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.
Further Information
Department of
Revenue
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 sfrost@bia.co.th
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