Cross Border Transactions

In any cross border transaction, how the parties structure the considerations and features of a transaction will have the significant impact on parties’ tax burden on such transaction.

Our tax attorneys can help clients structure a cross border transaction and craft a contract to evidence such transaction in the most tax efficient manner, taking full advantage of DTAs and tax incentive under the Revenue Code. We are familiar with international tax planning
strategies including transfer pricing, treaty shopping,
thin capitalization, use of conduit offshore company, remittance of business profit and royalty.

Only the rightly worded contract and the real economic substance behind a transaction will help the international tax planning withstand any challenge from a tax audit.

Cross Border Foreign Direct/Porfolio Investment

If multinational/international companies plan to do business here in Thailand, the choice of entities and structure will have the significant impacts on their tax burdens. Proper international tax planning helps companies minimize their tax burdens as they remit their profit out of the country either as a management fee, a service fee, a royalty, an interest, or a dividend.

Our licensed Thai tax lawyers can advise clients on how to remit their profit out of Thailand in the least possibly taxed way. Generally, we first run economic analysis of our clients’ transactions in order to ensure that our proposed structure reflects the economic reality of such ransactions. Afterward we help the clients structure their transactions and select their choice of entities in the manner that minimizes their tax burdens, fully taking advantages of DTAs, offshore company, and tax incentives available under the Revenue Code.

Local Transactions and Investments

In certain local transactions and investments, the international tax planning may be used to minimize the tax burden of the parties/investors as well. The use of offshore company may be used to minimize the tax liability of certain local transactions and investments.

A tax consequence of the proposed transaction is one of the major factors that the parties need to understand prior to making the deal. The consideration from the tax perspective can significantly weight in on how the parties would like to structure their deal, either as the share sale or the business/asset sale with the payment in either cash or share (or sometimes combinations of both).

For Buyer

We advise buyers on the tax status of target companies and the tax consequence of the proposed transaction so that buyers can make the decision on whether the acquisition should be the business/asset sale or the share sale. In addition, we also advise on depreciation and amortization strategies in the deal structure that provide substantial tax advantages once they assume control of the purchased business as well as the tax aspects of financing the purchase.

Looking forward to the future, buyers of the business want to acquire the business in the structure that will give them the substantial tax saving when acquirers/buyers exit/sell/dispose the business in the future.

We help buyers select the tax efficient structure that suits their needs and saves the transaction costs for clients. In achieving these objectives for our clients, we employ certain tax saving strategies.

For Seller

As far as tax is concerned, normally the most important issue for the sellers is how to find the legitimate ways to minimize the capital gain tax, VAT, specific business tax, stamp duties and official fees imposed on the sale of business. Our extensive experiences help us achieve these aims for our clients. It is crucial for sellers to find a tax planning strategy that fits the circumstance of their transaction to save the tax, otherwise sellers will find themselves with the huge tax liabilities, which come primarily from realization of the capital gain and the transfer of assets.

For Mergers & Restructure

Normally, when companies merge with each other or one company transfers the business to another company, the tax consequences from their merger or business transfer will be numerous, from corporate income tax, VAT, specific business tax, stamp duties and official fees. Without the proper tax planning, more or less the merger or the business transfer will end up with the significant tax liabilities. These tax liabilities primarily arise from the deemed capital gain and the imposition of VAT/specific business tax on asset transfer.

Therefore, it is important for the relevant parties to structure a merger or a business transfer deal in the most tax efficient manner. Our firm can help clients structure the mergers deal or restructure deal in the least possibly taxed way.

Property Purchase

Many people consider the property purchase as one form of investments and many property buyers call themselves a real estate investor. In order to maximize the return on the property investment, property buyers should consider some sort of tax planning that will minimize the capital gain tax when such property buyers resell the property and minimize the rental tax if such property is to be let out to a tenant.

We can help property buyers strategize the tax planning in the way to minimize the capital gain tax (when property buyers resell the property) and the rental tax (when property buyers let out the property) before property buyers purchase the property. Our tax attorneys assist our clients selecting the tax planning method for purchasing the property that will significantly save the capital gain tax and the rental tax for property buyers. Hence, prior to making any purchase, it might be worthwhile for buyers to check if anything can be done to save the tax or not. We advise both local and overseas property buyers.

Property Sale

Whenever a property owner sells the property, the government will impose the capital gain on the proceeds of the property sale. The capital gain tax can be quite significant. We advise the clients on what can be done to minimize the capital gain tax and the specific business tax when they sell their property. There are certain ways to save the tax burden on the sale of the property for property sellers.

Property Development

In addition to advising the property developer on regular tax questions concerning VAT, specific business tax, corporate income tax, house and land tax and local development tax, we advise the tax implications of the property development project that offers the long term leasehold instead of the freehold to foreign property buyers due to the restriction on foreign ownership of land.

Leasehold

For the shorter leasehold or rental, we assist landlords/lessors save the income tax and the property tax imposed on the rental with creative tax saving structure. For the long term leasehold, as soon as, any landowner sells the long term leasehold to a lessee in return for the large amount upfront lease paid to such landowner by a lessee, a landowner as a lessor usually ends up with the huge tax burden. Our law firm advises such lessor on the tax efficient method to minimize the taxes imposed on the sale of the long term leasehold.

The Board of Investment (“BOI”) is encouraging the investments in Thailand by granting the tax privileges and non-tax privileges. The BOI tax privileges always come with certain conditions that a BOI promoted company needs to comply with.

We advise clients on how to exploit the tax privileges to their advantage and other BOI related issues, including segregation of BOI business accounting book and non-BOI business accounting book, the loss carry forward, the dividends payments in the last year of a tax holiday, and procedures for disposal of inventory of BOI business.

The Revenue Code is complicate, huge and largely supplemented by series of subordinate legislation. Many businesses find it hard to follow the Revenue Code.

We assist corporations on corporate tax compliance to ensure that they comply with the Revenue Code and are not getting caught in the tax audit in the future, from simple issues like withholding income tax and recognition of income/expense to more complicated issues.

For many years, multinational corporations have been using the transfer pricing as one of tax planning strategies without much challenge from the Revenue Department of Thailand. Consequently, the Revenue Department lost a lot of tax revenues from the transfer pricing over those years. Therefore, in 2002 the Revenue Department issued the Departmental Instruction No. Por 113/2545 to set up the criteria to regulate the transfer pricing activities. With this Departmental Instruction, transfer pricing should be used with care and is becoming more and more vulnerable to the tax audit by the Revenue Department.

If companies have related transactions with offshore affiliated companies at the prices not based on the arm’s length basis, they may be vulnerable to the transfer pricing investigation made by the Revenue Department.

We assist clients on transfer pricing. In order to take the preventive measure against the transfer pricing investigation, some companies need to prepare the transfer pricing documents, which may be submitted to the Revenue Department upon request.

First, having the transfer pricing document is a preventive measure against the request to adjust up the profit made by the Revenue Department.

Second, knowing the profit margin of its peers in the same industry gives a company with more flexibility to adjust up or down its own profit margin.

Last but not least, presenting the transfer pricing documents to the Revenue Department official will shift the burden of proof to the Revenue Department.

• Structuring transactions in a tax-efficient manner • Providing advice regarding tax deductions and income recognition • Analyzing the tax treatment of discharge of indebtedness • Providing advice regarding tax free transfer and tax exemptions

1. Making representations on behalf of clients to tax a relevant tax authority in the pre-assessment stage; 2. Providing advice concerning the legality of tax assessment made by a relevant tax authority; 3. Preparation of notice of objection to tax assessments and request for re-determination to the tax appellate body; and 4. Representation in the tax court. While we are open to a possibility of negotiation with a relevant tax authority, which might lead to the satisfactory settlement, we can aggressively take the legal action in the court.

The slope of a progressive rate of the Thai personal income tax is quite steep. Most expatriates find their tax bracket hits 37% rather too quickly with no reasonable deduction that is genuinely appropriate for expatriates.

We help companies and expatriates structure the expatriate compensation package in the least taxed way.
Our goal is to minimize the Thai tax burden of an expatriate.

Our team has substantial experience in advising companies to arrange the secondment plan. In addition, we advise companies on the implication of reimbursement of expatriate remuneration.

We also assist companies on companies’ deductibility of expenses spent on employee benefits and welfares as employee’s taxability of these employee benefits and welfares.