Legal Restrictions in Thailand
Information about the legal process involved in setting up a Thai business...
The Foreign Employment Decree and Restrictions on Foreign Employment
The Foreign Employment Decree (2017) and regulations issued under it, list categories of work that foreigners are not allowed to carry out in Thailand, and is relevant to company formation for foreigners in Thailand. It should be noted that in general, foreigners are not allowed to work in Thailand unless they hold a valid work permit. The permit will describe the duties that may be performed and the location where they may be performed. It will be issued in favour of a particular employer. If the work permit holder wishes to change his/her employer, or the duties permitted or their location, application must be made in advance for this. A person wishing to work or operate a business in Thailand must enter Thailand under a Non-Immigrant B visa, as this is the only type of visa which can be used to support a work permit application. Note that except for certain special categories (e.g. where the employer has Board of Investment sponsorship), a work permit is only valid for one year and must be renewed before expiry.
Note also that certain activities do not require a work permit:
(a) No work permit is required to perform the following activities:
- Attendance at meetings, discussions or seminars.
- Attendance at exhibitions or trade exhibitions.
- Visits to observe businesses or to meet for business dialogues.
- Attendance at special lectures and academic lectures.
- Attendance at technical training and seminars.
- Purchasing of goods in trade exhibitions.
- Attendance at board of directors meetings of one’s company.
(b) No work permit is required if the applicant enters Thailand to carry out “urgent and necessary work” for up to 15 days. In such a case, the applicant may enter Thailand under any kind of visa. He should bring with him corporate documents relating to his employer and a letter explaining the reasons for carrying out such urgent work. He must apply immediately to the Ministry of Labour for such authorization. Approval is entirely discretionary.
In 2013, the procedure was tightened up on the grounds that some foreigners were abusing the procedure to avoid the stricter scrutiny that was applied when a full one year work permit was applied for.
It was ruled that back-to-back 15 days exemptions could no longer be issued, only two exemption may be issued per person per calendar year, and the time between any two applications within one year is subject to a minimum of two months.
In June 2017, the Ministry of Labour issued a regulation, specifically listing the activities for which a 15 day exemption may be issued, as follows:
(1) Arrangement of meetings, training, or seminars.
(2) Special academic lecture.
(3) Aviation facilitation.
(4) Internal auditing from time to time.
(5) Monitoring and rectification of technical problems.
(6) Product or goods quality inspection.
(7) Manufacturing process inspection or manufacturing process improvement.
(8) Inspection or repair of mechanical equipment and electricity production system.
(9) Mechanical equipment installation or repair.
(10) Electric vehicle system technician work.
(11) Aircraft technician work or aircraft equipment system work.
(12) Consultation for repair of mechanical equipment or mechanical equipment control system.
(13) Mechanical equipment testing and demonstration.
(14) Movie making and photo shooting.
(15) Selection of workers for working abroad.
(16) Testing of technician’s skills for working abroad
The Foreign Business Act and Restrictions on Foreign Ownership of Businesses
The Foreign Business Act (1999) (FBA) is the main legislation that regulates ownership of businesses by foreigners. It regulates 43 specified categories of business activity grouped into three Schedules. The ownership restrictions are different and depend on the schedule in which the business is listed. Regarding Schedule 1 activities, only 49% foreign ownership is permitted and there is no machinery to obtain majority foreign ownership. Regarding Schedule 2 business 60% foreign ownership is permitted (75% with Cabinet permission) but 40% of the directors must be Thai. As to Schedule 3 business, 49% foreign ownership permitted and up to 100% foreign ownership may be permitted after application to the Ministry of Commerce for a licence. In summary, foreigners may have 100 percent ownership of most manufacturing businesses, but only 49 percent ownership of a services business, unless permission for majority foreign ownership is obtained. There are also a number of other specific Acts and regulations that regulate foreign ownership in specific industries such as banking, shipping, insurance and telecommunications.
The Board of Investment has power to grant permission for majority foreign ownership of certain businesses that are restricted under Schedule 2 and 3 of the Foreign Business Act to promoted businesses. The Treaty of Amity and Economic Relations (1968) grants certain preferential rights to American investors with regard to the ownership of businesses in Thailand. These rights are far more generous than those that apply to foreigners of other nationalities under the FBA.
Foreign investors should also be aware that ownership of land by foreigners is generally prohibited, subject to a number of specified exceptions.
Generally speaking, ALL foreigners who work in Thailand must have a work permit issued to them allowing them to work in that position. A work permit may be applied for in any occupation, except for 39 prohibited occupations specified in a regulation issued under the Foreign Employment Act.
At: 90 Soi Phaholyothin 7, Phaholyothin Road, 10400
Tel: 02 272 8000
Ministry of Commerce
At: 44/100 Nonthaburi 1 Rd., Amphur Muang, Nonthaburi 1
Tel: 02 507 8000
Fax: 02 507 7717
Prepared by: Stephen Frost, Director, Bangkok International Associates 17th Floor ITF Tower, 140/36-37 Silom Road, Bangkok 10500, Thailand Tel: 02 231 6201-3 Fax: 02 231 6204 /e-mail email@example.com /Website www.bia.co.th Copyright © Bangkok International Associates 2017 All Rights Reserved