foreign investment

News/ Business Advisory/ How Thailand’s minimum wage affects foreign employees

How Thailand’s minimum wage affects foreign employees

Marisa Chicarelli

26/02/2020

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’s minimum wage differs by province

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 Daily Wage for 2020	Minimum Daily Wage for 2019
Chonburi, Phuket	336	330
Rayong	335	330
Bangkok, Nakhon Pathom, Nonthaburi, Pathumtani, Samutprakarn, Samutsakorn	331	325
Chacherngsao	330	325
Krabi, Khonkaen, Chiang Mai, Trat, Nakhonratchasrima, Phranakorn Sri Ayudhaya, Pang-nga, Lop Buri, Song khla, Saraburi, Suphanburi, Suratthani, Nongkhai, Ubonratchatani	325	320
Prachinburi	324	318
Kalasin, Chantaburi, Nakhonnayok, Mukdahan, Sakonnakorn, Samutsongkram	323	318
Kanchanaburi, Chainat, Nakhonpranom, Nakhonsawan, Nan, Buengkal, Buriram, Prachuapkirikan, Pattalung, Phitsanuloke, Petchaburi, Petchabune, Phayao, Yasothorn, Roi-et, Loei, Srakaew, Surin, Angthong, Udonthani, Utaraditr	320	315
Kamphangphet, Chaiyaphum, Chumporn, Chiangrai, Trang, Tak, Nakhonsrithammaratch, Phijit, Phrae, Mahasarakham, Mae Hong Sorn, Ranong, Ratchaburi, Lampang, Lamphun, Srisaket, Satul, Singha Buri, Sukhothai, Nong Bualamphu, Uthaitani, Amnatcharoen	315	310
Narathiwat, Pattani, Yala	313	308

Does your company hire foreign employees and how it will be affected?

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.

You must ensure filings comply with minimum wage increases

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.

GPS Legal can help you

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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News/ Business Advisory/ Myths about Foreign Business in Thailand: Say No to Nominees

Myths about Foreign Business in Thailand: Say No to Nominees

Marisa Chicarelli

13/01/2020

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.

Nominee Structures are NOT LEGAL for a Foreign Business in Thailand

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.

Opening a Majority Foreign Owned Business in Thailand is NOT Difficult

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.

GPS Legal Can Help You Set Up Your Foreign Business in Thailand

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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News/ Business Advisory/ Minimum capital requirements for foreign businesses in Thailand

Minimum capital requirements for foreign businesses in Thailand

Marisa Chicarelli

09/01/2020

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”).

Minimum capital can be as low as THB 2 million

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.

Exceptions for work permits, treaties, business activities, and the BOI

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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News/ Corporate & Finance/ Myths about Foreign Business in Thailand: Are You Doing This to Own Land?

Myths about Foreign Business in Thailand: Are You Doing This to Own Land?

Marisa Chicarelli

26/07/2019

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. In this article, we would like to discuss land ownership by businesses in Thailand.

A Foreign Business Should Not Use Nominees to Own Land

Under Thai law, neither foreign individuals nor companies, with some exceptions, can own land in Thailand. Despite that, there are advisors who will recommend a foreigner set up a majority Thai-owned company to buy property or have a Thai individual own the property on their behalf. Both options are nominee arrangements, which are illegal in Thailand. The former is doubly so, as a nominee structure for business is also illegal in Thailand.

This may sound obvious, but a company should be established for doing business, not for the sole purpose of owning property for the foreigner/proprietor to live in.

Other Options are Available for Foreigners Who Want to Reside in Thailand

As Thailand has grown in popularity as a new home destination for foreigners who are drawn to the climate, local destinations, and affordability, there are those who would mislead naïve people into legally tenuous situations at a price.

If you do not want to just rent a house or apartment and prefer to establish stronger roots in Thailand, you might choose to buy a condominium. Foreigners can purchase freehold condos in Thailand so long as the aggregate of total owners are a majority Thai.

If your spouse is Thai, he or she can own property with you as a registered resident. However, you both must file papers with the Land Office stating that you relinquish all claims to the property (i.e., the land is no longer a marital asset). You are still entitled to inherit the property as a marital asset; however, you must divest it within 12 months. Also, if you paid for the property yourself, your financial interests can be protected as a mortgagee.

One option for foreigners to directly own real property is available with a purchase of 40 million baht or more in qualified investments, in which case, you can apply for permission from the Land Department to acquire up to 1 rai (about 1,600 square meters) of land for residency purposes.

And although not ownership, you may lease a property for up to 30 years. Unfortunately, leases with a longer term are not enforceable, and renewing a lease after the 30 years is not a lease right protected under Thai law, meaning it too may not be enforceable. Then there is also superficies and usufructs, by which you can receive long term rights to property under certain conditions.

GPS Legal is Well-Versed in Real Estate in Thailand

GPS Legal understands why you would want to move to Thailand. Let us help you do it the right way so don’t have to worry. Contact us today find out what your options are and how we can help you!

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Myths about Foreign Business in Thailand: 1 Thai Director, 4 Thai Staff

Marisa Chicarelli

27/06/2019

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.

A Foreign Business in Thailand Does Not Always Need a Thai Director

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.

A Foreign Business in Thailand Does Not Always Need 4 Thai Staff Per Work Permit

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 Knows How to Structure a Foreign Business in Thailand

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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Nominee Structures are NOT LEGAL for a Foreign Business in Thailand

Section 35 of the Foreign Business Act explicitly states:

Opening a Majority Foreign Owned Business in Thailand is NOT Difficult

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News/ Publications/ Foreign Business Licenses and Certain Foreign Entities

Foreign Business Licenses and Certain Foreign Entities

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Foreign business licenses are no longer required for certain non-trading foreign entities in Thailand, allowing for easier establishment of representative and regional offices.

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News/ Publications/ GPS Guide to Doing Business Featured

GPS Guide to Doing Business Featured

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GPS Legal & Consulting announces affiliation with Fortis Law

Marisa Chicarelli

01/03/2017

GPS Legal & Consulting is pleased to announce our affiliation with Singapore’s Fortis Law. Sharing our conviction that law firms do more than just deal with legal issues, Fortis Law is a perfect match for GPS.

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News/ Firm News/ GPS Legal & Consulting announces affiliation with Moe & Tun Associates

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Marisa Chicarelli

01/02/2017

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