On 15 September 2020, the Cabinet agreed to allow in foreign tourists who agree to go through a 14-day quarantine and stay for at least 90 days to help stimulate Thailand’s economy. Prime Minister General Prayut Chan-o-cha said that the government would issue special tourist visas for long-stay visitors. The most critical condition would be a 14-day quarantine. He also said that “visitors can arrive for tourism or health services, and they can stay at alternative state quarantine facilities, specific areas, or hospitals that function as quarantine facilities.”
Deputy government spokeswoman Traisulee Traisaranakul said that long-stay visitors would have to present proof of payment for their extended stay in the country, which could be in the form of evidence of payment for a hotel reservation or the lease of a condominium unit. Ms. Traisulee also said that the 90-day special tourist visa could be extended twice, for 90 days each time, making the maximum duration of the long-stay visas 270 days and that long-stay visitors could begin arriving next month.
Mr. Prasong Poontaneat, finance permanent secretary, said that the country needs to generate income from tourists, especially those from the countries where Covid-19 had not been spreading in past months – such as China, Taiwan, and some European countries. He also said that there are now twenty Chinese provinces free of Covid-19, and these twenty states have a combined population of around 800 million people. If only one percent of them, about 8 million people, were to visit Thailand, they could support the tourism sector.
It is important to note that the long-stay tourist visas will only be issued to new tourists. Tourists who are currently in Thailand and are unable to or unwilling to return home must still obtain a letter from their respective embassies requesting that they be allowed to stay in the country. This letter will allow them to be granted only an extra 30 days’ stay in the country.
If you have any question regarding the visa matter, Feel free to contact us at [email protected] or +66 (02) 117 9131 – 2.
All goods that are imported into Thailand must be reported to the Thai Customs Department. The steps required to import products into Thailand legally are outlined below.
Step 1 – E-Customs system registration
As of January 1st, 2007, the procedures for importing goods into Thailand have been centralized into the online e-Customs system. In order to register for the e-Customs system, the importer must first obtain a “digital certificate” prior to registration. A digital certificate is an electronic signature file used to confirm the identity of the sender of electronic documents and the authenticity of said documents.
Once a digital certificate is obtained, the importer may then proceed to register for the e-Customs system. Companies can either register with the system directly (i.e. at their own office) or through an agent. If a company decides to register through an agent, the agent will handle all aspects of the registration process. If a company decides to register to use the e-Customs system directly, the following steps must be taken: e-Customs software must be installed on the company’s IT system, and digital certificates must be verified;
the importer must register with Thai Customs at one of the following places:
The Registration and Customs Privileges Sub-Division;
Customs Procedures and Valuation Standard Bureau;
or the General Administration Division at each Customs office;
the accuracy and readiness of message exchange with the e-Customs system must be tested;
once tests are completed successfully, the Communication and IT Bureau will issue an e-Customs registration ID, and the process is complete.
Step 2 – Review of controlled goods
Two separate checks must be made before goods are imported: first, products that require an import permit (if any) must be identified. A range of goods requires import permits issued by different agencies before the date of arrival. Second, it must be ascertained if products are considered ‘red line’ goods (as opposed to green line). Red line goods are goods found to be at high risk or requiring additional certification and verification upon arrival. When importing red line goods, it is necessary to provide the following supporting documents:
Bill of Lading (B/L) or Air Waybill
Import License (if required)
Certificates of origin
Other relevant documents (e.g. list of ingredients, technical standards certificates, etc.)
There is no definitive list of red line goods. However, the e-Customs system will inform the importer once the Import Declaration has been submitted (see Step 3) whether the goods are considered red line or green line. As such, it is crucial to ensure the correct paperwork is prepared for all imports in order to be prepared for a shipment being flagged as being red line.
Step 3 – Submission and verification of the declaration
Once all correct documentation is prepared, an Import Declaration can be submitted to the e-Customs system together with an arrival report with the information of the vessel carrying the shipment of goods. The e-Customs system will then check and verify the submission, identify any discrepancies, and specify whether the shipment is considered green line or red line.
Step 4 – Payment of taxes and duties
Thai Customs Tariff Decree B.E. 2530 (1987) stipulates that “goods imported or brought into, exported, or taken out of the Kingdom shall be chargeable with and liable to duty”. Some items are exempt from import duties.
For goods that are subject to import duties, payment can be made at either the Customs Department of the port of entry or via the e-Customs system’s e-Payment section.
Step 5 – Inspection and release
The final step before the imported cargo is released is the inspection of the goods. For green line goods, this is a simple online screening and will take only a few minutes. For red line goods, all the supporting documents will have to be presented, and the cargo must be physically examined by customs officials.
If you have any question regarding the Thailand’s Import Procedures, Feel free to contact us at [email protected] or +66 (02) 117 9131 – 2.
The Thai Revenue Department has raised its standard of tax auditing by joining the Tax Inspectors Without Borders (“TIWB”) program and requesting experts to share their know-how and exchange auditing experiences with Thai Revenue Officers. The purpose of joining this project is to close tax loopholes regarding multinational e-commerce businesses and newly established businesses, and to create fairness in paying taxes.
Mrs. Sommai Siriudomset, Spokeswoman of the Revenue Department, stated that “currently, every country is facing the problem of taxing foreign streaming or e-commerce businesses that have no permanent establishments in Thailand but are receiving income from Thailand. The Thai Revenue Department thereforeapplied to be part of the TIWB project, which is a project established under the cooperation between 2 international organizations, namely the Organization for Economic Co-operation and Development (“OECD”) and the United Nations Development Program (“UNDP”). The TIWB has the purpose of providing support, knowledge, and techniques to help improve the efficiency of tax auditing for developing countries and to strengthen international tax cooperation. There is a coordination of agencies in countries that are ready to send experts to share experiences or give advice to officers of the Thai Revenue Department through joint operations.”
The Spokeswoman of the Revenue Department added that “in addition to enhancing the ability of Thai tax authorities to track taxes from e-commerce businesses and new online businesses, joining the TIWB International Tax Auditor Programis also helping create fairness in tax collection between domestic operators and foreign operators providing services inThailand.”
In early June of 2020, the TIWB appointed Dr. Ekniti Nitithanpraphas, Director-General of the Thai Revenue Department, as a member of the Governing Board of TIWB as a result of his active participation in many international meetings, he was the first Asian to be appointed to this position.
If you have any questions regarding this matter, feel free to contact us at [email protected] or call us at +66 (0)2 117 9131-2.
Thailand became a party to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC), making Thailand the 137th state to become a party to the agreement. The MAC was established jointly by the Organization for Economic Co-operation and Development (“OECD”) and the Council of Europe in 1988 to promote tax transparency, fairness in tax administration, and to prevent evasion and avoidance of transnational taxes, which is in accordance with the international cooperation framework that Thailand is a party to.
Dr. Ekniti Nitithanpraphas, Director-General of the Revenue Department, stated that the MAC is an essential tool in helping tax authorities around the world cooperate in accordance with the framework of the OECD, the G20 group regarding Inclusive Framework on Base Erosion and Profit Shifting, which aims to prevent the migration of tax bases of multinational corporations, and the Global Forum on Transparency and Exchange of Information for Tax Purposes, which sets standards for the exchange of tax information between countries to allow the utilization of information that is exchanged under the MAC agreement by tax authorities. Thailand’s participation in the MAC agreement expands its network of parties in the exchange of tax information, from the previous 60 parties under the Double Tax Agreement (DTA) to more than 130 countries under the MAC, demonstrating Thailand’s commitment to international cooperation regarding tax matters.
The Director-General of the Revenue Department also added that the Revenue Department is in the process of bringing the signed MAC agreement to Parliament for consideration and ratification. Exchanging information under the MAC will help the Revenue Department obtain data to analyze the tax behavior and risk of multinational entrepreneurs and help promote tax fairness, such as through e-Service laws, which will lead to the increased competitiveness of domestic entrepreneurs and an expanded tax base, which will undoubtedly be beneficial for the country.
If you have any questions or require additional information, feel free to contact us at [email protected] or call us at +66 (0)2 117 9131-2.
On June 9th, 2020, the Thai Cabinet approved a draft amendment to the Thai Revenue Code which would impose a value-added tax (VAT) on foreign E-service providers and E-platform operators (with no permanent establishments in Thailand) that received payments from users located in Thailand. The new VAT requirement is expected to apply to all forms of qualifying international e-service providers and e-platform operators. These include but are not limited to websites, smartphone applications, and social media. The new amendment will apply to a variety of businesses, from hotel booking sites to streaming media platforms.
The new legislation aims to update Thailand’s tax guidelines to be in accordance with guidelines from the Organization for Economic Cooperation and Development (OECD) titled Mechanisms for the Effective Collection of VAT/GST where the supplier is not located in the jurisdiction of taxation, which has already been adopted by many countries. In addition to this, the amendment would allow Thais to see how much they spend on e-services and e-platforms provided by foreign operators.
According to this amendment, foreign e-service providers and e-platform operators which are not located in Thailand but receive more than THB 1.8 million in any given tax year from non-VAT registrant customers or users in Thailand, and that provide paid-for services within Thailand, must register for VAT with the Thai Revenue Department. This is the same rule that already applies to Thai operators of VAT-paying businesses. VAT registration (which can be done electronically) will result in foreign operators having to remit 7% VAT on income received from non-VAT registrant customers or users in Thailand, together with VAT returns, to the Revenue Department on a monthly basis. However, unlike ordinary Thai VAT registrants, foreign e-service providers and e-platform operators must not deduct output tax from the 7% VAT payable or issue tax invoices to Thai customers. Operators of e-platforms whose members provide e-services will have to pay VAT on behalf of those members.
The new amendment should not create any tax burdens for Thai consumers who purchase services from the offshore operators. Most Thai consumers are unaware that they must currently pay 7% VAT to the Revenue Department, and file the relevant VAT form, each time they pay foreign operators for services, on a self-assessed basis.
The amendment to the revenue Code will be sent to be approved by the parliament before it is published in the Government Gazette, and the Revenue Department is subsequently expected to issue ministerial implementing regulations and informational guides to the public. This should provide more clarity on specific unanswered questions such as the types of exempted e-services, enforcement mechanisms, penalties for non-compliance, and other issues.
If you have any questions, feel free to contact us at [email protected] or call us at +66 (0)2 117 9131-2.
Thailand is a country with many business opportunities for foreign investors; this includes the incorporation of partnerships and companies. There are two types of companies in Thailand, private limited companies and public limited companies. The main differences between the two is the governing law and the sale of shares. Private limited companies are governed by the Thai Civil and Commercial Code and sell shares privately. Whereas, public limited companies are governed by the Public Limited Companies Act B.E. 2535 (1992), and shares are traded on the Thai stock market.
For small businesses, setting up a private limited company is the most common way to start. There are specific requirements that should be met:
At least three founders holding at least one share each,
Value of a share should not be less than five THB, and
At least one appointed director.
The process for the registration for the company can be completed within one day. It must be noted that all information with regards to the directors, shareholders, and any changes in the company structure will be accessible to the public.
With regards to accounting, all juristic persons, including private limited companies, must submit financial statements every year, regardless of the company’s operation status. This means that if a company ceases to operate but has yet to go through the liquidation process, it must still comply with these legal requirements. All companies have the duty to start the accounting period from the date of the company registration.
A “Thai company” means that more than 50% of the total shares are owned by Thai nationals. Therefore, for the company to maintain its status as a Thai company, the amount of shares that foreigners can own must not reach 50%. If the amount reaches 50%, then the foreign company may – if no exemption is applicable – require a foreign business license (‘’FBL’’) to operate in Thailand. Due to restrictions imposed under the Foreign Business Act B.E. 2542,
the government official will consider various criteria before granting an FBL, such as the advantages and disadvantages to the nation’s safety and security, economic and social development, size of the enterprise, local employment, etc. The approval of the license depends on the profits that will be generated for Thailand, and if it promotes Thai interests. The entire process is rather time-consuming and often unpredictable.
Besides the FBL, Thailand also offers other incentives for foreign investors, such as through the Thailand Board of Investment (‘’BOI’’). The BOI was established pursuant to the Investment Promotion Act B.E. 2520 for the purposes of promoting certain foreign and domestic investments that are regarded as welcomed in Thailand. The BOI has discretionary authority to grant specific trade, taxation, employment, financial and other benefits. BOI incentives are divided into two categories, tax incentives and non-tax incentives. Tax incentives depend on many factors such as geographic location, nature of the business, and whether the output is intended for export or domestic sale, whereas non-tax incentives are available for all businesses
Company Registration Process:
The first step of the company registration process is name reservation. To reserve a name, a promoter is required to submit an Online Name Reservation Form to the Department of Business Development of the MOC.
After the name reservation has been approved, the company must then submit the application to register its Memorandum of Association (MOA) and to register the company formation which can be done at the same time.
The MOA must include the name of the company, the province where the company will be located, the scope of the company’s business, the capital to be registered, and the names of the promoters. The capital information must include the number of shares and their par value. At the formation step, the Articles of Association (AOA) (also called bylaws of the company), the director(s) and director(s)’ authority, company’s auditor and the authorized capital, although partly paid, must all be issued.
Although there are no minimum capital requirements for companies registered as Thai companies, the amount of capital should be reasonable and adequate for the intended business operation. Please note that if the company is to employ foreigners, certain minimum paid-up capital requirements for the visa and work permits may apply.
The official fees and stamp duty regarding company registration are as follows:
Certificate of registration
Stamp duty for MOA
Stamp duty for AOA
Total amount is 6,000 THB.
An additional 50-baht document examination fee may also be charged.
A company that have one or more employee shall register for Social Security with the Social Security Office within 30 days after the first employment. A company that has a turnover in excess of 1.8 Million THB must also register for VAT with the Revenue Department within 30 days of the date the annual turnover exceeded that threshold.
If you have any questions regarding the business operation in Thailand, feel free to contact us [email protected] or call us at +66 (0)2 117 9131-2.
In Thailand, all employers, and employees, except for the government administration and state enterprises, are governed by the Thai Labor Protection Act of 1998 (“LPA”) (amended 2019). This act regulates the basic rights of both employees and employers by defining the working hours, welfare funding, holidays, sick leave, educational leave, maternal leave, overtime, and work safety. It also contains rules on how to legally end an employment contract, and the procedures to follow in case of wrongful dismissal.
In Thailand, an employer is entitled to terminate the employment of employees at his/her discretion and is not required by law to specify a reason for dismissal. However, if the grounds for dismissal are not specified, an employer is obligated to make payment of statutory severance pay at the rate set out by the LPA, to an employee whose employment was terminated without reason or for reasons other than those stipulated in Section 119 of the LPA.
Dismissal without cause
Section 118 of the Labor Protection Act states that employees who have worked for 120 days or more are entitled to receive severance pay if they are dismissed without cause. Employees who have worked for less than 120 days can be dismissed without cause and are not entitled to receive severance pay.
The minimum notice period for the dismissal of employees must equal to at least 1 payment period but does not need to be longer than 3 months. However, if the employment contract provides a notice period of over 3 months, the employer must comply with such specific notice period.
Please note that a notice of dismissal is not required if an employee is being dismissed due to the reasons stipulated in section 119 of the LPA.
Severance pay must be paid to the employee when he/she is dismissed without cause and is based on the duration of the employment:
LENGTH OF SERVICE
SEVERANCE PAY RATE
120 DAYS ~ < 1 YEAR
1 YEAR ~ < 3 YEARS
3 YEARS ~ < 6 YEARS
6 YEARS ~ < 10 YEARS
10 YEARS ~ < 20 YEARS
> 20 YEARS
Dismissal with a cause
Section 119 of the LPA states that an employee will not be entitled to severance pay if his/her employment is terminated on the following grounds:
The employee performs his/her duty dishonestly or intentionally committed a criminal offence against the employer.
The employee willfully caused damage to the employer.
The employee committed negligent acts which caused serious damage to the employer.
The employee violated work rules, regulations or orders of the employer which are
The employee was absent from duty without justifiable reason for three consecutive working days regardless of whether there is a holiday in between.
The employee was sentenced to imprisonment by a final court judgment. If the imprisonment is for offences committed by negligence or a petty offense, it shall be an offense that causes damage to the employer.
Wrongful dismissal refers to a situation where an employer has terminated or laid off an employee in a manner that violates the employee’s rights under the LPA. Violation of the LPA may result in the employer receiving a fine of between 5,000 and 200,000 THB and/or imprisonment of up to one year.
Section 49 of the Labor Court Establishment and Dispute Procedure Act B.E. 2522 (1979) states that in the dismissal case, if the Labor Court thinks the dismissal is unfair, it shall order the employer to reinstate the employee at the same level of wage at the time of dismissal. However, if the labor court thinks that such employee and employer cannot work together, it shall fix the amount of compensation to be paid by the employer which the Labor Court shall take into consideration the age of the employee, the working period of the employee, the employee’s hardship when dismissed, the cause of dismissal and the compensation the employee is entitled to receive. Cases of wrongful dismissal include:
Immediate dismissal without a clear and full explanation of the reason or the termination of the agreement without serious cause nor severance pay.
The termination of the agreement without payment of the unused annual leave.
The termination of the agreement based on the (claimed) violation of the work regulations by the employee without any prior warning.
Due to the fact that section 49 of the Labor Court Establishment and Dispute Procedure Act B.E. 2522 does not provide a clear definition, or conditions for wrongful dismissal, it is the discretion of the Court to decide whether or not such dismissal is a lawful, and the amount of compensation to be awarded to the employee in case of a wrongful dismissal.
In conclusion, the LPA regulates the basic rights and duties of employees and employers in Thailand. All employers and employees, except for the government administration and state enterprises, are governed by the LPA. Violation of the LPA either by wrongful dismissal or any other violations may result in the employer having to compensate the employee, receiving a fine of between 5,000 and 200,000 THB and/or imprisonment of up to one year.
If an employee has worked for an uninterrupted period of over 120 days, and he/she was dismissed without cause, he/she is entitled to statutory severance pay of from 30 days’ wages to 400 days’ wages. If the employee was dismissed due to causes specified under section 119 of the LPA, the employer is not required to provide advance notice of dismissal, and he/she is not entitled to receive severance pay.
The notice period for the dismissal of an employee is at least 1 payment period but does not need to be longer than 3 months unless otherwise stated in the employment contract.
If an employee feels that he/she was a wrongfully dismissed, he/she may file a case with the Labor Court, but according to section 49 of the Labor Court Establishment and Dispute Procedure Act B.E. 2522, whether or not the dismissal was unlawful, and the amount of compensation the employee is entitled to depends on the sole discretion of the Court.
If you have any questions regarding these Dismissal of Employees in Thailand, feel free to contact us at [email protected], or call us at +66 (0)2 117 9131-2.
Comments Off on Bank of Thailand relaxes rules on Foreign Exchange Transactions
As the Thai Baht is under pressure due to imbalanced capital flows, thus unusually strong in comparison to foreign currencies, the Ministry of Finance (MOF) and the Bank of Thailand (BOT) decided to loosen rules to facilitate capital outflows. MOF and BOT expect these measures will lessen pressure on the Thai Baht. These regulations are effective since November 8th, 2019 and include facilitations on:
Repatriation of export proceeds;
Investment in foreign securities;
Outward transfers, and
Settlement of gold trading in foreign currency.
From a practical perspective it is particularly interesting that the threshold, based on which additional verification and documentation need to be provided to commercial banks when outward transfers are conducted, has been increased. This threshold was increased from 50.000 USD to now 200.000 USD. This relaxation of the regulation is aiming to facilitate foreign exchange transactions by reducing the burden of providing documentation. As a consequence, outward transfers – especially for companies and businessmen – will now be swifter and easier to handle.
If you have any questions regarding this topic, feel free to ask at [email protected].
When importing a boat from oversea to Thailand – even if it is solely for personal use and not for running a business – it is necessary to register the boat at the Marine Department in charge. Which department is in charge is determined by the mooring of the boat. To complete the registration process, the following documents are required:
Boat sale agreement;
Receipt of paying import taxes at the Customs Department;
Supporting documentation to certify domicile in Thailand by going to the immigration office that is in the province that the boat is located (certification of the Thai visa at the Immigration Office); and
Translations of all documents in English into Thai.
In case a pre-owned boat is imported, additional documents are required as follows:
Boat registration document from abroad;
Certificate of the cancellation of the boat registration abroad.
If the boat is neither registered as a Thai boat nor is operated under the Thai flag, the boat can remain in Thailand only for a limited time. The boat has to be brought out of Thailand after the permitted time has expired, thus if the boat shall be operated in Thailand without time restriction, it must be registered as a Thai boat.
There is no limitation regarding the number of boats which can be registered under the same person. However, the applicant for the boat registration must be the same person as the importer and the person on the purchase agreement. If the names differ, the registration cannot be done. Therefore, it is recommendable to complete the registration at the Marine Department under the buyer’s name as a first step, after the boat is imported. After the registration is completed, the transfer of the boat should go smoothly.
Please note: a boat registration for a foreign individual is possible, but a foreign company is not permitted to register a boat under its name. If a company wants to register a boat under its name, at least 70% of the shares have to be held by Thai nationals.
If there are any questions regarding the import of a boat to Thailand, feel free to contact us at [email protected].
Comments Off on Can foundations own land in Thailand?
As many foundations operate schools, or orphanages the possibility to own land is one of the key questions for them.
Under certain circumstances, a foundation may own property in Thailand. However, if a foundation has objectives that focus particularly or mainly on the benefit of foreigners, it may be deemed to be a foreign entity and may not own land in Thailand, referring to the Land Code, section 94 (4).
When reviewing the application for a transfer of ownership of land from a third party to a foundation, the Land Office will check the objectives and articles of association of the foundation, as well as interview the board of directors of the foundation. If it is found that the objectives are for foreigners, children that do not have Thai nationality, or have the purpose specifically for the benefits of foreigners, the transfer of ownership will not be allowed to the foundation.
Furthermore, the foundation should be established, especially for public charity, religious, art, scientific, educational, or another purpose for the public benefit and not for sharing profit. The property of a foundation must be managed to serve the objectives of the foundation, and not for the benefit of a third person.
If there are any questions regarding this matter, feel free to ask at [email protected].