A. Government
The Kingdom of Thailand is a constitutional monarchy with a parliamentary form of government. Thailand uses a civil law system and its primary laws are embodied in acts of parliament. The acts are supported by a variety of administrative laws and regulations, issued by the Thai Cabinet and permanent ministries of the Thai government. These regulations include royal decrees, ministerial regulations, notifications of directors general, as well as less formal policies and procedures adopted by departments within the Thai government. The policies have not gone through the formal legislative processes, but as a practical matter can be as important as an Act of Parliament for one doing business in Thailand.
B. Economy
Thailand is considered an upper-middle-income economy and has experienced significant economic growth over the last 30+ years. Thailand’s economy is heavily export-based with the industrial and service sectors dominant. Some of the main industries include manufacturing of auto parts, garments and textiles, electronics, plastics, computers and accessories, cement, and furniture. Thailand has a very low unemployment rate, usually hovering around 1%.
Thailand recently launched the “Thailand 4.0” initiative in an attempt to escape the middle-income trap by creating a “value-based” economy driven by innovation, technology and creativity. Ten specific industries have been targeted: next-generation automotive; smart electronics; high-income tourism and medical tourism; efficient agriculture and biotechnology; food innovation; automation and robotics; aerospace; bio-energy and bio-chemicals; digital; and medical and healthcare. The government has created a number of incentives for these industries via promotion through the Thai Board of Investment (“BOI”) and the creation of the SMART Visa program for employees working in these industries.
C. Legal System
Thailand is a civil law system meaning that it is a code-based system whose laws stem mostly from Codes and Acts issued by Parliament and other policies and regulations issued by the relevant government ministries.
The core law in Thailand for business and much more is the Thai Civil and Commercial Code ("TCCC"). The TCCC sets forth general principles and specific rules for the gamut of civil law issues affecting businesses and individuals. Some of the topics of special interest to businesses include company and partnership law, contracts, sales, obligations, wrongful acts (torts, such as liability for negligence or intentional harm), property, mortgage and other forms of loan security, leases and agency. For individuals, the TCCC covers marriage, divorce, wills and estate administration, and parental rights and duties.
The core law in Thailand for business and much more is the Thai Civil and Commercial Code ("TCCC"). The TCCC sets forth general principles and specific rules for the gamut of civil law issues affecting businesses and individuals. Some of the topics of special interest to businesses include company and partnership law, contracts, sales, obligations, wrongful acts (torts, such as liability for negligence or intentional harm), property, mortgage and other forms of loan security, leases and agency. For individuals, the TCCC covers marriage, divorce, wills and estate administration, and parental rights and duties.
While the TCCC is the core law in Thailand, there are of course many specific acts of importance when doing business in Thailand. Those of general relevance to Thai business include:
- Revenue Code
- Labor Protection Act of 1998
- Land Code
- Factory Act of 1992
- Intellectual Property Laws (the Trademark, Copyright and Patent Acts)
- Limited Public Company Act of 1992
- Bankruptcy Act and the Bankruptcy Act for Business Rehabilitation
- Social Security Act of 1990
- Arbitration Act of 2002
Laws of special significance to foreigners doing business in Thailand include the following:
- Foreign Business Act of 1999
- Alien Work Permit Act
- Immigration Act of 1979
- Promotion of Investments Act of 1978
- Industrial Estate Authority of Thailand Act of 1979
- Customs Act of 1926
Under the Thai judicial system, a trial court in Thailand is not bound by prior court rulings when it decides an issue under the TCCC, or any other Thai law. Every case brought before a Thai trial court is subject to the trial court judge's personal interpretation of the plain meaning of the applicable laws. Since the laws, by necessity, are often not specific and sometimes not even plain, predicting results on particular issues is sometimes an uncertain science. Still, the language of the TCCC is usually clear enough, and previous court rulings – especially those of the Thai Supreme Court – serve as reasonable guidelines for interpreting less certain provisions.
There are a number of ways to establish a business presence in Thailand but the private limited company is by far the most common entity used by foreign investors. A foreign company wishing to do business in Thailand may also establish a presence here without incorporating a Thai company, either through a representative office or a branch of the foreign company.
A. Private Limited Company
The private limited company is the most common form of business entity used by both foreign and local investors. The liability of the shareholders of a private limited company is limited to the payment of the capital for their shares.
There is no minimum capital requirement, but as a practical matter companies with under one million baht registered capital are rarely formed and if the company will employ foreign employees it must generally have minimum capital of Baht 2 million unless it is promoted by the BOI. A minimum of 25% of the registered capital must be paid-up upon formation.
All Thai companies must have a minimum of three shareholders at all times. The company cannot hold shares in itself (treasury shares), nor can it accept shares in pledge.
B. Representative Office
A representative office is an option for those companies which wish to establish a business presence in Thailand but which are not actually doing business in Thailand. A representative office must not perform revenue-generating activities and may not accept purchase orders, engage in sales activities or negotiate contracts with natural or juristic Thai persons. The permitted activities of a representative office are fairly narrowly defined and consist of the following:
a) Sourcing of goods or services in Thailand for the head office;
b) Inspecting and regulating the quality and quantity of goods purchased or manufactured in Thailand;
c) Advising the head office regarding goods sold to agents or consumers;
d) Disseminating information concerning new goods or services offered by the head office; and
e) Reporting to the head office on business trends in Thailand.
The head office is responsible for all expenses of the representative office. The head office must remit foreign currency into Thailand of Baht 2 million during its first three years of operation with 25% payable within the first three months, an additional 25% payable by the end of year 1, 25% payable before the end of year 2, and the final 25% payable by the end of year 3.
Representative offices are not subject to the same Thai-foreign employee ratios to be eligible for work permits and visas as for ordinary Thai companies. A representative office may be able to employ foreigners on a 1-1 ratio depending on the nature of its activities. Depending on the nature of these activities, the representative office will be limited to 2-5 foreign employees, although there are exceptions to this for certain business activities.
C. Branch of a Foreign Company
An entity registered under foreign law may establish a branch office to do business in Thailand. A branch office is similar to a limited liability company, the principal difference being that the head office abroad is responsible for all of the liabilities of the branch office, while a limited liability company registered in Thailand is only responsible for unpaid capital, if any.
Branch offices of companies incorporated outside of Thailand will be considered “foreign” for the purposes of the Foreign Business Act of 1999 (“FBA”) and therefore the branch will not be permitted to carry out any activities restricted under the FBA without a Foreign Business License or Foreign Business Certificate. A branch office is also subject to the minimum capital requirements under the FBA and therefore it must remit at least Baht 2 million of capital from abroad in foreign currency within its first 3 years of operation.
A branch office is subject to Thai income tax at the normal rate of 20% on income derived from its business operations in Thailand and is required to file annual corporate income tax returns with the Thai Revenue Department.
A. The Foreign Business Act
The Thai Foreign Business Act of 1999 governs the conduct of business by foreigners in Thailand. The FBA prohibits foreigners and foreign-owned enterprises from certain business activities in Thailand and sets forth under what conditions a foreigner or foreign enterprise can conduct other business activities in Thailand.
B. Restricted Activities
The FBA contains three lists of activities which are restricted to foreigners:
1. List One activities: List One [link to list 1 activities] of the FBA contains activities that foreigners are prohibited from engaging in “for special reasons”. In general terms, the activities relate to sensitive areas such as publication and broadcasting of news, domestic agriculture, trading in Thai antiquities and national historic objects, casting of Buddha images and alms bowls, and land trading.
2. List Two activities: List Two [link to List 2 activities] contains activities that are deemed to affect Thailand’s national security, culture, natural resources or environment. These activities will be permitted only with the approval of the Thai Cabinet, and generally will require a minimum of 40% shareholding by Thais. It is not easy for a foreigner to obtain approval from the Thai Cabinet to engage in a business. Businesses included in List Two include firearms; domestic transportation; trading in antiques, Thai arts or handicrafts; production of specified handicrafts and similar products; and specified mining, farming and wood-fabrication activities.
3. List Three activities: List Three [link to List 3 activities] contains activities that are deemed to be areas in which Thai businesses are not yet ready to compete. These activities will be permitted to foreigners only with the approval of the Director-General of the Commercial Registration Department. Unlike activities under Lists One and Two, a foreigner might have a reasonable opportunity to obtain permission to engage in a List Three activity by either obtaining a foreign business license or applying for promotion by the BOI. The most notable restriction under List 3 is the restriction on “service businesses.” This covers a broad swath of activities.
The most notable activity which is not restricted under the FBA is manufacturing. Majority foreign-owned companies may engage in manufacturing activities in Thailand without a foreign business license or foreign business certificate. However, it should be noted that the Department of Business Development (“DBD“) has ruled that manufacturing goods based on specifications or designs provided by customers is considered to be “manufacturing for hire” and is therefore a service activity which is restricted under List 3 of the FBA.
C. What is a “foreigner”?
In simple terms, “foreigners” under the FBA include foreign individuals, foreign-registered companies, companies registered in Thailand but majority-owned by foreigners, and partnerships managed by foreigners. If a Thai-registered company is more than 50% owned by Thai citizens or Thai companies which are themselves majority-owned by Thai citizens or Thai companies, they will be considered Thai and will not be subject to the restrictions under the FBA. For this reason many companies have 51% Thai and 49% foreign shareholding. The status of a company as foreign or Thai is determined entirely by shareholding, not control. So long as more than half of a company’s shares are owned by Thai individuals or companies, the company will be deemed Thai even if the foreign shareholders control the company by preferential voting rights, control of the board of directors, or other means.
D. Exceptions to the Foreign Business Act
Foreign companies may engage in activities restricted under the FBA only if they have a foreign business license or foreign business certificate granted by the Ministry of Commerce. Briefly, the eligibility requirements for a foreign business license or certificate are as follows:
a. Foreign Business Licenses
The FBA provides that a foreigner applying for a Foreign Business License must meet minimum capital requirements that are to be contained in regulations issued by the Commercial Registration Department. The law itself specifies that the minimum capital shall in no event be less than Baht 3 million. The policy of the Commercial Registration Department is that the minimum capital must be 25% of projected operating expenses during the first three years of business or Baht 3 million, whichever is greater.
Not all applicants meeting the minimum capital requirement will be granted a Foreign Business License. The decision as to whether to grant the license will be at the discretion of the Thai Cabinet for List Two activities or the Director-General of the Commercial Registration Department for List Three activities. The following factors are considered in determining whether to grant a foreign business license:
- the advantages and disadvantages to Thailand’s safety and security;
- economic and social development;
- public order and good morals;
- the art, culture and traditions of Thailand;
- natural resource conservation;
- energy and the environment;
- consumer protection;
- size of the proposed enterprise;
- impact on employment;
- technology transfer; and
- research and development.
b. Foreign Business Certificate
A company which has received promotion from the BOI is generally entitled to receive a foreign business certificate provided that the company has satisfied the conditions imposed by the BOI. It should be noted that in addition to the other requirements the BOI is entitled to impose (minimum capital, debt to equity ratios, etc.) the BOI is also entitled to impose requirements regarding minimum Thai shareholding.
E. Other Restrictions on Foreign Business
A foreigner contemplating establishing a business in Thailand should note that the FBA is not the only Thai law affecting a foreigner’s right to engage in business in Thailand. Many other laws establish restrictions on foreign ownership, including, for example, laws on banking, insurance, telecommunications and employment agencies. Those laws are not affected by the FBA.
It should also be noted that foreign companies are prohibited from owning land unless they have received promotion from the BOI granting specific authorization to own land.
A company can be formed in a day once all of the necessary paperwork has been completed. In order to register a company you will need to provide the following information:
1. Company name: Every company’s official name will be in Thai but can also have an English name. The Thai name can either be a translation or transliteration of the English name.
2. Head office location: Every company must have an address at the time of formation and the house registration number of that address will need to be included in the application. Many investors choose to initially use a virtual office until they find a permanent office.
3. Company objectives: There is a standard list of objectives provided by the Ministry of Commerce which cover most business activities but these should be reviewed to confirm whether they cover the specific activities of the company.
4. Registered capital: The registered capital of the company must be stated in the application along with the amount of the capital that will be fully paid-up upon formation. The registered capital of the company does not have to sit in a bank account and can and should be used for the expenses and investments of the company. A minimum of 25% of the capital must be paid upon formation.
5. Articles of Association: A company can use the default provisions of the Civil and Commercial Code as its articles though if there are multiple investors it is generally recommend that these are customized to incorporate the shareholders’ understanding regarding their respective rights and obligations with respect to the ownership and management of the company.
6. Number, identity and signing authority of directors: The company will need to determine the number and identity of each of its directors. The authority of each of the directors will also need to be specified. The directors’ authority can be defined in a number of different ways: directors can be individually authorized to sign for any matters, or joint signing can be required, or directors can be authorized to sign for only specific matters or government departments.
The government fees for registration of a company are Baht 5,500 for each Baht 1 million of registered capital, with a minimum fee of Baht 5,500 and a maximum fee of Baht 275,000.
A. Taxation of Corporations
1. Corporate Income Tax
The current corporate income tax (“CIT”) rate is 20%. This is applicable to the net profit of the company. However, the corporate income tax rate for small and medium-sized businesses, which are defined as those with registered capital of Baht 5 million or less and less than Baht 30 million in gross revenue, are taxed at a progressive rate with the first Baht 300,000 of net profit exempt from CIT, net profit between Baht 300,000 and 3 million is taxed at 15%, and profit in excess of Baht 3 million is taxed at the normal rate of 20%. Companies which have received promotion from the BOI may be entitled to corporate income tax holidays or reductions depending on the nature of their business activity. All companies must file annual audited financial statements with the Thai Revenue Department and these must also be delivered to the Ministry of Commerce.
2. Value Added Tax
Thailand applies a value added tax to most goods and services purchased in Thailand. The current rate is 7%. Every company with gross revenue exceeding Baht 1.8 million in a given 12-month period must be registered for VAT. Several types of transactions, notably the export of goods or services, qualify for "zero percent" VAT. Certain types of transactions are exempted from Thai VAT such as the sale or import of qualified agricultural products, the sale or import of published materials and books, auditing services, litigation (though not legal consulting) services, health services, other qualified professional services, cultural and religious services, educational services, and certain forms of domestic and international transportation services.
A business registered under VAT must file a monthly return with the Revenue Department. If the output tax exceeds the input tax, including the balance of input tax credits carried over from previous filings, the business must remit the amount by which the output tax exceeds the input tax and accumulated credits. If the input tax together with the accumulated credits exceeds that month's output tax, the business carries over the balance of credits to the next month after deducting the output tax. A business carrying a large amount of input tax credits is entitled to request a refund of its accumulated input credits.
3. Withholding Tax
Thailand uses a withholding tax system under which a payer of goods and services must withhold a certain percentage of service fees from its payments to suppliers and remit that tax directly to the government within 7 days after the end of the month in which payment is made. Withholding tax also applies to the payment of interest and dividends. Businesses must file withholding tax returns each month and remit the tax withheld to the Revenue Department by the 7th day of the month following the month in which the payment was made. The rate of withholding tax depends on the nature of the payment.
B. Personal Income Tax
Generally, income earned by an individual in Thailand is subject to personal income tax regardless of whether such income is paid inside or outside of Thailand. Additionally, income earned by an individual outside of Thailand from property or an employer located in Thailand is subject to the tax. Income earned abroad by a person who resided in Thailand for at least 180 days during a calendar year is subject to Thai personal income tax only to the extent that such income is brought into Thailand during that year. There are some exemptions from Thai personal income tax. Most importantly, the tax treaty provisions on personal services often provide relief to persons who work temporarily in Thailand. Income earned by United Nations and diplomatic personnel in Thailand is generally exempt from personal income tax.
a. Calculation of Net Income
Thai personal income tax is imposed on net income. Taxpayers are granted a standard deduction of 40% of wages or salary earned from employment, up to a maximum deduction of Baht 60,000. There are special rules for calculating deductions for other types of income earned by individuals. Taxpayers are also granted a personal allowance of Baht 60,000 per individual, as well as allowances for spouses and children, and contributions to provident funds, government-approved long-term mutual or retirement funds, the social security fund and charity.
b. Interest and Dividend Income
Interest income is subject to 15% withholding tax by the interest payer. The taxpayer may elect not to include that interest income in his net income. Dividends paid by a company or mutual fund organized under Thai law are subject to 10% withholding tax at the time of payment and likewise the taxpayer may elect not to include the dividend in his net income.
c. Tax Rates
Thai personal income tax is imposed on an individual's net income at progressive, graduated rates as follows:
Taxable Income |
Tax Rate |
0-150,000 |
0% |
150,001-300,000 |
5% |
300,001-500,000 |
10% |
500,001-750,000 |
15% |
750,001-1,000,000 |
20% |
1,000,001-2,000,000 |
25% |
2,000,001-5,000,000 |
30% |
5,000,000+ |
35% |
d. Provident Funds, Long Term Mutual Funds and Retirmenet Mutual Funds
Thailand offers a few different vehicles by which Thai taxpers can reduce their liability for Thai personal income tax. The most popular of these for expats are contributions to Provident Funds, Long Term Funds (LTFs) and Retirement Mutual Funds (RMFs). A provident fund is an employer sponsored, voluntary retirement savings fund similar to a 401(k). Long Term Funds (LTFs) and Retirement Mutual Funds (RMFs) are self-sponsored tax savings vehicles offered by approved asset management companies in Thailand, most commonly banks. Contributions to all of these funds are tax deductible for the individual and the earnings on contributions grow tax free. Distributions from the funds are also exempt from tax provided the individual has satisfied the relevant distribution requirements. Below please find a brief description of the requirements governing these funds.
Provident Fund
A provident fund is an employer sponsored, voluntary retirement savings fund similar to a 401(k). The employer and employee make tax deductible contributions to the fund and earnings on the contributions to the fund grow on a tax free basis. When the employee reaches retirement age of at least 55 years old they are entitled to receive the proceeds of the fund free of Thai tax provided they have been a member of the fund for at least 5 years.
Eligibility to participate in the Provident Fund, the employer’s contribution requirements to the fund and the employee’s eligibility to receive the employer’s contributions to the fund upon termination are determined according to the Articles of the Provident Fund established by the employer in consultation with the employees. The minimum employer contribution is 2% of the employee’s monthly salary. Employees are entitled to contribute up to 15% of their salary to the Provident Fund. Employee’s contributions to the Provident Fund are withheld from payment of their monthly salary and remitted to the fund along with the employer’s contribution.
The contributed funds are managed by an approved asset management company based on the employee’s desired risk profile and asset class preference. Employees are typically entitled to invest in a mix of fixed income products, gold or equity based mutual funds. The mutual funds are managed by the asset management company and employees are not entitled to invest in individual stocks.
If an employee moves to a different employer they are entitled to transfer their accumulated provident fund to the provident fund of their new employer. If an employee is unable to transfer their provident fund to a new employer they can roll their provident fund into a Retirement Mutual Fund to preserve their tax benefits until they are able to withdraw them tax free in accordance with the rules regarding RMFs.
Long Term Funds (LTFs)
LTFs were established as a program to encourage long term investment in the Thai securities and fixed income markets. An individual can make tax deductible contributions to an approved LTF of up to 15% of their annual income or Baht 500,000, whichever is lower. An individual’s LTF contribution limit is not reduced by contributions made to a provident fund and/or RMF and can be made on top of contributions to those vehicles. Contributions and earnings can be withdrawn by the individual without being subject to Thai tax after the contributions have been in the fund for seven calendar years. Partial years count as a full year for purposes of this requirement the effective minimum requirement is five years and two days. For example, a contribution made on December 31, 2018 could be withdrawn free of Thai tax on January 1, 2024.
Retirement Mutual Funds (RMFs)
An individual can make tax deductible contributions to an approved RMF. The limit on such contributions taken together with the individuals contributions to a Provident Fund is 15% of their annual income or Baht 500,000, whichever is lower. To be eligible for tax benefits the individual must make a minimum contribution of 3% of their taxable compensation or Baht 5,000, whichever is lower, every other year for a minimum of five years. Contributions and earnings in an RMF can be withdrawn free of Thai tax after the employee reaches 55 years of age and the relevant contributions have been in the fund for more than five calendar years.
Depending on the nature of the business a Thai company may be required to obtain various licenses from the relevant government departments. Some examples of licenses of relevance to foreign investors are:
- Factory license
- Hazardous materials license (for manufacturing using hazardous materials as defined by the relevant ministry)
- Import and export licenses
- Construction license (for construction or modification of structures)
- Hotel license
- Restaurant license
- Alcohol license
- Hazardous activities license (these are required for a large number of activities such as having a swimming pool, operating a sauna, operating dangerous machinery, etc.)
A. Work Permits
Foreigners are strictly prohibited from working in Thailand without a work permit – simply having a non-immigrant B visa does not entitle one to work in Thailand. Violations are subject to fines of up to Baht 100,000 or imprisonment for a term not exceeding five years or both.
As a general rule a company must have registered capital of Baht 2 million for each foreign employee. Subject to compliance with the minimum capital requirements companies are generally allowed to have up to 10 foreign employees under ordinary circumstances. However, there are a number of exceptions to these general rules. For example, if a company has received promotion from the Thai Board of Investment it will not be subject to the normal minimum capital requirements and may exceed the normal limit of 10 foreign employees. Some other exceptions to these rules are for companies with large capital or those working on contracts of particular benefit to the Thai economy or which employ a large number of Thai workers.
In order to be eligible for a work permit the applicant must first have a 90-day non-immigrant B visa. Citizens of New Zealand must also receive a minimum salary of Baht 50,000 per month to be eligible for a work permit.
B. Visas
Foreigners who wish to work or do business in Thailand must obtain a non-immigrant B visa. If the foreigner intends to work for a limited company in Thailand the company must have four Thai employees for each foreigner it employs before the foreign employee is entitled to receive a one-year non-immigrant B visa. This ratio can be reduced if the company has received promotion from the Board of Investment.
The procedure for obtaining a one-year visa is as follows. Foreigners who wish to work in Thailand must first apply for a pre-approval of their work permit from the Labour Department in Thailand (a “Tor Tor 3”). The foreigner must take this document to a Thai Embassy or consulate abroad to apply for their 90-day non-immigrant B visa along with the other required documents relating to the foreign employee’s Thai employer. Once the holder of a 90-day non-immigrant B visa has arrived in Thailand he must first obtain a work permit from the Ministry of Labour before applying for the one-year visa. This must be done before the employee commences working. Once the applicant has obtained his work permit and gathered the necessary documents, he or she may apply to the Immigration Bureau (for businesses with capital of Baht 30 million or less) or the One Stop Service Centre (for businesses with capital of more than Baht 30 million) to extend his or her 90-day visa to a one-year visa.
Dependents of the foreign worker will also be entitled to receive non-immigrant O visas for the duration of the foreign employee’s non-immigrant B visa. Applicants will need to present copies of the government certificates proving their relationship to the foreign worker (birth certificate, marriage certificate) legalized by the Thai Ministry of Foreign Affairs or a Thai Embassy or Consulate abroad.
C. SMART Visas
Effective form February 2018 the Thai Government has implanted the SMART Visa program under which foreign nationals employed in targeted industries will be entitled to visas of up to 4 years in duration subject to the fulfillment of specified criteria. Holders of SMART visas will also be exempt from the requirement to obtain work permits. The 10 targeted industries are:
1. Next-generation automotive
2. Smart electronics
3. Medical and wellness tourism
4. Food for the future
5. Agriculture and biotechnology
6. Automation and robotics
7. Aviation and logistics
8. Biochemicals and eco-friendly petrochemicals
9. Digital businesses
10. Medical hubs
There are four categories of SMART Visas: 1) Talent Visa; 2) Investor Visa; 3) Executive Visa; and 4) Startup Visa. Below please find a summary of the eligibility requirements and the rights and benefits of each.
“T” Talent Visa |
|
Eligibility |
Rights and Benefits |
1. Minimum salary of Baht 200,000/month 2. Employment contract for duration of at least one year with Thai company in one of the targeted industries 3. Having expertise in science and technology relevant to the targeted field and endorsed by a government agency 4. Employers in Thailand must be certified for being engaged in the targeted industry by the relevant government department |
1. 4-year visa, but not exceeding the contract term 2. No work permit required for working in the endorsed company 3. 90-day Immigration reporting extended to one-year 4. No re-entry permit required 5. Benefits of the employee extended to spouse and children |
“I” Investor Visa |
|
Eligibility |
Rights and Benefits |
1. Minimum investment of 20 million Baht in one or more companies in technology-based manufacturing or service businesses in the targeted industries 2. Investment must be maintained throughout the validity of the visa period 3. The business to be established or invested in must be certified for being engaged in the targeted industry by the relevant government department |
1. 4-year visa 2. No work permit required for working in the endorsed company 3. 90-day Immigration reporting extended to one-year 4. No re-entry permit required 5. Benefits of the employee extended to spouse and children |
“E” Executive Visa |
|
Eligibility |
Rights and Benefits |
1. Minimum salary of Baht 200,000/month 2. Hold a bachelor’s degree or higher with at least 10 years experience in the relevant field 3. Employment contract with Thai company or assignment from foreign company must have a remaining duration of at least one year 4. Must hold a senior management position such as Chairman or Managing Director 5. Employers in Thailand must be certified for being engaged in the targeted industry by the relevant government department |
1. 4-year visa, but not exceeding the contract term 2. No work permit required for working in the endorsed company 3. 90-day Immigration reporting extended to one-year 4. No re-entry permit required 5. Benefits of the employee extended to spouse and children |
“S” Startup Visa |
|
Eligibility |
Rights and Benefits |
1. Fixed deposit account with a minimum of 600,000 Baht with a maturity term of one-year or more plus an additional Baht 180,000 for an accompanying spouse and each child 2. Must hold health insurance policy for the duration of the employment for the applicant and accompanying spouse and children 3. Participating in an endorsed incubation, accelerator or similar program, obtaining joint-venture status, or being endorsed by a relevant government industry 4. Must set up a company in Thailand within 1 year and either have at least 25% ownership in or be a board member of a company in the targeted industries |
1. One year visa for the initial term with renewals valid for 2 years each subject to fulfillment of requirements 2. No work permit required for working in the endorsed company 3. 90-day Immigration reporting extended to one-year 4. No re-entry permit required 5. Benefits of the employee extended to spouse and children |
The Thai Board of Investment was established by the Thai Government in order to promote foreign and domestic investment in targeted industries by offering a scheme of privileges and special benefits to companies operating within the promoted industries. The benefits offered by the BOI will vary based on the particular activity which is being promoted but generally include the following:
- Permission for 100% foreign ownership
- Special privileges regarding work permits and visas
- Exemption from import duty on raw materials
- Exemption from import duty on machinery and equipment
- Exemption from corporate income tax for a certain number of years based on the business
- Permission for the company to own land for the business
- Permission of the foreign investors of the company to own land for residential purposes
A list of the activities entitled to promotion can be found here: http://www.boi.go.th/index.php?page=eligible_activities
Companies promoted by the BOI are subject to reporting requirements regarding their operations and financial performance. Companies promoted by the BOI must submit a report to the BOI reporting the progress of the implementation of the project after six months, one year and two years. The promoted company must also submit the financial status and project operation result every year within 31 July after it has begun operations.
A. Labor Law
The main law governing employment in Thailand is the Thai Labor Protection Act (“LPA”). The LPA is very prescriptive in nature and there are a number of mandatory requirements which all employers must follow regardless of what is stated in the contract of employment. Below is a list of some of the major requirements imposed under the LPA:
Working hours: Subject to certain exceptions an employer can only require employees to work for a maximum of 8 hours per day, excluding breaks, and up to a maximum of 48 hours per week. Employees are entitled to at least one day off per week. Work in excess of these working hours is subject to payment of overtime pay.
Sick leave: Employees are entitled to 30 days of paid sick leave per year. If an employee takes sick leave for three consecutive working days or longer the employer may acquire a medical certificate from a first-class medical practitioner.
Annual leave: Employees who have worked for at least one year are entitled to at least six days of annual leave per year. An employee cannot be required to forfeit annual leave without compensation.
Maternity Leave: A female employee who is pregnant is entitled to maternity leave of not more than 90 days (this includes holidays, weekends, etc.), 45 days of which shall be paid and 45 unpaid.
Public holidays: Employees are entitled to 13 public holidays per year, at least one of which must be Labor Day.
Advanced notice of termination: Unless an employer is terminating an employee for “cause” as defined under the LPA, the employer must provide advance written notice thereof at or before the time for payment of the employee’s salary to take effect as of the following date of payment. The employer can pay wages in lieu of advance notice and dismiss the employee immediately.
Severance Pay: Unless an employee is terminated for “cause” the employee will be entitled to severance pay according to the duration of their employment as follows:
Period of Employment |
Amount of Severance |
More than 120 days but less than 1 year |
30 days wages or salary |
At least 1 year but less than 3 years |
90 days wages or salary |
At least 3 years but less than 6 years |
180 days wages or salary |
At least 6 years but less than 10 years |
240 days wages or salary |
At least 10 years |
300 days wages or salary |
Cause for termination: “Cause” for immediate termination without advance notice and without severance may only be made where the employee has:
Been dishonest in performance of their duties or intentionally committed a crime against the employer
Intentionally caused damages to the employer
Performed an act of negligence which causes severe damages to the employer
Continued to violate of the employer’s work rules after receipt of written warning from the employer except in “serious” cases where warning is not required
Deserted employment for three consecutive work days without justification
Been imprisoned by final judgment for a criminal offence, excluding offences of negligence or petty offences.
The employer must state the grounds for termination in a written termination letter. If the employer fails to do so, it cannot assert the “cause” as a defence in a later claim by the employee for payment of salary in lieu of advance notice and severance pay.
Retirement: Where an employer retires in accordance with the work rules of the employer or their employment contract the employee shall be entitled to severance pay. In the absence of an agreement regarding retirement age when an employee has reached the age of sixty years old the employee has the right to notify the employer 30 days in advance of the date of retirement and the employee shall be entitled to severance pay.
Work Rules: Employers with 10 or more employees must arrange for their work rules and regulations in Thai to be announced in the workplace within 15 days from the day they started employing 10 or more employees.
There are other sources of employment law in Thailand such as the Civil and Commercial Code, the Labor Relations Act, and the Act for the Establishment of the Labor Court.
B. Social Security
All Thai employers must register with the Social Security Administration within 30 days of hiring their first employee and all new employees must be registered for social security within 30 days of being hired. The employer and employee must each contribute 5% of the employee’s salary to the social security fund up to a maximum contribution of Baht 750 each. Employees’ contributions must be withheld from their wages and are deductible from their gross income for personal income tax purposes. Employers’ contributions are likewise deductible from the company’s gross income.
The Thailand and New Zealand Closer Economic Partnership (“TNZCEP”) was signed on April 19, 2005 and came into effect on July 1, 2005. The agreement covers the liberalization of market access for goods and investment as well as cooperation in trade-related such as customs procedures, electronic commerce, intellectual property, government procurement, and competition policy. More information on the TNZCEP can be found here: https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-in-force/thailand#Highlights
There are additional benefits available for New Zealand companies which import goods into or export goods from Thailand under the ASEAN Australia New Zealand Free Trade Agreement (“AANZFTA”). Additional information on the benefits can be found here: http://aanzfta.asean.org/
To find the applicable tariffs for the export of goods from New Zealand to Thailand or the import of goods from Thailand into New Zealand under the TNZCEP or the AANZFTA and the applicable rules of origin you can use the MFAT Tariff Finder (external link) at https://tariff-finder.fta.govt.nz/