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Employing in Thailand

At a glance

Employment in Thailand

Thai labour market is highly regulated and is governed by regulations such as the Labor Protection Act B.E. 2551 (2008), Thai Civil and Commercial Code and Alien Employee Act B.E. 2521 (1978). It’s important that appropriate advice is sought out based on the business structure that would be established in Thailand.

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Payroll & Tax in Thailand

There are specific rules in Thailand depending on whether your company employs residents or non-residents. The key concerns for a company that needs to comply with tax laws in Thailand are net taxable income, social security contribution, value added tax (VAT), corporate income tax, specific business tax (SBT), and property tax. Moreover, international treaties to avoid double taxation, international social security agreements, free trade agreements and special tax regimes for specific industries or sectors can make an indirect impact on a company’s tax environment.

 

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Immigration / Work Permits in Thailand

Foreign workers are required to have the proper visas and work permits in Thailand, as established by immigration laws. Foreigners, who wish to work, conduct business or undertake investment activities may apply for

  • Business visa category “B”
  • Business approved visa category “B-A”
  • Investment and business visa work

 

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Incorporation

There are six types of business forms available for foreign companies in Thailand. Each of these business forms has unique advantages and disadvantages, as well as differing scope of approved business activities, registration requirements, minimum capital requirements and accounting/auditing requirements.

When setting up a company in Thailand you have the following options.

  • Partnership
  • Limited Companies
  • Representative Office
  • Branch Office
  • International Head Quarters
  • Joint Ventures

You may also want to consider the following when making your decision:

  • The industry and the nature of business that will be established
  • Nationality of the headquarters/Management and employees
  • Minimum capital and conditions
  • Treaties, free trade agreements and economic partnership agreements
  • Treaty of Amity between Thailand and the USA
  • Thailand – Australia Free Trade Agreement
  • Japan – Thailand Economic Partnership Agreement
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GEO Solutions or DIY Employment in Thailand?

Companies entering Thailand must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities.  A GEO or Thailand Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Thai entity established that can run payroll.

A DIY approach will typically take 6-9 months until there is a properly incorporated WFOE ready to run payroll and cost up to 6 figures if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.

Using Shield GEO Employer of Record Services in Thailand

Payroll Thailand
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote

Notes

Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.

 
Grossed income Tax Rate (%)
0-150,000 exempt
150,001-300,000 5
300,001-500,000 10
500,001-750,000 15
750,000-1,000,000 20
1,000,001-2,000,000 25
2,000,001-4,000,000 30
Over 4,000,001 35
Tax Returns Supplied

Yes

Corporate Tax Requirements

All individuals and corporate entities liable to pay tax must file annual tax returns.

Thai companies and foreign entities carrying on business in Thailand are required to file their tax returns (Form CIT 50) within 150 days from the closing date of their accounting periods. Tax payment must be made together with the tax returns.

In addition to the annual tax payment, any corporate entity subject to income tax on net profits is also required to make tax prepayment (Form CIT 51). A company is obliged to estimate its annual net profit as well as its tax liability and pay half of the estimated tax amount within two months after the end of the first six months of its accounting period.

Employers Social Security and statutory contributions

Employers are obligated to contribute 5% of employee salary upto a maximum of 750 Baht per month. An employer is obligated to contribute between 2%-15%  of the employee’s monthly wage to the Social Security Fund (SSF). This contribution should match the contribution made by the employee.

Employees Social Security and statutory contributions

Employees are obligated to contribute 5% of employee salary upto a maximum of 750 Baht per month. An employee is obligated to contribute between 2%-15%  of the employee’s monthly wage to the Social Security Fund (SSF).

Corporate Income Tax Rate

Companies in Thailand are generally taxed at 20%. Branch corporate income tax rate is also 20%. However, corporate tax rates may vary as follows.

  • Small companies with a net profit between 300,000-3,000,000 Baht are taxed at 15%
  • Small companies with a net profit over 3,000,000 Baht are taxed at 20%
  • Companies listed in the Stock Exchange of Thailand are taxed at 20%
  • Companies newly listed in the Stock Exchange of Thailand or the Market for Alternative Investment are taxed at 20%
  • Foreign companies engaging in international transportation are taxed at 3%
  • Foreign companies disposing profit out of Thailand are taxed at 10%
Sales Tax

Current Value Added Tax (VAT) rate is 7%.

Business entities with an annual turnover exceeding 1.8 million Baht per annum is legally obligated to pay VAT.

Withholding Tax

Certain income types paid to companies can be subject to withholding tax at the point of source.

Such withholding tax rates on pre-specified categories of income are as follows.

  • Dividends 10%
  • Interest 1%
  • Royalties 3%
  • Advertising fees 2%
  • Service and professional fees

    • If paid to a Thai or foreign company with a permanent branch in Thailand 3%
      • If paid to a foreign company not having a Permanent branch in Thailand 5%
      • Prizes 5%

       

Other Tax

Petroleum Income tax

An indirect tax paid on an annual basis on net profit earned while carrying out the business of petroleum exploration and production.

Act B.E. 2514 (status 1)                                                                  50%

Act B.E. 2522 (status 2)                                                                  35%

Act B.E. 2532 (status 3)                                                                  50%

Disposal of profits                                                                            23.08%

Withholding tax rates

(For transfer of petroleum)

Property or rights                                                                           50%

Payment of interest                                                                       50%

Payment of dividend                                                                      23.08%

Payment of interest                                                                        15%

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