59236 Thailand © 2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org All rights reserved. 1 2 3 4 08 07 06 05 A copublication of The World Bank and the International Finance Corporation. This volume is a product of the staff of the World Bank Group. The findings, interpretations and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone 978-750-8400; fax 978-750-4470; Internet www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher,The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax 202-522-2422; e-mail pubrights@worldbank.org. Additional copies of Doing Business 2011: Making a Difference for Entrepreneurs, Doing Business 2010: Reforming through Difficult Times, Doing Business 2009, Doing Business 2008, Doing Business 2007: How to Reform, Doing Business in 2006: Creating Jobs, Doing Business in 2005: Removing Obstacles to Growth and Doing Business in 2004:Understanding Regulations may be purchased at www.doingbusiness.org. ISBN: 978-0-8213-7960-8 E-ISBN: 978-0-8213-8630-9 DOI: 10.1596/978-0-8213-7960-8 ISSN: 1729-2638 Library of Congress Cataloging-in-Publication data has been applied for. Printed in the United States Current features News on the Doing Business project http://www.doingbusiness.org Rankings How economies rank-from 1 to 183 http://www.doingbusiness.org/rankings/ Contents Reformers Short summaries of DB2011 reforms, lists of reformers since DB2004 Introduction and a ranking simulation tool and Aggregate Rankings http://www.doingbusiness.org/reforms/ 5 - Year Measure of Historical data Cumulative Change Customized data sets since DB2004 http://www.doingbusiness.org/custom-query/ Starting a Business Methodology and research Dealing with The methodologies and research papers underlying Doing Business Construction Permits http://www.doingbusiness.org/Methodology/ Registering Property Download reports Access to Doing Business reports as well as subnational and regional Getting Credit reports, reform case studies and customized country and regional profiles Protecting Investors http://www.doingbusiness.org/reports/ Paying Taxes Subnational and regional projects Differences in business regulations at the subnational and regional Trading Across Borders level http://www.doingbusiness.org/subnational-reports/ Enforcing Contracts Law Library Closing a Business Online collection of business laws and regulations relating to business and gender issues Doing Business 2011 http://www.doingbusiness.org/law-library/ Business Reforms http://wbl.worldbank.org/ Local partners More than 8,200 specialists in 183 economies who participate in Doing Business http://www.doingbusiness.org/Local-Partners/Doing-Business/ Business Planet Interactive map on the ease of doing business http://rru.worldbank.org/businessplanet Doing Business 2011 : Making a Difference for Entrepreneurs is the eighth in a series of annual reports investigating regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies, from Afghanistan to Zimbabwe, over time. A set of regulations affecting 9 stages of a business's life are measured: starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. Data in Doing Business 2011 are current as of June 1, 2010*. The indicators are used to analyze economic outcomes and identify what reforms have worked, where, and why. The Doing Business methodology has limitations. Other areas important to business such as an economy 's proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions, are not studied directly by Doing Business. To make the data comparable across economies, the indicators refer to a specific type of business, generally a local limited liability company operating in the largest business city. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policymakers in designing reform. The data set covers 183 economies: 46 in Sub-Saharan Africa, 32 in Latin America and the Caribbean, 25 in Eastern Europe and Central Asia, 24 in East Asia and Pacific, 18 in the Middle East and North Africa and 8 in South Asia, as well as 30 OECD high-income economies. The following pages present the summary Doing Business indicators for Thailand. The data used for this economy profile come from the Doing Business database and are summarized in graphs. These graphs allow a comparison of the economies in each region not only with one another but also with the "good practice" economy for each indicator. The good-practice economies are identified by their position in each indicator as well as their overall ranking and by their capacity to provide good examples of business regulation to other countries. These good -practice economies do not necessarily rank number 1 in the topic or indicator, but they are in the top 10. More information is available in the full report. Doing Business 2011 : Making a Difference for Entrepreneurs presents the indicators, analyzes their relationship with economic outcomes and recommends reforms. The data, along with information on ordering the report, are available on the Doing Business website (www.doingbusiness.org). * Except for the Paying Taxes indicator that refers to the period January to December of 2009. Note: 2008-2010 Doing Business data and rankings have been recalculated to reflect changes to the methodology and the addition of new economies (in the case of the rankings). 1 Economy Rankings - Ease of Doing Business Thailand is ranked 19 out of 183 economies. Singapore is the top ranked economy in the Ease of Doing Business. Thailand - Compared to global good practice economy as well as selected economies: Thailand's ranking in Doing Business 2011 Rank Doing Business 2011 Ease of Doing Business 19 Starting a Business 95 Dealing with Construction Permits 12 Registering Property 19 Getting Credit 72 Protecting Investors 12 Paying Taxes 91 Trading Across Borders 12 Enforcing Contracts 25 Closing a Business 46 2 Summary of Indicators - Thailand Starting a Business Procedures (number) 7 Time (days) 32 Cost (% of income per capita) 5.6 Min. capital (% of income per capita) 0.0 Dealing with Construction Permits Procedures (number) 11 Time (days) 156 Cost (% of income per capita) 9.5 Registering Property Procedures (number) 2 Time (days) 2 Cost (% of property value) 4.3 Getting Credit Strength of legal rights index (0-10) 4 Depth of credit information index (0-6) 5 Public registry coverage (% of adults) 0.0 Private bureau coverage (% of adults) 35.7 Protecting Investors Extent of disclosure index (0-10) 10 Extent of director liability index (0-10) 7 Ease of shareholder suits index (0-10) 6 Strength of investor protection index (0-10) 7.7 Paying Taxes Payments (number per year) 23 Time (hours per year) 264 Profit tax (%) 28.9 Labor tax and contributions (%) 5.7 Other taxes (%) 2.8 Total tax rate (% profit) 37.4 Trading Across Borders Documents to export (number) 4 Time to export (days) 14 Cost to export (US$ per container) 625 Documents to import (number) 3 Time to import (days) 13 Cost to import (US$ per container) 795 3 Enforcing Contracts Procedures (number) 36 Time (days) 479 Cost (% of claim) 12.3 Closing a Business Recovery rate (cents on the dollar) 43.5 Time (years) 2.7 Cost (% of estate) 36 The 5 year measure of cumulative change illustrates how the business regulatory environment has changed in 174 economies from Doing Business 2006 to Doing Business 2011. Instead of highlighting which countries currently have the most business friendly environment, this new approach shows the extent to which an economy's regulatory environment for business has changed compared with 5 years ago. This snapshot reflects all cumulative changes in an economy's business regulation as measured by the Doing Business indicators-such as a reduction in the time to start a business thanks to a one-stop shop or an increase in the strength of investor protection index thanks to new stock exchange rules that tighten disclosure requirements for related -party transactions. This figure shows the distribution of cumulative change across the 9 indicators and time between Doing Business 2006 and Doing Business 2011 0.16 0.14 Doing 0.12 business has become easier (DB 0.10 change score) 0.08 0.06 0.04 0.02 Timor-Leste Indonesia Thailand Lao PDR Malaysia Philippines 6 1. Benchmarking Starting a Business Regulations: Thailand is ranked 95 overall for Starting a Business. Ranking of Thailand in Starting a Business - Compared to good practice and selected economies: 7 The following table shows Starting a Business data for Thailand compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of Min. capital (number) income per (% of income Economies capita) per capita) Denmark* 0.0 New Zealand* 1 1 0.0 Selected Economy Thailand 7 32 5.6 0.0 Comparator Economies Indonesia 9 47 22.3 53.1 Lao PDR 7 100 11.3 0.0 Malaysia 9 17 17.5 0.0 Philippines 15 38 29.7 6.0 Timor-Leste 10 83 18.4 921.3 * The following economies are also good practice economies for : Procedures (number): Canada Cost (% of income per capita): Slovenia 8 2. Historical data: Starting a Business in Thailand Starting a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 89 95 Procedures (number) 8 8 7 7 Time (days) 33 33 32 32 Cost (% of income per capita) 5.6 4.9 6.3 5.6 Min. capital (% of income per capita) 0.0 0.0 0.0 0.0 3. The following graphs illustrate the Starting a Business sub indicators in Thailand over the past 4 years: 9 Starting a Business Summary - Thailand This table summarizes the procedures and costs associated with setting up a business in Thailand. STANDARDIZED COMPANY Legal Form: Private Limited Liability Company City: Bangkok Registration Requirements: No: Procedure Time to complete Cost to complete 1 Apply for permission to use company name 2 THB 20 2 Deposit paid-in capital in a bank 1 no charge 3 Obtain a corporate seal 4 THB 400 4 Get approval for memorandum of association and apply to register the 1 THB 6,750 company as a legal entity (final registration) at the Private Limited Companies Registrar. 5 Register with the Revenue Department for tax 2 no charge 6 Register for social security and Workmen's Compensation Fund at the 1 no charge Social Security Office, Ministry of Labor 7 Submit company work regulations to the Office of Labor Protection 21 no charge and Welfare of the Ministry of Labor at the district where the head office of the company is located 10 Starting a Business Details - Thailand Procedure 1 Apply for permission to use company name Time to complete: 2 Cost to complete: THB 20 Comment: Promoters can search and reserve a company name on the Department of Business Development's Web site ( www.thairegistration.com or www.dbd.go.th). Otherwise, they can apply for a name reservation in person at the Department's Registrar. Procedure 2 Deposit paid-in capital in a bank Time to complete: 1 Cost to complete: no charge Comment: Once the company gets approval for the memorandum and the articles of association, it must hold a statutory meeting, and shareholders must pay in at least 25% of the registered capital. Procedure 3 Obtain a corporate seal Time to complete: 4 Cost to complete: THB 400 Comment: According to Thai law, a company is not required to have a corporate seal except for affixation on company share certificates. In practice, however, a Thai company usually affixes its corporate seal to other documents. Procedure 4 Get approval for memorandum of association and apply to register the company as a legal entity (final registration) at the Private Limited Companies Registrar. Time to complete: 1 Cost to complete: THB 6,750 Comment: The application for registration of the memorandum of association must contain (a) the company names in Thai and in a foreign language (for certificate of company name, see Procedure 1); (b) nature of business; (c) capital to be registered; (d) number and par value of shares; (e) address of the headquarters; (f) names, ages, and addresses of promoters; (g) number of shares subscribed by each promoter; and (h) signatures of all promoters. - The promotors prepare the application for registration of the memorandum of association containing the details specified in procedure 2; - The first statutory meeting shall still be convened, provided that the notice to summon the first statutory meeting is not required; - The shareholders must pay at least 25% of the registered capital; - The promotors and authorized signatory director must sign the applications for registration of memorandum of association and for registration of incorporation, respectively, before Private Limited Companies Registrar, attorney at law, or auditor registered with the Registrar. However, if the company has adopted complicated articles of association, the Registrar may take a few days to review the company's articles of association. In such case, the registration of company 11 incorporation may be prolonged for a few days or more. Procedure 5 Register with the Revenue Department for tax Time to complete: 2 Cost to complete: no charge Comment: Within 60 days of incorporation, the company must register with the Revenue Department to obtain a taxpayer identification card. The same tax number appears on the VAT certificate and on the taxpayer identification card, which are normally obtained on the same date of application filing. However, the VAT certificate will be mailed separately to the company's registered address. Businesses earning more than THB 1,800,000 per year must register for VAT within 30 days from the date the income was earned. The company must also file VAT returns within the 15th day of each month. This is required even if no income was derived in the proceeding month. VAT registration must be filed in person at the same office as for income tax registration. The procedure takes 1­3 days. Procedure 6 Register for social security and Workmen's Compensation Fund at the Social Security Office, Ministry of Labor Time to complete: 1 Cost to complete: no charge Comment: Employers (with one or more employees) must register their employees for social security and workers' compensation insurance by in person at the Social Security Office, Ministry of Labor. Procedure 7 Submit company work regulations to the Office of Labor Protection and Welfare of the Ministry of Labor at the district where the head office of the company is located Time to complete: 21 Cost to complete: no charge Comment: The company work regulations are reviewed by the Office of Labor Protection and Welfare, and the company is advised on the required revisions. An employer with 10 or more regular employees must establish written rules and regulations (in Thai) that comply with the amendments of theLabor Protection Act B.E. 2541 on work performance. The regulations must be displayed at the work premises within 15 days of hiring 10 or more employees. This procedure takes 2­4 weeks. 12 13 1. Benchmarking Dealing with Construction Permits Regulations: Thailand is ranked 12 overall for Dealing with Construction Permits. Ranking of Thailand in Dealing with Construction Permits - Compared to good practice and selected economies: 14 The following table shows Dealing with Construction Permits data for Thailand compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) income per Economies capita) Denmark 6 Qatar 0.8 Singapore 25 Selected Economy Thailand 11 156 9.5 Comparator Economies Indonesia 14 160 173.3 Lao PDR 24 172 131.3 Malaysia 25 261 7.9 Philippines 26 169 778.5 Timor-Leste 22 208 138.2 15 2. Historical data: Dealing with Construction Permits in Thailand Dealing with Construction Permits data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 13 12 Procedures (number) 11 11 11 11 Time (days) 156 156 156 156 Cost (% of income per capita) 10.7 9.4 12.1 9.5 3. The following graphs illustrate the Dealing with Construction Permits sub indicators in Thailand over the past 4 years: 16 Dealing with Construction Permits in Thailand The table below summarizes the procedures, time, and costs to build a warehouse in Thailand. BUILDING A WAREHOUSE City: Bangkok Registration Requirements: No: Procedure Time to complete Cost to complete 1 Request a building permit from the Bangkok Metropolitan Authority 1 day THB 650 2 Receive pre-approval inspection from the Bangkok Metropolitan Authority 1 day no charge 3 Obtain a building permit from the Bangkok Metropolitan Authority 73 days no charge 4 Notify the local authority and request approval of building controller 30 days no charge 5 Request and connect to telephone 21 days THB 3,350 6 * Request and connect to water 5 days THB 5,750 7 * Request inspection from the Metropolitan Electricity Authority (MEA) 1 day THB 2,380 8 * Receive inspection from the Metropolitan Electricity Authority (MEA) 1 day no charge 17 9 * Connect to electricity from the Metropolitan Electricity Authority (MEA) 4 days no charge 10 Receive final inspection 1 day THB 10 11 Obtain occupancy permit 30 days no charge * Takes place simultaneously with another procedure. 18 Dealing with Construction Permits Details - Thailand Procedure 1 Request a building permit from the Bangkok Metropolitan Authority Time to complete: 1 day Cost to complete: THB 650 Agency: Bangkok Metropolitan Authority Comment: An application for a permit to construct, alter, remove, or reallocate a building is required for any building of no more than four stories or 15 meters in height, which excludes any tall building, extraordinarily large building, hotel, hospital, all kinds of factories (except a household business or any business that does not cause any disturbance to the public). The application must be submitted to the relevant District Office with the following documents attached: - A copy of the applicant's corporate registration - A copy of the land title deed. - Permission to use the land space for construction or lease agreement. - The personal and tax identification cards of the applicant. - Approval and certification of the architect and design/calculation engineer. - A copy of a valid architectural license. - A copy of a valid engineering license. - Building plan. - A calculation of building structure. For an industrial factory, hospital, fresh market, condominium, apartment, and any undesirable commercial building, details of the water treatment system and its calculation must be provided. For any building that is taller than 23 meters or extraordinarily large and that has a floor area of up to 10,000 sq. m. on every floor or any single floor, the applicant must provide details on air conditioners; air ventilation; fire escapes, showing that all people in the building can be evacuated within an hour; an assessment of the waste water treatment system; an assessment of the electricity system; an assessment of the security system, an assessment of the water supply system. Other documents must also be provided: a copy of the applicant's corporate registration a copy of the land title deed, permission to use the land space for construction or lease agreement, the tax identification card of the applicant, and written approval of the architect and design engineer, with their professional licenses. A notice to the local authority in lieu of the building permit could be made. The application could be submitted to the local authority in a situation where construction work must be commenced urgently. The following supporting documents must be attached to the application to the local authority: - A copy of the applicant's corporate registration. - A copy of the land title deed. - Permission to use the land space for construction or lease agreement. - Tax identification card of the applicant. - Permission and certificate of architect and design/calculation engineer. - A copy of the license of a qualified senior architect and a copy of the license of a qualified senior engineer. - Permission of the building controller. - Certificate of building design. - Building plan. - Calculation of the building area. Acknowledgement of the notification is granted in 120 days from the date of filing the complete application. The cost is the same as for obtaining a building permit. The fees vary depending on the actual space area and size of the building: - THB 0.5 per square meter for a building not taller than 12 meters. 19 - THB 2 per square meter for a building taller than 12 meters but not more than 15 meters or three floors. - THB 4 per square meter of the entire building space area for a building taller than 15 meters or three floors. In the case considered here, the cost is THB 0.5 per square meter, or THB 650 total. (THB 5,200 if life load of the warehouse is more than or equal to 500 Kg/ sq. m. Procedure 2 Receive pre-approval inspection from the Bangkok Metropolitan Authority Time to complete: 1 day Cost to complete: no charge Agency: Bangkok Metropolitan Authority Comment: Before the plan approval, the municipal authority inspects the site to confirm that the drawing submitted accurately represents the project on site. The pre-approval inspection takes place immediately after the drawing is submitted. The building control officers of the Bangkok Metropolitan Authority process this approval. Procedure 3 Obtain a building permit from the Bangkok Metropolitan Authority Time to complete: 73 days Cost to complete: no charge Agency: Bangkok Metropolitan Authority Comment: Procedure 4 Notify the local authority and request approval of building controller Time to complete: 30 days Cost to complete: no charge Agency: Local Authority Comment: After the building permit has been granted, the name of the building controller must be given to the local authority with the permission of that controller. The latter could be any qualified person, including the building owner, unless that person is prohibited by the regulations of the Engineering or Architectural Profession Act. The following documents must be submitted with the application: - Written permission of the building controller and his or her professional license. - A copy of the existing license. It is assumed that one of BuildCo's employees or owners satisfies the requirements for being a building controller. It is common for the building controller to be the owner or one of the employees of the construction company. The building controller should inspect the building every 2 weeks (not included as separate procedures because they are done by BuildCo). Procedure 5 Request and connect to telephone Time to complete: 21 days Cost to complete: THB 3,350 20 Agency: TOT Corporation Public Company Limited Comment: The company should contact TOT Public Company Limited to request a telephone connection. Procedure 6 Request and connect to water Time to complete: 5 days Cost to complete: THB 5,750 Agency: Metropolitan Water Work authority (MWA) Comment: The company should contact the Metropolitan Water Work authority (MWA) to request a water connection. Procedure 7 Request inspection from the Metropolitan Electricity Authority (MEA) Time to complete: 1 day Cost to complete: THB 2,380 Agency: Metropolitan Electricity Authority (MEA) Comment: Several documents are necessary to obtain this approval, such as the building permit, electrical drawing, owner information, and application form. The Metropolitan Electricity Authority (MEA) staff check the building electricity (on site) before connecting it to the main supply. Procedure 8 Receive inspection from the Metropolitan Electricity Authority (MEA) Time to complete: 1 day Cost to complete: no charge Agency: Metropolitan Electricity Authority (MEA) Comment: Procedure 9 Connect to electricity from the Metropolitan Electricity Authority (MEA) Time to complete: 4 days Cost to complete: no charge Agency: Metropolitan Electricity Authority (MEA) Comment: Procedure 10 Receive final inspection Time to complete: 1 day 21 Cost to complete: THB 10 Agency: Local Authority Comment: For any building subject to controls over its use (such as a warehouse, theater, hotel, or hospital, and, in some building areas, any commercial, manufacturing, educational, meeting place, office, or health building), on completion of the construction, alteration, or allocation, a notification must be given to the local authority to inspect the establishment. Along with the application, the following documents are required: - A copy of the corporate registration. - A copy of the personnel identity card and family identity book of the applicant and/or agent. - A copy of the building permit. After the inspection, if the local authority determines that the construction, alteration, or allocation was made in line with the building permit, permission to use the building is granted. If the authority does not respond within 30 days, the user can unconditionally occupy the property. Procedure 11 Obtain occupancy permit Time to complete: 30 days Cost to complete: no charge Agency: Local Authority Comment: 22 23 1. Benchmarking Registering Property Regulations: Thailand is ranked 19 overall for Registering Property. Ranking of Thailand in Registering Property - Compared to good practice and selected economies: 24 The following table shows Registering Property data for Thailand compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) property Economies value) New Zealand* 2 Norway* 1 Saudi Arabia 0.0 Selected Economy Thailand 2 2 4.3 Comparator Economies Indonesia 6 22 10.9 Lao PDR 9 135 4.1 Malaysia 5 56 2.5 Philippines 8 33 4.3 Timor-Leste no practice no practice no practice * The following economies are also good practice economies for : Procedures (number): United Arab Emirates Time (days): Saudi Arabia, Thailand, United Arab Emirates 25 2. Historical data: Registering Property in Thailand Registering Property data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 5 19 Procedures (number) 2 2 2 2 Time (days) 2 2 2 2 Cost (% of property value) 6.3 1.1 1.1 4.3 3. The following graphs illustrate the Registering Property sub indicators in Thailand over the past 4 years: 26 Registering Property in Thailand This topic examines the steps, time, and cost involved in registering property in Thailand. STANDARDIZED PROPERTY Property Value: 6,378,766.10 City: Bangkok Registration Requirements: No: Procedure Time to complete Cost to complete 1 Obtain certified copies of companies' documents 1 day THB 200 (Affidavits) + from the Ministry of Commerce THB 700 (MoA, AoA) 2 Parties submit application for registration at the Land 1 day THB 10 (title search) + Office 0.01% of appraised value (registration fee) + 1% of sale price or appraised value, whichever is higher (withholding tax) + 3.3% of sale price or appraised value, whichever is higher (Specific Business Tax) 27 Registering Property Details - Thailand Procedure 1 Obtain certified copies of companies' documents from the Ministry of Commerce Time to complete: 1 day Cost to complete: THB 200 (Affidavits) + THB 700 (MoA, AoA) Agency: Ministry of Commerce Comment: Parties obtain from the Ministry of Commerce the following documents: 1. Companies' Affidavits confirming the name, address, the amount of registered capital, names of directors and the authorized signatories. (THB 100) 2. Certified copies of the Memorandum and Articles of Association of each party (THB 50 per page, cost of certification) 3. List of shareholders of the company from the Ministry of Commerce to prove their nationality. On average, the Memorandum of Association (MoA) has 2 pages and the Articles of Association (AoA) about 5 pages. Procedure 2 Parties submit application for registration at the Land Office Time to complete: 1 day Cost to complete: THB 10 (title search) + 0.01% of appraised value (registration fee) + 1% of sale price or appraised value, whichever is higher (withholding tax) + 3.3% of sale price or appraised value, whichever is higher (Specific Business Tax) Agency: Land Office Comment: The seller and the buyer, or their representatives, must go to the Land Office where the land is located, and submit an application to register the sale of the land and the buildings thereon. The Land Officer checks all the documents (from both the seller and the buyer) submitted with the application. He will also compare the original title deed with the original copy kept at the Land Office. All information in both original title deeds must be the same. If everything is consistent, he will proceed with the registration of the transfer of ownership. An official sales agreement is prepared and signed by the authorized representatives of the seller and buyer. The officer then records the sales transaction at the back of the original land title deeds (both the land owner's and the Land Office's copies). The Land Officer calculates all the registration fees and expenses and asks the parties to pay and submit to him the receipts. The Ministry of Interior reduced the registration fee to 0.01% of the appraised value calculated by the Central Valuation Authority (CVA). This registration was applicable for one year until March 2009, but was this year extended for another year until March 2010. The seller has to pay a 1% withholding tax on sale price or CVA- whichever is higher. (Seller may apply this as a credit towards their corporate income tax on any capital gain.) As the seller is a company, withholding tax is calculated on the greater of the appraised value and the sale price. The seller has to pay a 0.5% stamp duty, unless he is subject to the Specific Business Tax. The Royal Decree No 472 reduced the Specific Business Tax (SBT) to 0.11% of sale price or CVA, whichever is higher. The 0.11% Specific Business Tax includes the municipality tax. The Specific Business Tax is imposed on persons who sell their property for trade or a profit-seeking purpose. Companies who sell real property in Thailand are deemed to be selling for trade or profit and are subject to specific business tax. Even if a company sells property in order simply to move to a new place, it is still deemed to have sold for a trade or profit 28 seeking purpose. Accordingly, the company who is the seller in this example will be subject to Specific Business Tax. The registration fee, withholding and specific business taxes are collected by the Land Office. The cheques for the taxes are payable to the Ministry of Finance but collected by the Land Office. The Land Officer then attaches the receipts to the application, and submits all documents to the Chief in charge who is authorized to approve the registration of the transfer. Once the registration is approved, it is deemed completed. The seller will receive one copy of the registered sale agreement. The buyer will receive another copy of the registered sale agreement and the original Land Title Deed. As the Seller owns both the land and the buildings upon the land, the transfer of the building occurs in the same process at the same registry as for the transfer of the land. The Seller will need to produce the construction permit and household registration of the building to transfer the building. 29 30 1. Benchmarking Getting Credit Regulations: Thailand is ranked 72 overall for Getting Credit. Ranking of Thailand in Getting Credit - Compared to good practice and selected economies: 31 The following table shows Getting Credit data for Thailand compared to good practice and comparator economies: Good Practice Strength of Depth of Public Private legal rights credit registry bureau Economies index (0-10) information coverage (% coverage (% index (0-6) of adults) of adults) New Zealand* 100.0 Portugal 67.1 Singapore* 10 United Kingdom 6 Selected Economy Thailand 4 5 0.0 35.7 Comparator Economies Indonesia 3 4 25.2 0.0 Lao PDR 4 0 0.0 0.0 Malaysia 10 6 62.0 100.0 Philippines 3 3 0.0 7.4 Timor-Leste 1 0 0.0 0.0 * The following economies are also good practice economies for : Strength of legal rights index (0-10): Hong Kong, China, Kenya, Kyrgyz Republic, Malaysia Private bureau coverage (% of adults): Argentina, Australia, Canada, Iceland, Ireland, Norway, Sweden, United Kingdom, United States 27 countries have the highest credit information index. 32 2. Historical data: Getting Credit in Thailand Getting Credit data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 69 72 Strength of legal rights index (0-10) 4 4 4 4 Depth of credit information index (0-6) 5 5 5 5 Private bureau coverage (% of adults) 27.9 31.8 32.9 35.7 Public registry coverage (% of adults) 0.0 0.0 0.0 0.0 3. The following graphs illustrate the Getting Credit sub indicators in Thailand over the past 4 years: 33 Getting Credit in Thailand The following table summarize legal rights of borrowers and lenders, and the availability and legal framework of credit registries in Thailand. Getting Credit Indicators (2010) Indicator Private credit Public credit Private bureau coverage (% of adults) 5 bureau registry Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative data distributed? Yes No 1 Does the registry distribute credit information from retailers, trade No No 0 creditors or utility companies as well as financial institutions? Are more than 2 years of historical credit information distributed? Yes No 1 Is data on all loans below 1% of income per capita distributed? Yes No 1 Is it guaranteed by law that borrowers can inspect their data in the Yes No 1 largest credit registry? Coverage 35.7 0.0 Number of individuals 18,570,800 0 Number of firms 297,852 0 34 Strength of legal rights index (0-10) 4 Can any business use movable assets as collateral while keeping possession of the assets; and any financial Yes institution accept such assets as collateral ? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, No without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without No requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically to the products, No proceeds or replacements of the original assets ? Is a general description of debts and obligations permitted in collateral agreements, so that all types of obligations Yes and debts can be secured by stating a maximum amount rather than a specific amount between the parties ? Is a collateral registry in operation, that is unified geographically and by asset type, as well as indexed by the Yes grantor's name of a security right ? Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? Yes Do secured creditors have absolute priority to their collateral in bankruptcy procedures? No During reorganization, are secured creditors' claims exempt from an automatic stay on enforcement? No Does the law authorize parties to agree on out of court enforcement? No 35 36 1. Benchmarking Protecting Investors Regulations: Thailand is ranked 12 overall for Protecting Investors. Ranking of Thailand in Protecting Investors - Compared to good practice and selected economies: 37 The following table shows Protecting Investors data for Thailand compared to good practice and comparator economies: Good Practice Strength of investor Economies protection index (0-10) New Zealand 9.7 Selected Economy Thailand 7.7 Comparator Economies Indonesia 6.0 Lao PDR 1.7 Malaysia 8.7 Philippines 4.0 Timor-Leste 4.0 38 2. Historical data: Protecting Investors in Thailand Protecting Investors data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 12 12 Strength of investor protection index (0-10) 6.0 7.7 7.7 7.7 3. The following graph illustrates the Protecting Investors index in Thailand compared to best practice and selected Economies: 9.7 8.7 7.7 6.0 4.0 4.0 1.7 nd sia ia nd e es R la t ys ne PD es n ai a a pi al -L do Th al p o Ze M or In ili La m Ph ew Ti N Note: The higher the score, the greater the investor protection. 39 Protecting Investors in Thailand The table below provides a full breakdown of how the disclosure, director liability, and shareholder suits indexes are calculated in Thailand. Protecting Investors Data (2010) Indicator Extent of disclosure index (0-10) 10 3 What corporate body provides legally sufficient approval for the transaction? 2 Whether immediate disclosure of the transaction to the public and/or shareholders is required? 2 Whether disclosure of the transaction in published periodic filings (annual reports) is required? 2 Whether disclosure of the conflict of interest by Mr. James to the board of directors is required? 1 Whether an external body must review the terms of the transaction before it takes place? Extent of director liability index (0-10) 7 0 Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller transaction causes to the company? 2 Whether shareholders can hold the approving body (the CEO or board of directors) liable for the damage that the Buyer-Seller transaction causes to the company? 1 Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? 1 Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff? 40 1 Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff? 1 Whether fines and imprisonment can be applied against Mr. James? 1 Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction causes to the company? Ease of shareholder suits index (0-10) 6 4 Whether the plaintiff can obtain any documents from the defendant and witnesses during trial? 1 Whether the plaintiff can directly question the defendant and witnesses during trial? 0 Whether the plaintiff can request categories of documents from the defendant without identifying specific ones? 0 Whether shareholders owning 10% or less of Buyer's shares can request an inspector to investigate the transaction? 1 Whether the level of proof required for civil suits is lower than that of criminal cases? 0 Whether shareholders owning 10% or less of Buyer's shares can inspect transaction documents before filing suit? Strength of investor protection index (0-10) 7.7 41 42 1. Benchmarking Paying Taxes Regulations: Thailand is ranked 91 overall for Paying Taxes. Ranking of Thailand in Paying Taxes - Compared to good practice and selected economies: 43 The following table shows Paying Taxes data for Thailand compared to good practice and comparator economies: Good Practice Payments Time (hours Total tax rate (number per per year) (% profit) Economies year) Maldives* 3 0 Timor-Leste 0.2 Selected Economy Thailand 23 264 37.4 Comparator Economies Indonesia 51 266 37.3 Lao PDR 34 362 33.7 Malaysia 12 145 33.7 Philippines 47 195 45.8 Timor-Leste 6 276 0.2 * The following economies are also good practice economies for : Payments (number per year): Qatar 44 2. Historical data: Paying Taxes in Thailand Paying Taxes data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 86 91 Total tax rate (% profit) 37.7 37.8 37.2 37.4 Payments (number per year) 35 23 23 23 Time (hours per year) 264 264 264 264 3. The following graphs illustrate the Paying Taxes sub indicators in Thailand over the past 4 years: 45 Paying Taxes in Thailand The table below addresses the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year in Thailand, as well as measures of administrative burden in paying taxes. Tax or mandatory Payments Notes on Time Statutory tax Tax Totaltax rate Notes on contribution (number) Payments (hours) rate base (% profit) TTR Value added tax (VAT) 1 online 56 7.0% value added filing Tax on interest 0 withheld 1.0% interest 0.00 income Tax on check 1 3 Baht per 0.00 transactions check Property transfer tax 1 2.0% sale price 0.00 Stamp duty 1 0.1% transaction 0.10 value vehicle tax 1 fixed fee 0.10 (Baht 3,600) Workmen compensation 1 0.2% to 1% gross salaries 0.20 fund Advertising tax 1 2% and 3% service cost 0.40 Fuel Tax 1 5.3 Baht per fuel 0.60 liter consumption 46 Property Tax 1 12.5% assessed 1.60 property value Business specific tax 1 online 3.3% taxable profit 2.90 filing Social Security 12 48 5.0% gross salaries 5.40 contributions Corporate income tax 1 online 160 30.0% taxable profit 26.10 filing Totals 23 264 37.4 47 48 1. Benchmarking Trading Across Borders Regulations: Thailand is ranked 12 overall for Trading Across Borders. Ranking of Thailand in Trading Across Borders - Compared to good practice and selected economies: 49 The following table shows Trading Across Borders data for Thailand compared to good practice and comparator economies: Good Practice Documents to Time to Cost to Documents to Time to Cost to export export (days) export (US$ import import (days) import (US$ Economies (number) per (number) per container) container) Denmark* 5 France 2 2 Malaysia 450 Singapore 4 439 Selected Economy Thailand 4 14 625 3 13 795 Comparator Economies Indonesia 5 20 704 6 27 660 Lao PDR 9 48 1860 10 50 2040 Malaysia 7 18 450 7 14 450 Philippines 8 15 675 8 14 730 Timor-Leste 6 25 1010 7 26 1015 * The following economies are also good practice economies for : Time to export (days): Estonia 50 2. Historical data: Trading Across Borders in Thailand Trading Across Borders data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 12 12 Cost to export (US$ per container) 615 625 625 625 Cost to import (US$ per container) 786 795 795 795 Documents to export (number) 7 4 4 4 Documents to import (number) 9 3 3 3 Time to export (days) 17 14 14 14 Time to import (days) 14 13 13 13 3. The following graphs illustrate the Trading Across Borders sub indicators in Thailand over the past 4 years: 51 52 Trading Across Borders in Thailand These tables list the procedures necessary to import and export a standardized cargo of goods in Thailand. The documents required to export and import the goods are also shown. Nature of Export Procedures (2010) Duration (days) US$ Cost Documents preparation 8 270 Customs clearance and technical control 1 50 Ports and terminal handling 3 85 Inland transportation and handling 2 220 Totals 14 625 Nature of Import Procedures (2010) Duration (days) US$ Cost Documents preparation 8 300 Customs clearance and technical control 2 75 Ports and terminal handling 2 200 Inland transportation and handling 1 220 Totals 13 795 53 Documents for Export and Import Export Certificate of origin Commercial invoice Customs export declaration Terminal handling receipts Import Packing list Terminal handling receipts Customs import declaration 54 55 1. Benchmarking Enforcing Contracts Regulations: Thailand is ranked 25 overall for Enforcing Contracts. Ranking of Thailand in Enforcing Contracts - Compared to good practice and selected economies: 56 The following table shows Enforcing Contracts data for Thailand compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) claim) Economies Bhutan 0.1 Ireland 20 Singapore 150 Selected Economy Thailand 36 479 12.3 Comparator Economies Indonesia 40 570 122.7 Lao PDR 42 443 31.6 Malaysia 30 585 27.5 Philippines 37 842 26.0 Timor-Leste 51 1285 163.2 57 2. Historical data: Enforcing Contracts in Thailand Enforcing Contracts data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 25 25 Procedures (number) 36 36 36 36 Time (days) 479 479 479 479 Cost (% of claim) 12.3 12.3 12.3 12.3 3. The following graphs illustrate the Enforcing Contracts sub indicators in Thailand over the past 4 years: 58 Enforcing Contracts in Thailand This topic looks at the efficiency of contract enforcement in Thailand. Nature of Procedure (2010) Indicator Procedures (number) 36 Time (days) 479 Filing and service 99.0 Trial and judgment 260.0 Enforcement of judgment 120.0 Cost (% of claim)* 12.30 Attorney cost (% of claim) 9.2 Court cost (% of claim) 0.1 Enforcement Cost (% of claim) 3.0 59 Court information: Bangkok District Court ("") * Claim assumed to be equivalent to 200% of income per capita. 60 61 1. Benchmarking Closing Business Regulations: Thailand is ranked 46 overall for Closing a Business. Ranking of Thailand in Closing Business - Compared to good practice and selected economies: 62 The following table shows Closing Business data for Thailand compared to good practice and comparator economies: Good Practice Recovery rate Time (years) Cost (% of (cents on the estate) Economies dollar) Ireland 0.4 Japan 92.7 Singapore* 1 Selected Economy Thailand 43.5 2.7 36 Comparator Economies Indonesia 13.2 5.5 18 Lao PDR 0.0 no practice no practice Malaysia 39.8 2.3 15 Philippines 4.5 5.7 38 Timor-Leste 0.0 no practice no practice * The following economies are also good practice economies for : Cost (% of estate): Colombia, Kuwait, Norway 63 2. Historical data: Closing Business in Thailand Closing a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 48 46 Time (years) 2.7 2.7 2.7 2.7 Cost (% of estate) 36 36 36 36 Recovery rate (cents on the dollar) 41.8 42.4 42.4 43.5 3. The following graphs illustrate the Closing Business sub indicators in Thailand over the past 4 years: 64 Since 2004 Doing Business has been tracking reforms aimed at simplifying business regulations, strengthening property rights, opening access to credit and enforcing contracts by measuring their impact on 10 indicator sets . * Nearly 1,000 reforms have had an impact on these indicators. Doing Business 2011, covering June 2009 to June 2010, reports that 117 economies implemented 216 reforms to make it easier to start a business. 64% of economies measured by Doing Business have reformed this year, focusing on easing business start-up, lightening the tax burden, simplifying import and export regulations and improving credit information systems. The top 10 most-improved in Doing Business 2011 Dealing with Construction Trading Across Borders Positive Change Registering Property Enforcing Contracts Protecting Investors Starting a Business Closing a Business Negative Change Getting Credit Paying Taxes Permits Economy Kazakhstan Rwanda Peru Vietnam Cape Verde Tajikistan Zambia Hungary Grenada Brunei Darussalam * For Doing Business 2011 the Employing Workers indicator is not included in the aggregate ease of doing business ranking. 65 Summary of changes to business regulation in top 10 most improved economies in Doing Business 2011 and selected comparator economies. Brunei Darussalam Brunei Darussalam made starting a business easier by improving efficiency at the company registrar and implementing an electronic system for name searches. Brunei Darussalam reduced the corporate income tax rate from 23.5% to 22% while also introducing a lower tax rate for small businesses, ranging from 5.5% to 11%. The introduction of an electronic customs system in Brunei Darussalam made trading easier. Cape Verde Cape Verde made start-up easier by eliminating the need for a municipal inspection before a business begins operations and computerizing the system for delivering the municipal license. Cape Verde eased property registration by switching from fees based on a percentage of the property value to lower fixed rates. Cape Verde abolished the stamp duties on sales and checks. Grenada Grenada eased business start-up by transferring responsibility for the commercial registry from the courts to the civil administration. The appointment of a registrar focusing only on property cut the time needed to transfer property in Grenada by almost half. Grenada's customs administration made trading faster by simplifying procedures, reducing inspections, improving staff training and enhancing communication with users. Hungary Hungary implemented a time limit for the issuance of building permits. Hungary reduced the property registration fee by 6% of the property value. Hungary simplified taxes and tax bases. Amendments to Hungary's bankruptcy law encourage insolvent companies to consider reaching agreements with creditors out of court so as to avoid bankruptcy. Indonesia Indonesia eased business start-up by reducing the cost for company name clearance and reservation and the time required to reserve the name and approve the deed of incorporation. Indonesia reduced its corporate income tax rate. Indonesia reduced the time to export by launching a single-window service. Kazakhstan Kazakhstan eased business start-up by reducing the minimum capital requirement to 100 tenge ($0.70) and eliminating the need to have the memorandum of association and company charter notarized. Kazakhstan made dealing with construction permits easier by implementing a one-stop shop related to technical conditions for utilities. Kazakhstan strengthened investor protections by requiring greater corporate disclosure in company annual reports. Kazakhstan speeded up trade through efforts to modernize customs, including implementation of a risk management system and improvements in customs automation. Lao PDR Lao PDR replaced the business turnover tax with a new value added tax. Malaysia Malaysia eased business start-up by introducing more online services. Malaysia's introduction of online stamping reduced the time and cost to transfer property. Peru Peru eased business start-up by simplifying the requirements for operating licenses and creating an online one-stop shop for business registration. Peru streamlined construction permitting by implementing administrative reforms. Peru introduced fast-track procedures at the land registry, cutting by half the time needed to register property. Peru made trading easier by implementing a new web-based electronic data interchange system, risk-based inspections and payment deferrals. Philippines The Philippines eased business startup by setting up a one-stop shop at the municipal level. The Philippines made construction permitting more cumbersome through updated electricity connection costs. The Philippines reduced the time and cost to trade by improving its electronic customs systems, adding such functions as electronic payments and online submission of declarations. Rwanda Rwanda made dealing with construction permits easier by passing new building regulations at the end of April 2010 and implementing new time limits for the issuance of various permits. Rwanda enhanced access to credit by allowing borrowers the right to inspect their own credit report and mandating that loans of all sizes be reported to the central bank's public credit registry. Rwanda reduced the number of trade documents required and enhanced its joint border management procedures with Uganda and other neighbors, leading to an improvement in the trade logistics environment. 66 Tajikistan Tajikistan made starting a business easier by creating a one-stop shop that consolidates registration with the state and the tax authority. Tajikistan strengthened investor protections by requiring greater corporate disclosure in the annual report and greater access to corporate information for minority investors. Tajikistan lowered its corporate income tax rate. Thailand Thailand made registering property more costly by repealing a 2-year temporary tax reduction for property transfers. Thailand temporarily lowered taxes on business by reducing its specific business tax for 12 months. Timor-Leste Timor-Leste increased court efficiency by training and appointing new judges and passing a new civil procedure code. Vietnam Vietnam eased company start-up by creating a one-stop shop that combines the processes for obtaining a business license and tax license and by eliminating the need for a seal for company licensing. Vietnam made dealing with construction permits easier by reducing the cost to register newly completed buildings by 50% and transferring the authority to register buildings from local authorities to the Department of National Resources and Environment. Vietnam improved its credit information system by allowing borrowers to examine their own credit report and correct errors. Zambia Zambia eased business start-up by eliminating the minimum capital requirement. Zambia eased trade by implementing a one-stop border post with Zimbabwe, launching web-based submission of customs declarations and introducing scanning machines at border posts. Zambia improved contract enforcement by introducing an electronic case management system in the courts that provides electronic referencing of cases, a database of laws, real-time court reporting and public access to court records. 67 68