How to relocate your factory fromThailand to Cambodia your factory from
Cambodia - some business facts• With a size as nearly half of Germany, Cambodia is bordered by Thailand to the northwest, Laos to the northeast, Vietnam to the east and the Gulf of Thailand to the southwest. With a population of over 14.8 million, it is the 68th most populous country in the world.• Cambodia is a fast-growing regional economy based on agriculture and agro-industries, manufacturing and tourism-related industries.• Garment and shoe exports accounted for approximately 84% of Cambodia’s total exports, worth $2.4 billion in the first half of 2012, according to the Ministry of Commerce. The value of garment exports during the first half of the year increased by about 8% compared to the same period last year.• Government priority is to increase access to international markets by integrating the Cambodian economy into the regional and world economy.• There is a further need to rehabilitate and develop roads, airports, ports and other infrastructure including water supply, electricity distribution and tele- communication networks; and to strengthen the legal framework, institutio- nal capacity, investment and business facilitation.
Advantages of a relocation of themanufacturing site from Thailand to Cambodia• The simple truth is that the minimum daily salary in Thailand has been increased to THB 300, while the rates for Cambodia amount equal to THB 50. Normal overtime 150%, overtime during public holidays 200%.• Labor-intensive manufacturing processes will benefit from this dramatically lower wage costs. Even under consideration of a weaker and worse infra- structure than Thailand, this creates a healthy and significant competitive advantage for low-tech businesses.• The standard rate of profit tax rate for companies in Cambodia is 20%. Oil and gas, and a number of mineral exploitation activities are subject to a 30% tax rate. An additional tax burden will occur under certain conditions.• As specialist for international tax planning, PUGNATORIUS can show you how to combine Cambodian low salaries with a profit taxation in Thailand at a corporate income tax rate of 20%.• PUGNATORIUS advises on a strict corporate policy to unerringly prevent child labor, exploitation of work force and inhuman working conditions. This can be certified by recognized human rights organizations.
Where to go - the spe-cial economic zones• The Council for the Develop- ment of Cambodia (CDC) has approved 21 special economic zones (SEZs) across the coun- try, with total investment capi-tal in excess of $1 billion.• Eight of these are now operational – Sihanoukville SEZ, Phnom Penh SEZ, Man- hattan SEZ, Tai Seng Bavet SEZ, Poipet SEZ, Goldfame Pak Shun SEZ, Koh Kong SEZ and the recently opened Sihanoukville Port SEZ.• Others are at various stages of development, and some remain undeveloped.
How to set-up a business in Cambodia• Cambodia offers potential investment opportunities in tourism infrastructure and resorts, construction, and engineering services; household goods and appliances, agribusiness and food processing, automotive parts, power ge- neration equipment and power transmission infrastructure, pharmaceuticals, medical supplies, and medical equipment; and banking.• The Cambodian foreign investment law provides similar treatment to foreign and domestic investors alike, with the exception of the issue of land owner- ship. Foreign investors are able to lease land for a period of up to 70 years, with the possibility of renewal thereafter.• Investors can set up 100% foreign-owned Limited Liability Company in approximately two weeks and employ skilled workers from overseas, in cases where these workers cannot be found in the domestic labour force.• Foreigners are granted investment incentives, especially those concerned in investment projects geared towards exports.• An initial business visa can be obtained on arrival at Phnom Penh airport. It is valid for only one month but can be extended in-country for periods of up to 12 months each.
How to close-down the business in Thailand• The adequate closing down strategy might be a liquidation, a slow phasing out scheme, a partial outsourcing of labor intensive elements of the value added chain or smart exit strategies with dormant companies• There are clear liquidation steps under Thai company laws and important requirements for the disinvestment of the equity under corporate and currency exchange legislation• Employee compensation payments and other payment obligations have always to be met in time and an anti-litigation strategy has to be in place• A Thai tax audit after or during the liquidation / exit process has to be anticipated and the persons involved have to be carefully prepared and educated how to handle this in practice.• Other tasks include the handling of former BOI promotions, tax losses carried forward and the proper termination of long-term contracts• In many cases it is beneficial to keep the existing company in place and operation and just to outsource the manufacturing to Cambodia.
Our offer - a one stop cross-border shoppingsolution for legal, tax and financing• Group structuring ✓ The new value added chain and its legal implementation in the group ✓ The various options whether to keep Thailand as holding location ✓ Tax optimization and overall international tax planning ✓ Corporate financing and, as the case may be, project finance structuring• Thailand related tasks ✓ Liquidation, downsizing or put into dormant status of the Thai company ✓ Comprehensive corporate governance for post-exit phase ✓ Taxation issues of the restructuring and handling of a possible tax audit ✓ Support regarding management, administration, logistics, human resources• Cambodia related tasks (through an international law office in Phnom Penh) ✓ Company formation in compliance with the local investment laws and regulations ✓ Licenses and permissions, application for investment promotions ✓ Sales and lease agreements, financing, employment issues, etc. ✓ Tax, accounting and audit under Cambodian and international standards
The up-to-date and complete presentation isavailable for you as a free download at ✓www.scribd.com/collections/4054603 ✓www.pugnatorius.com
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