Help needed with foreign company operating from uk

[ross b]

Hi, i am forming a thai company in which we are based in the uk. 100% of our income is generated in Thailand and all we do here is purchase the stock and send it over there. My issue is that ofcourse we will be paying income tax and corporation tax to the Thai government. Where do we stand with UK corporation tax? Are we obliged to pay that too which leads on to my next question of double taxation. Im aware that the double taxation between the two countries exists. How would i go about getting this in place? Thanks in advance.

 

[Dina ELTOMA CORPORATE]

Hi Ross,

In order to answer your question re UK tax, please let me know if you have already any registered company in the UK?

If you have a registered business in the UK and that business would be assisting Thai company (acting as an agent) under some commission/%, then UK income tax would arise for that part.

If you don’t have any UK registered business, then we need to understand what would be your personal situation: are you a tax resident in the UK? Are you going to be a shareholder in the Thai company?

As this may lead to your personal requirement to register for self-assessment/pay tax.

And yes, there is a DTA (double tax agreement) in place between the UK and Thailand, so depending on the tax category (i.e. dividends/income tax, etc.) we shall review the application of the exemption available to you.

Regards,

Dina

 

[ross b]

Hi Dina no i do not have any registered company here. The operation will located here solely buying and sending the product out to thailand. No income will be generated only purchases. I am a tax resident in this country as its my home country but generate no earnings here only purchasing. I will be a 30% shareholder in the company yes. It will be a thai registered partnership. The only money coming back to the uk will be a small share for living costs and making more purchases. Any help and advice would be appreciated, thanks.

 

[Dina ELTOMA CORPORATE]

Ross,

As you confirm that you do not have a company here and no local sales, no corporate income tax in the UK.

However, as you are a UK tax resident, you need to pay tax on the dividends received. With regards to how much and what exemptions are available, we need to take a closer look at the DTA (UK-Thailand) and apply to your case. We also need to take a look at the tax law provision in Thailand regarding dividend distribution.

However, can you please once again confirm if in Thailand you are going to register a limited company or a partnership of some kind? I assume you meant registration of a limited company, however just need to clarify as you have referred to partnership as well. I would just like to mention that partnerships are taxed differently and that would play a significant role.

We could help with the actual analysis of the DTA and your applicable tax calculations if you would be interested. There is a fee to this project work, however we have flexible arrangements to match your budget if required (i.e. broader/smaller scope of work, etc.), please let me know if you may need further assistance.

 

[Dina ELTOMA CORPORATE]

Just to summarize, if you would like to make analysis yourself:

- Refer to dividend distribution tax in Thailand (withholding, tax subject to DTA)

- Apply provisions of the DTA

- Register for self-assessment with HMRC and report on the annual basis

 

[ross b]

i am forming a registered partnership

 

[ross b]

we will be based here with the two other part owners, do i need to set up a branch of the company in the uk? or just register a place of business?

 

[Dina ELTOMA CORPORATE]

Thank you for clarifying regarding your type of business.

As it’s a registered partnership, it is under the same corporate tax system as a limited company in Thailand, so the above advice is also applicable to a registered ordinary partnership (unlike unregistered), so the key point here for you is to be aware of withholding tax for your share of the profit (interest) received/declaring this income received in the UK under self-assessment.

No need to register your business here as long as you don’t plan to have any actual business presence in the UK (i.e. sales, marketing, etc.)

 

[ross b]

Thanks for the reply. I will be needing to transfer cash from the thai bank account for purchases in the uk. How would i get around that and tax reasons please?

 

[Dina ELTOMA CORPORATE]

Could you please provide more details about your business/business model? Is there a particular reason to make purchases in cash?

 

[ross b]

We will be making purchases off online auction websites and from wholesalers in the uk. By my understanding we will not be able to make these purchases from a thai company bank account. Is that correct?

 

[Dina ELTOMA CORPORATE]

Hi Ross,

It’s hard to confirm regarding the requirement of cash transactions without looking into the specifics of the case, in general, it’s better to avoid any cash transactions for business especially when dealing internationally. In my experience, most wholesalers and auctions accept bank transfers.

It’s recommended to use business account for all company activities. Most banks offer this service, however when making international money transfers it’s worth paying special attention to the fees applied by your bank when you move money or make direct payments between accounts which use different currencies. Sometimes using an alternative exchange and transfer service provider (just as an example – TransferWise) can be more cost effective.

If the problem lies with the Supplier’s requirement to have a local UK bank account for any reason, then you can consider either setting up a UK company that can act as an agent or becoming an agent yourself here using your personal bank account (Thai business may transfer money to you and in the accounting books of the Thai partnership you can act as the debtor). According legal agreements shall apply. If required, we can help.

It would be better to discuss your business model in more details in order to advise what would be a better option for you.

 

[nick34785]

Wouldn't this company be tax resident in the UK, as management and day to day operations are in the UK? The income is generated in the UK, even thought the income is coming from Thailand.