Foreigners who wish to work in the Kingdom can apply to get Residential Permit provided that the applicant meets the following qualifications:

1. The applicant has to be in a position of executive officer such as President of Committee or Committee of juristic person registered in Thailand with a capital of at least Baht 10 million and is authorized as a signatory for such juristic person, up to the date of application submission, for at least 1 year. The applicant must earn at least Baht 50,000 per month, up to the date of application submission, for a period of 2 consecutive years as minimum and tax return is required and
2. The business in which the applicant works must be of an interest of national economy i.e.
   1. International commerce where its export value in foreign currency in the past 3 years reached a threshold of Baht 20 million in average. This fact must be certified by a letter issued by commercial bank concerned or a company that provide loan to domestic manufacturing company by brining into this country, within the past three years, foreign currency at the amount not less than Baht 100 million or
   2. Tourism related business which in the past 3 years has brought into this country, at least 5,000 tourists in average. This fact must be certified by the letter issued by the authority concerned or
   3. Other type of business that the applicant is a shareholder of at least Baht 5 million for a period of at least 2 years up to the date of application submission.

In case the applicant could not meet any qualification as mentioned in A and B above, then the following requirement is required:

1. The applicant is a holder of work permit for at least 3 consecutive years up to the date of qualification submission and
2. The applicant has been working in the current company for at least year up to the date of application submission and
3. The applicant is earning annual income of at least Baht 80,000 per month for a period of at least 2 years, up to the date of application submission or has been filing tax return for the amount of annual income of Baht 100,000 for at least 2 consecutive years, up to the date of application submission.

Contact ThaiLawyers for residence permit application in Thailand.

One of the grounds for termination of employment of an employee with cause under the Labour Protection Act is repeated violation of work regulations, rules or orders which are both lawful and equitable subsequent to a written warning for which a previous letter of warning has been issued for the particular act. The letter will be effective for a period of 1 year from the date on which the employee commits the violation, not from when the letter was written. However, in case of a serious violation, a written warning notice is not required.

Section 119 (4) of the Labour Protection Act B.E. 2541 (1998) discusses the dismissal for serious cause of an employee who has committed a repeat violation of an offence for which a written warning has already been given, but does not give guidance for the form requirements for the warning letter itself based on the following:

1. Prior to issuing the warning letter, the employer should first consider the work rules. If they contain a disciplinary procedure consisting of several stages which have to be followed step by step, the employer must follow each step.
2. The warning letter must contain:
   1. Date of issuance of the warning letter;
   2. Name and position of the employee;
   3. A description of the behavior of the employee that constitutes a violation of the work rules;
   4. A reference to the work rules which the employee has violated;
   5. A statement that of the employee commits the same violation of the work rules again, the employer will punish the employee pursuant to the procedure in the work rules.

Furthermore, the employer should ask the employee to sign the warning letter as an acknowledgment. The employer can read the letter to the employee and ask 2 witnesses to sign the letter to confirm it has been read and that the employee refuses to sign. A letter from the employee acknowledging violations does not constitute a warning letter.

If the employee is a member of an Employee Committee formed in accordance with the Labour Relations Act, the employer may not discipline the employee, including by issuing a warning letter, even where there has been a determination of guilt. The employer must submit a petition to the Labour Court seeking an order approving the discipline of the employee. If approved, the employer may then proceed as described above.

In the event that the employer relocates its place of business in a way that essentially affects the normal living of an employee, the employer must notify the employee of the relocation at least 30 days in advance or pay an amount in lieu of the advance warning of 30 days’ wages. If the employee refuses to move and work in the new location, the employee has the right to terminate the employment contract within 30 days as from the date of being informed by the employer or the date of relocation, as the case may be. In this regard, the employee is entitled to receive a special severance pay at the rate of not less than the rate of severance pay.

In the event the employer terminates an employment as a consequence of streamlining the work units, production process and distribution service, due to an introduction or change of machinery or technology that reduces the required number of employees, the employer must notify the Labor Inspector and the employee concerned at least 60 days in advance of the date of termination or pay an amount in lieu of an advance notice, that is equal to 60 days’ wages to the employee. Moreover, the terminated employee will be entitled to the prescribed severance pay. In addition to that, if the terminated employee has worked consecutively for more than 6 years, the employee would be entitled to an additional special severance pay at the rate of not less than 15 days’ wages for each full year of service, calculated from the start of year seven onwards. However, the total amount of this additional special severance pay is limited to the equivalent of 360 days’ wages.

If you want to ask us questions on Thailand labor law, please visit www.msna.biz for more information.

In order to relieve the fiscal burden of the government and to respond to current and future economic situations, the Board of Investment prescribes investment policies as follows:

1.1 The efficiency and effectiveness of tax privileges given shall be enhanced. Privileges shall be granted to projects that actually benefit the economy and good governance shall be used for managing and supervising the application of tax and duty privileges. Promoted entities shall report the operating results of their promoted projects to the Board of Investment for review prior to the application of tax and duty privileges for that year.

1.2 Every promoted project that has investment capital of 10 million baht and upwards (not including land and working capital) must obtain ISO 9000 certification or similar international certification. This is to promote development of quality and production standards in Thai industries and, thereby, to enhance the competitiveness of Thai industry in the world market.

1.3 Previous conditions on exports and use of local material are repealed so that the criteria for promotion will be in line with international trade and investment agreements.

1.4 Special promotion shall be given to regions or areas with low income and inadequate investment facilities. Maximum tax and duty privileges shall be given to these regions or areas.

1.5 Importance is given to small and medium industries by applying a minimum level of investment capital of 1 million baht (excluding cost of land and working capital) for projects eligible for promotion.

1.6 Priority is given to activities in agriculture and agricultural products, projects related to technological and human resource development, public utilities and infrastructure, environmental protection and conservation and targeted industries.

Know more about Thailand BOI promotion and its privileges. Contact ThaiLawyers for consultation.

Can a company providing R&D activities apply for BOI promotion in Thailand?

Thai companies providing research and development business can apply for BOI promotion. Qualifying R&D activities are defined as follows:-

1. Basic research – involves theoretical or operational activities that are conducted to explore new knowledge from basic natural phenomena and factual observation, without initially considering the application.
2. Experimental development – involves a systematic operation based on the knowledge from research and/or experience with the objective of producing new materials, products or inventions; to install new procedures, systems and services; or to substantially improve the existing products.
3. Applied Science – involves research to explore new knowledge with an objective to put it in practice for specific use.

Interested in getting Thailand BOI, contact ThaiLawyers for application requirements and procedures.

Stamp duties are taxed on instruments and not on transactions or persons. For the purposes of stamp duty, an instrument is defined as any document chargeable with duty under the Revenue Code.

The instruments liable to stamp duty include the following:

– transfers of land,

– a lease,

– inter alia,

– power of attorney,

– promissory notes,

– letters of credit,

– travelers cheques,

– stock transfers,

– debentures,

– mortgages,

– life assurance policies,

– annuities

Who are liable to stamp duty?

1. Only instruments listed in the stamp duty schedule are subject to the stamp duty and the persons liable to pay stamp duty are those listed in column 3 of the schedule. They are for example, the persons executing the instrument, the holders of the instrument or the beneficiary such as landlord, contractor, lender, insurer, etc.
2. If an instrument liable to duty is executed outside of Thailand, the first holder of the instrument in Thailand shall pay the duty by stamping at the full amount and cancelling within 30 days from the date of receiving the instrument. If he does not comply as such, the instrument shall not be deemed duty stamped.

If he does not comply with the provisions of Paragraph 1, any holder of the instrument shall pay the duty by stamping at the full amount and cancelling and then he shall be able to submit the instrument for collection, endorsement, transfer or claiming of benefit.

Any holder who acquires possession of the instrument in accordance with this Section before the expiration of the time limit specified in Paragraph 1 may pay the duty by stamping at the full amount and cancelling and he has the right of recourse against the previous holders.

3. If a bill submitted for payment is not duty stamped, the recipient of the bill may pay the duty by stamping at the full amount and cancelling and may either have the right of recourse against the person liable to duty or deduct the amount of duty from the payment due.

Contact MSNA for your accounting, tax and other business needs in Thailand.

From the day the company has registered in the VAT system of Thai Revenue Department, the company director and the staff member have to always ask for an official receipt from the vendor when buying goods or services for company’s use otherwise, such expense cannot be used to reduce the company’s profit and may end up having to pay more tax. Even when buying goods or services from individuals (who are not companies), they still can issue a receipt or some kind of documents to prove that they received money from the company director or staff member. In this way, the company can have legitimate receipts that are tax deductible.

When asking for an official receipt, if the vendors (companies or individuals) are registered in the VAT system, they normally will ask to charge 7% VAT and because they charge VAT, they will also have to issue a tax invoice for you. It is important to know the information about Thailand VAT and tax invoice.

The company also needs to withhold taxes from vendors. Please read this article about withholding taxes from vendors for better clarifications.

Contact www.msnagroup.com for your Thai accounting, taxation and other business needs.

The new law regarding tax invoices will take effect from 1 January 2014. According to this new law, the tax invoice has to have the items on it as follows:

1. Under the address and contact number of the company, one must add:

– Headquarters (or in case of a branch office in Thailand, has to add the branch number too so that it can be specified whether the head office or the branch office is the one who issues the tax invoice.)

– Tax ID number, which should be near the company name and address) is the same number as the company’s registration number.

2. Under the address of the customer, add:

– ( ) Headquarters ( ) Branch Number………………..

– Tax ID No.: …………………………………

This is because when a tax invoice is issued to a company in Thailand, the issuer will have to check mark to indicate if the buyer of the goods/service is the headquarters or the branch of that company and need also to specify their Tax ID number which is the same as their company registration number.

Reminder if you are the customer:

From 1 January 2014, when you get a tax invoice from a vendor, please make sure you see their Tax ID number and that they specify headquarters or branch number near their company name on top of the tax invoice. Also, near your company name and address, it must specify headquarters (or branch) and your company’s Tax ID Number.

Know more about this new law regarding tax invoices and Thai taxation related matters. Contact MSNA for your accounting, tax and other business needs.

Today, we got a question from one of our accounting clients whom we also assisted in getting BOI promotion for their software business in Thailand.

Question: As you may have already known, our sister company (which is not BOI promoted) has proposed to develop an application that will enable users to download e-books in exchange for payment on a monthly basis. Would this activity be considered as sales of goods which I believe are VAT-exempt or will this be qualified for zero rate VAT in case our customer downloaded and used the e-book abroad.

Answer:

We verified it with the Thai Revenue Department and according to them, downloading of e-books is not categorized as sales of newspaper, magazine and textbook but it should be treated as a service which is subject to VAT. Hence, the zero rate VAT applies if such service is used overseas.

Contact MSNA, English speaking Thai accountants for your Thai accounting and tax questions.

There are certain requirements in order to extend a visa or permit of stay of a foreigner working in Thailand. Today, we talk about the required company papers in order to extend the permit of stay of a non-B visa holder in Thailand.

Aside from application forms set by government authorities and applicant’s personal documents, the employer or applicant have to prepare and provide these documents to the Immigration officials:

1. Value-added tax (VAT) returns and salary withholding tax returns from the last three months certified by and obtained from the Revenue Department Area Office;
2. Financial Statements and the Corporate Income Tax Return (PND.50) of the previous year certified by and obtained from the Regional Office of Revenue Department;
3. Social security submission forms from the last three months certified by and obtained from the Social Security Office in your area;
4. Company affidavit, list of shareholders and financial statement submission form (Sor Bor Chor 3) certified by and obtained from the Ministry of Commerce;
5. Latest Personal Income Tax Return of the applicant certified by and obtained from the Main Office of Revenue Department

Because the above documents were filed at different government authorities, you have to plan in advance and make sure that documents are certified before your permit of stay expires. If you rely on your staff but they are not familiar with the process, they may not know where to go and how to contact each authority. Thus, MSNA can help you obtain the certified documents in a timely manner and file the application to extend your permit of stay to one year. Contact us now for your Thai visa and work permit needs.

Today, we got a question from one of our accounting clients.

Question:

We registered the company into the VAT system because I need it for my work permit application. However, are we obliged to charge VAT even though we only do export activities in Thailand? If so, what rate? Please advice.

Answer:

Under the value-added tax (VAT) system of Thailand, you are allowed to export goods and services tax-free, in short; you are entitled to a zero VAT rate. This means that you are not required to charge VAT and therefore, can claim back the input VAT (VAT that you paid). However, it takes time before you can refund your VAT because the Revenue Department usually does VAT audits to ensure that your claim is true and each transaction paper qualifies as an “export” activity per Thai VAT law.

Contact MSNA for your Thai accounting and tax questions.