Integrity Legal

In a recent article in the Wall Street Journal a new bill proposed by the United States Congress was discussed:

Under a new law expected to take effect in January, the State Department will block Americans with “seriously delinquent” tax debt from receiving new passports and will be allowed to rescind existing passports of people who fall into that category. The list of affected taxpayers will be compiled by the Internal Revenue Service using a threshold of $50,000 of unpaid federal taxes, including penalties and interest, which would be adjusted for inflation.

Clearly this proposed legislation could have significant ramifications for Americans living abroad. Presently, Americans abroad could only see their passports rescinded or applications for renewals denied where said applicants have outstanding criminal warrants in the United States of America or are delinquent on their child support. The proposed legislation comes after the relatively recent  implementation of FATCA (the Foreign Account Tax Compliance Act) which requires foreign banking institutions to report the financial activities of American citizens making financial transactions abroad. There have been some who disapprove of FATCA and there have been moves made in the US Federal Court to challenge the law’s constitutionality. However, at present the law remains part of the current American legal framework with respect to overseas bank accounts. As a possible consequence, in recent years there have been a growing number of individuals who have opted to renounce their United States Citizenship. It is clear that more and more people are opting to renounce their United States Citizenship. Each individual’s renunciation is likely based upon a different calculus, but it seems clear that recent changes to American tax policy have had a significant impact upon Americans living abroad.

The recent announcement that passports could be revoked as a consequence of tax delinquency seems likely to cause the number of Citizenship renunciations to increase. Although, it remains to be seen if this new policy will have a significant impact upon renunciations. Regardless of the fact that 50,000 USD seems like a substantial amount of money it will be interesting to see if the proposed legislation will allow for a form of COLA (Cost of Living Adjustment) style system whereby the amount of money in tax delinquency which would trigger a passport renunciation would increase year by year in order to track inflation. It is unlikely that such a scheme would be implemented because Foreign Bank Account Reporting (FBAR) requirements have not changed since the late 70′s. Therefore it stands to reason that the passport issuance requirements will stay frozen. Therefore, this legislation, although unlikely to have a significant impact upon Americans abroad anytime soon could have serious ramifications for Americans in 15-20 years time when 50,000 USD is not the representation of wealth that it is today.

During the month of October 2015, it came to this blogger’s attention that the Thai government began to heavily enforce regulations against those overstaying their Thai visa and those utilizing nominees in order to control companies in Thailand. In a recent article on the Khaosod English website it was noted that more than 9000 people were arrested and detained pending deportation for overstaying their visas. The article went on to note:

The penalties announced Sunday are identical to regulations announced by the immigration bureau last year that have been in effect since Aug. 17, 2014. Foreign nationals who remain in the country more than 90 days after their visa expires are to be banned for one year. Those who overstay for one year, three years or five years are forbidden from re-entering the country for three years, five years and 10 years respectively. If they don’t turn themselves in and are instead caught by police, those who have overstayed less than a year would be blacklisted for five years while those with over a year face a 10-year ban…

The penalties referred to above were apparently applied to those detained in the aforementioned roundup and it would appear that such measures are likely to be applied to overstayers in the future. For this reason it is strongly recommended that those wishing to stay in Thailand obtain a visa and leave within the specified period of validity unless a Thai visa extension is obtained. There are many types of Thai visa categories including business visas, retirement visas, O visas for family members of Thai nationals, and the greatly anticipated long stay tourist visa which is set to begin being issued in mid-November.

Meanwhile, Thai officials in the Ministry of Commerce seem to be implementing stricter enforcement of rules regarding the use of nominee shareholders in Thai companies. Under the Foreign Business Act, foreign nationals are not permitted to use Thai nominee shareholders in order to circumvent the restrictions on foreign ownership of Thai companies. Those caught violating this law can face fines or possible imprisonment. Apparently, officials with the Department of Business Development will be investigating certain companies to determine if nominees are in use. To quote directly from The Nation:

The 10 sectors to be inspected are food and beverage, tourism, property rental, the property trade, car rental, spa, handicraft and souvenir retail, Internet retailing, direct sales, and education consultants. Chainarong said that those sectors would be targeted because it was believed that a high proportion of their businesses were foreign controlled through the use of Thai nominees…

Clearly Thai regulators are becoming increasingly serious regarding the enforcement of Thai law in both the realm of immigration and business. It should be noted that American Citizens are permitted to own 100% of certain types of Thai corporations pursuant to the provisions of the US-Thai Treaty of Amity.

Starting November 13th it will be possible for foreign tourists to apply for and obtain a 6 month Thai tourist visa. To provide more insight into this development it is necessary to quote directly from the Bangkok Post:

Unlike current tourist visas, which offer from one to three entries, the six-month multiple-entry visa will allow unlimited border crossings during the validity period. However, to prevent foreigners from basically living in Thailand on tourist visas, each entry will be limited to 60 days. The new multiple-entry visa will cost 5,000 baht, versus 1,000 baht for a single-entry, 60-day visa, which can be extended in-country for up to 30 days for an additional fee.

As noted above the new tourist visas will be more costly than previously, but the validity period will be longer. Meanwhile, those in Thailand on such visas will be required to adhere to the regulations which are already in place. It would appear that the Thai government is attempting to provide a long term visa solution for those travelers who wish to stay in Thailand for an extended period of time. It should be noted that in recent months Thai Immigration authorities have been cracking down on long term users of Thai visa exemption stamps as well as those attempting to remain in the Kingdom utilizing the Thai Education visa (also referred to as the ED visa). It remains to be seen whether Thai Immigration officers and Consular Officers at the various Royal Thai Embassies and Consulates abroad will be willing to issue multiple Thai 6 month tourist visas, but the creation of this new type of visa should provide a much needed option to longer term tourists.

It may still be possible to obtain a 1 year multiple entry Thai visa from certain countries. Such one year visas are often issued for those wishing to conduct business or work in Thailand (the Thai business visa), stay in the Kingdom with a Thai family member including spouses (the Thai O visa), or retire in Thailand (the retirement visa, also known as the O-A visa). Under certain circumstances a Thai ED visa may still be an option for long term stay, but it has been reported that those staying in the Kingdom on an ED visa to attend Thai language school are being frequently tested on their language capability.

Those who enter the Kingdom in B, O, O-A, or ED visa status may be eligible for a visa extension provided the applicant can provide certain documentation.

In a recent article in the Bangkok Post it was reported that the current government in Thailand is taking measures to foster growth for small to medium sized enterprises (SMEs) in Thailand. It would appear that the present government is eager to provide encouragement for small and medium sized businesses in Thailand. Furthermore it seems as though Thai officials are attempting to position the country as a location of choice for small business start-ups within the greater framework of the Association of Southeast Asian Nations (ASEAN) and the ASEAN Economic Community (AEC). However, of particular interest to this blogger was the mention of possible rule changes with regard to Thai corporate regulations pertaining to Thai Company registration and the shareholdings thereof. To quote the aforementioned article directly:

Mr Pongpun said the authorities were improving regulations on the incorporation of private companies to allow the incorporation of a juristic person registered by only one person.

At present, corporations (also referred to as juristic persons) in Thailand must have a minimum of three (3) shareholders in order to incorporate under Thai law. It should be noted that prior to an amendment to Thai corporate law at approximately the turn of the century it was required that all companies registered in Thailand have a minimum of 7 shareholders in order to incorporate pursuant to Thai law. Many at the time felt that the 7 shareholders requirement was too cumbersome and for that reason the statutorily required number of shareholders was reduced to 3. Since then, there have been those who have noted their belief that allowing Thai corporate structures with only one shareholder would bring Thai corporate law more in line with similar bodies of law globally. For example, in many American jurisdictions Limited Liability Companies or LLCs are only required to have one member/shareholder, while similar Limited Company (Ltd.) structures are allowed in Britain and the Commonwealth nations and many European jurisdictions allow for similar corporate structures as well.

It remains to be seen whether Thai corporate law will be amended to allow for single shareholder corporations in Thailand. It is a good sign that such structures are being considered by Thai officials especially since such structures would be especially beneficial to small business owners in Thailand. Of special note to American readers, pursuant to the provisions of the US-Thai Treaty of Amity it is possible for American Citizens to own 100% of an Amity company registered in Thailand. Should the aforementioned changes take place it could result in Americans being able to own their small business singularly without any Thai shareholders.

In recent weeks there has been a great deal of speculation and confusion surrounding the implementation of an alcohol ban in Thailand. Initially it was reported that a new nationwide ordinance was to come into effect whereby no one would be permitted to sell alcohol near schools in Thailand. It was then reported that such an ordinance had in fact been signed. This placed some business proprietors in Thailand into a state of consternation as the effect of the new rules would have significant impact upon their businesses. Furthermore, there were those who speculated that property owners in the relevant areas might lose real estate value in light of the new regulations.

However, Thai officials apparently reversed their decision at the last minute. Notwitstanding the fact that the proposed ordiance was signed by relevant officials, the text of the newly promulgated regulation was apparently not published in the Royal Thai Gazette and it would seem the proposed regulation has been withdrawn for the time being in order to more thoroughly review the overall policy regarding alcohol consumption and distribution in Thailand.

Meanwhile, it should be noted that from the 30th through the 31st of July, Thailand maintained an effective ban on alcohol pursuant to previously enacted legislation barring alcohol sales during significant Buddhist holidays. Notwithstanding the fact that the regulatory changes noted above were rescinded it remains illegal in Thailand (except under narrow circumstances) to sell alcohol during major Buddhist holidays.

In recent years there has been an upsurge in ordinances regarding alcohol sales. It appears that officials in Thailand are attempting to balance the need to maintain tourism with the conservative outlook of the majority of Thai people, especially on the issue of alcohol consumption. Where the balance will ultimately rest remains to be seen, but it is logical to infer that the alcohol laws in Thailand may be altered in the near future. Such changes seem unlikely to be as stringent as the recently proposed rules, but some form of regulatory change may be on the horizon.

Failure to comply with relevant regulations regarding alcohol sales could result in civil and criminal penalties for individuals and companies in Thailand. As of the time of this writing this blogger has been made aware of numerous anecdotes noting heightened police presence in entertainment areas in an effort to suppress alcohol sales during the Buddhist holidays. Thai authorities take violations of alcohol regulations seriously and this is especially the case during major Buddhist holidays in Thailand. Those establishments violating alcohol regulations could see their Thai alcohol licenses suspended or even rescinded depending upon the circumstances of the situation. Liquor sales in Thailand are often a significant component of a restaurant or entertainment venue’s revenue and therefore complying with relevant regulations could prove vital to such businesses in Thailand.

In recent weeks there has been talk of casino legalization in Thailand. Speculation began in earnest after the national police chief in Thailand came out in favor of casino legalization noting support for regional casinos in Thailand (many have also noted their belief that Pattaya would be an ideal location for a Casino should legalization ever become a reality). Meanwhile, other officials in Thailand noted their opposition to Casinos in Thailand citing the knock-on social problems that often arise in conjunction with legalized casino gambling. Notwithstanding the fact that members of the national reform council were in favor of casino legalization and the notion had gained support from other notables, including the Thai finance minister, the issue of Thai casino legalization appears to be a non-starter. This is especially the case in light of the fact that the current Prime Minister of Thailand has quashed the idea of casino legalization occuring during his term of office.

Even though casino legalization may not be coming to fruition under the current government, there are some forms of gaming which are legal in the Kingdom of Thailand. Currently, it is legal to gamble on horse racing at two of the main horse racing venues in Bangkok and there is sanctioned gaming associated with horse racing outside of Bangkok. Concurrently, Lumpinee Boxing Stadium allows gaming related to the boxing events which occur on the premises. Finally, the lottery is also a legal form of gaming in Thailand. In recent months issues have arisen with regard to the price of lottery tickets in Thailand as the Thai government has attempted to enforce laws regarding the prices for such tickets quoted to the consumer public.

As of the time of this writing, online gambling is illegal in Thailand and many online gaming websites are blocked by the Thai authorities. One of the main argumentss in favor of legalizing gambling in Thailand has been the notion that doing so would capture much of the money which is lost to casinos operating along Thailand’s borders with her neighbors. Whether this argument is sound remains anyone’s guess as casino legalization has yet to occur in Thailand. Meanwhile opponents of casino gaming in Thailand point to moral qualms they have with the practice and also to the fact that many in Thailand do not have the financial means to enjoy casino gambling and the overall lack of financial ability to support gambling habits could lead to serious social and economic problems for Thai society as a whole.

Only time will tell whether Thailand sees legal casinos and if such a transition to legalized gaming results in a net benefit for the Kingdom of Thailand.

In a historic decision the United States Supreme Court has legalized same sex marriage across the United States of America. The decision coming approximately 2 years after the important decision which provided Federal recognition to same sex marriages performed in States where  such unions were legal; the Supreme Court has ruled that same sex couples have a right to marry in any State throughout the country. As noted in a recent article in the Washington Post, Justice Kennedy pointed out the blatant inequality of the legal situation prior to this ruling:

“The limitation of marriage to opposite-sex couples may long have seemed natural and just, but its inconsistency with the central meaning of the fundamental right to marry is now manifest,” he wrote. “With that knowledge must come the recognition that laws excluding same-sex couples from the marriage right impose stigma and injury of the kind prohibited by our basic charter.”

This ruling is certainly a major victory for the LGBT community. For those who live overseas or who have a same sex partner abroad the ruling smooths out some of the rough edges of the United States Immigration process for same sex couples. In the past, a same sex couple could obtain a K1 Visa (for a fiance) in much the same way that a different sex couple could. However, if the couple intended to reside in a State that did not recognize same sex unions, then the couple might then be required to travel to a State which recognized such unions. With this recent ruling, that issue is effectively resolved. As has been previously noted on this blog, the US visa process for same sex couples has become essentially the same as the process for different sex couples. A Thai-American same sex couple may now opt to seek a fiance visa based upon an intention to marry in any US jurisdicition, or if already legally married the couple may choose to seek either and IR-1 or CR-1 immigrant visa based upon legal marriage to an American citizen.

Many expatriates in Thailand have been finding it increasingly difficult to obtain a long term (1 year or more) visa in Thailand. This frustration may be due in part to the fact that in 2014 new immigration rules were promulgated and the governmental administration in Thailand went through a transition. Moreover, it would also appear as though Thai Consular Officers abroad have been increasingly less inclined to issue one year non-immigrant multiple entry visas to foreign nationals seeking such documents outside of Thailand. Even 90 day visa applications are being placed under increased scrutiny compared to years past. Whether one agrees with these policies is basically irrelevant  as foreign nationals must acclimate themselves to the notion that staying in Thailand long term is becoming more difficult.

In fact, there is a great deal of anecdotal evidence to suggest that remaining in Thailand on an Education visa is not as simple as it used to be. In fact the cost of going to classes has increased for students in various Thai schools. This would appear to be the result of the fact that many so-called “visa mill” schools have been under review or in some cases even closed as they seem to exist only for the purpose of providing long term ED visas to foreign nationals.

Fortunately, all is not completely bleak on this topic. Some genuine schools which offer genuine classes are still able to offer Thai ED visas. That stated, it should be noted that attendance in such classes is being monitored more carefully. Also, if one wishes to conduct legitimate business in Thailand then it is possible to obtain a Thai business visa. However, such applications are being carefully reviewed. The same can be said for Thai retirement visa applications as applicants are finding their financial status reviewed carefully before new retirement visas or new  retirement visa extensions are being issued. Further, it appears that those present in the Kingdom of Thailand on a Thai marriage visa are being subjected to review and in some cases it appears that officers are traveling to marriage visa holder’s homes in order to ascertain whether or not such marriages are in fact genuine. Meanwhile, immigration authorities have imposed new rules requiring digital photographs of those seeking visa extensions notwithstanding the fact that such applicants routinely provide passport sized photos with their application.

In short, it appears that reforms of the Thai immigration system have changed the way in which foreign nationals apply for visas and the result could prove to be a more costly and/or cumbersome process for those seeking immigration benefits in Thailand.

As of the time of this writing it has been announced that applications for Permanent Residence in the Kingdom of Thailand are being accepted. Unlike other countries, authorities in Thailand do not accept applications for residence year-round. Instead such applications are only accepted during specified periods per announcements in the Royal Gazette. The following is the official announcement in English:

Notification of Immigration Bureau

Subject: Admission of application for residential permit in the year B.E. 2557(2014)

According to the notification from the Prime Minister and Minister of interior by approval of the cabinet issued on December, 29  B.E. 2557 (2014) regarding quota of aliens to have residence in the Kingdom for the year 2014 the following stipulations are applied.

 

1. 100 persons of each nationality

Colony or colonies of each country shall be considered as one country while each Sovereign state shall be considered as one country

2. 50 persons for stateless people.

Base on the Immigration Act B.E. 2522 (1979) stipulated that foreign nationals who wish to attain resident in the Kingdom of Thailand may apply for resident permit under the approval of the Immigration Commission and the Minister. The criteria on qualification and conditions of applicants are under consideration of the Immigration Commission.

 

Thus, additional criteria and qualifications of the foreign applicant for residential are issued as follows:

 

1. Qualification of the eligible applicant to be considered for

1.1 Foreign national applicant must hold a passport of his/her own current nationality except the holder of passport which stated as STATELESS person.

1.2    Foreign national applicant must be qualified for each category as prescribed in the Notification of the Immigration Bureau, Subject: Criterion and conditions of foreign nationals’ residential permit consideration dated 26 December B.E. 2546 (2003).

 

2. Time and place for submit the application forms

2.1 The application can be submitted on the following day after the date of this Notification until 30 January 2015 during office hours.

2.2 Place to submit the application: Bangkok: contact at Sub-division 1 , Immigration Division 1, The Government Complex Commemorating His Majesty The King’s 80th Birthday Anniversary, 5th December, B.E. 2550 (2007), Building B, 2 Floor, Counter D, 120 Moo 3, Chaengwattana Road, Thungsonghong Sub-District, Lak Si District, Bangkok 10210

In other regions : contact at local or nearby Immigration Office/Checkpoint,

 

3. Application and supplementary documents

 

3.1 Application (Form TM9.)  must be made in person. The photograph is required as well as all of their passports.

3.2 Applicants must submit the supplementary documents required as stipulated for each category.

4. Fees

4.1 A fee for each application is 7,600 baht (Seven thousand six hundred baht only) whether permission is granted or not. Application fee is not refundable.

4.2 If the application is approved by the Immigration Commission, Prime Minister and Minister of Interior, the fee for the residence permit is 191,400 baht (One hundred ninety-one thousand four hundred baht only). However, the residence permit fee for spouses and children (under 20 years of age) of aliens who already had the residence permit or Thai citizens is 95,700 baht (Ninety-five thousand and seven hundred baht only).

5. Procedures

For many the idea of setting up a business in Thailand is desirable if for no other reason than the thought of waking up and going to work every morning in one of the most idyllic countries in the world. In the past, many foreign owned businesses in Thailand were structured in such a way that they avoided some of the more stringent provisions of the Thai Foreign Business Act. In most cases Thai nominee shareholders were used to own the majority of a Thai company thereby ensuring that the company was considered “Thai” for purposes of the Act. However, this practice became illegal pursuant to section 36 of the currently enforced version of the Foreign Business Act as quoted below:

“A Thai national or a juristic person, not being a foreigner under this Act, who assists in or aids and abets or participates in the operation of a foreigner’s business specified in the Lists annexed hereto where such foreigner is not permitted to operate that business or who operates the business jointly with a foreigner in the manner holding it out as the former’s sole business or who acts as a foreigner’s nominee in holding shares in a partnership or a 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 or the aiding and abetting or order the cessation of the joint operation of the business or order the cessation of shareholding or partnership, as the case maybe. 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.”

Notwithstanding the fact that the use of Thai nominees is illegal, the practice persists. This fact was recently noted in a Bangkok Post article on the topic. However, in some cases discerning whether a company is utilizing nominees or simply structuring itself in such a way so as to provide security to foreign shareholders can be difficult. Therefore, when structuring a company in Thailand it is often prudent to seek the advice of competent legal advisers to in order to ensure that one’s business practices comport with relevant laws and regulations.