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How to calculate overtime payment for monthly salaried employees

We have an inquiry from many clients of how to calculate overtime payment for monthly salaried employees. If you have not read our excerpt of Thailand Labor Law, please consider reading it first. Below is the answer and an example of how to calculate overtime payment.

The maximum number of working hours of employees is fixed by law at 8 hours a day and 48 hours a week in total. Most employers, however, set it at 8 hours a day and 5 days a week (so 40 hours a week). For work performed in excess of the maximum number of hours, which is fixed either by the company’s regulation or by specific employment agreement (if the latter is lower), the employee must be paid overtime compensation. The rates of overtime are:

– 1.5 times if the employee works outside of normal working hours on normal work days. 

– 2 times if the employee works during normal working hours on a holiday. However, in case of monthly salaried employees, the employer will pay only 1 time extra because his monthly salary has already covered 1 time when he does not work on the day.

– 3 times if the employee works outside of normal working hours on a holiday. 

Example: A company’s normal work hours is 8 AM to 5 PM with 1 hour lunch break in between, Monday to Friday. If an employee whose monthly salary is THB 24,000, works for an hour after 5 PM, then the overtime rate is 150% of his hourly rate. You need to use 30 days per month (even if a particular month has more or fewer than 30 days) and 8 hours per day to calculate his hourly rate. In our example, his hourly rate is 24,000/30/8 = THB 100.

If the same employee works on a Saturday during 8 AM to 5 PM with 1 hour lunch break, he will be paid an OT of THB 100 per hour for this day.

If this employee happens to work after 5 PM on a holiday, he will receive 3 times the normal hourly rate for this period of work which is 100 x 3 = THB 300 per hour.

Consult with our Thai Lawyers at MSNA Group for your business and labor law issues.

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Changing the registered address of a company

When the company moves its office, it has to register the change with the Department of Business Development. However, in case it is registered in the VAT system, it has to file Form PP09 to change the address with the Revenue Department at least 15 days before registering the change with the Department of Business Development. Failure to do so will result in a fine of a few thousand Baht.

Now to register the change of address with the DBD:

A. Registering the change of address within the same province can be done within one day. However, the preparation of the registration forms and related documents may take much longer.      

B. Registering a relocation to another province will result in an amendment of the section 2 “Location of the company’s office” of the company’s Memorandum of Association (MOA). The process will take roughly 20 days with the following steps

1. The MOA can be amended through the Extra Ordinary Shareholder’s Meeting.

2. To summon the meeting, the signatory director will have to send a letter calling for the meeting to shareholders not less than 14 days before the date of the meeting.

3. Once the meeting has been held and the relocation has been approved through the meeting resolution, the relocation can then be registered with the Office of Partnership and Company Registration.

The mentioned process is only for the registration of the relocation of company’s registered office with the Department of Business Development. You also have to notify the Social Security Office if you have been registered with it when you first had an employee. Contact MSNA Group for your business needs in Thailand.

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Maternity leave in Thailand

On the side of employer:

1. Amount to pay the employee

– The employee is entitled to take Maternity Leave for a maximum of 98 days. So if she takes less than 98 days, it is fine.

– The employer will have to pay to the employee up to 45 days of wage. This means, if the employee takes 50 or 60 or 90 days of leave, the amount that the employer will have to pay is 45 days of wage anyway. On the other hand, if the employee takes less than 45 days of leave, the amount entitled to the employee shall base on the actual number of days of leave.

– In an event the wage is a monthly salary, one day of wage shall be equal to the amount of salary divided by 30.

2. Payment Term

– The payment shall be made on the date of regular payday. To make it clear please see the below example:

“The regular payday is on the 30th of each calendar month. The employee takes a 45-leave-day from the 23rd June 2019. At the end of June, the employer will have to separately pay a 23 days of wage for the work done by the employee and 7 days of wage for the Maternity Leave(from 24th to 30th).

By the 31st July 2019, a wage of 31 days shall be made to the employee and the rest of the wage of 8 days shall be paid on 30th August 2019.”

On the side of employee

The female employee can receive Child Delivery payment of THB 13,000 from the Social Security plus 50% of the 90 days’ wage, but the monthly salary cap for Social Security’s purpose is THB 15,000.

Let’s say if the monthly salary is THB 50,000, the cap allowed by the SSO is THB 15,000. The 90-day-wage shall be 15,000 x 3 = 45,000. So 50% of 45,000 is 22,500. Hence THB 22,500 shall be paid by SSO.

Contact MSNA Group for your business needs in Thailand

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Corporate health insurance policies

Corporate health insurance policies

We got a question from a client about corporate health insurance policies. Thailand has Social Security system.  The employer is required to deduct 5% (maximum Baht 750) from the employee’s salary and match the amount from their pocket and submit it to the Social Security Office. Social Security covers free medical treatment for most diseases at the hospital the employee chooses when he first joins the employer. Most companies in Thailand do not offer health insurance for their employees. However, some big companies do and they seem to be attractive employers to the job seekers.

In summary, it is not compulsory to purchase health insurance policies for your employees. Read more on Social Security and Workmen’s Compensation in Thailand.

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Accounting for BOI companies with various sources of incomes

 

Accounting for BOI companies with various sources of incomes

Most people misunderstand and assume that with the BOI status, they can receive incomes from many different sources. We want to explain here that having a BOI promoted company does not always mean you can always do any businesses and earn incomes from different sources. But in case you can (explain down here), you want to read further about accounting for BOI companies with various sources of incomes.

Thailand Foreign Business Law allows foreigners to do certain business activities. For most business activities, if you do not want to have a Thai majority partner, you need to get a permission to operate the business. One way for foreigners to own their business 100% is to get a BOI promotion whose main purpose is to promote investment in the businesses that truly benefit Thailand. The companies with BOI promotion can operate only the business activities that the BOI approved on the BOI certificates.

Now assuming that your company’s major shareholders are Thai, you may still want to get the BOI promotion for the tax benefits; corporate income tax exemption, machinery import duties reduction, etc. The benefits granted by the BOI are only for the business activities approved by the BOI. However, as a Thai company, you will be able to do other business activities too. This is when you have to be careful in your bookkeeping. In doing accounting for BOI companies with various sources of incomes, you need to separate the incomes and expenses into BOI business and non-BOI business. For the expenses that are paid for the whole company (benefiting both BOI and non-BOI businesses), you will have to allocate them using the most reasonable method. If 40% of the office space is used for the BOI business and 60% is for the non-BOI business, then you will allocate rents accordingly. If specific employees only work for your BOI business, then their salaries will be allocated to the BOI business while the other employees’ salaries will go to non-BOI business.

Contact us today to find out if your business is eligible for BOI promotion or if you need help with accounting.

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Providing Motion Picture Support Services in Thailand

motion picture support services

Providing Motion Picture Support Services in Thailand

Foreigners who want to do the business of providing support services to motion picture business in Thailand can apply for BOI promotion under activity ”7.21 – Motion picture support services” to get distinct benefits and be able to have 100% foreign owned company in Thailand.

 

What support services can get a BOI certificate

Here is the short overview of conditions you have to comply with in order to get a BOI certificate:

“Motion picture support services shall include documentaries, television programs, animation and commercials, which have a scope of business, as follows:

  • Rental services of movie production equipment and/or movie production props must have main equipment machinery, such as camera, grip equipment, light set, etc.
  • Film development and duplication services must have main equipment/ machinery, such as film development machine, film duplication machine, digital film duplication machine, etc.
  • Sound recording services must have main equipment/machinery, such as digital sound recorder, digital sound editing machine, digital sound mixing machine, etc.
  • Picture technical services must have machines and equipment capable of creating special pictures that are not possible with cameras. The service providers must have main equipment and machinery, such as standard definition/high definition digital recorders, editing suites, digital compositing and special effect creation, etc.
  • Coordination services for foreign movie production in Thailand must include coordinating with related government agencies for permits, location scouting and sourcing of staff and movie equipment. “

 

What to do to get the BOI Certificate

On the BOI website, you can download an application form. There are a lot of numbers and details that you will have to spend a lot of time and energy on trying to understand them and making them the way the BOI want to see and will approve your project. We suggest you get expert help from Thai Lawyers Ltd. so you can focus on getting clients and opening up new markets and making lots of money quickly.

 

Register a company

While waiting for the approval for Thailand BOI, company registration process can be started.

You can take a look at fully explained process of company registration here.

 

What else

Once you registered a company and got your BOI certificate you can start to conduct your business activity. However, you still need to apply for a Foreign Business Certificate to comply with Thailand Foreign Business Law.

Contact us today for consultation and read a similar article on how to set up a film production company in Thailand.

 

 

 

 

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Franchise Food Business in Thailand

food franchise in thailand

Franchise Food Business in Thailand

Anyone wanting to become a franchisor must have been operating their business for at least 2 years.

 

As a franchisee, here are the two ways you can operate your franchised business in Thailand:

  • Register a Thai company with 51% shares held by Thai shareholders.
  • If you do not have Thai partners to hold the majority shares in your business, then as a foreigner majority company, you will have to get a Foreign Business License, which is not easy to get.

 

After registering a company, you should:

  • Sign an agreement with the franchisor, who is the owner of the brand and know-how.
  • Apply with the Ministry of Public Health for the license to operate the place for cooking. This is so that you can have a cooking place in your restaurant.
  • Submit sign board tax at District Office where your restaurant is located within 15 days after putting your sign board up.
  • Register into VAT system and Social Security system.

 

These steps above take a lot of time and effort. Consult with MSNA Group, who will give you the best advice so you can spend time and energy on things that are more important.

 

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Manufacturing plastic products from recycled plastic

Manufacturing plastic products from recycled plastic

Manufacturing plastic products from recycled plastic

Thailand is strengthening its role as a leading global hub of plastics manufacturer, with makers placing greater emphasis on value-added and environment-friendly products. The Thai plastics industry is growing consistently, and demand in the vigorous domestic economy is the key driver.

 

To promote sustainable growth in the plastics industry together with protection of the environment, the BOI classifies projects in the manufacture of eco-friendly plastics as priority activities of special importance to the country. Therefore, these are given maximum investment incentives.

 

The only condition that a business needs to follow in order to become a manufacturer for plastic products from the recycled plastics is that it must have plastic forming process using domestic plastic raw materials only.

 

The incentives that can be given to this project are those under A4 category which includes:

  • 3 years of corporate tax exemption
  • Exemption of import duties on machinery
  • Exemption of import duties on raw materials used in the production for exports
  • 100% foreign business ownership
  • Permit to own land
  • Permit to bring skilled workers and expert to work into the Kingdom.

 

If you are planning to register your business in Thailand, please do not hesitate to contact MSNA for more information. We are experienced in BOI application, setting up a company, getting Foreign Business Certificate, visa and work permit application.

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Opening a Business in Thailand

Opening a Business in Thailand

Opening a Business in Thailand

Do you want to open a company in Thailand but don’t really know how to proceed or the process might seem difficult? Do not worry, we at MSNA can give you the best solution.

The procedures depend on the type of company that you will set up. Let’s discuss it in details.

 

A. Registering a Thai company with 51% shares held by Thai shareholder

Pros:

  • Your company can do business right after registration.
  • The process is much easier because you don’t need to get special license.

Cons:

  • If you want to hire foreigners to work, your company must have 2 million Baht capital and hire 4 Thai employees in order to apply for one work permit.

How to register:

  • You need at least 3 shareholders (if you have 2 foreigners, then you need 1 Thai).
  • The number of shares to be held by Thai must be at least 51%. This Thai shareholder must show proof of funds (at least 6 months update of bank statement showing enough money to buy the amount of shares they will hold).
  • Please read the steps here

 

B. Other options:

If new Thai limited company will be doing only export activities from Thailand or manufacturing goods in Thailand, then it can be foreign majority owned without obtaining a Foreign Business License.

  • Get BOI certificate (Board of Investment)

Pros:

  • It would be fine if you don’t have a Thai partner as long as your business activity falls under any category of eligible activities for BOI promotion.
  • Tax exemption such as corporate income tax, tariff exemption or reduction on import machinery and raw material (depending on the company’s activity).
  • Non-Tax privileges such as permission to own land, permission to bring foreign expert to work on the promoted projects, exemption on foreign ownership of companies and exemption from work permit and visa rules.

Cons:

  • Not all activities are eligible to obtain a BOI certificate. Please checkout Foreign Business law here 
  • If your company’s activity is not in this list, you will need to get Foreign Business License.

How to register:

  • The process to get BOI is summarized here

 

Registering a business in Thailand can be troublesome but we at MSNA can make it convenient for you. Contact us now for initial consultation.

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Manufacture of Hard Disk Drive

hdd manufacture

Manufacture of Hard Disk Drive

Since the last decade, Thailand has been the biggest manufacturer of hard disk drives. Thailand offers low cost, literate, high quality labour and national infrastructure that facilitates the export market. The big digital companies are now manufacturing their products in Thailand to take advantages of these benefits. Some of the conditions and incentives that could help you are listed below.

 

BOI Activity 5.4.6 Manufacture of hard disk drive

Conditions:

– The areal density of hard disk drives must not be less than 2,000 gigabits per square inch.

–  The cost of refurbishment of existing machines shall be regarded as an investment and will be taken into account in the calculation of corporate income tax exemption cap. The original cost of existing machines shall not be regarded as an investment.

 Incentives:

  • An exemption of corporate tax for 8 years.
  • Exemption of import duties on machinery
  • Exemption of import duties on raw materials used in production for export
  • 100% foreign ownership
  • Permit to own the land
  • Permit to bring skilled workers and experts into the Kingdom

 

Get in touch with us so we can help you set up your BOI Company in Thailand.

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