In this article, Tilleke & Gibbins is providing a summary of the announcement from Department of Business Development to ease the formalities of setting up business operations in Thailand.
The Department of Business Development (DBD) of the Ministry of Commerce, in collaboration with the Revenue Department (RD), has announced that, from 20 April 2020 onward, new partnerships and companies may submit a VAT registration application simultaneously with an application to register their incorporation. Both registrations will be effective on the same day, which means that the new company or partnership will become a VAT registrant upon its incorporation.
For many years, these two registrations have had to be done separately. Registration of company incorporation is a prerequisite for VAT registration, so business operators would first have to register the incorporation of their legal entity with the Partnerships and Companies Registration Office of the DBD, then register for VAT with the local RD office for the area where the business is situated. Although each registration can be done within one day, the RD’s onerous supporting document requirements, (such as an office lease agreement, map, and photos, which can usually only be acquired after corporate registration) made it a very lengthy process in practice.
Under the new system, the “VAT Registration Application Form by DBD” will be made available for download from the official website of the DBD (www.dbd.go.th). It is not yet known which supporting documents the DBD will require, or whether they will be similarly onerous to the current requirement. It also remains to be seen whether there will still be an office visit and inspection after VAT registration (which is currently RD standard practice); or when the VAT certificate (Form Phor. Phor. 20) will be issued, and by whom.
Nonetheless, this is a positive and business-friendly joint development by the two authorities, and it should reduce the waiting time for business operators who wish to make use of the VAT system as early as possible.
Tilleke & Gibbins will continue to monitor and provide updates on these developments. If you have any questions regarding this synchronisation of registrations, or on any aspect of doing business in Thailand, please contact Mr. Napat Siri-armart at [email protected] or +66 2056 5537.