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

Marisa Chicarelli

14/01/2020

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

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

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

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News/ Business Advisory/ What do you get with your BOI certification?

What do you get with your BOI certification?

Marisa Chicarelli

03/05/2019

We recently offered an overview of Thailand’s Board of Investment (BOI) certification program, whereby companies can qualify for certain promotions or privileges if they meet certain criteria. But are these BOI privileges worth the application for and the maintaining of the qualifications?

BOI certification applies to projects, not to companies

The BOI has an extensive list of promoted business activities that qualify for investment privileges. Since the BOI began by encouraging manufacturing, they still reference promoted activities as “Projects”. Projects refer to specific business activities within a company’s overall operation, not the company itself, which means that some activities may qualify for certification while others may not. Regardless, the entire company may still be able to benefit from BOI certification.

Promoted activities are divided into eight industry categories and include:

Agriculture and Agricultural Products
Mining, Ceramics, and Basic Metals
Light Industry
Metal Products, Machinery, and Transport Equipment
Electronic Industry and Electric Appliances
Chemicals, Paper, and Plastics
Services and Public Utilities
Technology and Innovation Development

Within each category are more specific activities that run the gamut from manufacturing to infrastructure development to professional and technological services and more. The BOI further identifies each activity with a designation that indicates the degree of promotion, incentive level and extent of privileges granted:

A1: Knowledge-based activities focused on research & development that are designed to enhance Thailand’s competitiveness.
A2: Activities to develop Thailand’s infrastructure or activities using advanced technology to create added value that have little or no existence in the country.
A3: High technology activities important to Thailand’s development that a negligible existence in the country.
A4: Activities not as advanced in technology as those in A1, A2, or A3 but which add value to domestic resources and strengthen the supply chain.
B1 – B2: Activities do not use much high technology but is still important to the supply chain.

BOI certification comes with tax and non-tax incentives

Once certified, a Project is then eligible for a range of basic incentives, including:

Tax Incentives

Exemption of corporate income tax and tax on dividends (up to 10 years).
Exemption/reduction of import duties on machinery (for duration of certification).
Reduction of import duties for raw or essential materials (for duration of certification).

Non-Tax Incentives

Expedited visas for foreign nationals to enter the Kingdom to study investment opportunities.
Expedited visas & work permits to bring qualified skilled workers and experts into the Kingdom.
Permit to own land.
Permit to take out or remit money abroad in foreign currency.

The certification designation (A1 to B2) will determine exactly which incentives apply and for how long.

There are also additional incentives available for competitive enhancements (as related to R&D or technology transfers), decentralization (certified activities located in designated provinces with low per capita income), and industrial area developments (certified activities located in designated industrial areas/estates), which include:

A 50% reduction of corporate income tax.
Double deductions from the costs of transportation, electricity and water supply.
An additional 25% deduction on the cost of installation or construction of facilities.

GPS Legal is experienced with BOI certification application and maintenance

The incentives for BOI certification are many, and it should behoove any investor or business owner to investigate whether any of their operations qualify. GPS Legal has assisted businesses at every level of BOI certification and maintenance, so if you would like to find out more about whether you should apply for BOI certification, please contact us today.

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