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NEWS UPDATES 19 July 2010

Six multinationals seek Thai headquarters

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Six leading multinational companies are showing interest in establishing regional operating headquarters (ROH) in Thailand, according to Sathit Limpongpan, permanent secretary of the Finance Ministry, as reported in the Bangkok Post.

All six are companies that already maintain extensive operations in the country - the Japanese automakers Nissan and Toyota; the Japanese electronics firm Hitachi; the German conglomerate Siemens; the U.S. chemical firm Dow Chemicals; and Siam Cement.

Mr. Sathit said more than 100 other Thai and foreign companies had contacted the Finance Ministry about the ROH programme and the new incentives recently approved.

The cabinet last month approved a new package of tax incentives for the ROH programme. Corporate tax waivers for up to 15 years are offered to companies with operating bases in Thailand engaged in services and transactions such as research and development, business management and administration, marketing and sales promotion, advisory services and HR training.

The zero tax rate applies for income earned for services provided outside of the country. Domestic services are taxed at a 10 percent rate, or one-third the standard corporate tax rate. Expatriates working for ROHs also will be eligible for a reduced personal income tax rate of 15 percent for eight years, compared with the normal progressive scale of 5 percent to 37 percent. The new incentives are aimed at jump-starting the ROH programme, first initiated in 2002 as a means of attracting more foreign investment. Over the past decade, only 89 companies have registered ROHs in Thailand.

The tax privileges will come into force once legal amendments now under review by the Council of State are finalised and published in the Royal Gazette.

A condition of the programme is that companies must have at least three subsidiaries operating in the region within five years served by the Thai office, with at least one established in the first year and two by the third year.

The Finance Ministry hopes that foregone tax revenues under the ROH programme will be offset by the gains enjoyed by the overall economy from greater foreign investment, spending and tourism by participating companies.

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