Thailand Key Industries, Incorporating, Employment, Payroll & Tax, and Immigration

Thailand Key Industries

Food and Agriculture Industry Capabilities

• Thailand is one of the largest producers and exporters of food globally, positioning itself as the “Kitchen of the World.” Notably, the top five exports are rice, sugar, chicken, tuna, and shrimp – which represented 50% of total food exports
• Thailand has abundant natural resources and year-round growing season
• In addition, there is a quality labour pool available and Thai producers possess valuable expertise, with over 60 years of experience
• Also, there is commitment to quality food and safety standards such as Codex, OIE Standards and the International Plant Protection Convention.

Medical Industry Capabilities

• Thailand is one of the world’s largest medical tourism markets, with over a million international patients traveling to Thailand every year on medical travel packages
• There is a well-developed infrastructure – state-of-the-art technology, facilities, medical services and qualified medical professionals
• Moreover, physicians with overseas training and staff that are multilingual helps to bridge communication barriers
• Altogether, the sectors within the industry that provides opportunities for investments are in medical services, medical device and pharmaceuticals

Biotechnology Industry Capabilities

• Since 1983, the National Center for Genetic Engineering and Biotechnology (BIOTEC) has laid the foundation for the industry, where other various public and private institutions have contributed to the biotechnology research
• The industry is knowledge-base and is applicable across many fields such as medical, agricultural, aquatic, and industrial
• Furthermore, the government has formed a Biotechnology Development Policy Framework 2012-2021 dedicated to further the growth of the industry
• Well-developed infrastructure
• Strict intellectual law enforcement and an abundant supply of skilled workers are available

Incorporating in Thailand

 Types of Entities

• Sole-proprietorship is a business owned by one person with unlimited liability.
• Partnership
  • Ordinary Partnership’s partners are liable for all obligations of the partnership.
    • A Registered Ordinary Partnership is registered with the Commercial Registrar as a juristic person and is taxed as a corporate entity.
    • On the other hand, a Non-Registered Ordinary Partnership is not a juristic person and is treated as an individual for tax purposes.
  • A Limited Partnership must be registered and is taxed as a corporate entity. It must consist of at least one partner whose individual liability is limited to the amount of capital contributed to the partnership. Otherwise, it must consist of one or more partners who are jointly and unlimitedly liable for all the obligations of the partnership.
• Representative Office of Foreign Company is an office established in Thailand that renders services to the head office, affiliated or group company without receiving income from the service, except receiving funds from the head office to cover its expenses.
• Branch Office of Foreign Company may carry out certain business in Thailand and has to maintain accounts related to its Thailand branch.  However, it cannot carry out any reserved business without a Foreign Business License.
• Limited Company
  • A Private Limited Company is managed by a board of directors. It requires a minimum of three shareholders and the shareholders’ liability is limited to the remaining unpaid amount of the par value of their shares. Point to note, the directors’ liability is unlimited if the company’s Memorandum of Association includes such as stipulation.
  • A Public Company Limited may apply to have their securities listed on the Stock Exchange of Thailand (SET) and offer shares, debentures, and warrants to the public.

Registering a Limited Company

1. Company’s director or owner(s) has to verify if the company’s name is not duplicated or similar to other previously registered names and then reserving the name online on the Ministry of Commerce, Department of Business Development portal.
2. After which, obtain the form for the registration of the memorandum of association from the Department of Business Development or any of the provincial business development office
3. Prepare other required documents for the registrar’s consideration.
4. If the issue of the certificate of registered transactions is required, submit the request to the officers.
5. Lastly, receive the certificate of registration.

 Registering a Branch Office of the Foreign Company

1. First, have the local Thai Embassy or Consulate to notarize and certify the following documents:
   1. Memorandum of Association
   2. Articles of Association
   3. Affidavit of the Manager containing key company, directors and shares information
2. Submit the documents to the Commercial Registrar
3. Lastly, register the Tax ID Card and VAT certificate with the Central Filing Office of the Revenue Department

Employment Regulations

Employment

Under the Minister of Labour and Social Welfare, the Labour Protection Act B.E. 2541, amended by the Labour Protection Act (No. 2) (No. 3) and (No. 4) governs the employment in Thailand. An employer with 10 or more employees has to submit a form on the employment and working conditions to the Director-General of the Department of Labour Protection and Welfare or a person entrusted by the Director-General within every January. A Labour Inspector will provide the form as prescribed by the Director-General to the employer within every December. If there are any changes to the conditions previously reported, the employer has to inform the Director-General or entrusted person in writing, of the change, within the following month after the change has taken place. In addition, the employees’ records have to be kept for not less than two years from the date of termination of employment. Employees’ documents pertaining to the payment of wages, overtime pay, holiday pay or holiday overtime pay have to be kept for not less than two years from the date of its payment.

Termination

The contract of employment can be written or oral, expressed or implied. A contract will expire upon the completion of the period specified in the contract without the need for notice. If there is no period specified in the contract, either the employer or employee may terminate the contract by giving advance notice in writing to the other party at or before any due date of wage payment. Thereafter, the following salary payment date will be the effective date of termination. Lastly, if the employer requires the employee to be terminated immediately, the employer is required to pay money in lieu of the notice, equivalent to the employee’s wage.

Payroll and Tax Regulations

Social Security Scheme

The Social Security Fund (SSF) relieves the insured person from difficulties such as sickness, maternity, child allowance, invalidity, death, old-age, and unemployment. The sources of funding are the employer, employee and government. The employees’ contribution is deducted from their wages.

Thailand Tax

The three main agencies under the Ministry of Finance that collects the main bulk of the taxes are the Revenue Department, the Excise Department, and the Customs Department.  

Corporate Income Tax

A company that is incorporated under Thai law, or that is incorporated under foreign law and is carrying on business in Thailand / deriving income from Thailand, will be subjected to Corporate Income Tax. All income from domestic and foreign sources by a company incorporated in Thailand is taxable.  Moreover, all profits from the business in Thailand are taxable for companies that are incorporated under foreign law but are carrying on business in Thailand.

The CIT standard rate is 20%. Small and Medium Enterprises (SME) with paid-up capital on the last day of any accounting period must not exceed Baht 5 million and income from the “sale of goods and provision of services” not exceeding Baht 30 million in any accounting period will be eligible for reduced CIT rates. The CIT rates from 2017 onwards for eligible SME are as follows:

2017 Corporate Income Tax Rates

Personal Income Tax

Tax Residents are those residing in Thailand for a period aggregating more than 180 days in any tax year. They are taxable on income from sources in Thailand and on the portion of income from sources outside of Thailand that is brought into Thailand. On the other hand, non-tax residents are only subjected to tax on income from sources within Thailand.

The Personal Income Tax rates are applied on progressive tax rates, with the following rates applicable from 2017 tax year onwards. The taxable income is the assessable income, after the deductions and allowances.

2017 Personal Income Tax Rates

Other Taxes

• Value Added Tax (VAT) is tax that is levied on the supply of goods and services in Thailand calculated on the total price of the delivered goods and supplied services.
• Specific Business Tax is applied on certain businesses that are excluded from VAT, usually applied in the financial services sectors.
• Stamp duties are taxed on instruments, with varying rates according to the nature of the instruments or documents.
• Custom duties are levied on imports and a limited number of exports. It is levied on a specific or ad valorem basis, whichever is higher.
• Excise duty is imposed on a selected range of goods, whether locally manufactured or imported.
• Property tax is levied on land and houses on the assessed rental value of the property.

Immigration