Tag: International Trade

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The US Internal Revenue Service has developed an IDES platform for International Financial Institutions to file under FATCA

Foreign Account Tax Compliance (“FATCA”) is a rule implemented by the United States with the goal of preventing tax avoidance by US taxpayers using foreign accounts. As the United States collects taxes on a worldwide basis, FATCA requires financial institutions all over the world to transmit accounting records of US taxpayers to the Internal Revenue Service (“IRS”).  This information is used by the IRS to identify taxpayers who may be evading their US tax obligations by hiding assets overseas. FATCA also requires US taxpayers to report certain offshore assets and income on their US tax returns.

To comply with FATCA’s objective, the US government enters into intergovernmental agreements (“IGA”) with other country governments to make it possible for taxpayers’ accountant information exchange to occur without violating those contracting parties’ internal regulations and for both parties to mutually assist in taxation benefits.

The IGA includes the following models:

  • Model 1: IGA in which the party gathers information on US citizens from financial institutions inside its jurisdiction and reports it to another party via an automated system. Model 1 is divided into two systems;
    • Model 1 A (Reciprocal): Both parties agree to transfer information back and forth via the automated system.
    • Model 1 B (Non-Reciprocal): The parties agree to provide the information to the US government in exchange for none in return.
  • Model 2: IGA in which the state parties agree to implement legislation permitting and compelling financial institutions to communicate information via an automated system.

Thailand has chosen International Data Exchange Service (IDES) as a tool for financial institutions information collecting in Thailand, and this method is known as M1O2.

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Currently, from 5 June through 30 June 2023 (Eastern Standard Time in the United States), the US Internal Revenue Service (IRS) will provide the IDES system for Thai financial institutions to trial receiving and transferring simulated data to the IRS. Financial institutions which did not register in the IDES system may register to participate by 1 June 2023 at 5:00 p.m. (Eastern Standard Time in the United States). Additionally, there is no need to re-register if the financial institutions have already registered in the IDES system. However, the new password must be validated before 1 June 2023 to ensure that it does not expire during the test. Also, ensure that the certificate used to send and receive data is valid for the length of the test, as financial institutions will be unable to modify their passwords or upload certificates during the test.

Author: Ms. Panisa Suwanmatajarn

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The USTR keeps Thailand on the Watch list, yet appreciates Thailand’s progress

On April 26th, 2023, the Director General of Thailand’s Department of Intellectual Property (“DIP”) revealed that the United States Trade Representative (“USTR”) announced the annual status review of Intellectual Property (“IP”) protection of the United States trading partners or the Special 301 Report published under Section 301 of the Trade Act of 1974. Thailand is still on the Watch List (“WL”) this year, along with 21 other nations.

USTR has recognized Thailand’s progress in IP protection and enforcement, particularly the amendment of the Copyright Act to include a notice and takedown procedure, allowing the copyright owner to inform the platform and have the counterfeit items removed. Thailand also updates the Technological Protection Measure (“TPM”) to extend the expiration date of photoprotection.

Furthermore, Thailand has entered into bilateral cooperation with the World Intellectual Property Organization Copyright Treaty (“WCT”) to preserve licenses in the digital era. USTR has also applauded Thai intra-agency efforts in IP protection and enforcement, such as the Thai Customs IPR Recordation System (“TCIRs”) and the signing of memorandums of understanding (MOUs) with e-commerce platforms to report online counterfeit goods.

birds eye view photo of freight containers

Apart from DIP’s progressive operations such as Smart DIP, Fast Track System for Trademark Registration, and so on, DIP also contributes to ASEAN’s protection and enforcement against IP infringement by nominating themselves to be the president of the ASEAN Network of Intellectual Property Enforcement Experts (ANIEE). The objective of being president is to drive economic growth through IP by establishing appropriate standards between Thailand and trading partners and protecting Thai entrepreneurs’ IP, to make ASEAN aware of the importance of IP protection and enforcement so that Thai products can be properly and timely protected, to provide opportunities and trade fairness under modern technology, as well as to improve ASEAN’s general IP image and ensure that Thai products exported to ASEAN will be protected and capable of competing without facing IP infringement.  Thailand has been promoting experiences, knowledge, and success paths to the ASEAN region such as by associating with the ASEAN e-Commerce platform and creating the Protection and Enforcement against IP Infringement handbook and increasing the operational capacity of law enforcement agencies.

However, the USTR remains concerned with unauthorized film recordings, online counterfeit and pirated goods, impersonation royalty collection rights, and delays of criminal and civil proceedings, causing Thai to stay on the WL. To solve these concerns, Thailand is in the process of developing an IP Work plan with the US to shift out of WL. Thailand has proposed the idea to the United States, and the current procedure is for the United States to examine it. DIP will work as promptly as possible to bring Thailand out of the WL of the USTR annual status review in the future.

Author: Panisa Suwanmatajarn, Managing Partner.

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Changes in Corporate Law: Easier to Operate Businesses in Thailand

The Amendment to the Civil and Commercial Code Act (No. 23), B.E. 2565 (2022) (“CCC Amendment Act“), came into force on February 7th, 2566 (2023). It amended various sections of the Partnerships and Companies Title of the Civil and Commercial Code in order to reduce the difficulty to operate a business, be up-to-date, and increase the country’s competitiveness. Significant amendments are such as:

  1. Referring to Section 1016, before the CCC Amendment Act, the registrations of partnerships or companies must be made at the Registration Office as prescribed by the Minister responsible for the registration of partnerships and companies. By virtue of the CCC Amendment Act, the registrations of partnerships or companies can also be made at the Registration Office where the principal business office of the partnership or company is situated.
  2. Referring to Section 1097, before the CCC Amendment Act, any three or more persons may promote and form a limited company by subscribing their names to a memorandum and otherwise complying with the provisions of the Civil and Commercial Code. By virtue of the CCC Amendment Act, any two or more persons are now enough to promote and form a limited company by the same procedures before the CCC Amendment Act;
  3. Referring to Section 1099, by virtue of the CCC Amendment Act, if the registration of the company is not made within three years from the date of registration of the Memorandum of Association, such the Memorandum of Association is invalid;
  4. Referring to Section 1162/1, by virtue of the CCC Amendment Act, a Board of Directors meeting can be possibly held electronically rather than only an on-site meeting except it is prohibited by the Articles of Association;
  5. Referring to Section 1128, before the CCC Amendment Act, every share certificate shall be signed by at least one of the directors. By virtue of the CCC Amendment Act, every share certificate shall now be signed by at least one of the directors and also bear the seal of the company (if any).
  6. Referring to Section 1175, before the CCC Amendment Act, a notice of summoning of every general meeting shall be published at least once in a local newspaper. By the virtue of the CCC Amendment Act, a notice of summoning of every general meeting is no longer required to be published in a local newspaper anymore unless a company has any share certificate to bearer then such a company is obliged to publish such a notice in a local newspaper or electronically according to the rules and procedures prescribed in the ministerial regulations.
  7. Referring to Section 1201 paragraph 4, before the CCC Amendment Act, distribution of dividends shall be made within one month from the date of the resolution of the general meeting or of the board of directors. By virtue of the CCC Amendment Act, distribution of dividends shall be completely made within one month from the date of the resolution of the general meeting or of the board of directors.
  8. Referring to Part 9: Amalgamation of Limited Companies. The key change in this part is that before the CCC Amendment Act, a limited company formed by the amalgamation of two or more companies will be a new company, howsoever by virtue of the CCC Amendment Act, the company amalgamation will result in any of the following:
    • Amalgamate to a new company and the amalgamated companies cease to be a juristic person. (A+B=C)
    • Amalgamate to one of the amalgamated companies, one company retains the juristic person’s status and the other one ceases to be a juristic person. (A+B=A or B)
low angle photography of high rise building

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Digital Devices to Be Used to Locate and Track the Whereabouts of Goods under the Authorities of the Customs Department

Digital devices can be used to transmit information on the whereabouts of shipments of goods under the control of the Customs Department. GPS technology, for example, can be used to accurately track the shipment’s position in real-time, allowing for precise updates that can be monitored from a remote location. This technology provides customs officials with more efficient tracking capabilities and can reduce the physical time and labor associated with tracking shipments. Furthermore, digital devices can be used to manage customs paperwork and store valuable data that can be accessed for future reference. This enables customs officials to quickly process documents and identify discrepancies that could delay shipment clearance. Several countries are using blockchain technology. For example, the United Arab Emirates is using blockchain to track international shipments and China has started using blockchain-powered technology.

As for Thailand, for the first time, the Ministry of Finance has recently issued a ministerial regulation regarding controlling the transportation of goods held in customs custody which will affect cross-border transportation, transportation to the bonded warehouse or duty-free zone, transportation of goods between ports and depots, multimodal transportation and other types of transportation as prescribed by the Director of Customs Department.

The control of this ministerial regulation was divided into two types, namely controlling the transportation of goods with a specific device such as GPS and controlling the transportation of goods with digital technology such as blockchain, which can be explained below.

Controlling the transportation of goods with a specific device is about using equipment indicated on the package or cargo or using other equipment which may be different according to the container or vehicle of transportation.  Meanwhile, controlling the transportation of goods with digital technology is about using technology equipment to control, follow and verify the transportation of goods in customs custody. During transporting of goods, a customer has a right to access the information in order to track the status of transportation.

For using these services, a customer such as an importer needs to declare the intention of using this service and pay a service fee before customs clearance. Furthermore, this ministerial regulation was issued to control and monitor the transportation of goods in customs custody and also prevent avoidance of payment by modern technology.

Author: Panisa Suwanmatajarn – Managing Partner, The Legal Co., Ltd.

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Thailand – New Rules for Company and Partnership

The Civil and Commercial Code Amendment Act (No. 23) B.E. 2565 (2022) will come into force and effect on 16 February 2023. The objectives of this amendment are to reduce career barriers and increase competitiveness of the country.

Key changes are as follows:

close up photo of a wooden gavel
SectionsAmendments
Section 1097: Any three or more persons may, by subscribing their names to a memorandum and otherwise complying with the provisions of this Civil and Commercial Code, promote and form a limited companyTwo (2) persons may  form a limited company
Enacting Section 1162/1Directors are able to remotely attend meetings via video conference
Section 1237: A limited company may also be dissolved by the court on the following grounds: (4) the numbers of shareholders are reduced to less than threeMinimized shareholders from less than three (3) to only one person
Section 1238: Amalgamation and merger1) After amalgamating, a new company may only exist and others are dissolved or 2) A merging company exists and others are dissolved
Enacting Section 1239/1 A new mechanism was established to deal with shareholders who do not agree with amalgamation/merger
Section 1240: The company must publish once at least in a local newspaper and send to all creditors known to the company a notice indicating the particulars of the proposed amalgamation and requiring the creditors to present, within sixty days from the date of the notice, any objections they may have to it. If no objection is raised during such period, none is deemed to exist. If an objection is raised by any creditor, the company may not proceed with the amalgamation unless it has satisfied the claim or given security for it.Protecting the company’s creditors and minimizing the time to make the process faster
Enacting Section 1240/1Holding a shareholders’ meeting shall be completed within six (6) months from the amalgamation
Section 1243: The new company is entitled to the rights and is subject to the liabilities of the amalgamated companies.Revised wording to be more specific in regard to rights and liabilities
Section 1246/1: A registered partnership or limited partnership having at least three partners may be transformed into a limited company upon having consent of all partners and upon following actions being taken: (1) notifying, in writing, the partners’ consent to  transformation of a partnership into a limited company to the Registrar within fourteen days as from the date of all partners’ consent; (2) publishing once at least in a local newspaper and sending to all creditors known to the partnership a notice, in writing, indicating particulars of the proposed transformation of the partnership into a company and requiring the creditors to present, within thirty days as from the date of the notice, any objections they may have to it. If an objection is raised by any creditor, the partnership may not proceed with transformation unless it has satisfied the claim or given security for itAll partners, instead of having at least three partners, must agree  to transform a registered partnership into a limited company.

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Time Extension for Operating of Liquor Production Facilities

To facilitate the liquor production licensees who may not construct liquor factories, install machinery and equipment used for liquor production or initiate a liquor production on time as set out in the licenses, the Excise Department has drafted a Notification of the Excise Department on Determining Causes of Necessity, Procedures for Requesting and Permission to Extend the Construction Period of a Liquor Factory, Installation of Machinery and Equipment Used for Liquor Production and the initiating of Liquor Production (“Notification”) for the purpose of extending the period of time for Initial liquor production.

blue plastic pail

This Notification applies to the liquor production licensees who may not be able to construct liquor factories, install machinery and equipment used for liquor production or initiate a liquor production on time as indicated in the licenses due to (1) natural disaster, (2) laws, notifications or regulations issued by government agencies, (3) waiting for permission from other agencies or (4) other necessary causes with explicit evidence. Those liquor production licensees may submit an application requesting for an extension together with relevant documents before the period specified in a liquor production license has lapsed. The application may be submitted to an Excise Official for their consideration at the Area Excise Office or Branch Area Excise Office in the area where the liquor factory is located. After consideration, the Excise Official will render its order as follows:

  • In the case that the Excise Official considers the submitted application and its supporting documents are incorrect or incomplete and such issues can be amended at that time, the Excise Official shall notify the applicant to make an amendment immediately. Or else, if such issues cannot be amended at that time, the Excise Official shall record such issues and list of additional documents to be submitted together with imposing a period of time as deemed appropriate so that the applicant may amend or submit additional documents within such period of time.
  • In the case that the Excise Official considers that the submitted application and its supporting documents are correct and complete or the applicant has corrected issues or submitted additional documents as ordered within the imposed period of time, the Excise Official shall report to either the relevant Area Excise Office or the Director of the Bureau of Standard and Tax Collection 1 for further consideration.
pile of gray metal drumt inside factory

Furthermore, kindly be noted that this Notification is only a draft that has not yet been published in the Royal Gazette. Hence, it is not enforced at the moment. Upon approval by all relevant authorities as required by laws and published in the Royal Gazette, it shall repeal the Notification of the Excise Department on Determining Causes of Necessity, Procedures for Requesting and Permission to Extend the Construction Period of a Liquor Factory, Installation of Machinery and Equipment Used for Liquor Production and Initiating of Liquor Production issued on December 1st, 2554 (2021) and this Notification shall become enforced since the date of publication in the Royal Gazette.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand – New Regulation over the Defective Products

Nowadays consumers may face problems with defective products which the consumers find out about them later as the products never show any malfunction at the time of delivery. A draft Liability of Defective Product Act (“Act”), which was approved in principle by the cabinet on 22 November 2022, has been proposed to keep up with the problems and for the benefit of protecting the rights of consumers.

The draft Act will cover manufacturing for sale, hiring for manufacturing for sale and ordering or importing products into the kingdom for sale. This also includes a seller or a hire-purchaser where a manufacturer or an importer of such products cannot be identified. The products fallen under this draft Act are in the categories of electric and electronic types of equipment, vehicles, motorcycles, including other products prescribed by the Royal Decree.

This draft Act is requiring for the business operators to be liable for defect in products that cause depreciation expenses or deterioration of products within 2 years from the date of delivery regardless of whether the business operators are aware of the defect of the products or not. In case that the products are defective within 1 year from the delivery date, it is presumed that the products are defective at the time of delivery.

Moreover, the business operators are responsible for any defect in the case that the business operators install or assemble the products or where the consumers assemble the products or install the same according to the manual provided by the business operators, but the manual does not specify how to install or assemble the products correctly or completely.

The draft Act prescribes the rights of consumers against the business operators who are liable for defect as follows:

  1. Claiming the business operators to repair the products;
  2. Asking the business operators to exchange the products;
  3. Asking for a price reduction; and
  4. Terminating the agreement.

If there is an agreement in advance excluding liabilities of the business operators for any defect, such agreement is voided.

Under this draft Act, the statute of limitation for claiming under this draft Act is 2 years from the date that the defect is found or business operators refuse to be responsible for the defect. However, it does not extinguish the consumer’s rights to demand the business operators being liable for such defect by virtue of rights under other laws.

This draft Act will need to be processed through several steps before becoming into effect. It will possibly take a few years.

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Controlling of Exportation, Importation and Transit of Trademark and Copyright Infringing Goods

Following publication of the Announcement of Ministry of Commerce on Prohibition of Import, Export and Transit through the Kingdom of Trademark and Copyright Infringing Goods B.E.2565 (2022), Thai Customs Department (the “Customs”) has recently issued an Announcement in regard to Import, Export, and Transit Restriction on Trademark and Copyright Infringing Goods (the “Announcement on Trademark and Copyright Infringing Goods Restriction”) to lay down its rules, procedures and requirements. This allows trademark/copyright owners or agents to submit information of their registered trademark/copyright (the “Information”) to the Customs for recordation so that it can be used by the Enforcement Division of Customs to identify counterfeits among the ongoing exported goods, imported goods and goods in transit.

The key principles of submission of the Information are as follows:

  • The right-holders or the agents who submit the Information must either be a Thai national residing in Thailand or a Thai juristic person. In the case where the right holders or the agents are foreigners, they must appoint and authorize a representative who meets the aforementioned criteria.
  • The Information will be valid for 3 years or until the expiration of the underlying trademark/copyright protection whichever comes first. However, the validity can be extended for another 3 years or until the expiration of rights, by submitting a request to the Enforcement Division of Customs.
  • If the Information is charged, a notification of such change shall be submitted to the Enforcement Division of Customs as well.

When export, import, transit goods are subjected to reasonable suspicion of possibility of infringing trademark/copyright based on the Information submitted to the Customs, the Customs officers will proceed as follows:

  • Customs officers will detain goods in question and accordingly inform both the exporter/importer/transit operator and the right-holders/agents who submitted the Information.
  • In the case where the exporter/importer/ transit operator admits on the offence, Customs officers will prepare for a report on seizing of the goods or arresting the alleged offender and collaborate with the Legal Affair Division to proceed for further proceedings in accordance with its regulations.
  • In the case where the exporter/importer/transit operator would like to oppose, the exporter/importer/ transit operator can submit a petition together with supporting evidence to challenge the detention decision within 3 days after receiving a notification from the Customs officer in which the Customs officer shall notify this opposition to the right-holders/agents. If the exporter/importer/ transit operator cannot be contacted, goods in question are deemed to be infringing trademark/copyright according to the Information submitted by the right holders/agents.
  • The right-holders/agents will have 3 days to file a confirmation and petition to prosecute the case to the Customs officers. The Customs officer will prepare for a report on seizing of the goods or arresting the alleged offender and collaborate with the Legal Affair Division to proceed for further proceedings in accordance with its regulations. The right holders/agents is able to request for the extension of time to submit such confirmation and petition to prosecute the case under specified conditions but the extension of time shall not be more than 10 days from the date of receipt of notification from the Customs officers.
happy woman shopping online at home

In addition, if the goods are reasonably suspected to be the trademark/copyright infringing goods, the right holders/agents are able to request for inspection of such goods before the goods passing through custom clearance for exportation/importation. In this case, the Customs officers will detain goods in question, notify the exporter/importer/transit operator and the right holders/agents, who are also required to attend the inspection which should be held within 24 hours after receiving a notification.

These proactive measures offer trademark/copyright owners a cost and time efficient way to prevent the infringing goods for passing though the boarder and ensuring a quality customs control of their intellectual property rights. Overall, the Announcement on Trademark and Copyright Infringing Goods Restriction could be considered as a promising effort from the Customs to keep up with international standard in terms of tackling counterfeit and pirated goods at border crossing points as well as to provide security to the rights of trademark/copyright owners.

Author: Panisa Suwanmatajarn – Managing Partner, The Legal Co., Ltd.