One of the largest nations in Southeast Asia, Thailand is part of the Indochinese Peninsula, and lies between Myanmar, Laos, Vietnam, Cambodia, and Malaysia. Although considered an emerging economy, Thailand is the second largest in Asia (behind Indonesia), with a GDP of around $670 billion. As a newly-industrialised country, Thailand is heavily export-focused: exported goods and services make up two-thirds of the country’s GDP, amount to $105 billion of revenue each year, and include electrical and computer components, cars and automotive parts, agricultural products, and textiles. With the manufacturing, tourism and energy industries growing in importance over the 20th century, Thailand’s economy is diversifying, and the country now boasts one of the lowest unemployment rates in Asia. Thailand is a member of ASEAN, the UN, and the WTO, and was ranked 26th in the World Bank’s Ease of Doing Business Survey 2018.
Thailand’s economy offer numerous reasons for investment. These include:
The Government of Thailand welcomes inward investment from foreign investors to help develop the economy. Some incentives are available to encourage investors to support emerging industries within Thailand.
The company is required to have a legal entity established in order to process a payroll.
The timescale for completion of this process is one - two months.
Typically foreign investors will do business in the form of a limited company, branch or representative office. There are different regulations and different tax issues for each form. The most common is the limited company.
Formation of a limited company is regulated by the Civil and Commercial Code. There must be at least three persons to form a company; they must subscribe their names to a memorandum of association (MOA) and then register. Upon receiving the amount of shares, the director must register the company within three months from the date of company’s meeting to establish the company.
If more than 49% of the shares in the limited company are owned by non-Thai nationals then the company is subject to the Foreign Business Act and the restrictions that it imposes.
In Thai law the branch and its head office are a single legal entity. This means that the head office is liable for lawsuits brought against its branch in Thailand. The head office will be required to pay tax on transactions in Thailand, even when the Thai branch is not involved.
This form of company can only partake in limited business activities. This office is forbidden from rendering services for anyone other than its head office. It can only receive funds from its head office.
The Treaty of Amity is a treaty between the US and Thailand, which creates favourable, trade conditions. The treaty allows citizens of the US to establish a business in Thailand with majority ownership, this is usually prohibited under the Foreign Business Act – usually the majority owner must be Thai national(s). A company can register under the Treaty of Amity if at least 51% of the company shares are owned by US citizens. Usually the directors of the company have to be US citizens. It should be noted that this exception for US citizens does not extend to all types of business activity.
It is not mandatory to make payments to both employees and the authorities from an in-country bank account.
Working Days and Working Hours In Thailand
The working days in Thailand are Monday to Friday. Generally the working hours for commercial offices are from 0830 to 1730.
Thailand lies at the centre of Southeast Asia and is bordered by Myanmar to the northwest, Laos and Cambodia to the east, and Malaysia to the south. Thailand and its neighbours make up a large part of the Indochinese Peninsula, while its southern coast looks out onto the Gulf of Thailand - which provided historic maritime trade access and connections to the rest of the world. Formerly known as Siam, Thailand’s earliest civilisations date back to prehistory and show visible religious and cultural influences from across Asia. Once ruled by an imperial dynasty, Thailand is now a constitutional monarchy with a parliamentary government and separate legislative branch. Thailand’s tropical climate and scenic beauty is known across the world, and attracts millions of tourists each year: a variety of regional environments include thick forests, mountainous highlands and stretches of picturesque coastline - along with numerous island destinations. Temperatures and weather vary dramatically in Thailand - from hot, tourist friendly seasons, to warm, wet monsoons.
Full Name: Kingdom of Thailand
Population: 68.1 million (UN, 2010)
Primary Language: Thai
Main Religion: Buddhism
Monetary unit: 1 baht = 1 santangs
Main Exports: Rice, Seafood, Live animals, office equipment, rubber.
GNI per Capita: US $3,760 (World Bank, 2010)
Internet Domain: .th
International Dialing Code: +66
Hello: สวัสดี / sà-wàt-dee
Good morning: ดีตอนเช้า / sà-wàt-dee kráp (male), sà-wàt-dee kâ (female)
Good evening: สวัสดี / sà-wàt-dee kráp (male), sà-wàt-dee kâ (female)
Do you speak English?: คุณพูดภาษาอังกฤษได้ไหม / pôot ang-grìt dâai măi
Good bye: ลาก่อน / sà-wàt-dee kráp (male), sà-wàt-dee kâ (female)
Thank you: ขอขอบคุณคุณ / kòp kun mâak
See you later: ไว้พบกันใหม่ / láir-o jer gun ná
Dates are usually written in the day, month and year sequence. For example: 1st of July 2018 or 1/7/18.
Numbers are written with a comma to denote thousands and a full stop to denote fractions, for example, 2,000.50 BHT (2000 baht and 50 satang).
Tax year runs from 1 January to 31 December in Thailand.
There are two mandatory statutory contributions in Thailand:
Social Security Fund (SSF) - Both the employee and employer have to contribute on a monthly basis. The contribution rate is usually 5% with basic salary capped at THB15,000.00. With the minimum wage being increased recently, it has been decided to extend the reduction in Social Security contribution rate.
This is due for payment on the 15th of the next month. For late payments a surcharge will be charged at 2% per month of the amount due.
Workmen Compensation (WCF) - Only the employer is required to contribute on an annual basis. The contribution rate is based on the total annual salary paid to employees. The contribution rate will depend on the type of company business.
Provident Fund/Welfare Fund- The payment for the provident fund must be submitted three days after payday and may vary depending on PF trustee.
Monthly social security payments must be submitted by the 15th of the following month and must be submitted to the Social Security Department (www.sso.go.th). For instance, contributions for October must be paid by November 15th, after which they will be charged an extra 2 percent of the overdue amount each month until the payment is made.
The penalty for late Social Security payment is 2% on the due amount calculated monthly.
Employers are responsible for submitting Monthly Withholding Tax (WHT) on a monthly basis.
The deadline is by 7th (Manual Submission) or 15th ( for online submission) of the following month. The amount can be calculated using the tax table supplied by the government.
Provident Fund (monthly)
The format of this is determined by the vendor
SS report to Social Security Department
A ‘PDN1 K report’ must be completed at the end of every year. It must be submitted to the Revenue Department (www.rd.go.th)
Information required in each form varies however the employee name and salary is always required.
Filing of all reports can be done by any party but statutory forms need to be approved by the company’s authorized signatory.
It is required for all new starts to be registered with the following departments within the first month of employment:
Registration is usually submitted together with monthly PF and SS forms.
To set up a new start the following information is required:
The Following Documents are also required when setting up a new start:
All leavers must notify the local authorities if they are leaving their job by completing the following:
Employers in Thailand have withholding obligations to their employees, and must make income tax and social security contributions on their behalf:
Employees in Thailand must be issued with payslips for each pay period (payslips may be issued online), and payroll records must be kept for at least 7 years. Thai payroll may be handled in-house by a dedicated payroll officer or payroll team, or outsourced to a third party to take advantage of regional expertise. It may be advisable for foreign businesses setting up in Thailand to take advantage of global service providers in order to acquire valuable compliance expertise - and ensure their international employee populations are paid accurately and efficiently.