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Australia-Thailand

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Submitted By grim30
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Australia –Thailand FTA
The Thailand-Australia Free Trade Agreement (TAFTA) was signed on 5 July 2004 and came into effect on January 1, 2005. This agreement implements to ensure greater access for Australian products, enhances prospects for services trade and investment, improves the regulatory environment and promotes increased business mobility. This report focuses on two sections which include immigration policy and transfer of funds and earning from Thailand back to Australian.

Immigration policy under Free Trade Agreement

The immigration policy under TAFTA provides the temporary entry of natural person who needs to perform engagement on business purpose. Natural person must be a person who is a national or a permanent resident of Australia. This natural person should be employed or signed service contract with company that registered in Australia or Thailand. Furthermore, this person should also meet the criteria on immigration formality in order to have a right to receive temporary entry visa. The eligibility and duration of each stay depend on different business purpose.
1. Business visitors - Thailand does not require a work permit for Australian citizens who are business visitors conducting business meetings in Thailand for up to 15 days, and up to 90 days for APEC Travel Card Holders. This condition is available for service seller, investor and natural persons who are employed by an investor. Service sellers or sales representative of the service firm are people who want to visit Thailand for negotiation about business without make direct sale to the general public or supply service directly. Those Australian investors seek investment opportunity in the territory of Thailand. It also can be natural persons who employed by an investor who seek to perform investment in the territory of Thailand.
2. Intra company transfers - Thailand will grant a visa and work permit for up to five years’ stay for all Australian citizens transferred to work in Thailand within the same company. The visa and work permit will be renewed annually. These people should be work as a manager, executive or specialist only.
3. Contractual service suppliers - Thailand will grant a visa and work permit for up to three years’ stay for all Australian citizens entering Thailand to work on the basis of a contract with an Australian or Thai company. The visa and work permit will be renewed annually. Again, these people should work as a manager, executive or specialist only.
Transfer of funds and earning under Free Trade Agreement

According to investment section under TAFTA, the agreement states that Thailand should provide investment promotion and protection provisions with a guarantee of fair and equitable treatment to Australian investor and their investment. Moreover, it is prohibited expropriation except for public purpose, the right to prompt and adequate compensation, and the right to transfer their funds out of Thailand. Thailand will permit Australian investors to transfer their funds freely unless Thailand faces a serious event of balance of payment or external financial difficulties. However, Thailand should consult with achieve an agreement with Australia before make any restrictions on funds transfer. The exchange rate should be a spot rate at the time while company performs to transfer the funds back to its home country. The freely transfer of funds will be the following:
1. The initial capital plus any additional capital used to maintain or expand the investment.
2. Any returns that derived from an investment which includes profits, dividends, interest, capital gains, royalty payments, payments in connection with intellectual property rights and all other lawful income.
3. Money that received by liquidation of the investment either in full or partial.
4. Money that received by repayment of a claim.
5. Money that received due to compensation for the losses.
6. Any earning and other remuneration of personnel engaged from abroad in connection with that investment.
Nevertheless, Thailand might prohibit the transfer of funds or earning in case that company is still under financial liability due to bankruptcy, insolvency or satisfaction of judgments in adjudicatory proceedings.

The income that derived from investment such as business profit, dividend, interest, and royalties may subject to get double taxation. Double taxation is the imposition of two or more taxes on the same income and mostly occurs by transferring income from source country back to host country. Especially on dividend, interest and royalties, there will be immediate imposition of withholding tax from Thailand according to below information.

Withholding taxes (% rate limits)
Dividend
15% of the gross amount of the dividends if the company payment for the dividends engages in an industrial undertaking
20% of the gross amount of the dividends in other cases

Interest
10% of the gross amount of the interest if it is a interest to which any financial institution (including an insurance company) is beneficially entitled
25% of the gross amount of the interest in other cases

Royalties
15% of the gross amount of the royalties

This may effect to the return on investment if Australian company wants to transfer their earning back to their host country. However, TAFTA has also covered the right on double taxation agreement between Australia and Thailand regarding to transfer of funds and earning. In the event of any inconsistency between TAFTA and double tax agreement between Australia and Thailand, the tax agreement shall be prevails. In order to relieve the double taxation, double taxation agreement between Australia and Thailand states that Australia government should provide a credit against Australian tax payable in respect of that income which include business profit, dividend, interest and royalties. Given this, it means that company can take advantage on double taxation agreement to improve the return on investment once company transfers earning from Thailand back to Australia.

Conclusion
Thailand-Australia Free Trade Agreement (TAFTA) will definitely benefit to the company whose employees, especially manager, executive and specialist, need to visit Thailand for business purpose. They can receive a visa and work permit for up to 5 years for business services. In case of travel as business visitor, it is exempt from work permit altogether with allowance to stay in Thailand for up to 15 days. Furthermore, the company can freely transfer capital and profit from investment back to home country unless that firm has financial obligation due to bankruptcy, insolvency or in satisfaction of judgments in adjudicatory proceedings. This TAFTA still maintains the right for Australian firm to claim the taxation credit based on double taxation agreement between Thailand and Australia. This agreement will help to prohibit lower return on investment once Australian firm transfer their earning back to their home country.

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