Accounting for Foreign-Owned Companies in Thailand in Thailand

One ledger that answers both the authorities and the parent

We do not recommend keeping two separate sets of books. Every adjustment posted in one set nudges the other out of line until reconciliation becomes impossible. What works is a single base ledger in the operating currency required locally, with extra dimensions tagged on each entry — business unit, project, and the group's reporting category. The parent's reporting then comes from regrouping those dimensions rather than from re-typing figures.

The differences that genuinely cannot be avoided between the two levels belong in a standing reconciliation refreshed monthly, with one line per cause: asset lives the group mandates differing from those used for tax, accrued costs without documents yet, and translation effects. That schedule lets the auditor, a tax officer and a foreign manager read the same numbers without relying on a verbal explanation.

Items that need extra watching in a foreign-invested company

The first is expenditure the parent pays on the subsidiary's behalf and recharges. Without a written agreement and an allocation basis set in advance, these become both income-tax and withholding issues. The second is intercompany lending: the rate applied, the repayment terms, and withholding on interest paid abroad together with any treaty relief available. The third is technical service fees and royalties, where documentation must show the service actually happened and the company benefited from it.

Another commonly neglected area is expatriate remuneration and benefits — housing, home leave travel, school fees, and tax the company bears on the employee's behalf. These must be recorded consistently with what is used for the individual's income tax and the related contributions, because a mismatch between the company's books and the individual's return is easy to spot and hard to explain afterwards.

The work calendar and bilingual reporting

We set a three-tier calendar. Monthly: tax filings and a short bilingual performance report. Quarterly: intercompany reconciliation, a review of accruals, and an estimate of the half-year tax charge. Annually: statutory financial statements, the audit, and the group's own reporting pack. Splitting it this way means problems are found in the month they arise rather than in the week of the close.

Reporting to foreign management should carry an English commentary explaining what moved and why, not just translated account names. A reader unfamiliar with local rules will misread certain items — non-recoverable input tax, or costs that are simply not deductible. We attach a short note to that class of item every time, which removes a great deal of repeated questioning in meetings.

When to act, and when waiting is fine

• You have just set up a Thai subsidiary with no local finance team

  Fix the chart and reporting dimensions before the first month is posted; changing later means reworking everything already recorded

• The parent has begun asking for monthly reporting in the group format

  Do not open a separate reporting file; add dimensions in the existing system and report from the same base

• There are loans or royalties paid abroad

  Review withholding rates and treaty entitlement before the first payment; reclaiming afterwards is slow

• You are preparing an investment promotion or business licence application

  Separate income and costs by promoted activity from the outset, so no retrospective allocation is needed when reporting