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Employment vs Liberal Profession

Thai Tax Treatment of Physicians under Sections 40 (1) and 40 (6) of the Thailand Revenue Code

Background

As Thailand’s healthcare sector continues to evolve, the engagement structure between physicians and private hospitals has become increasingly diverse. Traditional employment relationships are often replaced or supplemented by hybrid arrangements, including revenue-sharing models and per-case compensation structures.

Against this backdrop, a recurring tax issue arises – Should a physician’s income be classified as employment income under Section 40 (1), or as income from a liberal profession under Section 40 (6) of the Revenue Code?

The distinction is critical, as it directly affects the availability of deductions and the overall tax burden.

Legal Framework

The Thailand Revenue Code distinguishes between:

  • Section 40 (1): income derived from employment, including salaries, wages and similar benefits; and
  • Section 40 (6): income derived from liberal professions, namely arts of healing, expressly including the medical profession.

While the statutory wording appears clear, its application in practice is highly fact-specific and has been shaped by both judicial interpretation and tax rulings issued by the Revenue Department in response to tax inquiries under applicable law.

Judicial Approach : substance over form

Thai Supreme Court (Tax Division) jurisprudence has consistently adopted a substance-over-form approach in determining the nature of a physician’s income.

In Supreme Court Judgment No. 1802/2533, the Court considered a physician engaged by a private hospital under a service-based remuneration model. The physician exercised discretion in treating patients and was compensated based on services rendered.

The Court held that such income could fall within Section 40 (6), emphasizing that:

•   the exercise of liberal profession judgment is central to medical practice; and

•   the use of hospital facilities does not, in itself, create an employment relationship.

However, the Court made clear that where the factual circumstances demonstrate:

•   Subordination to hospital management;

•   Fixed working hours; and

•   Characteristics typical of employment,

the income must be classified under Section 40 (1).

Revenue Department Rulings : administrative perspective

The Revenue Department has addressed similar scenarios through a number of rulings, which largely align with the Supreme Court’s approach, albeit with a stronger focus on operational control.

In these rulings, the Revenue Department has generally taken the position that:

•   Physicians receiving fixed monthly remuneration;

•   Working under assigned schedules; and

•   Operating subject to hospital direction

derive income under Section 40 (1), regardless of how the contractual relationship is described.

Conversely, the Revenue Department has accepted classification under Section 40 (6) where:

•   Remuneration is based on actual services performed (e.g., per patient or procedure);

•   Income varies depending on workload; and

•   The physician retains meaningful professional independence.

Particular weight is often given to whether the physician bears economic variability, which is viewed as indicative of independent professional activity.

Converging Principles

Taken together, the Supreme Court decisions and Revenue Department rulings establish a consistent principle:

The classification of a physician’s income depends on the true nature of the working relationship, not the contractual label or the professional title.

Importantly, while medicine is recognized as a liberal profession under Section 40 (6), this does not automatically determine the tax treatment in every case. The decisive factor remains the degree of independence versus control.

Practical Implications

For physicians, misclassification may result in reassessment, denial of deductions and potential penalties. Reliance on contractual wording alone is insufficient; actual working conditions must support the intended tax treatment.

For hospitals, engagement structures should be carefully reviewed. Arrangements involving:

•   Fixed or guaranteed payments;

•   Strict scheduling requirements; and

•   Integration into organizational hierarchies

may be vulnerable to recharacterization as employment relationships.

Hybrid models, common in practice, present the greatest risk, particularly where contractual independence is not reflected in day-to-day operations.

Key Takeaways

•   Substance prevails over form : Courts and the Revenue Department will look beyond contractual labels to the actual working relationship.

•   Professional status is not decisive : Although medicine is a liberal profession, not all physicians earn income under Section 40 (6).

•   Control is a key indicator : Fixed hours, supervision, and integration into hospital management point toward Section 40 (1).

•   Payment structure matters : Fixed remuneration suggests employment, while case-based or revenue-sharing arrangements support Section 40 (6).

•   Economic risk is relevant : Variable income linked to performance with indicative of independent professional activity.

•   Alignment is essential: Contracts, payment terms and actual practices must be consistent to withstand scrutiny.

Author: Panisa Suwanmatajarn, Managing Partner.

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Labor: The Case of Continuous Employment After Retirement – A Landmark Ruling on Severance Pay Continuity

In Thailand, it is a common practice for employees to reach the mandatory retirement age stipulated in company regulations, receive severance compensation as required by law, and then be rehired by the same employer under a new employment contract. This approach treats the post-retirement period as entirely separate employment, effectively resetting the length of service for future severance calculations. However, a recent Supreme Court decision has clarified that this outcome is not automatic and depends on the specific circumstances, intentions, and conduct of the parties involved.

Background of the Case:

The dispute originated from an employee who began working in 2010 in the position of financial controller. According to the company’s employee handbook, the retirement age was set at 55 years, which the employee reached in 2017. Rather than terminating the employment and paying severance at that time, both the employer and the employee mutually agreed to continue the working relationship without any severance payment being made upon reaching retirement age. The employee continued performing the same duties and receiving regular wages as before.

This arrangement persisted until 2020, when the employer decided to terminate the employment, citing retirement age as the reason, and paid severance based on the continuous service period from 2010 to 2020. The employee contested this, arguing that the original contract had ended upon reaching age 55 in 2017, constituting a termination that should have triggered severance pay at that point. Consequently, the post-2017 employment should be regarded as a new contract, entitling the employee to a second severance payment (a “double” compensation claim) upon the 2020 termination.

The case progressed through the courts. The Appellate Court for Specialized Cases sided with the employee, viewing the continuation as a new contract and requiring additional severance for the post-retirement period. The employer appealed to the Supreme Court.

Applicable Law:

The primary legal framework is the Labor Protection Act B.E. 2541 (1998), as amended, particularly Section 118, which mandates severance pay upon termination by the employer (absent exceptions), with the amount scaled according to length of service (e.g., 30 days’ wages for 120 days to less than 1 year, up to 400 days for 20 years or more).

Section 118/1 specifically addresses retirement: Retirement at an age agreed upon by the parties or stipulated by the employer is deemed a termination under Section 118, paragraph 2, obligating severance payment unless otherwise provided. If no retirement age is set or it exceeds 60 years, employees aged 60 or older may elect to retire by notifying the employer, with 30 days’ notice, and receive severance.

The key interpretive issue concerns whether reaching the retirement age automatically terminates the contract or if continuation without severance payment indicates an extension of the original contract.

The Supreme Court’s Decision:

In Supreme Court Judgment No. 3114/2567, the Court overturned the Appellate Court’s ruling. It held that the employment contract did not terminate in 2017. The decisive factors included:

•  The employee handbook explicitly permitted the company to extend the retirement age on a case-by-case basis.

•  No severance was paid at age 55, and the employee continued working seamlessly with regular wages and duties.

•  The parties’ conduct demonstrated an intention to extend the existing contract rather than conclude the original one and commence a new one.

The court emphasized that termination due to retirement under Section 118/1 occurs only when the employer ceases to allow continued work and does not pay wages. Absent such actions—particularly where no severance is paid at the retirement point—the contractual relationship persists as a continuous extension.

Consequently, the length of service must be calculated as a single, unbroken period from the initial start date (2010) to the actual termination date (2020). The employer was not required to pay “double” severance; the single payment made in 2020, based on the full continuous service, satisfied the legal obligation.

Key Takeaways:

This ruling establishes an important precedent emphasizing the significance of parties’ intentions and actual conduct over formalistic interpretations:

•  For employers and HR professionals: Clearly stipulate provisions for extending retirement age in employee handbooks or regulations. To reset service length post-retirement, pay full severance at the retirement point and execute a distinct new contract with explicit terms indicating a fresh employment relationship.

•  For employees: Continuous service without severance at retirement can benefit long-term accumulation toward higher severance tiers (up to 400 days’ wages), though it defers immediate payout. Employees should review company policies and seek clarification on contract status upon reaching retirement age.

•  Overall: Judicial decisions in labor cases prioritize the substance of the relationship—evidenced by ongoing work, wages, and absence of severance—over mere labels, ensuring fairness while aligning with statutory protections.

This decision promotes clarity in employment practices and reduces disputes by underscoring the need for transparent agreements regarding retirement and continuation.

Author: Panisa Suwanmatajarn, Managing Partner.

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Partnerships and Limited Companies: Enhanced Measures to Prevent Nominee Arrangements Involving Foreigners

The Department of Business Development (DBD) has identified more than 75,000 companies operating in Thailand with foreign shareholders holding less than 50 percent of shares while engaging in restricted businesses under the schedules of the Foreign Business Act B.E. 2542 (1999) (“FBA”). Such structures may indicate the use of Thai nationals as nominees to conceal foreign ownership or control.

To strengthen the prevention of these arrangements, the DBD proposes the Draft Central Partnership and Company Registration Office Order No. .. / 2569 on Criteria and Procedures for Registration of Amendments to Include a Foreigner as a Partner of a Partnership or as an Authorized Signatory of a Limited Company (the “Draft Order”).

The Draft Order aims to prevent Thai nationals from providing assistance, support, or joint participation in business operations with foreign investors in a nominee capacity, which may constitute an offense under section 36 of the FBA.

Key Provisions of the Draft Order:

The Draft Order introduces mandatory in-person verification procedures for specific post-incorporation amendments to registered partnerships and limited companies, supplementing existing controls (such as three-month bank statement requirements for initial registrations involving foreign elements).

1.  Amendments to Partners of Registered Partnerships: For amendments to a registered partnership that originally had all Thai-national partners or previously had foreign partners contributing 50 percent or more of the capital, where the proposed change results in foreign partners collectively holding less than 50 percent of the capital, the Registrar requires:

      •  All existing partners and incoming Thai-national partners to appear in person before the Registrar.

      •  Presentation of valid national identification cards or equivalent photographic identification documents (unexpired).

      •  Recording of formal sworn statements confirming relevant details and denying nominee conduct.

2.  Amendments to Limited Companies: The Draft Order applies to limited companies where all existing authorized directors (with the power to bind the company) are Thai nationals. If an amendment seeks to appoint new directors, change the number or names of authorized directors, or otherwise result in a foreigner becoming an authorized director or co-signatory with binding authority, the Registrar requires:

      •  All existing directors and incoming Thai-national directors to appear in person.

      •  Presentation of valid identification as above.

      •  Recording of formal sworn statements affirming genuine participation and denying nominee arrangements.

3.  Exceptions to the Procedure:
In cases where full compliance is not feasible, the registration application may be accepted upon demonstration of reasonable grounds and receipt of written approval from designated senior officials, including the Head of the Business Registration and Trade Facilitation Group, the Director of the Central Business Registration Division, the Director of the Digital Juristic Person Registration System Promotion and Development Division, or the Director of a relevant Department of Business Development District Office.

Public Consultation and Expected Implementation:

The Draft Order is currently undergoing public consultation, commencing on 29 February 2026 and concluding on 13 March 2026. Following the consultation, submitted feedback will be reviewed, potential revisions made, and the order advanced toward finalization and promulgation. If adopted in its current or a similar form, implementation is tentatively anticipated around early April 2026 or shortly thereafter, subject to official confirmation.

Businesses and Individuals Potentially Affected:

The Draft Order may impact:

  • Limited companies and registered partnerships in Thailand.
  • Thai-national directors, partners, and incoming participants in relevant amendments.
  • Foreign investors or directors seeking involvement through shareholding below 50 percent or signatory authority.
  • Legal practitioners, corporate service providers, and other parties facilitating business registrations.
  • Entities with foreign investment or managerial involvement, particularly in restricted sectors, should review their structures and monitor developments to ensure future compliance.

Conclusion:

The Draft Order represents a targeted extension of the DBD’s intensified efforts to enforce foreign business restrictions and combat nominee practices. By requiring direct verification and sworn declarations from Thai participants. It aims to promote greater transparency and deter circumvention of the FBA. This measure complements—not replaces—prior registration safeguards and aligns with broader regulatory initiatives against illicit nominee structures observed since early 2026.

Stakeholders are advised to consult and seek professional legal advice to prepare for potential requirements once the Draft Order is finalized.

Author: Panisa Suwanmatajarn, Managing Partner.

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Strengthening Control over Illegal Foreign Employment in Thailand

Current Situation

Thailand continues to face significant challenges related to illegal migration and the unauthorized employment of foreign nationals. A substantial number of foreign nationals are estimated to have entered or remained in the Kingdom without valid immigration status or lawful work authorization, particularly in border areas. This situation raises serious concerns regarding national security, labor market integrity, and the protection of Thai workers’ rights.

In response, the Thai Government has reaffirmed its commitment to strict enforcement against illegal foreign employment. Relevant security agencies have been instructed to coordinate closely with provincial employment offices, especially in border provinces, to enhance surveillance, inspections, and preventive measures. Authorities have also been directed to conduct rigorous workplace inspections to ensure full compliance with applicable labor laws.

Legal Framework Governing Foreign Employment in Thailand

Under Thai law, foreign nationals must hold a valid work permit and perform only the work expressly authorized under that permit. Any violation of these requirements exposes both foreign workers and employers to significant legal penalties.

Liability of Foreign Workers

A foreign national who works in Thailand without a valid work permit, or who performs work beyond the permitted scope, is subject to:

  • A fine of THB 5,000 to THB 50,000;
  • Deportation to the country of origin; and
  • A two-year prohibition on applying for a new work permit from the date of punishment.

Liability of Employers and Business Owners

Employers or business owners who employ foreign nationals without a valid work permit, or permit foreign workers to perform work outside the permitted scope, shall be subject to:

  • A fine of THB 10,000 to THB 100,000 per foreign worker.

Enhanced Penalties for Repeat Offenses

In the event of repeat violations by employers, enhanced penalties apply, including:

  • Imprisonment for a term not exceeding one year; or
  • A fine of THB 50,000 to THB 200,000 per foreign worker; or
  • Both imprisonment and fine; and
  • A three-year prohibition on employing foreign workers.

Potential Impacts

Increased Legal Exposure for Foreign Nationals: Stricter inspections are likely to result in increased enforcement actions, including fines, deportation, and a two-year prohibition on obtaining a new work permit.

Heightened Compliance Obligations for Employers: Employers face greater legal and financial exposure, as fines are imposed on a per-worker basis, and repeat offenses may result in imprisonment, increased fines, and a three-year ban on employing foreign nationals.

Market and Workforce Implications: Industries that rely heavily on migrant labor may experience short-term labor shortages and higher compliance-related costs.

Strengthened Regulatory Enforcement and National Security: Enhanced coordination between security agencies and employment authorities is expected to improve enforcement efficiency, deter illegal employment, and promote standardized employment practices aimed at protecting Thai workers’ rights.

Conclusion

These measures are expected to strengthen the prevention and suppression of illegal foreign employment and promote greater legal compliance among employers. In the short term, businesses that rely heavily on foreign labor may face operational challenges, including labor shortages and increased compliance costs. In the long term, however, these measures are intended to enhance the protection of Thai workers’ rights and establish standardized employment practices consistent with internationally recognized labor standards.

Author: Panisa Suwanmatajarn, Managing Partner.

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Medical Professionals: Key Legislation

Thailand’s healthcare system operates under a robust legal framework designed to regulate the conduct, qualifications, and responsibilities of doctors, nurses, and other medical personnel. These laws aim to protect patient rights, uphold professional standards, and ensure public health safety. The primary legislation is administered by professional councils under the oversight of the Ministry of Public Health. This article provides a brief overview of the most relevant acts, their core provisions, and how they interact within the broader healthcare ecosystem.

1. Medical Profession Act, B.E. 2525 (1982)

This foundational law governs the practice of medicine by physicians. It establishes the Medical Council of Thailand as the regulatory body responsible for:

  • Issuing and revoking licenses to practice medicine.
  • Approving medical education programs and continuing professional development.
  • Enforcing ethical standards and disciplinary measures for misconduct.

The Act defines the scope of medical practice, prohibiting unlicensed individuals from performing medical acts. Violations can result in fines, imprisonment, or license suspension.

2. Professional Nursing and Midwifery Act, B.E. 2528 (1985), as Amended

This Act regulates the nursing and midwifery professions. It creates the Thailand Nursing and Midwifery Council, which oversees:

  • Licensing for nurses, midwives, and combined nursing-midwifery practitioners.
  • Setting standards for education, training, and the scope of practice.
  • Maintaining professional ethics and handling complaints or disciplinary actions.

The law delineates specific nursing duties, such as patient care, administration of treatments under medical supervision, and midwifery services. Unauthorized practice is penalized similarly to the Medical Profession Act.

3. Medical Facilities Act, B.E. 2541 (1998), with Amendments

Also known as the Sanatorium Act, this legislation governs the establishment and operation of hospitals, clinics, and other healthcare facilities. It requires:

  • Licensing for medical facilities.
  • Compliance with standards for infrastructure, equipment, and staffing.
  • Oversight to ensure safe and ethical service delivery.

This Act applies to institutions where doctors, nurses, and other personnel practice, imposing responsibilities on facility operators for overall compliance.

4. Act on the Practice of the Art of Healing, B.E. 2542 (1999)

This law regulates non-modern medical practices, including traditional Thai medicine, physical therapy, and applied arts of healing. It categorizes practices into branches (e.g., Thai traditional medicine, massage) and requires licensing for practitioners in these fields. It prevents overlap with modern medicine while allowing regulated traditional practices.

5. Other Supporting Legislation

  • Pharmaceutical Profession Act, B.E. 2537 (1994): Regulates pharmacists, often interacting with doctors and nurses in medication management.
  • Medical Device Act, B.E. 2551 (2008) and Narcotics/Pharmaceutical Laws: Govern equipment and controlled substances used by medical personnel.
  • Patient Rights Protections: Embedded in various acts and the National Health Act, B.E. 2550 (2007), ensuring informed consent and confidentiality.
  • Emerging protections: As of late 2025, drafts like the Act on Protection of Public Health Personnel B.E. …. aim to safeguard healthcare workers from violence or undue legal risks during duty.

Interactions Among These Laws

These acts form an interconnected system:

  • Professional vs. Institutional Focus: The Medical Profession Act, B.E. 2551 (2008)and Nursing/Midwifery Act, B.E. 2528 (1985) target individual practitioners’ qualifications and ethics, while the Medical Facilities Act, B.E. 2541 (1998)ensures the environments (hospitals/clinics) meet operational standards. Practitioners must comply with both—e.g., a licensed nurse working in an unlicensed facility could face indirect sanctions.
  • Scope of Practice Boundaries: Laws clearly define roles to prevent unauthorized acts (e.g., nurses cannot perform surgical procedures reserved for doctors). Overlaps are managed through collaboration, such as nurses administering treatments under physician orders.
  • Disciplinary and Legal Overlaps: Professional councils handle ethical breaches (e.g., license revocation), while civil liability (damages under the Civil and Commercial Code) or criminal charges (negligence under the Penal Code) are pursued in courts. A single incident, like malpractice, may trigger parallel proceedings.
  • Unified Oversight: All fall under the Ministry of Public Health, with councils promoting harmonized standards. This ensures multidisciplinary teams (doctors, nurses, technicians) function cohesively in patient care.

Understanding these laws is essential for medical personnel to avoid liability and maintain high standards. Resources from the Medical Council of Thailand and the Thailand Nursing and Midwifery Council provide detailed guidelines and updates.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand’s Social Security Reform: From Draft to Implementation of the New Wage Base

Further to our previous article, “Thailand’s Social Security Reform” (https://thelegal.co.th/2024/12/16/thailand-social-security-reform/), which explained the draft Ministerial Regulation on the revision of the wage base for social security contributions, the Thai Cabinet has now approved the draft regulation prescribing the minimum and maximum wage rates to be used as the contribution base.

This development represents a significant milestone, as the regulation has progressed beyond the proposal stage and received formal endorsement, accompanied by clear implementation timelines.

Background and Key Changes

The approved regulation repeals Ministerial Regulation No. 7 B.E. 2538 (1995), which had maintained a fixed wage base of 1,650–15,000 baht per month for nearly three decades. This framework no longer accurately reflected prevailing wage levels, contemporary economic conditions, or inflationary trends.

The new regulation modernizes the system through a gradual increase in the maximum wage base while preserving the existing minimum threshold, thereby providing stakeholders with adequate time to adjust to the changes.

Phased Implementation of the New Wage Base

Phase 1: 1 January B.E. 2569 (2026) – 31 December B.E. 2571 (2028)

  • Minimum: 1,650 baht/month
  • Maximum: 17,500 baht/month

Phase 2: 1 January B.E. 2572 (2029) – 31 December B.E. 2574 (2031)

  • Minimum: 1,650 baht/month
  • Maximum: 20,000 baht/month

Phase 3: From 1 January B.E. 2575 (2032) onwards

  • Minimum: 1,650 baht/month
  • Maximum: 23,000 baht/month

Practical Implications

As discussed in our previous article, the revised wage base will result in higher contribution ceilings and, correspondingly, enhanced social security benefits particularly for employees whose earnings exceed the former cap. Concurrently, the phased implementation approach enables employers to manage increased contribution obligations in a predictable and manageable manner.

From a systemic perspective, this adjustment strengthens the long-term fiscal sustainability of the Social Security Fund and better positions it to address demographic shifts, including Thailand’s aging population.

Conclusion

With Cabinet approval now secured, the reform of Thailand’s social security wage base has transitioned from conceptual framework to actionable implementation. While the substantive elements of the reform remain consistent with the earlier draft, the confirmation of effective dates provides legal certainty for employers, employees, and policymakers alike.

This milestone represents a significant step forward in aligning Thailand’s social security system with current economic realities and international best practices.

Related Article: https://thelegal.co.th/2024/12/16/thailand-social-security-reform/

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand : Penalties of non-tax compliance

Introduction

Taxes in Thailand are imposed in various forms, and the authorities governing each form of payment are separated from each other. The main authorities governing the tax collection in Thailand will be as follows:

  • Revenue Department – Responsible for collecting personal income tax, corporate income tax, value-added tax (VAT), withholding tax, specific business tax, and stamp duty.
  • Excise Department – Responsible for collecting excise taxes.
  • Customs Department – Responsible for collecting customs duties on imported and exported goods.
  • Local Administrative Authorities – Responsible for collecting local taxes, including land and building tax and signboard tax.

If a taxpayer fails to comply with the obligations to pay the taxes referred to above, neglects or refuses to act in accordance with the law, evades taxes, or provides

false information, the relevant authorities are entitled to impose fines, additional charges, and in some cases, criminal penalties against such taxpayer.

Personal Income Tax (PIT)Failure to file or late submission of a tax returnFine not exceeding 2,000 THBSection 35 of the Revenue Code
Failure to file a tax return to evade taxFine not exceeding 200,000 THB or imprisonment for a term not exceeding 1 year or bothSection 37 Bis of the Revenue Code
Giving false statement or evidence to evade taxImprisonment for a term of 3 months to 7 years, and a fine of 2,000 to 200,000 THBSection 37 of the Revenue Code
Late payment of assessed taxSurcharge of 1.5 percent per month and a fine of 2,000 THB imposed on the period of the month that the tax has not yet been paidSection 27  of the Revenue Code
Corporate Income Tax (CIT)Failure to file or late submission of a tax returnFine not exceeding 2,000 THBSection 35 of the Revenue Code
Failure to file a tax return to evade taxFine not exceeding 200,000 THB or an imprisonment for a term not exceeding 1 year or bothSection 37 Bis of the Revenue Code
False statement or gives false statement or evidence to evade taxImprisonment for a term of 3 months to 7 years, and a fine of 2,000 to 200,000 THBSection 37 of the Revenue Code
Late payment of assessed tax Surcharge of 1.5 percent per monthSection 27  of the Revenue Code
Value Added Tax (VAT)Operating a business without VAT registrationFine twice the tax due in the tax month for the duration of failure to comply with such provision, or 1,000 THB, whichever is greater.
Imprisonment up to 1 month, or a fine up to 5,000 THB, or both		Section 89 (1) of the Revenue Code
Section 90/2 of the Revenue Code
Late or missing VAT return/paymentFine twice the amount of tax due or remittable in the tax monthSection 89 (2) of the Revenue Code
Filing a VAT return or remitting VAT incorrectly, causing the VAT due or remitted to be under- or over-statedAdditional penalty equal to the amount of underpaid or overpaid VATSection 89 (3) of the Revenue Code
Filing an incorrect VAT return resulting in understated output VAT or overstated input VATFine for the amount of the deficient output tax or excess input taxSection 89 (4) of the Revenue Code
Using false tax invoice in tax calculation partly or whollyFine twice the amount of tax on such an invoiceSection 89 (7) of the Revenue Code
Late or incomplete VAT payment/remittance Surcharge of 1.5 percent per month on the unpaid VATSection 89/1 of the Revenue Code
Failure to issue or deliver a tax invoiceImprisonment up to 1 month, or a fine up to 5,000 THB, or bothSection 90/2 of the Revenue Code
Failure to prepare VAT-related reportsImprisonment up to 6 months, or a fine up to 10,000 THB, or bothSection 90/3 of the Revenue Code
Specific Business taxOperating a business subject to specific business tax without registrationImprisonment not exceeding 1 month or a fine not exceeding 5,000 THB or bothSection 91/18 of the Revenue Code
Failure to prepare a record of taxable and exempt gross receiptsImprisonment not exceeding 6 months or a fine not exceeding 10,000 THB or bothSection 91/19  of the Revenue Code
Stamp DutyNeglecting or refusing to pay duty or cancel stampFine not exceeding 500 THBSection 124  of the Revenue Code
Customs DutyFailure to comply with the Customs Act, including the failure to submit goods
declaration, pay the full amount of duties, or provide a security deposit		Fine not exceeding 50,000 THBSection 208  of Customs Act 2017
Withholding taxFailure to pay or remit withholding tax within the prescribed periodSurcharge of 1.5 percent per month and fine of 2,000 THB imposing on the period of the month that the tax has not yet been paidSection 27 of the Revenue Code
Failure to issue withholding tax certificatesFine not exceeding 2,000 THBSection 35 of the Revenue Code
Failure to withhold or remit the full Withholding TaxPayer is jointly liable with the payee for the unpaid Withholding TaxSection 54 of the Revenue Code

Source: International Comparison November 2025: Antea

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Strengthened Maternity and Parental Leave Rights under Thai Labor Law

Overview of the Labor Protection Act

The Labor Protection Act B.E…………(……………) (“Act”) serves as Thailand’s principal legal framework governing employment relationships. It establishes fundamental rights concerning wages, working hours, holidays, sick leave, resignation, wrongful termination, and unfair contract terms. The Act’s primary objective is to ensure equitable treatment, prevent exploitation, and enhance workplace quality of life.

Key Provisions of the Amendment

The recent amendment, approved by the Senate, introduces significant enhancements to maternity and parental leave rights, responding to Thailand’s demographic challenges, including declining birth rates and an aging workforce. The key provisions are as follows:

1.  Expanded Maternity Leave: The duration of maternity leave is extended from 98 days to 120 days. Employers are required to pay full wages to pregnant employees during maternity leave for up to 60 days.

2.  Additional Leave for Childcare: Employees are entitled to an additional 15 days of leave to care for a child born with medical conditions, disabilities, or risks of complications, with employers obligated to pay 50% of the regular wage during this period.

3.  Parental Leave for Spouses: Employees whose spouses give birth are granted up to 15 days of paid leave, receiving full wages throughout the leave period.

4.  Expanded Scope of Application: The amendment extends protections to individuals engaged in service contracts with government agencies, state enterprises, public organizations, or other state entities, even if they are not civil servants. These workers are entitled to holidays, leave, and working hours consistent with the Act.

These provisions reflect a commitment to fostering family-oriented policies, ensuring that both male and female employees can prioritize newborn care without risking job security or income stability.

Legislative Progress

Having passed the Senate’s third reading, the draft amendment has been forwarded to the House of Representatives for final endorsement. Should no further revisions be proposed, the draft will proceed to be published in the Royal Gazette and the enforcement is anticipated by the end of 2025.

Broader Implications

This amendment underscores the Thai government’s efforts to balance economic growth, labor productivity, and social welfare. By prioritizing equitable labor rights, particularly for working women and families, the legislation represents a progressive step toward modernizing Thailand’s labor framework to align with evolving social and economic contexts.

However, certain aspects, such as the potential administrative burden on small employers and the need for clear medical criteria for additional childcare leave, may require further clarification through subordinate legislation. The Department of Labor Protection and Welfare, under the Ministry of Labor, is expected to expedite the development of implementing regulations and coordinate with relevant agencies to ensure effective enforcement.

This amendment marks a significant advancement in promoting fair, inclusive, and comprehensive labor protections, reinforcing Thailand’s commitment to improving workforce welfare and supporting family life.

Author: Panisa Suwanmatajarn, Managing Partner.

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New Tax Framework for Foreign-Sourced Income: Thailand’s Draft Decree Explained

The taxation of foreign-sourced income has emerged as a pivotal issue within Thailand’s tax system, particularly as increasing numbers of Thai individuals engage in overseas employment, investment, and asset holdings. The government seeks to achieve a delicate balance between closing tax loopholes and incentivizing the repatriation of overseas funds to stimulate domestic economic growth.

Historical Framework

Under the previous Revenue Department Order No. GorKhor 0802/696, dated 1 May 1987, foreign-sourced income remained exempt from Thai personal income tax provided it was brought into Thailand in a tax year different from the year in which it was earned. This provision enabled many individuals to legally defer the remittance of foreign income, thereby avoiding immediate taxation obligations.

Current Regulatory Changes

Effective 1 January 2024, the aforementioned provision was repealed by Revenue Department Order No. Por.161/2566. Under this regulation, individuals classified as Thai tax residents, those residing in Thailand for more than 180 days within a calendar year, are now obligated to pay personal income tax on foreign-sourced income if such income is remitted to Thailand, regardless of the calendar year it is earned. The applicable personal income tax rates for this remitted foreign income range progressively from 5% to 35%, determined by the total taxable amount.

Unintended Consequences and Policy Response

While Revenue Department Order No. Por.161/2566 was enacted to enhance tax transparency and align Thailand’s tax framework with international standards, including those established by the OECD, it has generated an unintended consequence. Many Thai individuals earning foreign-sourced income have opted not to remit such funds to Thailand due to concerns regarding potentially substantial tax burdens.

In response to these matters, the Revenue Department is currently drafting a new Royal Decree (hereinafter referred to as “the Draft“) designed to address these conditions.

person holding dollar bills while using a calculator

Key Proposed Provisions

The Draft includes the following principal proposals:

  • Tax Exemption Extension: Personal income tax exemption will apply to foreign-sourced income remitted to Thailand within one to two years from the year it was earned. If remitted after that, the income tax will be applied.
  • Elimination of Same-Year Requirement: The current requirement mandating income remittance within the same calendar year it was earned will be removed.

This revised approach aims to provide taxpayers with enhanced flexibility in managing financial transactions, such as year-end dividend payments, while serving as a positive incentive for overseas Thais to repatriate funds for domestic investment across capital markets, business enterprises, and real estate sectors.

Current Status and Implementation Considerations

While the Draft represents a promising policy development, it has not yet been formally enacted and enforced. Uncertainty remains regarding whether the new provisions will apply retroactively to income remitted to Thailand during 2024.

Until formal enactment occurs, timing remains a critical consideration. Remitting income outside the anticipated grace period may result in taxation under current regulations.

Conclusion

The recent policy initiative by the Thai government reflects a broader strategic objective to incentivize, rather than penalize, the repatriation of foreign-sourced income. This approach serves dual purposes—reducing the tax burden on individuals earning income abroad while acting as a catalyst for attracting capital back into the domestic economy. Should the Draft be formally enacted and enforced, it will communicate a clear and positive message to overseas Thai nationals that repatriating funds will no longer entail prohibitive tax costs.

The success of this policy framework will ultimately depend on its implementation details and the government’s ability to balance revenue generation with economic stimulus objectives.

Author: Panisa Suwanmatajarn, Managing Partner.

Source: International Comparison August 2025: Antea

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Thailand Labor Landmark Case: Employers Jailed for Unpaid Severance of more than 800 Workers

In August 2025, a pivotal moment in Thailand’s labor rights landscape occurred when the Samut Prakan Provincial Court denied bail to four executives of the company who were immediately imprisoned for unlawfully terminating of  more than 800 employees without paying mandated severance and advance notice compensation. This case marks a rare instance of employers facing immediate incarceration for violating labor laws, reinforcing the judiciary’s commitment to upholding workers’ rights under the Labor Protection Act B.E. 2541 (1998).

Background of the Case:

The dispute originated in November 2024, when the company terminated more than 800 employees without providing severance pay or advance notice payments, as required by Thai labor law. The total amount owed to the employees is approximately 220 million baht (USD 6.2 million). Despite labor inspectors’ orders to compensate the workers, the company’s executives failed to comply, prompting the affected employees, supported by labor advocates, to pursue criminal legal action against the company and executives.

Legal Framework: Labor Protection Act B.E. 2541 (1998):

The court’s ruling is grounded in the Labor Protection Act B.E. 2541 (1998), which outlines key protections for employees:

•  Mandates advance notice of termination and payment in lieu of notice.

•  Requires severance pay for employees terminated without cause, with amounts based on length of service.

•  Imposes penalties, including fines and up to six months’ imprisonment, for employers who fail to comply with severance or other compensation requirements.

The executives’ non-compliance with labor inspectors’ orders and their attempts to delay judicial proceedings justified the court’s decision to deny bail and order immediate detention.

Court Proceedings and Worker Advocacy:

The former employees attended the court’s hearing to oppose the executives’ bail applications, submitting objections citing the financial hardship caused by the employer’s actions and their defiance of legal orders. The court’s denial of bail and immediate imprisonment of the executives is an uncommon outcome in Thailand, where labor disputes often result in prolonged negotiations or unenforced rulings. The workers’ eight-month struggle involved repeated appeals to government bodies, including the Ministry of Labor, police, and public prosecutors, showcasing the power of collective action.

Broader Implications for Thai Labor Rights:

This case sets a significant precedent for Thailand’s labor movement, demonstrating that persistent advocacy can lead to criminal accountability for employers. Enforcement of labor laws in Thailand has historically been inconsistent, with many employers evading penalties. This case signals that violations of the Labor Protection Act B.E. 2541 (1998) can result in severe consequences, potentially deterring future non-compliance. However, the affected workers still await their 220 million baht in compensation, and the Ministry of Labor’s silence on this and similar cases involving over 43,000 workers nationwide highlights the need for stronger enforcement and systemic reforms.

Key Takeaways:

1.  Judicial Accountability: The court ruling upholds the Labor Protection Act B.E. 2541 (1998), affirming the judiciary’s role in protecting workers’ rights.

2.  Power of Collective Action: The workers’ eight-month campaign through protests and legal advocacy illustrates the impact of organized labor in achieving justice, despite limited union protections.

3.  Ongoing Challenges: The workers have yet to receive their 220 million baht in compensation, underscoring gaps in enforcement and the need for government intervention.

4.  Precedent for Employers: The imprisonment of the executives serves as a deterrent, warning employers of criminal penalties for labor law violations.

5.  Call for Reform: The case highlights systemic issues, including the Ministry of Labor’s inaction and weak unionization laws, necessitating reforms to strengthen labor protections.

This landmark ruling not only delivers justice for more than 800 affected workers but also galvanizes Thailand’s labor movement, proving that collective action can challenge systemic inequities.

Author: Panisa Suwanmatajarn, Managing Partner.

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