It is challenging for entrepreneurs to start their businesses in unknown countries. Hence, you should become well-versed in the local laws set by the government to avoid the possibility of getting any problems in the future. If you are interested in starting a business in Thailand, you should have a precise idea about company registration and a few other vital aspects. It includes:
- Corporate laws
- Tax implications
- Licensing issues
- Joint venture possibilities
- Work permit
- Staff obligations
- Application procedures
Often many entrepreneurs are misled by inappropriate data. That’s why the Thailand government gives expert and correct guidance on the issues.
The process of understanding both operational and legal procedures is essential for reaching your business goal in Thailand.
If you plan to implement your startup business in Thailand, you can consider the following steps. It is equally important to do a smart search before setting up a business in Thailand.
Company Registration
There are different ways available to set up business in the country. In these two cases, you must register your company.
To establish a Thai Limited business, you need about three promoters. You can ensure that one of these three promoters must be Thai. As a result, Thai Limited company needs to have a Thai citizen holding about fifty-one per cent of shares. It means that foreign investors can have only forty-nine per cent.
Also, you must have a valid physical address, whether it is a serviced office, rental office, or virtual office for registering your Thai limited business. When it comes to VAT registration, is required while starting the company.
If you want to get VAT certification, you should get the written permission of the premise owner where your office is located.
A minimal capital of 2 million THB is required for company registration in Thailand. This investment is mandatory for every limited company, which is planning to recruit a minimum of one foreign individual for your work. After company registration, you can apply for VAT, and tax, and open your bank account. If you are a foreign Director, you are capable of applying for a work permit and working visa. With Asia Business Consulting, you can be informed about the possible options for your professional operations. If you are looking for a precise guide on how to start a business in Thailand, you can read this guide precisely.
BOI (Board of Investment) Thailand
BOI (Board of Investment) Thailand is developed to promote business opportunities in Thailand by giving privileges to foreign entities or local entities planning on setting up their business under Thai law. It provides special incentive options to businesses falling under specific categories of business. It enhances both the technical improvement of the workforce and foreign investment.
What are the key benefits of BOI Thailand?
- Permission for overseas individuals to own the land
- Permission for operating under complete foreign ownership
- Permission for offering most foreign experts and technicians required
- A complete exception of your import duty on your machinery
- Tax exemption of corporate income for roughly about eight years
- Permission for remitting foreign currency overseas
- Deduction of water cost, transportation and electricity costs
- Deduction of Infrastructure Installation of the project
- Import duty exemption on essential or raw materials used in producing export products for five years
BOI offers a few promoted activities as special privileges which are given below: - Agricultural products and agriculture
- Industrial zones for wastewater treatment and environmental preservation
- Projects with straight involvement in human resource and technological development
- Ceramics, Basic Metals, and mining
- Light industry
- Transport Equipment, Metal Products, and Machinery
- Electrical Appliances and Electronics Industry
- Plastics, Chemicals, and Paper
- Software
Taxation
The Revenue Code of Thailand creates the regulations for tax imposition in income with the income tax.
It is classified into three divisions, including personal income tax, corporate income tax, and value-added taxes.
Personal Income Tax
Every individual, non-resident or resident, who derives the assessable income amount from business or employment in the country or has assets situated in the country, is directly subject to the personal income tax if the income is either paid outside of or in Thailand. All the exemptions are allowed to certain individuals such as the United Nations, diplomats, visiting experts and officers, under the conditions of bilateral and international agreements.
If you are residing in Thailand for more than 180 days are subject to the income tax process on the income from any foreign sources. It applies to the situation when the income is brought into the country during a similar taxable year.
A usual deduction of forty per cent but not an additional of 60,000 baht is allowed against the income from services rendered or employment or income from the copyrights.
Corporate Tax
Every business registered under Thai law and regulation is directly subject to taxation when stipulated in the Revenue Code. They are also subject to the income tax rate on income grabbed from sources outside of and within Thailand. Foreign businesses not residing or registered in Thailand are only subject to the tax on income, which is derived from the sources within this country.
The regular business depreciation allowances and expenses, at amounts, ranging from 5 to 100%, based on the product or at a cost under the remaining acceptable depreciation technique, are permitted as the dedications from your gross income. The inventory is valued at the cost or the lower market rate.
The net losses are carried above for roughly about five consecutive years. The interest rates on some overseas loans are exempt from the income tax of your firm.
VAT (Value Added Tax)
This tax system can replace the existing tax system of businesses that critics claimed created highly inefficient redundancies as well as facilitated tax evasion.
As per the new tax system, value-added at all production stages is subject to 7% of the tax amount. The following people are affected by this system. It includes producers, wholesalers, service providers, importers, retailers, and exporters.
This rate is paid monthly. It is calculated through this formula, which is 0utput tax – input tax = tax paid.
It is where the output tax rate is VAT that the operator grabs from the buyer while the sales are made. On the other hand, the input tax rate is VAT that the operator pays to service providers or goods sellers, which is used in the operator’s business.
When the outcome of the calculation is positive, the operator submits the tax to the Revenue Department before 15 days at the end of every month. However, for the negative balance, the operators are entitled to a refund in cash form or a tax credit form that is paid in the upcoming month.
Labour Laws
It is essential to know that employment legislation includes a straight bearing on the labour practices for all kinds of businesses. Both investors and business owners should get professional advice from consultants to identify which type of legislation is suitable for their business and the right technique for moving forward.
Here are the significant protections involved in business law as follow:
Holidays and work hours
Employees need to spend 8 hours a day doing a non-hazardous job. It is not exceeding forty-eight hours per week.
If the working time of a day is below 8 hours, the employee and the employee will agree to compensate for the remaining working time in standard working days. It does not exceed nine hours per day, and overall working hours per week never exceed forty-eight hours.
In other kinds of work, both employee and employer will agree to create the work schedule, but it does not exceed forty-eight hours a week. The hazardous work never exceeds seven hours a day, and forty-two hours per 7 days or a week. Workers are entitled to not less than thirteen 13 national holidays per year, and a minimum of six days of yearly vacation after working uninterruptedly for one full year.
The workers have the option of whether they desire to work on holidays or overtime. The female employees are entitled to maternity leave for 90 days, including holidays. The paid leave never exceeds 45 days.
All workers are allowed to take a minimum of 1 hour as the rest period daily after working for five consecutive hours. The employee and employer may create rest time for themselves, but it should not be less than one hour per day overall. Companies should arrange a weekly holiday of a minimum of one day per 7 days a week for workers at the intervals of a six-day duration.
For a job done which is the addition of fixed working hours or maximum buyers, the companies must be smoothly paid the overtime compensation. These amounts may differ and range from about 1-1/2 times to 3 times the standard hourly wage for real overtime worked. This maximum number of extra working hours is minimal, which is not over thirty-six hours a week.
The employee must have a minimum of 15 years of age. Employees below 18 years of age are entirely banned from hazardous jobs. Also, they are restricted from working on holidays, overtime, or between the time of 10 p.m. and 6 a.m.
The pregnant ladies are also limited from working on holidays, overtime, or between the time of 10 p.m. and 6 a.m. However, if pregnant employees are in the executive position, or do administrative, academic, or work relating to accounts or finance, the company may assign them to work overtime only on the working days with their consent insofar. Also, companies must ensure that it never affects the health of pregnant workers.
Visa and work permits
Similar to other nations, overseas people need to have a valid work permit and visa if they decide to work in Thailand. Through, things are somewhat challenging and demanding in Thailand. Both people and business entrepreneurs should come up with precise planned and firm goals while applying for a Work permit and visa in the country.
Government schemes for startups in Thailand
The Thailand government can understand the significance of the startup industry, so it has developed three “S” approaches. It helps the government further support businesses including SMEs, Startup and Social enterprises. The main of Thailand’s government is to overcome the replace the old mechanisms with the new model. It lets the private sector get involved in the stimulation decision of the state.
Here are a few supportive measures as follow:
Law and regulations
This corporate law lets people register their business as a corporate entity to support the entrepreneurs. The Business Security Act has also changed from having the requirement for different mortgages and guarantees to only having an idea is enough for your business security.
Ecosystem
It will foster the sources of funding and support, including venture capital, crowdfunding, and incubators. It also encourages startups to enter the system to become transparent corporate with the standards that will attract visitors.
Final words
If you are more interested in setting up a business in Thailand, you can read the legal assistance offered by the Thailand government, which is explained below. It helps you to have a precise idea about business setup in the country.
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