Financial records provide a true and fair picture of a company’s financial status. Therefore, it is important that your business in Thailand adhere to the accounting standards, accounting activities, and other restrictions.
In this post, we’ll go over the basics of accounting in Thailand and break down the accounting criteria that businesses must satisfy in order to be legal.
Accounting Standards in Thailand
Thailand Financial Reporting Standards are the accounting standards used in Thailand (TFRS). The TFRS is a set of standards that must be followed when creating and presenting financial statements for publicly traded companies.
The TFRS for NPAEs is used for non-publicly accountable entities (NPAEs). NPAEs, on the other hand, can choose to use the TFRS.
SMEs (Small and Medium-sized Enterprises) can use the following types of accounting standards:
- TFRS
- TFRS for NPAEs
The TFRS and TFRS for NPAEs are based on the International Financial Reporting Standards (IFRS).
Foreign companies are allowed to apply the IFRS Standards.
Who are Non-Publicly Accountable Entities (NPAE)?
Any entity(ies) which fails to comply with the following conditions are NPAEs –
- Public Companies
- Having equity instruments or bonds trading in a public market (a domestic or foreign stock exchange or an over-the-counter market). Additionally, it can also be an entity preparing to file financial statements with securities.
- Financial institutions, insurance firms, securities companies, and mutual funds are examples of entities. Their major business is holding assets in a fiduciary position for a diverse range of outsiders.
Financial Year-end for Your Business in Thailand
Companies in Thailand have a financial year-end of 31 December by default.
A firm that is fresh, a company in the year of dissolution, or a company that changes in its accounting technique can have an accounting term that is fewer than 12 months.
It is permissible for businesses to modify their accounting period. To do so, the corporation must submit a request to the Director-General of the Revenue Department and receive formal approval.
Bookkeeping Requirements for Business in Thailand
The company accounts must be in accordance with the Institute of Certified Accountants and Auditors of Thailand’s Thai Accounting Standards. Additionally, they must give a true and correct picture of the firm’s expenses and assets.
At the end of each period, the balance sheet — an overview of the assets and liabilities — and the profit and loss accounts must be ready for filing. Moreover, the accounts and other relevant company documents must be kept at the company’s registered address for at least five years from the date of closing. However, this may be extended to seven years depending on the company’s business activity.
To maintain the standards, companies must maintain the following documents, records and statements:
- Accounting journal
- Statement of accounts
- Records of payment and receipts
- Profit and loss statements
- Balance sheets
- Records of electronic funds transfer
- Credit card transactions
- Bank statements, including cheque records
- Internal or external audit reports
Financial statements, accounts, and papers must be in Thai or in a foreign language with Thai translation, written in ink, typewritten, or in print. However, companies can choose between monthly bookkeeping and preparing their books and required reports once a year at the conclusion of the fiscal year.
Annual Financial Statements
Financial statements are written documents that describe a company’s operations and financial performance. Moreover, government authorities, accountants, corporations, and others frequently audit financial statements to verify accuracy and for tax, financing, and investing purposes.
The financial statements of a Thai company include:
- Statement of financial position
- Profit and loss statement
- Statement of changes equity
- Cash flow statement
- Notes to the financial statement
The following information must be in the notes to the financial statement:
- Criteria of the preparation of the financial statements
- Description of the accounting policies
- Additional information of the balance sheet, income statement, cash flow statement and statement of changes in equity
Annual Auditing of Financial Statements
Regardless of whether the company is publicly traded or not, all firms must prepare financial statements. Additionally, it must undergo audit and confirmation of an independent certified auditor at the conclusion of the fiscal year.
Because the audit opinion is necessary when filing financial statements and tax returns, the auditor must provide their view on the financial statements.
A private or public limited company’s board of directors must call an annual shareholders’ meeting within four months of the fiscal year’s end for approval and audit of financial statements.
Within one month of the shareholder meeting, the documents, along with supporting documentation, including a list of shareholders, must be with the Revenue Department and the Commercial Registrar. However, in cases of non-compliance, it will attract a penalty of up to 200,000 THB.
Within one month of the shareholders’ meeting, public limited corporations must also publish the balance sheet in a newspaper for at least one day.
A foreign company (branch, representative, or regional office) must submit a copy of its financial statement to the MOC within 150 days of the fiscal year’s end. Moreover, it does not require the approval of the shareholder meeting.
Annual Reports
Both private and public limited companies must provide the following documents at the end of each accounting period:
- Audited financial statement
- Balance sheet
- Company name
- Detail of directors
- List of shareholders
- Minutes of the annual meeting
- Profit and loss accounts
- Type of business
The documents must be in the Thai language.
Foreign companies can prepare their documents in a foreign language, by attaching their Thai translation with them.
Accounting is a vital part of your business in Thailand. Therefore, you must guarantee that the financial statements and paperwork are correct.
However, we recommend outsourcing your accounting to Konrad Legal to manage your bookkeeping and financial statements. We have a staff of professional accountants that will take care of your books and records. Therefore, simply mail us your requirements at [email protected].
