Integrity Legal

It is becoming increasingly clear that Thai Immigration officials are becoming ever more concerned with those who are working illegally in Thailand. Therefore, this state of affairs begs the question: how does one obtain and/or maintain work authorization in Thailand?

It should be noted that there are two ways in which one can obtain employment authorization in Thailand. One way is to receive an offer of employment from a Thai company. Generally, if the prospective employee is offered employment while abroad, then a WP3 work pre-authorization letter will need to be obtained and the foreign worker will need to apply for a Thai business visa before traveling to Thailand to have their work permit booklet issued. However, if the foreign worker is not abroad, then that individual may need to travel abroad in order to see to it that a WP3 is issued as the Thai Labor Department will only issue such documentation on foreign workers who are physically residing outside of Thailand. Within Southeast Asia, the WP3 is increasingly necessary as those Royal Thai Embassies and Consulates in the region which issue Thai business visas will only do so for those who have been issued a WP3.

Once in Thailand with a B visa, the prospective employee can seek their work permit booklet. Their employer must formally request such documentation as the employer is the sponsor of the work permit. After the permit is issued it should remain either on the premises of the place of business or if the employee must travel to another location to undertake work-related activity a copy should go along with the employee. It is worth noting that in March of 2018 the Thai Labor Department relaxed Thai work permit rules and therefore it is now possible for foreign work permit holders to engage in work activity away from their sponsoring-business’s premises.

The protocols regarding work permit issuance in the context of a business owner are qualitatively different compared to work permit issuance for someone wishing to be employed at a company in Thailand. One significant difference, especially in the context of an SME or a startup company is the “Catch-22” situation some prospectively self-employed foreigners find themselves in. For example, in order for an entrepreneur to obtain a work permit, they need a business visa, a WP3 is often necessary, and in order to obtain a WP3 a company is necessary. Therefore, Thailand company registration is often the first step toward obtaining a Thai business visa and work permit. Those wishing to setup a Thai company are well advised to seek professional guidance as there are multiple ways to incorporate a Thai business which, depending upon the legal structure, may provide differing benefits.

Tags: B Visa Thailand, business incorporation thailand, Thai B Visa, thai business setup, Thai Business Visa, Thai Work Permit, Thailand B Visa, Thailand Business Registration, thailand business setup, Thailand Business Visa, Thailand company registration, Thailand Work Permit, work permit Thailand, Work Visa Thailand, working visa thailand, WP1, WP3
Posted in Thailand Work Permit | No Comments »

It recently came to this blogger’s attention that the Department of Special Investigations in Thailand have undertaken a raid on various offices of those reportedly engaged in the maintenance of corporate structures utilized for the sole purpose of allowing foreigners to enjoy use of Thai real estate. The text of the announcement from DSI was originally published in Thai. We have undertaken a translation of the announcement in order to provide clarity for what could be considered an important issue for expats in Thailand. The translation is below:

DSI in collaboration with the Institute of Communication Science and the Board of Investment are currently investigating a group of Law Offices in the Phuket, Suratthani and Bangkok area that seem engaged in ‘camouflaged’ corporate structures acting as nominees on behalf of foreign shareholders.

As per government policy to actively pursue foreign investors using Thai nominee companies to own land in order to protect the nation’s interests.  On the 15^th of August 2018, Police Colonel Paisit Wongsmuang, the head of DSI; and Police Major Suriya Singhokmol, his second in command; in collaboration with The Institute of Communication Science and the Board of Investment obtained a warrant to search 4 offices as follows:

1. The first team led by Piya Watnawarangul (special agent investigating civil embezzlement) searched the premises of the Office’s Phuket Branch located at 393/4-5 Moo 1 Soi Bantao 1 Srisuntorn Rd., Chengtalay Subdistrict Thalang District, Phuket.  The premises appeared to be the work place of the Thai Nominees and a suspected location for falsifying documents for the purpose of camouflaging nominee activities.
2. The second team led by Worapoj Maihom, searched the premises of the Office’s accounting branch located at 123/9 Moo 5 Chengtalay Subdistrict Thlang District, Phuket.  The office appeared to provide accounting services for the Nominee companies.
3. The third team led by Jakrapop Klinhom searched the premises of the firm’s Samui branch office located at 17/10 Moo 1 Taweeratpakdee Borpud Sub district, Koh Samu District, Suratthani .  The premises were apparently the work place of the Thai Nominees and a suspected location for falsifying documents for the purpose of camouflaging nominee activities.
4. The fourth team led by Mr. Taweewat Surasit, searched the premises of the Bangkok Branch located at Rajanakarn Building, 3 Floor AA Sathorn Rd, Yannawa Subdistrict, Sathorn District Bangkok, and the work place of the Foreign Managing Directors.

The search yielded copies of documentation, computer data and hardware that will be used as evidence in court proceedings.

Additional information found at each premises showed that the foreign investors seemingly purchased over 80 plots of real estate, consisting of land, vacation homes and houses.

Sources also reveal that the firms seem engaged in nominee activities that allow a large number of foreign investors to buy and sell land in Southern Thailand such as Surat Thani, Pangna, Phuket and Krabi with such activities grossing over 2 billion baht per year.

The investigation has found that the group has used Thai employees to incorporate Thai companies.  These Thai Corporate Entities in turn are used to hold shares in other companies for the purpose of allowing foreign investors to buy land.  These activities are in violation of the foreign business act (1999).  Using Nominees to hold land on behalf of foreign persons or entities has a negative impact on national interests and the real estate industry.  DSI will continue to actively pursue and shutdown such activities.

Please note that the above translation should not be viewed as a definitive interpretation of the underlying announcement and is solely for informational purposes. It should also be noted that the matter has yet to be fully settled via adjudication and the final outcome of the case remains to be seen.

The reader of this posting should note that Thai authorities are becoming increasingly efficient and sophisticated in their law enforcement endeavors. This is clear from the increasing number of immigration raids and the heightened scrutiny of officers throughout the Thai civil bureaucracy on issues ranging from revenue assessment to traffic ordinances. Clearly, it is a time to be mindful not only of the formalities inherent in the letter of relevant laws, but the policy considerations which embody the spirit of those laws as well.

Tags: Board of Investment, BOI Company, BOI Company Thailand, Foreign Business Act, Foreign Business License, Land Holding Company Thailand, Thailand BOI Company, Thailand Business Registration, Thailand company, Thailand company registration, Thailand Holding Company, Thailand Nominee Company, Thailand Property Company, Thailand Real Estate Company
Posted in Thailand Property, Thailand Real Estate | No Comments »

It recently came to this blogger’s attention that there are new penalties associated with violation of the laws and rules regarding foreign nationals working in Thailand as set forth by the Thai Ministry of Labor. Specifically on June 22 of 2017 an Emergency Decree was promulgated stipulating some new rules and new penalties associated with both new and old regulations. Please see below for a distilled translated summary of the important points noted in this recent decree:

1. Should an employer employ a foreign national to work in a position specifically restricted to Thai nationals, such employer shall be fined between 400,000 and 800,000 Baht per employed foreign national.
2. Should an employer allow a foreign national to work outside the scope of the employment specifically noted in the work permit they shall be fined no more than 400,000 Baht for each employed foreign national.
3. Should a foreign national work without first obtaining a work permit or work in a position specifically restricted to Thai nationals, they may be subject to imprisonment of no more than five years and/or fined between 2,000-100,000 Baht, or both.
4. Should a foreign national work on a matter which is deemed immediate and important and do so without acknowledgment of a Labour Ministry officer by receiving form WP-10, they may be fined not more than 100,000 Baht.
5. Should a foreign national work outside the scope of the job description set forth in the work permit, they may imprisoned not more than 6 months and/or fined not more than 100,000 Baht, or both.
6. If an individual, through deceptive means, explicitly or implicitly advertises that they are able to bring a foreign national to work in Thailand in a dmestic capacity without a work permit, they may be imprisoned 3-10 years and/or fined 600,000-1,000,000 Baht, or both.
7. Anyone found operating as a foreign job placement agency without a proper license shall be subject to possible imprisonment for 1-3 years and/or fines ebtween 200,000-600,000 Baht, or both.
8. There appears to be a deposit/pre-authorization requirement being imposed by this decree, but the implications of this section are somewhat unclear. We will update this posting or post again to provide clarification on this point if necessary.

It should be noted that the above summary and translation is for informational purposes only and should be viewed as neither exhaustive nor as a substitute for fully analyzed legal research and translation. Those interested in delving further into this topic are urged to view the full decree in its entirety by following this link provided by the official wesbite of the Royal Thai Gazette.

As has been noted, in recent weeks and months there has been increased scrutiny from the Royal Thai Immigration Police with respect to Thai business visa applicants in the form of surprise inspections. This recent announcement regarding heightened penalties associated with imporperly obtained Thai work permits leads this blogger to infer that heightened scrutiny and possible inspections could be imposed upon foreign nationals working in Thailand in the relatively near future.

Tags: Corporate Services, Thai Business, Thai Company, Thai Visa, Thai Work Permit, Thailand Business, Thailand Business Registration, Thailand company, Thailand company registration, Thailand Work Permit, Work Permit, Working in Thailand, WP1, WP10, WP3
Posted in Thailand Work Permit | No Comments »

It recently came to the attention of the administration of this web log that the subject of the Value Added Tax (VAT) has been a hot news item in Thailand in recent days as the current Prime Minister was noted speculating about the advantages to be gained by the Thai government if the VAT were to be raised one percentage point from the current level of 7% to 8%. To quote directly from The Nation’s website:

Prime Minister Prayut Chan-o-cha has floated the idea of raising the value-added tax (VAT) rate by one percentage point from the current 7 per cent to 8 per cent to raise an additional Bt100 billion in annual tax revenues to finance various public projects.

Meanwhile, it became unclear from further reports whether the Prime Minister was simply expounding upon the advantages to be gained by an increase in VAT or if a change of policy was being discussed. To quote from the official website of the Bangkok Post:

Finance Minister Apisak Tantivorawong said the government plans to keep VAT unchanged at 7% for another year when the previous extension of the last period for keeping VAT at 7% ends on Sept 30. VAT would not increase during the term of this government, he added.

Setting aside the issue of what the Prime Minister’s intentions were with respect to his comments regarding VAT increase (and it would appear from this writer’s perspective that he was indeed simply commenting upon the benefits to be garnered by the government should VAT be increased to 8%) it appears that at least for the foreseeable future the VAT in Thailand will not be increased.

For those who have had experience doing business in Thailand VAT is known as a fact of business-life. In fact, those foreign nationals wishing to setup a Company in Thailand are well advised to note that in order to get a Thai work permit associated with such companies the relevant corporate entity oftentimes must be registered for VAT. Therefore, unlike Thai businesses which may or may not require VAT registration, foreign companies in Thailand will often be VAT registered and therefore an increase in VAT will have a substantial impact upon such enterprises.

Meanwhile, in the aftermath of recent changes to American policy with respect to US Immigration it appears that a number of new Immigration Judges have been impaneled to deal with the staggering backlog of United States Immigration cases in the Immigration Courts. To quote directly from Reuters News Service:

The Department of Justice is deploying 50 judges to immigration detention facilities across the United States, according to two sources and a letter seen by Reuters and sent to judges on Thursday. The department is also considering asking judges to sit from 6 a.m. to 10 p.m., split between two rotating shifts, to adjudicate more cases, the sources said. A notice about shift times was not included in the letter.

Clearly, the new Administration in the USA is stringently enforcing immigration laws as evidenced by the recent stories of increased deportations, travel bans, and heightened scrutiny of immigrants (both Green Card holders and other immigrants) at ports of entry in the USA. It seems rather reasonable to infer that US Immigration matters are likely to be more difficult and time consuming to process in coming weeks and months.

Tags: Green Card, Thai Company Registration, Thai VAT, Thai Work Permit, Thailand Business Registration, Thailand VAT, Thailand Work Permit, US Immigration, US Immigration Court, US Immigration Judge, Value Added Tax, VAT
Posted in Thailand Business, US Visa and Immigration | No Comments »

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.

Tags: Amity Company, Amity Treaty Company, Business Registration Thailand, Company Registration Thailand, juristic person Thailand, Limited Company Thailand, Limited Liability Company Thailand, LLC Thailand, Ltd., Small Medium Sized Business, SME, Thai Business Registration, Thai Company, Thai Company Registration, Thai Corporate Law, Thai juristic person, Thai Limited Company, Thai Limited Liability Company, Thai LLC, Thai SMEs, Thailand Amity Company, Thailand Business Registration, Thailand company, Thailand company registration, Thailand Corporate Law, Thailand juristic person, Thailand limited company, Thailand SMEs, Treaty of Amity, US-Thai Treaty of Amity
Posted in Amity Treaty, Thailand Business, Thailand company, Thailand Legal News | No Comments »

Many people living in Thailand establish corporate entities in order to conduct business in the Kingdom. This is no different for foreign nationals wishing to do business in Thailand. In the past, it was relatively easy for foreign nationals to set-up a Thai company. However, over the years the rules regarding corporate formation have grown increasingly complex as the business environment has evolved. At the same time, Thai officials have implemented policies which foster foreign investment (most notably recent regulations which have decreased the Thai corporate tax rate from 23% to 20%). All of these issues gain a new complexion when one considers the fact that as Thai laws regarding corporations have developed so too have the agreements creating the infrastructure which underlies the Association of Southeast Asian Nations (ASEAN).

In the past, Thai authorities did not, in general, heavily scrutinize Thai companies with all Thai shareholders, even such entities having a foreign director. In fact, there was a time when simply maintaining a majority of Thai shareholders provided a degree of protection against substantial official examination. Thai partnerships (both limited and ordinary) were also somewhat immune from significant governmental oversight even where a foreign partner controlled a stake the firm. However, it should be noted that pursuant to the provisions of the Thai Foreign Business Act virtually all Thai business entities with a foreign majority ownership structure have been required to obtain either a Foreign Business License, a Treaty Certificate pursuant to the provisions of the US-Thai Treaty of Amity, or some other form of documentation showing either licensure from the Ministry of Commerce pursuant to Thai law or exemption based upon a Free Trade Agreement.

As of January 2013, a new policy regarding newly established Thai companies came into effect. Thai companies with any foreign directors must now prove that the registered capital has been paid into the company by the relevant shareholders. This is even the case where the company is wholly owned by Thai nationals. Furthermore, where a foreign national maintains 50% (or more) interest in a Thai partnership evidence must be provided showing paid up capital in the enterprise. Registered capital has always been an issue for Thai authorities, but it would now appear that the rules regarding registered capital will be applied more stringently especially where there is a foreign director or partner involved in the Thai company or partnership.

As the ASEAN Economic Community (AEC) is set to come into existence in 2015 and based upon the fact that Thailand has signed various international agreements pertaining to international trade and foreign direct investment there are some who argue that the time is quickly coming when Thai regulation of foreign run businesses will be liberalized. Until that time comes, the rules imposed upon foreigners setting up businesses in Thailand are likely to be more strictly enforced compared to times past.

For related information please see: Thailand Business Registration.

Tags: Amity Treaty, Amity Treaty Company, ASEAN, ASsociation of Southeast ASian Nations, Business Registration Thailand, Registered Capital, Thai Business Incorporation, Thai Company, Thai Limited Partnership, Thai Partnerhip, Thailand Business, Thailand Business Incorporation, Thailand Business Registration, Thailand company, Thailand company registration, Thailand Limited Partnership, Thailand Partnership, Treaty of Amity, US-Thai Treaty of Amity
Posted in Amity Treaty, ASEAN Business, Thailand Business, Thailand company | No Comments »