THAILAND Law and Practice Contributed by: Tirayu Songdacha, Nutchaya Khayan, Piyachat Suwanwihok and Lalita Sriboonruang, MSC International Law Office
2025, the total number of BEVs on the road reached 280,600 units, up 60.1% year-on-year. Emerging Technologies Emerging technologies such as artificial intelligence (AI) and data management systems play a vital role in advancing and enhancing efficiency within the electric vehicle industry. For instance, AI is increasingly used in controlling the manufacture, analysing data from sensors installed in electric cars as well as managing supply chains. For JVs formed to operate in the electric vehicle sector, it is essential to carefully consider and clearly agree on the type and structure of the JV. Particular attention should be given to intellectual property rights related to the technologies and software used in the electric vehicles as well as the responsibilities of partners in the case where AI or automated systems malfunction such as failures in driver’s assistance systems or bat - tery management. Currently, Thailand is in the legislative process of creating an AI Act aimed at raising ethical standards for AI use, ensuring respect for rights and promoting accountability. Thailand does not have specific legislation governing joint ventures. However, joint ventures can generally be classified into two main types: • Unincorporated Joint Venture (UJV) – a contrac - tual arrangement without separated legal entity under the Thai Civil and Commercial Code (CCC), although recognised as a tax unit under the Thai Revenue Code. • Incorporated Joint Venture (IJV) – a separate legal entity distinct from its participants. In Thailand, this is most established as a private limited company under the CCC. Both JV types have advantages and disadvantages depending on factors such as tax treatment, legal 2. JV Structure and Strategy 2.1 Typical JV Structures
liability, regulatory compliance, and other considera - tions, which will be discussed further. 2.2 Strategic Drivers for JV Structuring The choice between UJV and IJV in Thailand is influ - enced by several key factors: • The purpose of the JV – for example, if the JV is incorporated to be participating in government ten - ders, such JV shall be an incorporated joint venture (juristic person) under the laws of Thailand. • The commercial terms and structure agreed between the JV participants and whether they align better with a contractual arrangement or a sepa - rate legal entity. • The intended duration of the JV. • Available tax benefits or incentives. • The legal status of the JV and the corresponding liability structure. Risk sharing is generally the primary consideration in selecting an appropriate JV vehicle. From a liability standpoint, a UJV, while treated as a separate tax unit, lacks separate legal entity, meaning its partici - pants are jointly and unlimitedly liable (ie, jointly and severally liable) to third parties, including for any tax liabilities. In contrast, an IJV, typically established as a private limited company, is also treated as a separate tax unit from the JV participants and provides limited liability protection, restricting participants’ exposure to the amount of their unpaid capital. This structure is generally more advantageous for managing exter - nal claims and liabilities, in particular the potential tax debts. Tax Considerations For income tax purposes, both a UJV and IJV are treated as separate tax units with similar tax obliga - tions. The key differences affecting the choice of JV vehicles in the tax treatment of profit distribution are the distribution of the dividend and of the profit shar - ing. An IJV distributes its profits through dividends. A Thai-incorporated corporate shareholder that holds at least 25% of the IJV’s shares for a minimum period of three months before and after the dividend pay - ment, and without any cross-shareholding, is exempt
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