquarters (IHQ) provide the following services to Associated Enterprises (in Thailand/Overseas) Supporting services including General management, business planning and business coordination Research and development of products Technical support Marketing and sales promotion Human resource management and training Financial advisory services Economic and investment analysis and research Credit management and control Any Other supporting services as specified Procurement of raw materials and parts, including services related to International Trading Centers Treasury Center (in accordance with The Exchange Control Law)

IHQ (Sourcing of raw materials and parts) Overseas Associated Enterprises located overseas Payment for goods/services Raw materials and parts Out-Out (1) Manufacturer/Trading Partner located overseas Purchase of goods In-Out Raw materials (4) and parts services IHQ services Out-In (2) Raw materials and parts (wholesale only) Manufacturer/Trading Partner Located in Thailand Thailand Purchase of goods (3) In-In Raw materials and parts (wholesale only) Payment for goods/services Associated Enterprises located in Thailand

Incentives offered by the BOI Tax Incentives Exemption of import duty on machinery (only for R&D and training activities) Exemption of import duty on raw materials and parts used in the production for export Non-Tax Incentives Permission for majority or total foreign ownership Permission to own land Permission to bring in skilled personnel and experts into the Kingdom to work in investment promoted activities

Conditions to apply for BOI Paid-up capital must be at least THB 10 million Must supervise branch or associated enterprise that are located overseas, of more than in 1 country

International Trading Center (ITC) A company incorporated under Thai laws that purchases and sells goods, raw materials and parts or that provides international trading related to juristic persons incorporated under foreign laws

ITC Activities Overseas Associated Enterprises located overseas Payment of goods Goods Out-Out (1) Manufacturers/Trading Partners located overseas Purchase of goods In-Out (4) Goods ITC Out-In (2) Goods (wholesale only) Purchase of goods Manufacturers/Trading Partners located in Thailand (3) In-In Goods (wholesale only) Payment of goods Associated Enterprises located in Thailand Thailand Remark: Scope of ITC includes Procurement of raw materials and parts and services related to International Trading Centers

Incentives offered by the BOI Tax Incentives Exemption of import duty on machinery Exemption of import duty on raw materials and parts used in the production for export Non-Tax Incentives Permission for majority or total foreign ownership Permission to own land Permission to bring in skilled personnel and experts into the Kingdom to work in investment promoted activities

Condition to apply for BOI Paid-up capital must be at least THB 10 million

The difference between ITC and IPO Procurement of goods (from Thailand/overseas) Sale of goods in Thailand Export goods overseas ITC - Raw materials, parts and semifinished goods - Finished goods IPO - Raw materials, parts and semifinished goods - Sell to manufacturers to further assemble/produce into other products (In-In / Out-In) - is not retail sale/direct sale to end-users - Export goods that were sourced in Thailand (In-Out) - Purchase and sell goods outside Thailand without importing into Thailand (Out-Out) - Export raw materials, parts and semi-finished goods that were purchased in Thailand (In-Out) Paid-up capital Other conditions for investment promotion At least THB 10 million None - Procurement domestically in Thailand - Inspection and packaging Remarks 1) An ITC activity covers the former International Procurement Office (IPO) activity 2) BOI-promoted IPO projects can apply for ITC activity either as a new project or amendment of the existing project from IPO to ITC

One Start One Stop Investment Center Address: 18th Floor, Chamchuri Square Building, 319 Phayathai Road, Pathumwan, Bangkok Domestic Call: 0 2209 1100, Inter. Call: (66 2) 209 1100 Email: osos@boi.go.th

INTERNATIONAL HEADQUARTERS & INTERNATIONAL TRADING CENTER Mrs. Patricia Mongkhonvanit Director, Bureau of Tax Policy and Planning The Revenue Department

CONTENTS IHQ : International Headquarters Activities Qualifications Tax Benefits ITC : International Trading Center Qualifications Tax Benefits Application Procedures Contacts

INTERNATIONAL HEADQUARTERS

IHQ : INTERNATIONAL HEADQUARTERS A company incorporated under Thai law which : Provides managerial, technical, supporting services to its associated enterprises Provides financial management service to its associated enterprises Performs offshore trading activities

IHQ : INTERNATIONAL HEADQUARTERS Managerial or technical services Supporting services General management, business planning and business coordination Procurement of raw materials and parts Research and development of products Supporting technical assistance Marketing and sale promotion Financial advisory services Economic and investment analysis and research Credit management and control

IHQ : INTERNATIONAL HEADQUARTERS Financial management service Corporate Treasury Centers under BOT regulations Borrowing and lending in Thai Baht

IHQ : INTERNATIONAL HEADQUARTERS Offshore trading activities Purchases and sales of goods overseas (Out-Out) Provides international trading related services

IHQ : ASSOCIATED ENTERPRISES A company which holds shares directly or indirectly in IHQ not less than 25% of the total capital A company which has the power to control or supervise IHQ S Co. A Co. A1 Co. A2 Co. 25%/Control A company in which IHQ is directly or indirectly a shareholder not less than 25% of total capital A company in which IHQ has the power to control or supervise B2 Co. 25%/Control B1 Co. B Co. IHQ 25%/Control A company in which the company in Box 1 is directly or indirectly a shareholder not less than 25% of total capital A company in which the company in Box 4 has the power to control or supervise C Co. D Co. 25%/Control

IHQ : QUALIFICATIONS Must provide managerial, technical, supporting services or financial management to at least one offshore associated enterprise Minimum paid-up capital = THB10 million Minimum operating expenses paid to recipients in Thailand = THB15 million * If the IHQ fails to meet the above qualifications in any accounting period, the IHQ will disqualify for all tax benefits in such accounting period including tax benefit for its expats

IHQ S TAX BENEFITS

IHQ : CIT EXEMPTION Income from offshore associated enterprises Income from managerial or technical or supporting or financial management services. Royalties Dividends Capital gains Income from offshore trading & related services Income from out-out trading including transshipment or transit under Thai Customs Law Income from providing international trading related services to foreign companies

IHQ : CIT RATE REDUCTION FROM 20% TO 10% Income from associated enterprises in Thailand Income from managerial, technical, supporting or financial management Royalties

IHQ : SBT EXEMPTION Gross receipts from lending to associated enterprises

IHQ : CIT EXEMPTION ON OUTBOUND PAYMENT Dividends paid out of CIT exemption income Interests on loan made for onlending to associated enterprises

IHQ : PERSONAL INCOME TAX FOR EXPATRIATES 15% on gross income and all benefits derived from employment

INTERNATIONAL TRADING CENTER

ITC : QUALIFICATIONS Minimum paid-up capital = THB10 million Minimum operating expenses paid to recipients in Thailand = THB15 million * If the ITC fails to meet the above qualifications in any accounting period, the ITC will disqualify for all tax benefits in such accounting period including tax benefit for its expats

ITC S TAX BENEFITS

ITC : CIT EXEMPTION Income from offshore trading & related services Income from out-out trading including transshipment or transit under Thai Customs Law Income from providing international trading related services to foreign companies

ITC : CIT EXEMPTION ON OUTBOUND PAYMENT Dividends paid out of CIT exemption income

ITC : PERSONAL INCOME TAX FOR EXPATRIATES 15% on gross income and all benefits derived from employment

APPLICATION PROCEDURES www.rd.go.th

APPLICATION PROCEDURES IHQ and ITC Rules & Regulations

APPLICATION PROCEDURES Register and login to file SorYorKor1 form Attach XML files Thai associated enterprises of IHQ Foreign associated enterprises of IHQ Expats who work in IHQ or ITC that desire to receive PIT benefit Print out the form and signed by authorized director with company s seal Submit the form along with electronic file of business plan to LTO at 11 th floor, RD Building Login Track your application process online Receive the result from the Director-General of the Revenue Department Approved Partially approved Not Approved

APPLICATION FORM (ส.ญ.ค.1) Application form requirement Company s profile Activities to apply Company s accounting period Other information Number of pages of business plan Number of IHQ s Thai associated enterprises Number of IHQ s foreign associated enterprises Number of expatriates working in IHQ/ITC entitled to PIT benefit Signature of authorized director and company s seal

RD CONTACTS (IHQ-ITC ISSUES) Bureau of Tax Policy and Planning 02-272-8033 Bureau of Legal Affairs 02-272-8390 Bureau of Information Technology 02-272-8735, 02-272-8871

Thank you

Corporate Treasury Center

Agenda Definition of Treasury Center Benefits of establishing TC in Thailand Scope of business of Treasury Center in Thailand Conditions and regulations in operating a Treasury Center in Thailand TC licensing application Contact point for applying establishment of Treasury Center 2

Definition of Treasury Center (TC) Treasury Center is a Thai juristic person not engaging in financial business which manages foreign currency funds for its Group Companies both in Thailand and overseas Group company Group company Group company TC Thailand Group company Group company Group company Group company Group company Holding company is allowed as a Group Company. Regulatory Relaxation on April 30,2015 4

Benefits of establishing TC in Thailand Reduce transaction costs and help increase companies efficiency and competitiveness through cash pooling and netting. Entitle to benefits under International Headquarter (IHQ) if TC choose to apply for IHQ license Facilitate MNCs, either their parent companies abroad or in Thailand, to centralize all treasury management in Thailand 6

Scope of business of Treasury Center in Thailand Payment & Collection Netting of FX Transactions $ FX Transactions & Risk Management Liquidity Management 8

I. Payment and Collection Agent Goods/Services/Dividend/Interest Regulatory Relaxation on April 30,2015 Group Company in Thailand and abroad e.g. Importer, Exporter THB / FX TC THB / FX Counterparty Re-invoicing Goods/Services Group Company in Re-Invoice Re-Invoice Thailand and abroad TC Counterparty THB / FX THB / FX 10

II. Netting of FX Transactions TC can net FX transactions and pay to Group Companies in Thailand and abroad or counterparties abroad on the net basis. International trade and services* of Group Companies in Thailand and abroad TC s FX transactions under its scope of business e.g.fx lending and borrowing *including dividend and interest Regulatory Relaxation on April 30,2015 GC 1 Producer / Importer GC 2 Producer / Importer / Exporter GC 3 Exporter e.g. Multi - netting TC GC A Importer/ Exporter GC B Exporter 11

III. FX Transactions and Risk Management Domestic FIs Purchase /Sale/ Hedging TC Purchase /Sale/ Hedging Group Company TC submits a copy of treasury center license. TC checks underlying transactions of the Group Companies in Thailand e.g. invoices for goods and services, loan agreement. TC may let Group Companies keep their own documents of underlying transactions. Regulatory Relaxation on April 30,2015 12

III. FX Transactions and Risk Management (2) Regulatory Relaxation on April 30,2015 Allow TC to open one type of FCD Account (foreign sources). For payment of goods, services and other purposes such as loans, TC can purchase FX up to the amount of the underlying transactions. TC can purchase FX up to an aggregate amount of USD 500 million per year for the following purposes: Deposit into the FCD opened with domestic FIs without having documents of underlying transactions Deposit with FIs abroad Debt securities investment abroad Outstanding : up to USD 500 mil. 13

IV. Liquidity Management GC :Cash Surplus Company 1 Company 2 Company A Company B GC :Cash shortage Company 3 Company 4 Company C Company D TC TC :Cash Surplus Deposit into domestic FCD Deposit with FIs abroad Debt securities investment abroad TC :Cash shortage Borrow from domestic FIs / FIs abroad Borrow from FIs, Group Companies, affiliate companies or other juristic persons abroad TC can lend to its Group Companies more than 1 year. Regulatory Relaxation on April 30,2015 14

TC licensing application TC Licensing application Additional Procedures A company submits application & related documents BOT processess application (30 working days) MOF approves and grants the license (30 working days) Juristic persons must register with MOC to carry out Treasury Center Business If TC is a foreigner, It is subject to the Foreign Business ACT, B.E. 1999 and must apply for Foreign Business License / Certificate TC receives the license from BOT together with BOT s letter indicating list of Group Companies (7 days) 16

Agenda Definition of Treasury Center Scope of business of Treasury Center in Thailand Conditions and regulations in operating a Treasury Center in Thailand TC licensing application Contact point for applying establishment of Treasury Center 17

Contact point for applying establishment of Treasury Center Website: www.bot.or.th >> Foreign Exchange Regulations >>Treasury Center E-mail : FOG_ECST@bot.or.th FX_ADMSV_NB@bot.or.th Tel : 02 356 7345, 02 356 7858, 02 283 5135 18

IHQ - ITC and FOREIGN BUSINESS ACT (1999) Department of Business Development Foreign Business Administration Division

Outline 1. Legal Mechanism 2. Definition of Foreigner & Regulated Businesses 3. IHQ ITC and FBA 4. Foreign Business Permitting 5. Department s Facilitating 6. Contacting Points 2

Who are foreigner? Definition Foreigner Regulated Businesses What are regulated businesses? Foreign Business License Foreign Business Certificate Licensing & Certificate Granting 3

2. Definition of Foreigner & Regulated Businesses 1 a natural person not of Thai nationality 2 a juristic person not registered in Thailand Registered aboard 3 a juristic person registered in Thailand, having 50 % or more of the capital shares held by following persons ; Natural Person not of Thai nationality or Juristic Person Registered aboard 50% Juristic Person registered in Thailand 4

2. Definition of Foreigner & Regulated Businesses 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Foreign Shareholding Thai Shareholding 4 9. 9 9 % 5

2. Definition of Foreigner & Regulated Businesses Business means? Lists Annexed to FBA Operating Of Undertaking In Activities For The Purpose Of Trade : In the Field of Agriculture Industry Handicraft Commerce Services Others List 1 List 2 List 3 Business Activities Reserved For THAI Only Businesses Related To National Safety Or Security Or Having Impacts On Arts, Culture, Traditions, Customs And Folklore Handicrafts Or Natural Resources And The Environment Businesses Which Thai Nationals Are Not Ready To Compete With Foreigners 6

Business Activities Under IHQ Managerial or Technical Services Financial Management Supporting Services: - General Management - Research and Development of Product - Financial Advisory Service Regarded As Service Businesses Under List 3 (21) Foreign Shareholding Up to 100 % 7

Business Activities Under ITC Purchasing And Selling Goods, Raw Materials Parts or Providing International Trading Related Services : Selling in Domestic Market Regarded As Wholesaling Business Under List 3 (15) Foreign Shareholding Up to 100 % : Selling in International Market Regarded As Exporting Business Permission is not Required 8

Section 11 30 Days Section 12 30 Days Section 17 60 Days 9

Non Tax Incentive Measures Shortening Licensing Process Certificate Granting Licensing 10

Section 17 Licensing Procedures for IHQ - ITC Filing Application Examining Application Considering Application Notifying In Writing within 30 Days Section 12 Filing Application Examining Validity of Investment Promotion Certificate Notifying In Writing within 15 Days 11

6. Contacting Points 1 2 0-2547-4425-6 Walk-in 4 3 Foreign Business Administration Bureau Dept. of Business Development Foreign@dbd.go.th 12

Working of Alien Act, B.E. 2551 has stipulated that Alien shall engage in any work when being granted permit from registrar which means the Director-General of the Department of Employment and the competent official appoint by the Minister upon recommendation of the Director-General Work Engaging in work by exerting energy or using knowledge whether or not in consideration of wages or other benefits

Foreign Classification Section 9 and 11 (Skilled and profession) - An alien who has residence in the Kingdom - An alien who has permission to stay in the Kingdom temporarily (Non-Immigrant B), not a tourist/transit.

Qualification of an alien 1. Having residence in the Kingdom or having permission to stay in the Kingdom temporarily (Non-Immigrant B), not being tourist/transit 2. Having the knowledge and/or skills to perform the work as stated in the application for a work permit 3. Not being insane or mentally sick, suffering from Leprosy, Tuberculosis, Drug Addiction, Alcoholism, Elephantitus and Tertiary Syphilis. 4. Have never been imprisoned for violation of the Immigration Law or the Working of Alien Act at least one year prior to the date of application.

Criteria for Granting Work Permit 1. (International Headquarters: IHQ) A company incorporated under Thai laws that provide services to its associated enterprises or branches, whether located in Thailand or overseas. The work permit will be granted to a maximum10 workers. In case, an IHQ needs to employ more foreigners than the stipulated ratio (10 workers), in which the IHQ have paid personal income tax of not less than 3 million baht during the previous year, work permits will be granted as deemed necessary and appropriate.

Criteria for Granting Work Permit 2. International Trading Centers: ITC A company incorporated under Thai laws that purchases and sells goods, raw materials and parts or that provide international trading-related to juristic persons under foreign laws. The work permit will be granted to 10 workers for maximum. In case, an ITC needs to employ more aliens than the stipulated ratio (10 workers). An ITC have paid personal income tax of not less than 3 million baht during the previous year, work permit will be granted as deemed necessary and appropriate

Applying for Work Permit

Duration of the Work Permit As necessary and appropriate According to the employment certified letter or employment contract Not exceeding 2 years/time

Contacts Applications must be submitted to the local authority where the applicant s office is located Bangkok - Office of Foreign Workers Administration, Department of Employment, Ministry of Labor Mit-Maitree Road, Dindaeng Bangkok 10400 Other provinces - Provincial Department of Employment For further Information: System management group on foreign workers for skilled labor, Professional Tel: 0 2245 2745, 0 2248 7202 Website: wp.doe.go.th