Let company go defunct or pay 80k?

[ChiangMaiThai]

Had my company for less than a year. Main reason was for WP. I no longer need the WP (and it's already expired) and the monthly fees for accounting and other fees for audits etc are out of control. 

 

I asked the team that set it up to shut it down. This isn't Delaware where you go online and pay $200.

 

Apparently in Thailand, if your business fails, they say, 'that's nice, now go find 80,000 Baht to close your company'. 

 

The lawyers have said that if there is no movement for 3 years that the company may be considered defunct and deleted from DBD database and that's that. But they don't know / don't want to say if I would have problems being in Thailand listed as a Director of a company that has no business activity, but also doesn't file any paperwork.  I don't ever plan on ever registering another company in Thailand again, but I may at some point want a work permit again.

 

Does anyone have experience in letting a company go defunct vs paying to have it shut down? Paying 80,000 Baht more when the company never had any revenue of any type seems somewhat insane. But are there any penalties to me as a Director for simply walking away? And would there be any problems if one day another company wants to issue a work permit to me?

 

 

 

Edited October 29, 2020 by ChiangMaiThai

[johng]

Assuming your company doesn't own  land/property and does absolutely no trading

I'd just wait the 3 years..

I think you can also  close the company yourself for much less than 80,000 baht.

[ChiangMaiThai]

1 minute ago, johng said:

Assuming your company doesn't own  land/property and does absolutely no trading

I'd just wait the 3 years..

I think you can also  close the company yourself for much less than 80,000 baht.

Thanks. The company literally does nothing. No assets. Never any bank deposits. It was there for the WP and a future business idea that has't panned out. The firm that wants 80,000 Baht sent me the cost breakdown in case anyone is curious. It's a hell of a process to walk away from a company that has literally done nothing. 

 

 

1 Legal process to close limited company 22,500.00

2 Closure Audit (basic fee) 25,000.00

3 Cancellation of TAX ID with revenue department 5,000.00

4 Cancellation of social fund account 3,000.00

5 Cancellation of Personal TAX ID and work permit 2,500.00

6 Minutes of meeting to close corporate account 2,000.00

7 Newspaper publication 2,000.00

8 Notification to shareholders 2,000.00

9 VAT Filings (3 months) 6,000.00

10 Account management 2,000.00

11 Travelling fees and expenses 3,500.00

 Sale Discount 15% -11,325.00

 

Government fees

Government Fee (Company closure with DBD) 4,000.00

Government Fee (Other Government Fee) 6,000.00

Government Fee (Certification of Document) 1,500.00

Government Fee (Duty Stamp) 1,000.00

 

 

 

 

[mariohh1]

i had the same problem and just sold it for 5000thb instead, its really cheap and people buy it quickly

 

[ChiangMaiThai]

1 hour ago, mariohh1 said:

i had the same problem and just sold it for 5000thb instead, its really cheap and people buy it quickly

 

Anyone who wants to buy a company, please send me a PM!

 

I now find out that even though my work permit is expired and my current visa is unrelated to the company or work permit, that in addition to paying a cancellation fee, I must also pay a fine of up to 20,000 Baht. Why does doing business in Thailand as a foreigner feel like being fleeced by the mafia?

 

Edited October 29, 2020 by ChiangMaiThai

[yankee99]

17 hours ago, ChiangMaiThai said:

Thanks. The company literally does nothing. No assets. Never any bank deposits. It was there for the WP and a future business idea that has't panned out. The firm that wants 80,000 Baht sent me the cost breakdown in case anyone is curious. It's a hell of a process to walk away from a company that has literally done nothing. 

 

 

1 Legal process to close limited company 22,500.00

2 Closure Audit (basic fee) 25,000.00

3 Cancellation of TAX ID with revenue department 5,000.00

4 Cancellation of social fund account 3,000.00

5 Cancellation of Personal TAX ID and work permit 2,500.00

6 Minutes of meeting to close corporate account 2,000.00

7 Newspaper publication 2,000.00

8 Notification to shareholders 2,000.00

9 VAT Filings (3 months) 6,000.00

10 Account management 2,000.00

11 Travelling fees and expenses 3,500.00

 Sale Discount 15% -11,325.00

 

Government fees

Government Fee (Company closure with DBD) 4,000.00

Government Fee (Other Government Fee) 6,000.00

Government Fee (Certification of Document) 1,500.00

Government Fee (Duty Stamp) 1,000.00

 

 

 

 

Well i cant speak for all the fees but id find a real accountant because your getting shafted. 

 

2000 baht for minutes of meeting is crazy 

 

Vat filing 0 6000 baht its the same paper with 3 different dates. 

 

25000 for audit is also out of line

 

I would go to the local dbd and see what the deal is they are very helpful 

[rgb]

My WP was expiring on May 20th but I was stuck in Canada. My staff went to Labour Dept and asked if I could take my medical in Canada and submit that for the renewal. They refused. So I was going to let it lapse, but luckily my staff was told on the spot that it was a 20,000 Baht fine if I did not cancel it on my own within 3 weeks (it could have been a month). It seems they do this to ensure we keep our paperwork in order and make their life a little easier. So I cancel, and was immediately told that my NonB, which was good until Feb 2021, was automatically canceled. So now I have to start all over. Lots fund huh?

 

Re the wind up costs,  I have been quoted similar, but agree with Yankee99 that you might be able to do some or most of it on your own if there never was any revenue or expenses or VAT, etc. Paying 25,000 Baht for an audit is plain highway robbery. I was a CPA in a previous life, and can tell you that it will a matter of minutes to get your audit done.

 

Good luck. Let us know how the wind up works for you. I might be winding mine up too and moving on to other pastures.

[Seeall]

Mass confusion I see

[NightSky]

You are being taken for a ride.

 

the cost of an accountant including all fees to close a simple company including all those things you listed is about 10k

 

I would find an honest local accountant and ask them a price to help close your company

 

as someone else mentioned, you've been fleeced

 

 

[MarleyMarl]

I have a company here, and if I recall correctly my lawyer, whose become more of a friend over the years told me its easier to just walk away from the company than officially close it here. 

 

The fees look steep, I would get pricing from another law firm, and avoid farang run places. That being said I recently closed a company in HK and it cost me about 100k.

[Yme]

If you don't do the shut down properly in Cambodia you are subject to fines and penalties. Every business needs to have a physical address so at the very least you end up liable for unpaid withholding tax on rent up to the date the company/ business is cleared by the tax department (an audit) and shut at the MoC. Failure to pay results in prosecution, seizure f bank accounts, and outward travel ban. The fees and processes look very similar, though there is no court filing required in Thailand by the looks. 

[Kerryd]

You're being taken for a ride.

I spoke to the law firm (not an accountant) that I deal with in Pattaya about a company closure.
For a company with no assets, they charge 46,000 broken down as 
Meeting Report - 2,000
Company Update - 3,000

Final Balance Sheet - 16,000
Company closure - 25,000.

To be sure, a lot of the cost of each of those items is probably pure profit for the law firm but the flip side is, do you really think you could do all that yourself ?

If there is a transfer of assets (i.e. land/house) there would be an additional 10,000 baht for the transfer (plus other expenses).

(Not including additonal fees/taxes associated with selling a house/condo, even if it's just a "paper transaction" and no money changes hands. Like if you signed over a house to your wife. Even though no money changes hands (in theory), you'd still have to pay the taxes and transfer fees as though she handed you the full amount in cash. Apparently there'd also be a fee if no "cheque" was involved as they normally want a bank cheque to prove the payment was made.)

If you are hoping to get another WP in the future the same way (using your own company and hiring the required staff to meet the WP requirements) then you'd probably want to close the current company down properly, especially if you are staying in the same area.
Your name/passport/address will go into a database and if they flagged your previous company then it could be a problem. 

If you are planning on leaving the country and never coming back, well then, take the money and run ! I'm sure Thailand has hundreds of "notional" companies that are simply abandoned every year, for the same reasons.

How good of a database they have to track them (and their owners) is another question. I'd suspect it's not that great (or that anyone may even check) but I could  be wrong.

[mr_lob]

Love the way they give you a ''discount'' at the end, like they are giving you a good deal.

 

Name and shame these snakes!!

[natway09]

The Company was probably set up to get around the laws of the land anyway as never traded 

anything.

[ChiangMaiThai]

20 minutes ago, natway09 said:

The Company was probably set up to get around the laws of the land anyway as never traded 

anything.

Wrong and totally irrelevant anyway. 

[ChiangMaiThai]

Thanks for all the replies. I don't want to name the company because then the insane defamation laws in this country will probably get me too. 

 

I've been advised by another lawyer to simply stop filing paperwork and of course don't do any business with the company and in three years it will be declared defunct. 

 

The WP expired in Sep. That's another issue. It sounds like as has been mentioned there is a fine up to 20,000 Baht for failing to cancel a WP. What kind of madness is this?

 

1. WP Expired

2. New visa paid for (now totally unrelated to the WP)

3. 'That's nice, now give us 20,000 Baht for failing to officially cancel the WP'. 

 

Maybe I will sleep on it, but at this moment I can't imagine ever wanting to register a company in this country again. For anyone thinking about it, the amount of paperwork and fees if you want it done correctly by a third party is way beyond what you might be used to in many other jurisdictions around the world. A hub of commerce Thailand is not.

 

 

 

 

 

[Tropicalevo]

2 hours ago, MarleyMarl said:

I have a company here, and if I recall correctly my lawyer, whose become more of a friend over the years told me its easier to just walk away from the company than officially close it here.

I agree with this statement.

I set up a company 20 years ago, just in case.....

Never used it. Never traded and never filled in any returns. I just walked awayfrom it and have never had any problems with it.

I also have been told that it is 'tricky' to officially close down a company.

[NightSky]

54 minutes ago, ChiangMaiThai said:

Thanks for all the replies. I don't want to name the company because then the insane defamation laws in this country will probably get me too. 

 

I've been advised by another lawyer to simply stop filing paperwork and of course don't do any business with the company and in three years it will be declared defunct. 

 

The WP expired in Sep. That's another issue. It sounds like as has been mentioned there is a fine up to 20,000 Baht for failing to cancel a WP. What kind of madness is this?

 

1. WP Expired

2. New visa paid for (now totally unrelated to the WP)

3. 'That's nice, now give us 20,000 Baht for failing to officially cancel the WP'. 

 

Maybe I will sleep on it, but at this moment I can't imagine ever wanting to register a company in this country again. For anyone thinking about it, the amount of paperwork and fees if you want it done correctly by a third party is way beyond what you might be used to in many other jurisdictions around the world. A hub of commerce Thailand is not.

 

 

 

 

 

As I am aware there is no fine for not cancelling a work permit. When the permit expires or is no longer needed it should be handed back to the labor department. You have to fill a form in. There are threads about this specifically on ThaiVisa.

 

As I mentioned before all these fees and fines you mention is just you being fleeced.

 

I operated a company for 6 years for the WP mainly just as you did. I began with a company who fleeced me just as you did but after a year or so I figured it out and realized I was being fleeced when I found a local Thai accountant who did everything at the same price they would charge a Thai.

 

As I said, I paid about 10k to close a company including taxes and fees that is all, any more and people are being fleeced. The only high costs are the costs charged by the middle men agents/accounting firms who fleece the newbies.

 

Sorry about that, but at least you know now.

 

 

Edited October 30, 2020 by NightSky

[ChiangMaiThai]

17 hours ago, NightSky said:

As I am aware there is no fine for not cancelling a work permit. When the permit expires or is no longer needed it should be handed back to the labor department. You have to fill a form in. There are threads about this specifically on ThaiVisa.

 

As I mentioned before all these fees and fines you mention is just you being fleeced.

 

I operated a company for 6 years for the WP mainly just as you did. I began with a company who fleeced me just as you did but after a year or so I figured it out and realized I was being fleeced when I found a local Thai accountant who did everything at the same price they would charge a Thai.

 

As I said, I paid about 10k to close a company including taxes and fees that is all, any more and people are being fleeced. The only high costs are the costs charged by the middle men agents/accounting firms who fleece the newbies.

 

Sorry about that, but at least you know now.

Thanks for this. I thought I was hiring 'the best' and I wouldn't have to worry. Also thought my business would have real revenue, but that's a different story. The company didn't notify me that WP and visa were expiring even though they helped set it up. That's a whole different story. Not even an attempt at an apology. But maybe that's why I get the 15% discount when closing it all down lol. 

 

I should have been more on top of things in terms of expiration dates. Anyway, my plan going forward is to tell this company to cease all activity and I will go to Labor Dept and turn in my expired WP and see what happens. 

 

17 hours ago, NightSky said:

 

 

[Leaver]

I agree with the general advice to just let the company go dormant, however, with many Thai companies going broke, particularly those owned by farang in the hospitality / tourism industry, they may make it harder for a company director to leave Thailand in the near future. 

 

There are already reports of Thai landlords taking farang tenants to Court over unpaid rent.

 

It may be better to officially wind up the company, so you can prove there are no debts outstanding. 

 

    

Edited October 31, 2020 by Leaver

[ChiangMaiThai]

This wouldn't be Thailand if the answer was simple. After hearing from a few lawyers that letting it go defunct is no big risk, today another lawyer tells me this:

 

"Your way to leave the company is not good, you may find the police summon letter and its penalty if the financial statement are not submitted and also some fine from tax return for un-submission so better to clean up the company and find the good and cheap provider to close it...

 

Firstly, you have to close social security fund, bank account and other related to this company also you have to clear up all liabilities of the company (return your work permit) and etc...

 

If you proffer to leave the company as defunct, you may find the Police Summon Letter and then being in court..."

 

If we just assume for a moment that I set out with a great idea and Covid then hit and it didn't work out, then we're talking about me potentially being summoned to court and fined for failing in business and being unable to afford the fees associated with closing the company. Been here 20 years. Didn't think I could be surprised by much anymore. 

[ChiangMaiThai]

On 10/31/2020 at 6:26 PM, Leaver said:

I agree with the general advice to just let the company go dormant, however, with many Thai companies going broke, particularly those owned by farang in the hospitality / tourism industry, they may make it harder for a company director to leave Thailand in the near future. 

 

There are already reports of Thai landlords taking farang tenants to Court over unpaid rent.

 

It may be better to officially wind up the company, so you can prove there are no debts outstanding. 

 

    

I'm leaning towards just paying the crazy fees to simply not have to worry. But the company has literally had no business activity so no Thai landlord is taking me to court. But who knows, maybe they prevent people like me from leaving the country in the future. As usual, probably have to just smile, pay, and bend over.

Edited November 2, 2020 by ChiangMaiThai

[yankee99]

41 minutes ago, ChiangMaiThai said:

I'm leaning towards just paying the crazy fees to simply not have to worry. But the company has literally had no business activity so no Thai landlord is taking me to court. But who knows, maybe they prevent people like me from leaving the country in the future. As usual, probably have to just smile, pay, and bend over.

You know you been given advice but choose not to do it maybe its more convenient to pay the money. Again just go to DBD and do it yourself or take someone that speaks thai and it will be really easy 

[ChiangMaiThai]

5 hours ago, yankee99 said:

You know you been given advice but choose not to do it maybe its more convenient to pay the money. Again just go to DBD and do it yourself or take someone that speaks thai and it will be really easy 

 

 

To be clear, the advice I have been given:

 

1. Pay nothing. Let it go defunct. Nothing bad will happen to me. 

2. Pay to cancel WP. As above for company. 

3. Close the company, but do it with a firm that charges less. Risk court and police summons otherwise.

4. Go to DBD myself (I speak Thai) as per item 3 above. 

5. Just pay the extortionate fees to close it all down with current firm and save myself the worry

 

So, far from black and white as usual in this country! Anyway, thanks everyone for the replies. Will update when I sort it out. Hopefully it helps the next guy who comes along thinking opening a company here is a good idea.

 

[Leaver]

On 11/2/2020 at 9:55 AM, ChiangMaiThai said:

I'm leaning towards just paying the crazy fees to simply not have to worry. But the company has literally had no business activity so no Thai landlord is taking me to court. But who knows, maybe they prevent people like me from leaving the country in the future. As usual, probably have to just smile, pay, and bend over.

You are in a foreign country where you have no rights, and for all intense and purposes, doing business, even though you actually did little to no business.  

 

In my opinion, best to play safe, despite the cost.  

 

Others have suggested a cheaper option, but many here tend to come undone when they try to cut corners.  

[VyacheslavKHV]

You may have a problems if you just abandon the company,  unlikely but still possible. 

Normal price for the  liquidation process is 30000-40000 THB. 

Never heard about fine for not canceling work permit 20000 THB, as i remember is 500THB. 

Our lawyers would help you for a fair price, but we are in Bangkok.

 

More details in the link. 

https://www.panwagroup.com/closingcompany.htm