Business Incorporation and Relevant Registrations in Thailand

Setting up a company in Thailand requires at least 3 or more individuals to subscribe their shares at the incorporation stage. Then, such subscribers shall conduct a statutory meeting for a company establishment to appoint the director(s) of the company and hand over the business to the director(s). The director(s) shall call for shares subscription either in kind or in cash and register for incorporation within 3 months from the statutory meeting.

The company’s director(s) can be both Thai and foreigner. This does not affect the ownership of shares in the company or types of the company whether it is a Thai company or a foreign company under Thai law. However, in the event that the director(s) is a foreigner and receive salary from the company, this shall be considered as an employee who is required to apply for a work permit in order to work in Thailand legally.

Once the company has already been established and if the company has an employee, social security registration is required. In addition, if the company has its income more than 1,800,000 baht per year, the company is required to register for value added tax (VAT) number.

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Last but not least, other registrations or procedures may be required for any other specific types of business. For example, specific licenses are required for operating the restaurant business, securities business, tourism business, etc. The business owners need to seek consultation and check the relevant laws whether the business requires any other specific registrations or procedures.

Draft Ministerial Regulation Designating Government Agencies Being Able to Request an Execution Officer to Conduct Administrative Enforcement (No. ..) B.E. ….

The Cabinet, on 19 April 2022, approved in principle the draft Ministerial Regulation Designating Government Agencies Being Able to Request an Execution Officer to Conduct Administrative Enforcement (No. ..) B.E. …. (“Ministerial Regulation”) as proposed by the Ministry of Finance.

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The main object of this Ministerial Regulation is to prescribe that 16 agencies, i.e. the Bank of Thailand (BOT), Government Pension Fund, National Savings Fund, Life Insurance Fund, General Insurance Fund, Neighbouring Countries Economic Development Cooperation Agency (NEDA), Bank for Agriculture and Agricultural Cooperatives, Export-Import Bank of Thailand (EXIM Bank), Thai Credit Guarantee Corporation, Government Housing Bank (GH Bank), Government Lottery Office, Tobacco Authority of Thailand (TOAT), Securities and Exchange Commission (SEC), Deposit Protection Agency (DPA), Office of Insurance Commission (OIC) and Student Loan Fund, are able to request an execution officer to conduct on administrative enforcement under the law regarding administrative procedures.

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Under the Administrative Procedure Act B.E. 2539 (1996) (“Act”), if the government agencies, in the case of force for payment and the administrative order requesting for the payment becomes final, wish the execution officer under the Legal Execution Department to enforce such administrative order, the request shall be submitted unilaterally to the court within 10 years from the date that the administrative order to settle the payment becomes final.

The court will issue a writ of execution to enforce such administrative order by specifying the amount that the person subject to the administrative enforcement has not paid according to the administrative order, regardless of whether such government agencies implement the administrative enforcement or carry out the administrative enforcement but have not receive payment or receive some portion of the same.

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The Ministry of Finance has specified the abovementioned 16 government agencies under the supervision of the Ministry of Finance in order to effectively implement the enforcement of administrative order to settle the payment.

Draft Ministerial Regulation Stipulating Rules, Procedures, Durations and Rates of Compensation for Elder Benefits during the Reduction of Rate of Contribution Period (No. ..) B.E. ….

The Cabinet, on 5 April 2022, approved in principle of the Draft Ministerial Regulation Stipulating Rules, Procedures, Durations and Rates of Compensation for Elder Benefits during the Reduction of Rate of contribution Period (No. ..) B.E. …. (“Ministerial Regulation”) as proposed by the Ministry of Labor.

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Due to the 3-month reduction of contribution rate measure causing some insurers receive a reduced old age pension based on the amount of contribution into the fund, the Ministry of Labor then proposed for enforcing of the Ministerial Regulation to help such insurers. he main points of this Ministerial Regulation are as follows:

  • This Ministerial Regulation shall be effective from 1 May 2022 onwards.
  • The payment of old age pension to insurers who contribute to the fund during the reduction of contribution rate from 1 May 2022 – 31 July 2022 shall be calculated from additional 2.95% of wages of insurers from 1 May 2022 – 31 July 2022 in order to additionally pay the old age pension from the rate stipulated in Article 6 (2) of the Ministerial Regulations Stipulating Rules, Procedures, Durations and Rates of Compensation for Elder Benefits B.E. 2550 (2007).
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The Ministry of Labor has issued the measures to alleviate suffering of insurers affected during the reduction of contribution rate causing some insurers receive less old age pension. The old age pension shall be paid to the insurers who contributed   into the fund during the reduction of the contribution rate, from May – July 2022, calculated from the additional 2.95% of the insurers’ wages. Such increased payment of pension is from budget of the Social Security Fund.

Updated Rate of Contribution to the Social Security Fund

The Cabinet, on 5 April 2022, approved in principle of the draft Ministerial Regulation Stipulating the Rate of Contribution to the Social Security Fund B.E. …. (“Ministerial Regulation”) as proposed by the Ministry of Labor in order to make an amendment to the Ministerial Regulation Stipulating the Rate of Contribution to the Social Security Fund B.E. 2564 (2021). The main points of this Ministerial Regulation are as follows:

  • Repealing the Ministerial Regulation Stipulating the Rate of Contribution to the Social Security Fund B.E. 2564.
  • From 1 May – 31 July 2022, the government, employers, and insurers under Section 33 of the Social Security Act B.E. 2533 (1990) shall contribute 0.9% of the insurers’ wage rate for compensation in the event of injury or sickness, disability, death, and childbirth. For the compensation in case of child support and old age, the employers and insurers shall contribute 0.05% of the insurers’ wage rates and the government shall contribute 1.6% of the insurers’ wage rates. For the compensation in case of unemployment, the employers and insurers, shall contribute 0.05% of the insurers’ wage rates and the government shall contribute 0.25% of the insurers’ wage rates.
  • From 1 August 2022 onwards, the government, employers and insurers under Section 33 of the Social Security Act B.E. 2533 shall contribute 1.5% of the insurers’ wage rates to the fund for compensation for injury or sickness, disability, death, and childbirth. For compensation in case of child support and old age, the employers and insurers shall contribute 3% of the insurers’ wage rates and the government shall contribute 1% of the insurers’ wage rates. For the compensation in case of unemployment, the employers and the insurers shall contribute 0.5% of the insurers’ wage rates and the government shall contribute 0.25% of the insurers’ wage rates.
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The reduction in employers and insurers contribution rates has resulted in a lower contribution that the employers and insurers is required to contribute to the Social Security Fund from 5% to 1% of the insurers’ wage rates. In addition, the insurers under Section 39 of the Social Security Act B.E. 2533 (1990) also contribute less to the Social Security Fund, from the rate of 432 baht per month to the rate of 91 baht per month.

Tax Relief Measures for Digital Asset Trading

The Cabinet, on 8 March 2022, has approved in principle drafts Royal Decree under the Revenue Code regarding VAT exemption (No. ..) B.E. …. (“Royal Decree”) and Ministerial Regulation (No. ..) B.E. …. (“Ministerial Regulation”) issued under the Revenue Code regarding VAT and income tax exemption as proposed by the Ministry of Finance.

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These drafts Royal Decree and Ministerial Regulations are measures to relieve the tax burden for people in trading digital assets by exempting VAT for transferring of cryptocurrencies or digital tokens in digital asset exchanges and transferring of digital currencies issued by the Bank of Thailand (“BOT”) as well as exempting personal income tax from the benefit of transferring of cryptocurrencies or digital tokens from the profits earned.

The main points of these Royal Decrees and Ministerial Regulation are as follows:

  • The drafts Royal Decree is applied for VAT exemption for transferring of cryptocurrencies or digital tokens in digital asset exchanges approved by the Minister of Finance and VAT exemption for transferring of digital currencies under the development and trial program for public sector usage issued by the BOT, starting from the 1st date of the next month that the Cabinet has granted its approval until 31 December 2023.
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  • The draft Ministerial Regulation is applied for personal income tax exemption on profits obtained from transferring of cryptocurrencies or digital tokens in digital asset exchanges approved by the Minister of Finance in the amount equal to losses in the same fiscal year (the other words, profits – losses = amount of income for tax calculation), starting  from 14 May 2018 onwards, in which rules, procedures and conditions announced by the Director-General of the Revenue Department will be applied.

Asia IP : When should you rebrand?

“In Thailand, there is a very old brand for compact powder”

“When the younger generation of owner family members took over the management, they saw that the product that was popular 50 years ago was not suited for the consumers in a younger generation. The management started rebranding and re-packaging the overall product, making it more attractive to the new generation of consumers which are their targeted group. This local product now becomes an eye-catching compact powder fighting with many more western brands.”

Panisa Suwanmatajarn said in Asia IP When should you rebrand? on 17 January 2022.

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Observations of the Extraordinary Committees Considering on Revision of the Copyright Act (No. ..) B.E. ….

On 1 February 2022, the Cabinet considered and approved the following resolutions:

  1. The Cabinet considered and approved observations of the Extraordinary Committees of the House of Representatives and the Senate on revision of the Copyright Act (No. ..) B.E. …. as proposed by the Secretariats of the House of Representatives and the Senate.
  2. The Office of the Council of State shall accept the observations of the Extraordinary Committees of the House of Representatives for consideration. If the Office of the Council of State deems it appropriate to make amendment on the ground for preparation of this revision of the Copyright Act (No. ..) B.E. …. , the Office of the Council of State shall send to the Secretariat of the Cabinet on such revised ground according to the observations of the Extraordinary Committees of the House of Representatives and the Senate for publishing in the Government’s Gazette.
  3. The Ministry of Commerce, as the main agency, is required to consider the observations of the Extraordinary Committees of the House of Representatives and the Senate together with the Office of the Court of Justice, Royal Thai Police, and relevant agencies and summarize the results of consideration and submit the same to the Secretariat of the Cabinet within 30 days for the Cabinet’s consideration.
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The main points of these observations are as follows:

  • This revision of Copyright Act (No. ..) B.E. …. is essentially an amendment to the Copyright Act B.E. 2537 regarding the duration of copyright protection in photographic works by providing protection for photographic works throughout the author’s life and for 50 years from the death of the author in order to comply with the World Intellectual Property Organization’s Copyright Treaty as well as making amendment on provisions of the technology protection measures and  the limitation of liability of service providers to create a mechanism for cooperation between service providers and copyright owners to promote fair trade on the Internet. In addition, regarding the penalties, this revision of Copyright Act (No. ..) B.E. ….  increases penalties for offenses in providing, producing, selling or distributing services, products or devices causing ineffectiveness on technology protection measures in order to create prevention of an infringement of copyright works more effectively.
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  • The Extraordinary Committees of the House of Representatives and the Senate consider that the ground for amendment of Copyright Act (No. ..) B.E. …. is too narrow since it does not cover the supervision of copyright works. The Extraordinary Committees of the House of Representatives and the Senate therefore deem it appropriate to amend the same to provide effective protection of copyright works and keep up with technological changes to be in line with consumer’s behaviors and current social situations. There are also observations about the development of copyright database system, encouraging the use of other intellectual properties in which the term of protection is going to expire for the benefit of Thailand, stipulating guidelines or practices regarding litigation of copyright infringement and considering amendment on the minimum penalty rate under the Copyright Act B.E. 2537 to make all provisions being in line to each other in the future. Last but not least,  to provide effective protection of copyright works and keeping up with technological changes, the Extraordinary Committees of the House of Representatives and the Senate considers making amendment to the provisions related to the protection of performers’ rights to suit the current situation as well as encouraging copyright owners to adopt technology protection measures that do not impede the use of assistive technology for persons with disabilities to access copyright works and creating knowledge and understanding of this revision of Copyright Act (No. ..) B.E. ….

Currently, there are plenty of internet users causing copyright infringement works substantially. The current Copyright Act does not cover the advance of today’s technology. Therefore, the Amendment to Copyright Act (No. 5) B.E. 2565 (“Act”) was proposed by the Ministry of Commerce and will be officially enforced on 23 August 2022. The reasons for enactment of this Act are for complying with the World Intellectual Property Organization’s Copyright Treaty (WIPO Copyright Treaty) in which Thailand became a contracting party, strengthen efficiency in protecting copyright works while changing in technology as well as revising the provisions on protection of technological measures. This Act also improves the provisions on limitation of liability of the service providers for effective law enforcement along with creating cooperation between service providers and copyright owners in solving piracy problems on the internet.

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This Act has added definition of the term “Service Provider” which has a broader meaning than the current Copyright Act and also added the definition of the term “Service User”. The Act has also amended the definition of “Technology Protection Measure” to include the performer’s rights and recording of performance mediums. Moreover, this Act has intended to improve the provisions on limitation of liability for several types of service providers which are service providers for mediums for transmitting computer data or allowing the communication to be communicated by other means through the computer system, temporary computer storage service providers, computer depository service providers, and service providers for the computer data search. It has also amended the way to conduct taking down and notice against the infringement works. It is hoped that this Act will help in balancing among the rights of copyright holders, liabilities of service providers and using of copyright works under fair use principal.

Draft Royal Decree issued by virtue of the Revenue Code Regarding Tax Exemption (No. ..) B.E. …. [Tax Measures to Promote Fundraising in Startup Enterprises]

The Cabinet, on 8 March 2022, has approved in principle of drafting Royal Decree issued by virtue of the Revenue Code regarding Tax Exemption (No. ..) B.E. …. (“Royal Decree”) as proposed by the Ministry of Finance which improves tax incentives measures to promote fundraising in startup enterprises according to previous Royal Decree regarding Tax Exemption (No. 597) B.E. 2559 and Royal Decree regarding Tax Exemption (No. 636) B.E. 2560.

This Royal Decree exempts personal income tax and corporate income tax on profits from transferring of shares and unit trusts in enterprise investment and investment in startup enterprises through venture capital. This tax exemption shall be effective from the date following the date of its publication in the Government Gazette until 30 June 2032 in order to enable Thai startup enterprises to raise more fund from the investors which will result in further expanding of the country’s economic system. The main points of this Royal Decree regarding the tax incentives are as follows:

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Investment TypesTax Benefits
1. Direct investment of an individual or a juristic partnership or a company registered in Thailand and a juristic partnership or a company registered overseas (previously not mentioned)An individual or a juristic partnership or a company both registered in Thailand and overseas will receive exemption on personal income tax or corporate income tax for income (only profit) from transferring of shares of startup enterprises. However, such startup enterprises shall operate on the targeted industries as supported by the government.
2. Investment through Venture Capital (VC)Corporate Venture Capital (“CVC”) will receive exemption on corporate income tax on income (only profit) from transferring of shares of startup enterprises only on transferring of shares of startup enterprise. However, such startup enterprises shall operate on the targeted industries as supported by the government. · Private Equity Trust (PE Trust) is not subject to corporate income tax. · Investors in CVC will receive exemption on personal income tax or corporate income tax on income (only profit) from transferring of CVC shares. · Investors in PE Trust will receive exemption on personal income tax or corporate income tax on income (only profits) from transferring of unit trusts on PE Trust.