An overview of the key aspects of Foundations in Thailand

Every month we receive several enquiries and emails at our law firm in Thailand regarding setting up foundations and charity organizations. Many foreigners intend to start foundations and consult H&P lawyers in Bangkok if a foreign individual can register this type of legal entities. Generally speaking, a foreign individual can incorporate a foundation by having a total of 3 founders, and one of them should be Thai at least.

The law tin Thailand to regulate the foundations is the section 110 of the Civil and Commercial Code. By definition, the Foundation is a property allocated specifically for public charity, religion, art, science, literature, education, or other public benefits without seeking to share profits.

The foundation is not aimed to benefit a specific individual and the concept is bringing properties, assets or a fund or both to carry out certain objectives and activities. In practical the government of Thailand has set up guidelines of this “initial capital as follows: by registering the establishment of the Foundation, the fund must be at least 500,000 baht in cash. Other assets must have at least 250,000 THB in cash, and when combined with other assets, the value must not be less than 500,000 THB.

For certain activities related to social welfare objectives promoting education, sports, religion, public health, and for treatment, research, and prevention of patients from drug abuse, AIDS, then the government have waived to have assets but the initial fund must be at least 200,000 THB.

One of the key legal aspects of the foundation is related to section 111 of the Civil and Commercial Code, meaning the board of directors (3 individuals) and its way to operate and being regulated.

After this they should appoint and determine the position of the Foundation’s committee, such as the Chairman of the Board—Vice Chairman, Treasurer, Secretary, etc.

After the meeting has been conducted according, the assigned person shall prepare 4 sets of documents for submitting a foundation request as follows: A list of property owners and a list of assets to be allocated for the Foundation.

In case of incorporating a foundation in Bangkok, we need to file the application to the permanent secretary of the Ministry of Interior. In case we incorporate a foundation in other provinces we should submit the application to the provincial governor.

Regarding the taxation of foundations in Thailand, our H&P Thai lawyers and foreign legal consultants would like to highlight that section 47(7)(b) of the Revenue Code and the form P.N.D. 55. In this regard, we would like to distinguish two types of foundations:

A) Income of a foundation or association subject to income tax. Income subject to income tax of the Foundation or association is income from business operations such as rent and revenue from sales of goods and services and capital gains such as interest and dividends, etc. Foundations or associations must bring such income to calculate corporate income tax (CIT) according to the rate. It is required by law without deducting any expenses

B) Income of foundations or associations that are exempt from income tax. Foundations or associations that have not been declared as charitable organizations or institutions under section 47(7) (b) of the Revenue Code will be exempted from having to include the following income in the calculation of corporate income tax: 1. Registration fee or maintenance fee received from members 2. Money or assets received from donations 3. Cash or property obtained from giving affectionately 4. Income from private school activities of foundations or associations was established under the law on private schools but not including the revenue from the sale of goods, hire of work or any other services that a private school which is a vocational school receives from a person who is not a student.

If you want to consult a lawyer in Bangkok on incorporating a foundation in Thailand, please contact H&P at [email protected]