Working in Thailand - Permits, Companies and Visas

Work permit Thailand

For some foreign retirees living in Thailand my suggestion to sit back and enjoy the aesthetics of the moment seems very difficult. Just the idea of this creates images of doing nothing. With our Western idea of success and accomplishments, the idea of relaxing and just being equates to being a bum. So for those that just HAVE TO to do something that they feel is productive I give you the info on how to work legally in Thailand.

Contents
Work Permits
Working or Starting Your Own Business
Setting Up a Company
Thai Company Ownership
American Treaty Companies
Companies That Manufacturer Solely for Export
Warnings
Things to Keep In Mind

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Work Permits

To work in Thailand legally, you must have a work permit. According to how the Thai labor law is written, the broad definition of work is “exerting effort” and “employing knowledge”, “whether or not for wages or other benefits”, and is based on the individual, not employment as in some other countries. So this in reality even includes volunteering. This is a typical trait of Thai law. They intentionally make things vague, and leave flexible judgment to officials, thereby eliminating legal loopholes and haggling.

In reality though, it seems to only get enforced when foreigners are working for Thai companies in Thailand, or doing business in Thailand with Thai entities, i.e., dual entity relationships, when both parties are in Thailand, encompassing both employment and consulting. An example would be, if a company in Thailand employs you within Thailand without getting you a work permit, then the law would be enforced. Also the law is enforced against single entities that compete with Thais such as foreigners in the travel business, restaurant business, etc., serving other foreigners, or in import-export businesses without the proper registration. This list is not all-inclusive, but it should give you an idea of the kinds of situations that will raise a flag.

It is extremely rare for anyone doing work like trading stocks online or doing web design for a UK or other foreign based company from their home or apartment alone to be hassled, unless of course the officials have reason to believe these are just covers for actual work in Thailand, or they have any indication that any entity involved has anything significant to do with Thailand. To the letter of the Thai law, if a businessman travels to Thailand for a holiday, but he logs into his foreign based company’s server to read his email and direct his foreign based employees residing and working in a foreign country, he’s actually “working in Thailand”. But do you really think the immigration police would arrest him? What kind of precedent that would be! I’ve personally never heard of anybody being hassled by any Thai authority for any of these kinds of work (as long as it has nothing to do with Thailand).  Also CHAPTER 23 of the TELECOMMUNICATIONS, IT AND E-COMMERCE laws show that that online businesses with the server and clients NOT residing in Thailand also does not fall into the definition of “working in Thailand”.

Technically, charity work requires a work permit, but it is extremely rare that this is enforced. Also volunteering is considered working. That is why many volunteering possibilities are considered tours where the volunteer pays a fee to participate. This circumvents the work permit issues.

There are some exceptions to needing or getting granted a permit, such as “urgent and essential” (again, not clearly defined) work for up to 15 days on any kind of visa. It includes meetings, research, and some other things, which can be extended another 15 days if you exit and re-enter Thailand in-between. This requires that your foreign employer fill out a form which is quickly approved or rejected, even if it’s for a local branch office in Thailand. All the criteria to these circumstances are beyond the scope of this post.

As a rule, Thai officials are not into hassling foreigners or doing random interrogations, and they’re really not “out to get you”. However, if you are working for a Thai company or Thai people or doing business with any Thai entities then you must follow the proper ways. I have been told personally though that if a Thai citizen complains that Thai immigration is “compelled” to act.

History shows that Thai officials have been tolerant of newcomers coming to Thailand to have meetings to explore the possibility of doing business or go to interviews for a job, for a short period of time, but you want to be completely safe you should fill out the proper forms and get the quick 15-day permit.

Now we are talking about people who wish to be employed. So someone who comes to Thailand under the sponsorship of a company or school to teach should be properly guided by that company or school. If you don’t see having a sponsoring company or school, or whose sponsoring company or school may be lacking in their efforts or their explanations or communications to you it will be helpful to know for yourself what the obligations are. So we will go over the basics here and if your company or school isn’t doing things properly, it should be readily apparent from reading this post.

If you are coming to Thailand for the purpose of any kind of work including teaching, then your employer should apply for a work permit for you. To facilitate this you should come on a non-immigrant visa, normally a non-immigrant B visa for business employment. In this case your Thai employer would send you a letter for you to present to the Thai embassy or consulate in your own country when you apply for your non-immigrant B visa. Then once you arrive your Thai employer should take care of most everything and instruct you on the process of getting your permit.

Working or Starting Your Own Business

If you wish to start your own business, then you can obtain a work permit for yourself. This is done by setting up a company, employing Thais (normally 4 per work permit), paying yourself sufficiently (minimum of 50,000 baht per month for foreigners), and paying all the appropriate taxes. The minimum registered capital for a company to be created must be 2,000,000 baht per work permit, or 1,000,000 baht if the work permit applicant is legally married to a Thai citizen, but all this money does not need to be in the company bank account at the creation of the company, and usually doesn’t need to be all paid up at the beginning. Note that some areas of work are prohibited for foreigners to do. Most, but not all, are common sense, like low skilled jobs. An example of this would be you can’t drive a taxi, but most kinds of work are allowed.

To create a Thai company, you can enter Thailand on any kind of visa such as a tourist visa, and after you set up your new Thai company; your own company can create the letter on its own letterhead using the official address of your company. Then you exit Thailand, go to a neighboring country’s Thai embassy or consulate and apply for a non-immigrant B visa based on your company letter plus a copy of your company’s official paperwork. Then you re-enter Thailand again on this new non-immigrant B visa and apply for the work permit.

Actually, it is fairly easy to get a non-immigrant B (business) visa from a Thai consulate or embassy in your home country by just applying with the invitation letter from an established company in Thailand, or even by alternative documentation accepted by your consulate in your home country. Usually though, applications by westerners for a non-immigrant B visa from a Thai consulate or embassy in a neighboring Asian country (except Australia or New Zealand) are generally refused unless you have all the proper Thai company documentation in perfect order. This is because these embassies and consulates are routinely abused by Farangs just trying to stay longer in Thailand with shell companies that don’t really do anything except sponsor their visa or work permit.

You can get a multiple entry visa from your home country. This is good enough to get by for a year, though you must exit Thailand and re-enter every 3 months if you don’t get your work permit quickly and thereby you are extending your stay within Thailand while setting up a Thai company or getting a work permit.

I strongly advise you to use a good lawyer or else a company setup business with experience rather than try to fill out all the forms yourself. It is possible to do it all yourself though with enough due diligence. The signatory authority of the company can submit the application themselves. Note that the forms are in Thai language, so a translation of the paper work is the first thing you will need to complete this process. Some parts of the application are particularly strange, especially the company objectives which needs to be fairly specific.

You can apply for the work permit after completing the company setup and VAT tax registration to the right specifications to qualify the company to apply for a work permit.

The work permit application though is available in English, and this application is not that difficult to complete yourself. The Thai government branch responsible for issuing work permits is the Ministry of Labor, and they have an English language website at eng.mol.go.th but the information there doesn’t seem to be very helpful. You can pick up a form at their office, but you must apply in the province where your company’s office is officially located. Where are the branches of the Ministry of Labor offices? The Ministry of Labor website lists the branch offices around Thailand and their phone numbers, but no addresses. So somebody who speaks Thai fluently needs to call so you can get the address and directions for your closest branch office.

Once you obtain a work permit, then you are able to extend your stay in Thailand without needing to do any visa runs (you will still do 90 day reporting of your address at the closest immigration office or by mail) if you meet the minimum salary requirements (in addition to other requirements) and pay your taxes. These minimum salary requirements were updated on October 1, 2006 and are:

Australia, Canada, Europe, Japan, USA50,000 baht/month (US $1,400 in Dec 2006)
Hong Kong, Singapore, South Korea, Taiwan45,000 baht/month
Other Asian Countries not listed, Central and South America, eastern Europe, Mexico, Russia, South Africa, and Turkey35,000 baht/month
Africa, Burma, Cambodia, Laos, Vietnam25,000 baht/month

Note that USA, Japan, and Canada had salary requirements previously set at 60,000 baht/month in 2004 but were reduced in 2006.

Be aware that with Thailand and your home country (or possibly the multinational company’s home country), there could be an issue of double taxation. You should consult with your accountant and resolve any legal matters with your employer or your overseas associates so that you are not double-taxed, so that you don’t pay full income tax in both Thailand and your home country, or to your employer’s home country. Some countries have tax treaties with Thailand. Look into this as well to avoid the double taxation.

If you are coming to work for a Thai company you should have a contract with their company prior to arriving in Thailand, and it should spell out your employer’s support for your presence and work in Thailand as well as tax matters. Foreigners have arrived in Thailand and experienced disappointments with the work situation and the difficulties with employers and the immigration officials, as well as gaining knowledge and clarification regarding the details of their employment and their responsibilities later rather than sooner.

As is commonly discussed, many people have worked illegally in Thailand for trusted employers, usually for a short time, and have had no problems or complaints. On the other hand, there are countless reports by people who come to Thailand and do work for people and businesses they don’t know, who eventually refuse to pay them in full or part for their efforts. Without a proper work permit or a Thai company (plus written communications and agreements or witnesses or other proof of their work), these people not only have no legal leg to stand on, but in fact they can get into some trouble by telling the authorities that they worked illegally. This is not uncommon.

The usual penalty for working in Thailand in a blatantly illegal way is a quick deportation. Immigration officials, if nice, may oblige and take you to your hotel or apartment to collect whatever belongings you wish to take with you, and subsequently take you to the airport. It is also possible that you may be detained by immigration until you make some of your own arrangements for travel departure. All of this depends on the overall situation and attitude of the officials.

In many of these cases the immigration officials were “tipped off” by outsiders. As I said before, Thai authorities are “compelled” to act if a complaint is lodged by a Thai citizen. It is always best to do things the right way and know the right people if possible.

It is important not to make enemies, act irresponsibly, or associate with the wrong kinds of people.

If you are an employee, then you should expect your employer to be up to date on all pertinent matters and to keep you abreast, and you should double-check them.

Now let’s talk about people who wish to do business themselves in Thailand and/or start their own company in Thailand, for a long term presence.

Setting Up a Company

Here is some general information and advice about the initial set up a company in Thailand and some information about doing business here as well.

Actually, if you have intentions of  really doing business in Thailand, then creating a Thai company is fairly straightforward and not difficult, especially compared to some other countries.

You will see many areas to be able to improve service or products in Thailand. Also it is a strong market economy.

The legal system in Thailand in regards to setting up a company and complying with tax matters is largely patterned after the USA and some European countries like Switzerland and France. Many foreigners doing business in Thailand find it reasonable and easy to work within the governing laws.

Having a successful business in Thailand isn’t difficult because of having to set up a company. It is only one of the challenges you will face. Other challenges will be hiring and managing responsible employees and trying to market your products or services. Before starting, make sure your business is financially viable in regards to the product(s) and/or service(s) you are providing. The legal set up might be the easiest part of having a successful business in Thailand.

The laws regarding foreign ownership of businesses and the business activities of foreigners in Thailand are stated in the Foreign Business Act of 1999, although there are some other laws and regulations you will also have to conform to.

Once you have an understanding of what you can and cannot do, then you should go talk with a reputable lawyer for further information about your particular business of interest.

Thai Company Ownership

The laws in Thailand are pretty slanted towards Thai ownership of companies. Most of the time (there are a few exceptions) the company must be “majority owned” by Thai citizens, in terms of the company shareholders. What this means is that the company can be no more than 49% foreign owned. This is usually the biggest issue about company ownership for foreigners.

You will probably see or be told that you can set up a majority foreign-owned company. Actually you can. You can do business, and continue to do business as long as nobody notices you and/or prosecutes, but what you won’t be able to do is get a non-immigrant B business visa or work permit, or extend either of these, plus you will have trouble getting other permits and licenses as well, based on the paperwork for this majority foreign-owned business which you submit. It is also possible may also be hit with fines and penalties if caught.

Have no fear, control of a majority Thai owned company, its financial assets, property, decisions, etc., are not necessarily lost by not having “majority ownership” of the Thai company. Here are some things that can be done whereby a foreigner can completely control their own company. Let’s say that you own just 49% of the company’s stock, and the Thai shareholders own 51%.

  • You will make yourself the sole Managing Director
  • You will be the sole signatory authority — in the bylaws / Articles of Incorporation it will state that all decisions must be signed by this Managing Director, YOU!
  • You could set the quorum of shareholders at 65%, thereby if you don’t attend the meeting, there would be no quorum. This way the company’s bylaws could not be changed nor could the Managing Director’s sole authority and powers be changed.

Also the foreign Managing Director can hold the largest shareholder stake, and the rest of the shares could be split into smaller quantities, and diversified among other interests as you see fit.

You will find that many law firms will tell the foreigner to “pay off” the Thai shareholders so that the Thai shareholders sign away their shares in an undated share transfer agreement right after setting up the company. That’s OK but for every Thai shareholder who signs away their shares, by law, you must transfer the shares to someone else. Shares cannot just be left without an owner; they must be transferred, either to another Thai or else to you. Again, if you transfer the shares back to yourself, then you have violated the law by operating as an alien company, and subject to prosecution. If you go this route, and have the share holders sign away their shares, you would just leave the signed and undated share transfer agreements locked away somewhere safe and leave them un-transferred and undated.  Some day you might want or need to transfer their shares to a Thai person or persons.

Note that you must report any transfer of shares of stock in your Annual Report. This means if you do fill in the date and name, you will have to update the Ministry of Commerce of the transfer. At any time you can give away these shares to someone else, but until someone else actually accepts and signs for these shares, the original shareholders still own them. Remember, nobody can just sign away their shares without someone else accepting them.

Another possibility is to have your attorney provide the shareholders who will never meet you and don’t even know you. This too is illegal. In this case if your company becomes financially lucrative or acquires property, and if you subsequently have an “unfortunate accident” (or are just murdered), you can probably guess who will get all the assets and property or could arrange to have those shares transferred directly to them. You need to ask yourself how much trust you have in your lawyer or these people.  So to feel comfortable in my opinion, you might want to know and diversify your shareholders before they become actual shareholders.

Another thing to consider is to clearly state where the wealth of a company goes in case of the demise of the Managing Director. Provide this information in your will, and make the information public knowledge where the assets would go in the worse case scenario; death. Make sure that you keep the location of this vital information confidential and safe.

Another option is assigning the shares to your Thai wife and her family. Needless to say this can be risky if you have problems in the relationship later. In my opinion it is best to assign these shares to a diversity of Thais who you think you can trust.

American Treaty Companies

One exception to this rule of Thai majority ownership of Thai companies has been that American citizens have been able to set up an “American Treaty” company that is majority American owned. The reason they can do this is because of an old bilateral treaty negotiated during colonial times when Thailand was the only non-colonized country in the region and the United States was an important ally. This relationship continued on during the Vietnam War years when America was both an important ally to hold off any communist insurgency into Thailand and was also a major investor in Thailand.

Creating a Thai company under the American Treaty is a bit more complicated than creating a regular Thai majority company, but has been accomplished in the past. Since 2004, when the treaty expired, the Thai government has been iffy about honoring these corporate applications. The Thai government plans to eventually phase out the option of an American Treaty Company. And I have known personally where Americans have tried to register companies this way to be greeted with an official saying, “not in this office”!

Companies That Manufacturer Solely for Export

Written in the Foreign Business Act there is a list of areas of business commerce with specified restrictions for foreigners. But it appears that one kind of majority foreign owned business you can have is manufacturing solely for export.

Thailand economy’s Gross National Product is 68% exports, 7% tourism, and only 25% domestic consumption. Thailand relies heavily on the export business, which has propelled Thailand’s growth. This is the reason the government keeps a legal loophole for sole exporters. If you feel like this is your area of expertise you can try creating a majority foreign owned company solely for export.

If you do this you will actually have to engage in export business. These types of companies are scrutinized very carefully, and getting this approved is at the discretion of the Thai officials and is based on a lot of inspection.

Warnings

Be advised. Do not set up a company just to get a long-term visa in Thailand or to buy property in your company’s name (Thai companies can own land in Thailand). Creating a shell company for these purposes are both illegal. It would be better to just do visa runs to stay in the country and to get land by having a 30 year lease on a property (extendable to 60 years and possibly more). These are both legitimate and will keep you out of trouble in the long run.

You will find many lawyers telling you “don’t worry” and that they do it “all the time”. Remember that these lawyers will always make their profit. But you will be the one in trouble if something happens, not them. So you should consider all this before you try to set up any kind of shell company for a visa or property purchase.

Also do not believe everything you hear about bribes being required to get a company created. Sometimes a Thai will say they “know somebody” and the will be the go between or the broker and pass on some grease to get it done swiftly and effortlessly. My question is, what’s to stop the broker from pocketing the so called bribe in whole or in part? I have created a few companies and never had to bribe anybody to get the job done.

In the long run the success of running a profitable business in Thailand will mostly depend on things like:

  • The market for your services or goods
  • Your due diligence
  • Your general experience and ability to do that particular business
  • Your partner or partners
  • The quality and dependability of the staff you hire

Remember, it is illegal for an individual to work in Thailand without a “work permit” (a little booklet that looks like a passport) and a tax ID number. Your tax id will be a laminated card approximately the size of a driver’s license.

After the set up your company is complete, you will have your company apply for a work permit for you. At this point you can work legally, and your company can pay you a salary.

You must maintain a ratio of 4:1 Thais to foreigners in terms of full-time employment and pay both their and your own taxes, and also be able to show sufficient capital investment.

Keep in mind the number of foreign work permits will be dependent upon your number of Thai employees and your investment (2 million baht “registered capital” per work permit if you aren’t married to a Thai).

Actually before you get your work permit, your company could still do business with other companies because it would be a company to company transaction, not a transaction between yourself and another company. Just remember, you cannot work, and your company cannot pay you a salary until you get your work permit and personal tax ID number.

Be forewarned. There are many cases of foreigners doing work in Thailand for companies, and then the companies refuse to pay them until they get a work permit.

A lot of foreigners will work without a work permit anyway, as you can read on the internet and see for yourself in the general public. They will sometimes manage and work in their own little business of some sort. And if they are living in a small city and not stepping on anybody’s toes they can probably get away with it. It’s not as if the Thai immigration officials are “out to get you”. However, be aware of the risks.

I get many questions about whether it’s legal to work in Thailand for a company not located in Thailand, especially by internet. An example of this would be a guy who does architectural design work on his computer while living in Thailand for a company overseas. He designs a new building in Florida for a company in the USA. They wire him the money or deposit it in an account in his home country. There is nothing against this in the law, and I’ve never heard of anyone having any problems doing work like this. Yes technically he’s working in Thailand, but not for any Thai companies or any entity in the Thai economy. His work has nothing at all to do with Thailand except that he’s sitting on his computer in his apartment doing the work. Technically you could say he is “working” in Thailand, but I can say that I’ve never heard of anyone getting into trouble for something like this, and to me he’s working in the USA not Thailand. Think of the precedent and ramifications of charging somebody in this scenario. What would be the upside?

Also another common question I get asked is whether it is legal to export products from Thailand. They want to come and find some products, such as hand made crafts or jewelry around Chiang Mai or some place and sell them on eBay or someplace back home. If they kept this on a small scale, they would just go to the post office or FedEx office and ship small amounts or cubic meters of merchandise back home. In my opinion that would be fine. However, as their business grows and they establish more customers, they would probably need to set up a company and go thru the proper customs channels for shipping quantities of the same product, paying suppliers, paying themselves, paying taxes, hiring Thai staff, and so on. You would probably be gently but firmly forced to straighten out your Thailand paperwork as the quantity of exports and activity got to a certain level.

Things to Keep In Mind

There are occupations and areas of work in which foreigners are not permitted to work in. Most of these areas are generally low skilled jobs and not of interest to most foreigners. The majority of occupations that Farangs of means would want to work in are permitted by law.

Another thing. You will need representation of some kind. One problem is that the laws, instructions and forms are all written in Thai language. Everything that you will submit to the Thai government is in Thai language. Most foreigners are illiterate when it comes to the Thai language and law, so you will be dependent upon someone else reading the laws, instructions and applications, then trying to tell you in plain English what it all means, and then put your responses back into Thai writing. Thai people must help you in many aspects of the process and also handle complications as they develop.

Many Farangs are asked by their lawyer to sign forms that aren’t filled in at all. There will be many blanks among all the Thai writing, which your lawyer would fill in later and submit. There is a point that you would have to trust your lawyer. You could ask the lawyer to fill them in before you sign the document, but even if they filled them in, could you read them?

If you go out and get someone you can trust to proof-read the forms first, try to make sure they are a well educated and skilled the area of law. Don’t ask a bargirl to perform this task. This would be a great mistake since most of them have just the required 6th grade education or less. Apply the same mentality you would back home. You wouldn’t have a similarly educated person back home handle your legal issues would you?

Accounting and bookkeeping inside your company can be done in English. However, the tax forms submitted to the Thai government are in Thai, and other reports must be translated into Thai as well.

Thais in general do not have a good command of spoken English. This includes government offices. The nomenclature for doing business is a very high vocabulary level, unlike ordinary socializing and talking among vendors on the street.

About banking. If your company is relatively small, then usually when you open a business account the bank will not give you a checking account. You will probably only get only a savings account, with which you can only withdraw cash. You also will not get an ATM card with your new company account. To do your company transactions you must go or send someone over to the bank in person along with a withdrawal slip that has the authorized signature (probably yours) and also the slip will be stamped with your company stamp. Doing business here usually means you will pay your clients in cash, or else transfer/deposit funds directly into their account at the bank.

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The Board of Investment (BOI) website has a good page on setting up a business in Thailand, at www.boi.go.th/english/business/

A translation of the Foreign Business Act of 1999 is at the Thai Law Forum website, including the categorized lists of all business activities prohibited for foreign entities. Companies doing these types of business must be a majority Thai owned entity. List 3 is of primary interest. Note that manufacturing for exports is missing altogether, so foreigners are not excluded…