Operating Websites In Thailand
Stick has just posted an interesting article about operating a website in Thailand and the implications for those who are living in Thailand. Thought I would add some thoughts to this as this is an area in which I specialise. For those who are operating profitable websites it is important to consider where the business should be located and the servers located. There have been recent court decisions that indicate that a server does not constitute a place of business so merely having a server placed in a tax haven e.g. Gibraltar, Isle of Man, etc does not mean that the taxing point is that location. What the authorities (read OECD) usually look for is what is termed a “permanent establishment”. Basically this means where the decisions are made for the business, where the admin staff are located, where contracts are signed, etc. Now with a little planning this can allow you to legally operate from a low tax jurisdiction and not be foul of the laws.
The other main advantage of operating the business through a server outside of Thailand and a business setup outside of Thailand will mean that the local authorities are less likely to scrutinise the business. With internet banking it is possible to have an account setup in these jurisdictions (which I can tell you is a long process) but again if someone comes knocking and asks where you are getting your funds you can legitimately say it is from outside of Thailand as a dividend paid from your investment in a company located outside of Thailand. My favourite bank is HSBC due to its impressive size worldwide and ease of use for the internet banking facilities.
So how would one go about it? Well let’s take Malta. Malta is a favourite of many gaming companies because of its gaming laws and the reason why many online gambling companies have setup there. It is important to look into the licensing requirements but let’s assume that the activities you do are not considered gambling and therefore not subject to a license. You could set up a Maltese company with another Maltese company as the sole shareholder of this company. The advantage of such a structure if that the tax rate works out to be around 5%. Funds are then paid out of the second Maltese company to a shareholder as a dividend and taxes paid in that location. Not sure about taxes on offshore dividends received by foreigners in Thailand but in many countries the dividends are considered to be tax free. Something worth discussing with your advisors.
Again the big benefits are the fact that your company is not registered in Thailand. If set up properly the taxing source is that country in which it has a permanent establishment and if dividends are then paid through they can be tax free in many countries. This requires careful planning and discussions with advisors but the many problems that Stick talks about can be mitigated. I agree with him that it is best not to tell anyone where you earn your money and how you earn it. People will over time as they get close to you understand what you are doing, particularly if you are operating a website, but best to tell people that the admin is administered offshore and the decisions are made outside of Thailand.
These sort of structures also protect any claims made against your assets from greedy ex spouses. Your spouse will probably know a little bit about what you do but if she knows that your website is located in some foreign jurisdiction and that you are an international businessman then the threat of calling the local police is less of a concern. It also removes the great risk of having someone you don’t really know or possibly can even trust owing 51% of your company. What if those shareholders have a falling out with you ? You could end up losing your business and as Stick says facing criminal prosecution and the risk of never being able to come back to Thailand. Now if you have a bricks and mortar business then this is unfortunately the only option available to you. However for online website operators, affiliates, day traders, etc consideration needs to be given to careful tax planning and ensuring you don’t fall foul of the laws in Thailand.
The final option is to look into the 183 day rule. It is my understanding that a similar rule exists in Thailand and means that if you don’t live in the country for more than 183 days then you are not taxed on your income earned as you are not considered to be a tax resident. 3 months in Thailand, 3 months in the Philippines, 3 months in Vietnam and 3 months in Cambodia would mean you don’t fall foul of the laws. The unfortunate part of this strategy is that it requires a lot of moving around which is something most people really don’t want to do.
If operating a website then I would seriously be considering locating the server and the business outside of the Kingdom so prying eyes have nowhere to look and when the question is asked “where you earn your money” you can legitimately say “offshore dividends from my foreign investments”. Maybe enough to keep them prying any further.
There are a number of options to manage your business / income so as to avoid registering a company etc. in Thailand and you have touched on some of them.
Your interpretation of the 183-day rule isn't exactly right. If you earn money in Thailand and it is paid to you in Thailand then the Thai authorities expect you to pay tax on it in Thailand, irrespective of the length of time you spend in the Kingdom.