Regional Operating Headquarters Thailand (ROH)
A Regional Operating Headquarters (ROH) is a juristic company or partnership organizer under Thai law to provide managerial, technical, or other supporting Services (see below) to its associated companies or its domestic or foreign branches.
Supporting Services
(1) General administration, business planning and coordination.
(2) Procurement of raw materials and components.
(3) Research and development of products.
(4) Supporting technical assistance.
(5) Marketing control and sales promotion planning.
(6) Human resource management and training in the region.
(7) Corporate financial advisory services.
(8) Economic and investment research and analysis.
(9) Credit control and administration.
(10) Any other services stipulated by the Director -General of the Revenue Department.
Associated Company
A juristic company or partnership shall be regarded as an ROH’s associated enterprise if:
A. Shareholding basis:
i . A juristic company or partnership holing shares in the ROH worth not less than 25 % of total capital; or
ii. A juristic company or partnership in which the ROH is a partner or holds shares worth not less than 25 % of total caput; or
iii. A juristic company or partnership in which a juristic company or partnership under (i) is a partner or holds shares worth not less than 25 % of total capital.
B. Control basis:
i. A juristic company or partnership that has the power to control or supervise the operation and management of the ROH; or
ii. A juristic company or partnership that the ROH has the power to control or supervise the operation and management; or
iii. A juristic partnership that a juristic company or partnership in (i) has the power to control or supervise the operation and management.
Incentives The government provides tax breaks and incentives to attract foreign companies to set up in the Kingdom.
A. Reduction/exemptions on Corporate Income Tax
i. Business Income – ROH will be taxed at the reduced corporate rate of 10 % on income derived from the provision of qualifying services to the ROH’s associated companies or branches.
ii. Royalties-Royalties received from associated companies or branches arising from Research and Development (R&D) work carried out in Thailand will be subject to tax at a reduced corporate rate of 10 %. This benefit is extended to include Royalties received from. third party providing services to the ROH’s branches or associated companies using the ROH’s R&D.
iii. Interest- Interest income derived from associated companies or branches on loans made by an ROH and extended to its associated companies or branches will be subject to tax at a reduced corporate of 10%
iv. Dividends-Dividends received by an ROH from associated companies will be exempt from tax. Dividends paid to companies incorporated outside of Thailand and which do not carry on business in Thailand will be exempt from tax
B. Accelerated Depreciation Allowances
25 % of asset value is allowed as an initial allowance and the remaining can be deducted for over 20 years for the purchase or acquisition of buildings used in carrying out the operations of the ROH
C. Expatriates
i. An expatriate who is assigned by the ROH to work outside of Thailand is exempt from personal income tax in Thailand for services outside of Thailand. However, the said income must not be borne by the ROH or its associated company in Thailand.
ii. An expatriate who works for an ROH may choose to be subject to withholding tax at the rate of 15 % for up to 4 years. By doing so, the expatriate is allowed to omit such income in the calculation of their annual personal income tax liability.
Requirements
In order for an ROH to be eligible for tax benefits, it must fulfill the following conditions:
- The ROH must be a juristic company or partnership incorporated under Thai law.
- The ROH must have at least 10 million baht in paid-up capital on the closing date of any accounting period.
- The ROH must provide services to its overseas affiliated companies and/or branches in at least 3 countries excluding Thailand.
- At least half of the revenue generated by the ROH must be derived from service provided to its overseas affiliated companies and/or branches, although this requirement will be reduced to not less than one-third of the ROH’s revenue for the first 3 years.
- The company must submit the notification to the Revenue Department; and
- Other requirements may be imposed by the Director-General of the Revenue Department.
For more information, please feel free to contact us:
Phone: +66 2 933 9000
Fax: +66 2 933 6120
Email: bkk@panwa.co.th