Financial Crime World

Best Practices in Financial Compliance in Thailand

Thailand operates a self-assessment tax system, with the tax year generally set as the 12-month period ending on December 31. Foreign companies must submit their financial statements no later than 150 days after the end of the fiscal year.

Audit and Compliance Requirements

Thailand has outlined several laws governing audit and compliance, including:

  • The Accounting Act of 2000
  • The Securities and Exchange Act of 1992
  • The Bank of Thailand Act B.E. 2485
  • Insurance Commission Act B.E. 2550
  • Financial Institutions Business Act B.E. 2551

Annual General Meetings (AGMs)

Companies and partnerships must comply with the requirements set out in the Thai Civil and Commercial Code to hold AGMs.

The board of directors must issue a letter to organize the AGM within four months of the end of the fiscal year, and the AGM must be held at least once a year. The AGM should have the following agendas:

  • To clarify the minutes of the AGM for the previous AGM
  • Approval of the director’s report on the company’s business activities
  • Acknowledge the company’s operational results from the previous year
  • Select new directors to replace those that have been terminated
  • To appoint an auditor and determination of audit fees
  • To consider dividends

Appointing Auditors

Financial statements must be examined and certified by an independent certified auditor. The Thai Accounting Professions Act requires all certified public accountants (CPAs) to apply the Thai Standards of Auditing.

The audit opinion issued by the CPA is required when submitting financial statements and tax returns. This auditing should be done regardless of whether the company is traded or not, except for registered partnerships with total capital, assets, and income not exceeding that prescribed in Ministerial Regulations.

Fiscal Year

Thailand operates a self-assessment tax system with the tax year generally set as the 12-month period ending on December 31. A company can choose its own accounting period as long as it does not exceed 12 months.

If a company chooses its own accounting period, it must inform the Director-General of the Revenue Department. As of April 2020, financial statements must be filed electronically with the Department of Business Development (DBD) of the Ministry of Commerce.

Accounting Standards

Under Thai law, companies registered in Thailand are obligated to keep their accounts and undertake annual audits. Companies should apply the Thai Financial Reporting Standards (TFRS) in the preparation of financial statements.

Currently, SMEs in Thailand are allowed to use one of two standards: Thai Accounting Standards (TAS) or Thai Accounting Standard for Non-Publicly Accountable Entities (NPAEs). Foreign companies are permitted to use the IFRS system. Companies listed on the Thailand Stock Exchange must also prepare financial statements reviewed by Thai auditors on a quarterly basis.

Annual Reports

Limited companies, both public and private, should provide the following documents at the end of each accounting period:

  • Company name
  • Type of business
  • Details of directors
  • Audited financial statement
  • Balance sheet
  • Profit and loss accounts
  • List of shareholders, as of the date of the meeting
  • Minutes of the annual meeting

For reporting purposes, companies must prepare their documents in the Thai language. While foreign companies may prepare their documents in a language other than Thai, a translation must be attached.

Retention of Books of Accounts

In accordance with the Accounting Act of 2000, businesses are required to retain their books of accounts for at least five years. This may be reduced by 50 percent if the taxpayer submits a written request to the tax officer.

Penalties for Non-Compliance

If a business underestimates its profits for an entire year by more than 25 percent, it is subject to a 20 percent surcharge. A surcharge of 100 percent in the case of an incorrect filing and 200 percent in the case of failure to file a return.

The penalty can be reduced by 50 percent if the taxpayer submits a written request to the tax officer.

By following these best practices, companies can ensure compliance with Thai financial regulations and avoid potential penalties.