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Complying with Financial Regulations in Thailand: A Guide for Foreign Investors

Overview of Audit and Compliance Requirements

Thailand’s business environment is increasingly attracting foreign direct investment, making it crucial for international investors to understand the country’s audit and compliance requirements.

Key Laws Governing Audit and Compliance

Several laws govern audit and compliance in Thailand:

  • The Accounting Act of 2000: Outlines financial reporting and auditing requirements for Thai companies.
  • The Securities and Exchange Act of 1992: Regulates listed companies on the Stock Exchange of Thailand.
  • The Bank of Thailand Act: Governs financial reporting and auditing for banks and financial institutions.
  • The Insurance Commission Act: Mandates auditing and reporting for insurance firms.
  • The Financial Institutions Business Act: Regulates accounting, tax, and commercial registration requirements.

Compliance Requirements for Foreign Companies

Foreign companies operating in Thailand through subsidiaries, branches, or representative offices have additional compliance requirements:

  • Submit financial statements within 150 days from the fiscal year end.
  • Prepare statements in a language other than Thai, with a Thai translation attached (for reporting purposes).
  • Use International Financial Reporting Standards (IFRS) and have their statements audited by a Thailand-licensed Certified Public Accountant (CPA).

Annual Reports and Documentation

Limited companies in Thailand must prepare an annual report at the end of each accounting period. This includes:

  1. Corporate information like capital structure, business nature, and number of employees.
  2. Background on directors and management team.
  3. Chairman’s statement on performance and outlook.
  4. Business review and analysis of operations.
  5. Corporate governance and risk management policies.
  6. Sustainability initiatives and CSR activities.
  7. Decisions taken at the annual general meeting.
  8. Branding and marketing highlights.

Documents can be maintained in English, but a Thai version of the annual report should be provided to local shareholders.

Retention of Books of Accounts

Companies must retain accounting books and records for at least five years from the end of the fiscal year. Certain businesses like banks, finance companies, and insurance firms have to maintain books for longer (7-10 years) as stipulated by sector regulators.

Penalties for Non-Compliance

Late filing of financial statements can attract fines of up to 100,000 THB. Under the Revenue Code, more severe penalties apply for non-compliance:

  • 20% surcharge for under-reporting income by over 25%.
  • 100% penalty for incorrect tax return filing.
  • 200% penalty for no filing.

Investors can submit a written request to the tax officer explaining justifiable circumstances. However, ignorance of compliance duties will not be accepted.

Conclusion

Engaging professional accounting firms in Thailand can benefit foreign businesses navigate regulatory landscapes, maintain proper books, select auditors, file taxes correctly, and avoid penalties for non-compliance. This expertise makes engaging their services worthwhile.