You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

September 8, 2022

Thailand Tightens Definition of SMEs Eligible for Special Protection from Unfair Credit Terms

Subscribe to Updates

Thailand’s Trade Competition Commission has amended the guidelines prohibiting large purchasers from setting unfair credit terms for small and medium-sized enterprises (SMEs). The new guidelines, which were published in the Government Gazette on August 17, 2022, revise the definition of SMEs and clarify the duties of concerned parties.

The original guidelines, which took effect in December 2021, set a favorable maximum period for credit terms for SMEs selling products or services to a third-party purchaser. Prescribing longer credit terms than the mandatory period would constitute an unfair trade practice in violation of the Trade Competition Act B.E. 2560 (2017).

In defining what businesses are considered SMEs, the guidelines set thresholds for the number of employees and amount of annual turnover. The amended guidelines maintain these thresholds, but the new guidelines require that both employee-number and turnover thresholds be met in order for a business to be considered an SME. In contrast, the original guidelines only required either the employee-number threshold or the turnover threshold to be met. This amendment will likely mean that fewer business operators qualify as SMEs.

Accordingly, two types of businesses are defined as SMEs under the guidelines:

  • Manufacturers of goods with up to 200 employees and an annual turnover of no more than THB 500 million (approximately USD 13.5 million); or
  • Service providers or wholesale or retail businesses with up to 100 employees and an annual turnover of no more than THB 300 million (approximately USD 8.1 million).

To benefit from protection under the new guidelines against unfair credit terms, SMEs must provide documents proving the number of employees and the amount of annual turnover to trade partners that purchase goods or services from them.

The new guidelines come into force on September 16, 2022.

For more information on the unfair credit term guidelines, or on any aspect of compliance with Thailand’s antitrust and competition laws, please contact Kobkit Thienpreecha at [email protected] or +66 2056 5534, Nutavit Sirikan at [email protected] or +66 2056 5510, or Suphitsara Jaturaphitjaroen at [email protected] or +66 2056 5645.

Related Professionals

Practices

Antitrust and Competition

Corporate/M&A

Customs and International Trade

Location

RELATED INSIGHTS​ 

January 7, 2025
Myanmar’s Ministry of Commerce (MOC) announced a significant policy change allowing foreign companies incorporated in Myanmar under the Myanmar Companies Law 2017 to export eight categories of locally produced commodities, with effect from December 17, 2024. Notification 93/2024 allows eligible foreign companies—companies with more than 35% of their shares held by foreign entities or individuals—to export, manufacture, or trade the following additional commodities: Value-added meats, fish, and fishery products Value-added agricultural products Pulp and various papers Seeds Refined metals Semifinished or finished horticultural products, including fruits and vegetables Wood-based furniture Products supporting environmental conservation The notification, which was issued under the Export and Import Law 2012, does not set a minimum capital requirement for foreign companies taking advantage of these opportunities. Any type of foreign company can apply to export the eight commodities listed above. Companies permitted or endorsed by the Myanmar Investment Commission (MIC) that wish to engage in these opportunities must also adhere to the rules and regulations set by the MIC. To facilitate the export process, the notification specifies that foreign companies must obtain an export recommendation from the relevant government departments and an export license from the MOC’s Department of Trade for each of these commodities. For more information on this announcement, the relevant licensing authorities for different commodities, or any other aspect of import and export matters in Myanmar, please contact Tilleke & Gibbins at [email protected].
Read More
January 3, 2025
Thailand has adopted the OECD’s global minimum tax framework through the Emergency Decree on Top-Up Tax B.E. 2567 (2024). Published in the Government Gazette on December 26, 2024, this legislation implements a 15% global minimum effective tax rate for large multinational enterprise (MNE) groups. The emergency decree took effect on January 1, 2025. The emergency decree was enacted through expedited procedures to implement “pillar two” of the OECD’s Base Erosion and Profit Shifting (BEPS) 2.0 project’s Global Anti-Base Erosion (GloBE) Rules. This swift implementation ensures Thailand can collect relevant tax revenues and prevents potential revenue losses from MNEs that might otherwise shift profits to jurisdictions with lower tax rates or to countries that have already implemented similar top-up tax legislation. Key aspects of Thailand’s implementation of the global minimum tax through the emergency decree are described below. Top-Up Tax The emergency decree introduces a dual mechanism for collecting additional top-up tax from MNEs whose effective tax rate falls below 15%. The first mechanism is a domestic top-up tax that targets MNEs operating within Thailand when their local effective tax rate is lower than 15%. The second mechanism is the income inclusion rule, which determines when a company’s foreign income should be included in the parent (main) company’s taxable income. This rule applies to Thai-based entities—including ultimate parent entities (UPE), intermediate parent entities, and partially owned parent entities—that hold ownership stakes in low-tax foreign jurisdictions. Scope MNEs subject to Thailand’s implementation of the global minimum tax framework are defined in the emergency decree as those whose UPEs report consolidated revenue of at least EUR 750 million (approximately THB 28 billion) in at least two of the four accounting periods preceding the relevant fiscal year. Reporting and Payment In-scope MNEs must comply with specific reporting obligations to the Thai Revenue Department. The filing deadline is set
Read More
December 20, 2024
With intellectual property playing an ever-increasing role in economic development, the need to harness, promote, and protect ASEAN innovation remains urgent as integration progresses. Among its objectives, the ASEAN Economic Community aims to transform the region into a hub of innovation and competitiveness and ensure that the region remains an active participant in the international IP community. With ASEAN member states increasing IP generation and further committing to global IP regimes, the region is increasingly looking toward sophisticated IP ownership and holding structures. IP Holding Companies ASEAN-based companies continue to centralize ownership of their IP assets in offshore holding and licensing vehicles—an approach multinational companies headquartered elsewhere have been using for a number of years. IP-intensive companies look to locate their IP portfolios in low-tax jurisdictions with strong IP registration and protection laws. The company then licenses the IP to operating companies in the group or to third-party licensees, franchisees, agents, distributors, and other partners in return for royalties or license fees. These special-purpose vehicles are typically referred to as IP holding companies. IP holding companies are popular because they can help corporations minimize tax, gain tax benefits or concessions, protect IP from bankruptcy or other claims against the parent company, and focus management attention on the IP portfolio as an income generator. Tax and IP Holding Companies Tax is the primary reason most companies park their IP in separate IP holding vehicles. Sometimes, companies choose to establish their IP holding company in a no-tax, low-tax, or preferred-tax jurisdiction close to their home country. The selected jurisdiction should also be a country with a large and well-established tax treaty network. Double taxation treaties are key considerations in jurisdiction shopping. If the IP assets need to be pledged as security for future borrowings or if they are to be included
Read More
December 18, 2024
The EU-Thailand Free Trade Agreement is drawing a lot of interest as the fourth round recently concluded in Bangkok. Despite negotiations starting in 2013, there was a ten-year pause before we saw the first round of negotiations end in September 2023. The initial plan was for four rounds of negotiations, with the free trade agreement (FTA) finalized in 2025. However, following the fourth round it is clear that the negotiations are still ongoing. Now, the question is: how much closer are the EU and Thailand to concluding their FTA? The EU initially submitted 13 chapter proposals for the FTA, followed by a further 12, and these became the springboard for the negotiations. Given the complexity of agreeing on an accord of this size, there will probably be additional proposals submitted in 2025. These chapters have seen sector-specific negotiation groups formed, and although it has been difficult to truly gauge the status, steady progress has been made in each. Arguably one of the biggest points of discussion pertains to the customs process for imports and exports. Both sides aim to align their practices in relation to rules of origin and custom rates, with preferential tariff treatments offered to goods originating from Thailand and the EU, as well as talks of eliminating or reducing relevant taxes. The desire for a faster customs clearance can be seen in EU proposals for clearance of goods on arrival. Although there has been progress in agreeing to a more simplified customs process, more work needs to be done before we hear news of the agreed-upon fees and charges, or confirmation of what goods would be allowed temporary admission. When we consider customs clearance, it is important to also examine what this FTA could mean for rightsholders. One piece of good news is that it appears
Read More