The COVID-19 crisis has the entire world on edge. No more so than here in Thailand, where employers and employees worry about their respective companies and jobs as the days unfold. GPS Legal would like to follow up our interview with BrandNow Asia by outlining some of the rights and obligations that employers and employees have during these uncertain times.
Continue reading “COVID-19 in Thailand: Employer/Employee Rights and Obligations”
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GPS Legal Managing Partner Lawrence Chaney recently discussed the legal implications of Covid-19 on business with BrandNow Asia. He covers employee and employer rights regarding furloughs, sick leave, and pay cuts. He also explains how this health crisis may or may not qualify as a trigger for force majeure clauses in business contracts.
Continue reading “GPS Legal Discusses Legal Issues in Thailand Related to Covid-19”
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Last year, Thailand passed the Personal Data Protection Act (PDPA) to ensure data privacy in the Kingdom. The official Royal Gazette announcement was on May 27, 2019, and the law provided a year for relevant parties to ensure compliance. As there are only a few months from this article’s publication date before the law comes into full effect, we would like to remind employers and employees of their rights and responsibilities under the PDPA.
Continue reading “Personal Data Protection Act (PDPA): Companies are Responsible for Data Privacy”
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As an employer in Thailand, you should be aware that Thailand’s minimum wage increases (Link in Thai) went into effect as of January 1, 2020. What you may not be aware of is how these increases could impact your foreign employees as this relates to their work permit and visa applications. We feel that this is also a good time to go over local employee to foreign employee ratio requirements.
Thailand has a minimum wage law; however, the baseline amount varies across the country. This is a table of daily minimum wage rates for 2020 compared to 2019. Provinces with major business or tourist centers are bolded for ease of reference:
|
Area |
Minimum |
Minimum |
|
Chonburi, Phuket |
336 |
330 |
|
Rayong |
335 |
|
|
Bangkok, |
331 |
325 |
|
Chacherngsao |
330 |
|
|
Krabi, Khonkaen, Chiang Mai, |
325 |
320 |
|
Prachinburi |
324 |
318 |
|
Kalasin, |
323 |
|
|
Kanchanaburi, Chainat, Nakhonpranom, Nakhonsawan, Nan, |
320 |
315 |
|
Kamphangphet, |
315 |
310 |
|
Narathiwat, Pattani, Yala |
313 |
308 |
While the minimum salary requirements for foreign skilled employees to qualify for a work permit and visa are well above these minimums, the minimum daily wage rates for Thais remain relevant. The criteria for sponsoring one business (type “B”) visa for a foreign employee is generally 4:1 Thai to foreign staff (without BOI promotion) and 1:1 for certain foreign businesses (i.e. representative offices, branch offices, and regional offices).
So, for example, a Thai company with a registered address in Bangkok that wishes to hire a foreign employee must have at least four full-time Thai employees on payroll. In 2019, that would have required a monthly payroll of THB 9,750 x 4 or THB 39,000. In 2020, that increased to THB 9,930 x 4 or THB 39,720.
If you do the math, you may notice that these amounts would mean hiring a daily worker for 30 days a month. This is based on a Labor Department legal interpretation (link in Thai) on calculating daily wages for monthly salaries under Section 68 of the Labor Protection Act and citing Section 193/6, paragraph 3, of the Civil and Commercial Code. Labor and Immigration Department officials have been known to rely on this interpretation when assessing filings, which is why we are using them here.
When reviewing work permit and visa applications, officials will require payment receipts and the corresponding monthly income tax form PND.1 and social security form SPS.1-10 for qualifying Thai employees over the most recent three months immediately preceding the application. This is required for both new and renewing work permits and visas.
For January work permit and visa filings, applicants would have been held to 2019 minimums. But starting February 2020, applicants must show PND.1 and SPS.1-10 forms and payment receipts reflecting wage increases according to the following table:
|
Work permit & visa applications in: |
Require filings from: |
For these amounts: |
|
January 2020 |
October 2019 |
THB 9,750 per employee |
|
|
November 2019 |
THB 9,750 per employee |
|
|
December 2019 |
THB 9,750 per employee |
|
February 2020 |
November 2019 |
THB 9,750 per employee |
|
|
December 2019 |
THB 9,750 per employee |
|
|
January 2020 |
THB 9,930 per employee |
|
March 2020 |
December 2019 |
THB 9,750 per employee |
|
|
January 2020 |
THB 9,930 per employee |
|
|
February 2020 |
THB 9,930 per employee |
|
April 2020 |
January 2020 |
THB 9,930 per employee |
|
|
February 2020 |
THB 9,930 per employee |
|
|
March 2020 |
THB 9,930 per employee |
Please note that officials will scrutinize both sets of forms and payment receipts for every month to ensure that the correct amounts were paid before approving any application. This may seem like a small detail, but officials are known for being extremely meticulous in checking these amounts, and any discrepancy will almost certainly result in an application being rejected.
Whether you are starting a new business in Thailand or have existing foreign employees and just want to ensure everything is correct, contact GPS Legal today. Our immigration and work permit experts will evaluate your status and go through the steps required to get you in compliance.
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At GPS Legal, we get many inquiries about starting a business in Thailand. We often find that these entrepreneurs have received misleading or even completely erroneous information. Here, we would like to address some misconceptions about the need for a Thai director and staff.
There have been cases where foreign investors have been misled into creating a convoluted nominee structure, mainly to the benefit of an unscrupulous advisor. Part of this “advice” may also include that the business must have one Thai director registered with the new company, which the advisor can help identify, for an additional fee.
There are only a few situations where a company needs one or more directors to be a Thai national, such as a foreign business conducting operations that fall under List 2 of the Foreign Business Act. There are other circumstances as well, but these are more the exception and not the rule. While it may make sense to have a locally resident Thai or foreign director for expediency, the Civil and Commercial Code does not stipulate the need for a locally resident director, or that a director must be Thai. Only that a company must have at least one authorized director.
Another misconception that is frequently repeated is that a company must have a ratio of four Thai staff to one foreigner to qualify for a work permit for that foreigner. This is wholly incorrect. The employee ratio requirement is actually related to Immigration regulations for the 1-year extension and renewal of a Non-B visa application and not to the 90-day “B” visa or to the Labor Department’s work permit requirements. To be clear, the Labor Department only requires that a company meets the minimum capitalization of THB 2M per work permit holder, with little to no emphasis on local staffing levels.
Further, the ratio depends on the entity type. A standard company limited (foreign or Thai majority owned) must employ four Thai staff to one foreigner employee’s visa, while a branch, foreign representative office, or regional office need only employ a one to one ratio per visa holder for their authorized representatives, though any other foreign staff must adhere to the 4:1 ratio. Also, there are other options available that rely on certain business and employment structures.
Furthermore, there are exemptions from the employee ratio requirement for businesses with Board of Investment certification.
GPS Legal wants to help you establish your business in Thailand in the most efficient, effective, and affordable way possible. There is no need to try to make your situation more complex with nominee structures or unnecessary local staff hires to fulfill a ratio. Want to learn how? Contact us for a free initial consultation.
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Living in Thailand as an expatriate with a family is surely an excellent adventure for children! The opportunity to travel and experience different cultures and the myriad of thrills and learning opportunities that help expand their horizons as they develop into well-rounded adults. But what happens if, unfortunately, tragedy befalls that excellent adventure, and something should happen to you as a parent? Do you have guardianship arrangements in place that Thai law will recognize?
The Hague Convention on the Civil Aspects of International Child Abduction, also known as the Hague Abduction Convention, of which Thailand is a party, would likely come into play if the custody rights of an intended guardian are not carefully considered and spelled out beforehand, and where that guardian lives someplace other than Thailand. While the Convention was drafted to primarily prevent one parent taking a child to a country that would take their side in a custody battle and thus ensures the prompt return of the child to their country of habitual residence, one aspect of the Convention governs which country has jurisdiction in determining a child custody. The effect is to preserve whatever status quo child custody arrangement existed immediately before an alleged “wrongful removal or retention” thereby deterring a parent (or as it relates to this article, an intended but unspecified guardian), from crossing international boundaries in search of a more sympathetic court. The Convention applies only to children under the age of 16 and places the jurisdictional right with the Thai courts to determine custody over children who “habitually reside” in the Kingdom. Put simply, if you and your children consider Thailand your current and primary country of residence, Thai law prevails regarding custody and guardianship.
Thai courts can appoint a legal guardian to minor children if their parents are no longer able to care for them. The court can grant full or limited guardianship as it sees fit, meaning the court could restrict or allow complete control over medical, financial, and legal decisions for the child(ren) in question.
Normally, when a petition for guardianship is filed with the courts, the applicant must appear before the court to first prove that there is a need for a guardian and that they are suitable to be appointed as guardian. The court then assesses the application and renders its decision at a second hearing (if the petition is not disputed).
The process could take at least three months if not longer if the court is unwilling to consider an emergency petition, so the better prepared the applicant is with the proper documentation, (a will compliant under Thai law naming them as guardian), the easier the process.
GPS Legal has years of experience assisting foreigners assert their rights in Thai courts, including for guardianship and custody of a minor child. Our team understands that this can be a sensitive issue and will work to ensure that the process is as smooth as possible. If you’d like to make sure that your family is taken care of in case of an emergency, please get in touch with GPS Legal.
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At GPS Legal, we get many inquiries about starting a business in Thailand. We often find that these entrepreneurs have received misleading or even completely erroneous information. We would like to take this opportunity to address these misconceptions.
Section 35 of the Foreign Business Act explicitly states:
A Thai national or a juristic person [i.e. an individual or registered entity], not being a foreigner under this Act, who assists in or aids and abets or participates in the operation of a foreigner’s business … where such foreigner is not permitted to operate that business or [where said Thai person] operates the business jointly with a foreigner in the manner holding it out as the [Thai person’s] sole business or who acts as a foreigner’s nominee in holding shares in a partnership [or] limited company or any juristic person with a view to enabling the foreigner to operate the business in circumvention or violation of the provisions of this Act, or a foreigner who allows such act to be committed by a Thai national or a juristic person that is not a foreigner under this Act, shall be liable to imprisonment for a term not exceeding three years or to a fine of one hundred thousand Baht to one million Baht or to both, and the Court shall order the cessation of the assistance…the aiding and abetting, … [or] the joint operation of the business, or [the] shareholding or partnership, as the case may be. In the case of violation of the order of the Court, the violator shall be liable to a fine at the daily rate of ten thousand Baht to fifty thousand Baht throughout the period of the violation.
This means that if any Thai person or entity participates in a business in name only to fulfill a legal requirement for a business to be considered Thai, then that party and anyone else involved is breaking the law and could be punished with imprisonment and/or hefty fines.
Nevertheless, there are many out there who will suggest a nominee structure as a perfectly legal way to set up a business in Thailand. It is not. Besides being illegal, you are giving up control of your company, assets, profits, and clients to someone that you must implicitly trust but may ultimately not have your best interests at heart. Do not be lulled into a false sense of security by documents or contracts that presumably legitimize the nominee or protect your interests – since the fact of the nominee itself is illegal, the supporting documents or contracts are in turn void or unenforceable.
If you have a Thai partner who has legitimately invested and partnered with you, then a majority-Thai owned company is a perfectly viable entity. Further, your interests and control of the company can be protected through legally sound shareholding structures and shareholder agreements, including assigning reduced voting rights and a rebalanced share of profits in favor of the minority foreign shareholder. Alternatively, if you do not have the benefit of a local investor, there are a variety of majority-foreign owned structures that you can pursue.
As discussed in a previous article, there are several options for foreigners to start a business in Thailand without needing a Thai partner (or nominee), which are legal, transparent, scalable, and affordable.
Cost center entities include a Foreign Representative Office to fulfill quality control, market research or customer support roles, or a Regional Office to administratively oversee nearby branch office operations around Asia. Revenue generating entities include a Branch Office as a wholly owned extension of an overseas parent company or a full-fledged Foreign Limited Company or Limited Partnership.
Foreign entities that trade and compete in the local marketplace and whose business objectives fall into any of the three lists of restricted businesses, will require a Foreign Business License. While there are some sectors in which foreigners are generally prohibited from pursuing in Thailand, it is not a long list, and furthermore, applying for a Foreign Business License is not an overly arduous process.
Additionally, Thailand’s Board of Investment (BOI) offers various tax and non-tax incentives and privileges to qualifying foreign-owned companies. This is also not an arduous process and is one that many foreign investors overlook—often because their “business advisors” want them to pursue a nominee structure so that these very advisors can profit from being engaged as the nominee.
Build your business from the start on a solid foundation, not a house of cards. If you have a friend or an advisor who tries to convince you that a nominee structure is perfectly legitimate, please note that there have been, and will continue to be, crackdowns on both businesses and advisors alike.
GPS Legal will help you decide which structure is best for your business goals in Thailand. Please contact us for more information
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Foreign businesses in Thailand must comply with specific minimum capital requirements. These amounts differ depending on a multitude of variables, including the type of entity, the type of activity, the number of foreign employees, and whether the entity requires a Foreign Business License (“FBL”), a Foreign Business Certificate, or received promotion from Thailand’s Board of Investment (“BOI”).
Generally, where an FBL is required, the minimum capitalization is the greater of a) three million baht or b) 25% of the estimated average annual expenditures over three years. However, where a foreign business does not need an FBL to operate in Thailand, the minimum capital may drop to as little as two million baht.
Where the foreign business is a limited company that does not require an FBL, it must fully pay up its minimum capital before commencing business operations. If it does need one, then it must be fully paid up as a criterion prior to receiving the FBL.
Branch and representative offices, as well as BOI companies, do not have to be fully paid up to commence operations in Thailand. The maximum timeline for meeting capital requirements is 25% within the first three months of registration, a second 25% within the first year, the third 25% within the second year, and the final 25% within the third year.
Additional capitalization minimums may be imposed according to the business activity the company is engaged in, and in some circumstances, you must also consider your work permit requirements. While two million baht in registered capital is typically required for each work permit application, there are exceptions for certain BOI promoted companies where capitalization requirements may be as little as THB 1M.
Another consideration is whether your business can benefit from a trade treaty or agreement, such as the Thai-US Treaty of Amity or the Australia-Thai Free Trade Agreement. Under these types of arrangements, foreign businesses formed under these treaties may be exempt from remitting the required minimum capital until 29 August 2029.
If you want to find out if your foreign business qualifies under a trade agreement or what are your minimum capital requirements are, contact GPS Legal. Our expert team has successfully assisted many foreign businesses in establishing and operating in Thailand.
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Estate planning is an important if not essential task that everyone should be concerned about. This is especially true if you are married or have children, if you own a business or hold substantial assets that you want to protect if you pass away or are incapacitated, particularly in today’s global environment where families, residences, domiciles, and assets can be located across multiple jurisdictions.
A last will and testament is an essential component of an estate planning strategy. It is a legal document that communicates your final wishes regarding your possessions and, in some instances, your dependents. This is accomplished by appointing one or more executors to manage your estate after your passing, ensuring that every instruction and distribution is carried out.
A will however only takes effect after you pass away. What happens if you are alive but temporarily or permanently incapacitated, unable to make decisions for yourself or to care for your family or your business? Consider integrating an “advance directive” into your estate plan to deal with these possible situations. An advance directive is a document by which you make provisions for certain critical decisions if you become unable to make those decisions on your own. They can also be used to grant legal decision-making authority to another person to be your advocate and agent during a crisis period.
This is a type of advance directive that appoints someone to be your attorney-in-fact, to act for you if and only if you become incapacitated (it springs into action, hence the name). You can control the scope to be general and broad reaching or limited and narrow in scope. Springing powers of attorney usually cover such decisions as: health and medical decisions, financial decisions, or the temporary care, custody, and control of any minor children. If something should happen and you don’t have a document like this in place, local laws or the courts may assume authority over these decisions either directly or through a conservator or guardian or even well-meaning but mis-guided relatives. A springing power of authority will remain in effect for as long as you remain incapacitated or until your death but is automatically rescinded once you are of sound mind and body and regain the ability to make decisions on your own.
A living will is another type of advance directive specific to end of life care. You record your wishes regarding future treatment if you become unable to express your informed consent. This would cover such things as resuscitation, life sustaining treatment, and end of life care regarding nutrition and hydration that you do or don’t want to receive.
Trusts are legal structures that create fiduciary (“trusted”) relationships in which one party, the trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trusts are used to legally protect assets. A trust may be used to ensure your assets are distributed according to your wishes or are consolidated and saved for distribution later. Because they aggregate assets, they can save time, reduce paperwork, and, in some cases, help avoid or reduce inheritance or estate taxes.
You have a certain level of flexibility with trusts regarding what they cover, when they are executed, and whether they can be amended once put in place. These reasons are why many specialists suggest trusts as an estate planning solution.
However, Thailand, along with other (usually civil law) jurisdictions, does not recognize trusts as special structures. Some benefits, especially regarding inheritance or estate taxes, may not be available through trusts for your assets in Thailand. Nevertheless, an expert in estate planning and family law, such as GPS Legal, can offer you practical, effective alternatives for your Thai assets or customized trust solutions for your offshore assets.
GPS Legal has the experience to ensure that your estate is executed to your specific requirements. Whether your assets are in Thailand or abroad, whether you need a springing power of attorney or a living will, whether you need a trust or alternate solution, GPS Legal will work with you through every step, so that you, your family, your business, and your assets are protected. Contact GPS Legal today for your free initial consultation and find out how.
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If you plan on residing in Thailand for an extended period, becoming a permanent resident may be an option over applying for a visa or annual renewal. Once a year, the Immigration Department begins accepting permanent resident applications, usually from October to December; however, this year (2019), the application window was opened in July.
With Immigration only accepting 100 applications from each nationality annually and professional fees reaching as much as 200,000 baht in addition to costs and government fees, here is some information about permanent residency to help you make an informed choice.
For any foreigner who has made Thailand their long-term home, becoming a permanent resident makes a lot of sense. Once granted, you will no longer need to worry about Thai visa applications, renewals, and 90-day reports. Permanent residents are also exempt from TM30 reporting requirements.
Furthermore, permanent residents, also known as “PRs”, may find the process for buying a condominium easier with direct access to local bank loans, although a PR still may not own land in Thailand. And while a permanent resident still requires a work permit to be legally employed in Thailand, companies hiring permanent residents do not need to meet the 4:1 local to foreign employee ratios since PRs do not require a separate “B” visa – companies only need to meet the capital requirements.
Becoming a permanent resident is also part of the path to Thai citizenship. While it is possible to obtain Thai citizenship without first obtaining your PR status (for instance if you are already married to a Thai), being a permanent resident eases the process.
Every adult applicant for permanent residency must meet these minimum requirements:
Then, depending on the category the application is being filed under, there are separate requirements for:
Some of these requirements also include tax and employment histories going back three years as well as confirmation letters from employers and government ministries.
Meeting all the requirements does not guarantee permanent residency will be granted. There is also an interview process with immigration officials to gauge Thai-language abilities and to assess suitability. Unfortunately, this can be a subjective determination, but it remains an instrumental part of the process.
Some may consider the permanent residency application process and fees too cumbersome, but others may find that this process outweighs the other standard visa alternatives, particularly those with businesses in Thailand or Thai family members. If you wish to discuss whether permanent residency is a viable path for you, contact GPS today for a free initial consultation.
Since 7 February 2023, forming and operating a Thai private company limited for doing business in Thailand has…
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Among the many amendments to the Thai Civil and Commercial Code that came into force in February 2023,…