Board of Investment Actions according to Economic and Investment Stimulus Measures
On 10th May 2022, the Cabinet approved in principle a draft Regulation of Prime Minister Office on Setting up of Visa & Work Permit Service Center (No. ..) B.E. …. and a draft Announcement of Board of Investment on Rules and Conditions for Special Non-Immigrant Visa (Long Term Resident Visa: LTR) and a draft Announcement of Board of Investment on Rules and Conditions for Special Non-Immigrant Visa (Smart Visa) No. .. B.E. …. as proposed by the Board of Investment.
Key summary of the above-mentioned draft rules and regulations are as follows:
LTR visa holders and their dependents including foreign cinematographer staffs as proposed by the Creative Economy Agency are allowed to use the service of this visa and work permit service center. The Board of Investment will be in charge of this service center.
There are 4 types of foreigners who are eligible to apply for the LTR visa, i.e. wealthy global citizen, wealthy pensioner, work from Thailand professional and high skilled professional and their spouse and children.
The applicant under the LTR visa is required to show a health insurance having coverage of not less than 50,000 USD and having period of coverage not less than 10 months or holding a Thai social security or money deposited in Thai or foreign account for not less than 12 months in the amount of not less than 100,000 USD. The applicant is also required to show a personal income at least such as average of 80,000 USD per year within 2 years. The employment or service contract with an entity in Thailand or overseas is required. The documents showing experiences of working in target industries no less than 5 years except the applicant who will work for educational institute or research or special coaching institute operated by Thai government or government authority or applicant who graduates in doctorate degree or equivalent.
The applicant who would like to apply for a Smart Visa is required to be a specialist on science and technology in the target industries certified by the Strategic Talent Center or related organizations. There is a direct investment or through an investment company in the business from the applicant not less than 20 million THB in the industry using technology base for its manufacturing or service.
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.
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.
Key Issues You Need to Know When Doing a Business in Thailand
On the scenario that a foreigner is exploring the business opportunity and would like to establish a company for operating its business in Thailand, if more than 49% of shares are held by foreigner(s) (either individual(s) or entity(ies)), the company is considered as a foreign company under the Foreign Business Act B.E. 2542 (“FBA”). In this case, certain restrictions in doing businesses will be applied and the company cannot hold ownership over the land subject to international agreements/treaties that the country of nationality of such foreigner(s) has entered into with Thailand and/or privilege policies granted by the government of Thailand.
For some restricted business under the FBA, if the foreign company would like to do so, a specific foreign business license is required. However, some types of business are exempted from the provisions of FBA such as the businesses related to the securities exchange and financial institutes. but, those exempted businesses from the provisions of FBA may be, on the other hand, regulated, supervised or monitored by other specific laws and regulations of relevant authorities such as the Bank of Thailand.
It is noteworthy that the numbers of foreign individual working or representing the company, even as a director or authorized director, will not impact the ownership of shares in the company.
The requirements on visa and work permit for foreign employee(s)/director(s) play a significant role on the elements of business operation. The specific ratio of Thai employees to each foreign employee will be applied when considering the matters of visa and work permit. The size of investment is also a matter attribute to the requirements for granting visa and work permit to the foreign employee(s)/director(s).
Last but not least, the issues of tax and dividend are among major questions and concerns how the laws and practices work here in Thailand. The corporate income tax is currently imposed in the range of 15% – 20% of the net profit subject to certain exemptions. Also, the dividend distribution is subject to tax implications, but may be deducted or credited under the applicable double taxation agreement that Thailand have entered into, and regulatory corporate provisions before its distribution.
In the nutshell, the business and investment opportunities in Thailand is wide open for foreign investors. You are totally welcome here in Thailand, but it is for your best advantage to be fully aware of restrictions with good strategies and structure planning.
Suspension of the Incentives for Owning Lands by Foreigners in Thailand
On 21 January 2022, it is official that the incentives for foreigners owning the lands and real estates in Thailand has been halted. It was previously controversial that the governmental body for economy drive under the Covid-19 situation is deliberating the additional incentives for foreigners to own the lands and real estates in Thailand (the “New Incentives”).
Prior to the deliberation on the New Incentives, foreigners, mostly individuals, are not permitted to own the lands in Thailand under general circumstances. Foreigners residing in Thailand are permitted to own only residential units in apartments or condominium with the regulated ratio that the foreign ownership in any specific condominium must not exceed 49% of the total space. The leasehold up to 30 years is also another option permitted by the laws.
Until late 2021, the economy driving body has proposed to deliberate on the New Incentives with details as follows:
Lifting 49% restriction foreign ownership in condominium – this incentive is later halted due to the requirement to amend the Building Control Act B.E.2522. The amendment process will take approximately 1 year which will not be a swift action to tackle to economic crisis;
Extending the leasehold from 30 years to 50 years – this incentive is not practicable. The 30-year leasehold is currently legitimated under the Thai Civil Commercial Code. The extension of the leasehold by foreigners to 50 years may require amending on Civil Commercial Code or passing a new act with a specific purpose to extend the timing limit of the leasehold by foreigners. This is not the swift response to spontaneous economic crisis; and
Permitting foreigners to own the land for a space not more 1 rai (approximately 1,600 sq.m) – the responsibilities lie upon Department of Lands to work on the legitimation and the existing land laws of this incentive. As it is a sensitive issue, this incentive is now also suspended.
The ownership of lands/real estates by foreigners in Thailand for residential purpose is still under the existing options stated above. For the business and commercial purpose, the land ownership by foreigners is based on the similar principles. It is however can be slightly different depending on the type of business which require specific consultations with competent bodies and authorities.
Announcement of the Ministry of Labor on Permission for Foreigners to Work in the Kingdom as a Special Case according to Economic and Investment Stimulus Measures by Attracting High Potential Foreigners to Thailand
To implement the Cabinet Resolution on December 7, 2021, the Cabinet, on January 18, 2022, has approved the draft Announcement of the Ministry of Labor on Permission for Foreigners to Work in the Kingdom as a Special Case according to Economic and Investment Stimulus Measures by Attracting High Potential Foreigners to Thailand (“Announcement”) which has the main principle of allowing foreigners and their spouses, according to the Draft Announcement of the Ministry of Interior on Permission of Certain Groups of Foreigners to Stay in the Kingdom as a Special Case, to work in the Kingdom as a special case in response to the government’s measures on economic and investment stimulus that will result in more domestic spending as well as bring the positive outcome to the entrepreneurs. These will generate solid income for people and workers and lead to more investment and enable Thailand to have more specialists in various fields in which it will be benefit to the country’s economy. The main points of this Announcement are as follows:
Defining the term “Foreigner” as a foreigner and its dependent who is a foreigner’s spouse in compliance with the Draft Announcement of the Ministry of Interior on Permission of Certain Groups of Foreigners to Stay in the Kingdom as a Special Case according to Economic and Investment Stimulus Measures by Attracting High Potential Foreigners to Thailand
Stipulating that the foreigner can apply for a work permit in accordance with the law on foreign working management. Once, the foreigner has submitted an application, such foreigner will be allowed to work for the time being without a work permit.
The duration of the work permit is as follows:
In case the foreigner works with its employers, the work permit shall be valid in the same period as the employment contract but not more than 5 years from the date of issuing of such work permit. The foreigner can renew its work permit to be in accordance with the duration of its employment contract but not more than 5 years at each time.
In case the foreigner works without any employer, the work permit shall be valid for the period as requested by the foreigner but not more 5 years from the date of issuing of such work permit. The foreigner can renew its work permit according to the period as requested by the foreigner but not more 5 years at each time.
Permission for the foreigner to work shall be expired when the permission to stay in the Kingdom has expired according to the Draft Announcement of the Ministry of Interior on Permission of Certain Groups of Foreigners to Stay in the Kingdom as a Special Case, e.g. the foreigner acts against the Announcement of the Ministry of Interior, is lack of qualifications required by law, or is believed to behave as a threat to society, etc.
The Cabinet has approved for a Draft Notification of the Ministry of Interior Re: Permission for Certain Groups of Aliens to Remain in the Kingdom as a Special Case (“Draft Notification”) as proposed by the Royal Thai Police in order to assist the aliens extending their permission to stay in the Kingdom temporarily due to Covid-19 pandemic situation.
The groups of aliens permitted to extend their stay in the Kingdom under the Draft Notification are as follow:
Aliens holding non-immigrant visa (include visa on arrival).
Aliens allowed to stay in the Kingdom temporarily under the visa waiver program according to Section 13 of the Ministerial Regulations on Guidelines, Methods and Conditions for Examination, Exception and Change of Visa Type B.E. 2545 and its amendments.
Aliens allowed to stay in the Kingdom temporarily under the Petroleum Act B.E. 2514 and its amendments, Investment Promotion Act B.E. 2520 and its amendments, Industrial Estate Authority of Thailand Act B.E. 2522 and its amendments or related notifications of the Ministry of Interior and that the period of permission for staying in the Kingdom will be expired on the date that this Draft Notification becomes enforced, such aliens will be allowed to extend their period of remaining in the Kingdom until 31 December 2021.
Aliens allowed to stay in the Kingdom more than 90 days and the notification for such 90 days period will be reached on the date that this Draft Notification becomes enforced, such aliens will be allowed to extend their notification until 31 December 2021.
On 19 October 2021, The Cabinet has approved in principle of the draft Notification of the Ministry of Interior regarding the Permission of Foreigners Granted Thailand Privilege Card to Stay in Thailand for Working as a Special Case (“Draft Notification”) and the draft Rules and Conditions for Allowing Foreigners Received Thailand Privilege Card to stay in Thailand for Working as a Special Case (“Draft Rules and Conditions”) as proposed by the Ministry of Tourism and Sports and considers this matter as an urgent matter.
The main points of the 2 drafts are as follows:
The aliens who receive Thailand Privilege Card under the conditions as specified in the Ministry of Interior’s Notification regarding permission of certain classes of aliens to stay in Thailand as a special case dated 22 February 2013 and have minimum investment of USD 1,000,000 per year, in a specified business, including their spouses and their under-20-year-old children, can request to change the type of visa to Non-Immigrant Visa for a term of 5 years throughout the investment period in the Flexible Plus Program.
The aliens whom their types of visa have been changed as mentioned above, can apply for a work permit under the law on foreigners working management.
The termination of the permission of aliens and their dependents to stay in Thailand according to this Draft Notification is under one of the following cases:
The minimum investment, in a specified business, does not reach USD 1,000,000 within one year from the date of entering into the program;
The work permit has been terminated under the law on foreigners working management; or
Such aliens have presumably into believing that their behavior that is danger to society, have been issued a warrant of arrest by a foreign government, being deported by the Thai government or foreign governments, or being revoked the right to stay in Thailand.
Draft Rules and Conditions
Aliens must be a special member holding Thailand Privilege Card:
For the remaining members, Thailand Privilege Card must be validity at least 5 years; or
For the new members, they must apply for Thailand Privilege Card with a minimum card value of 1 million Baht and the validity of the card is for more than 10 years.
An alien must receive a special Privilege Entry Visa (PE).
An alien must invest in Thailand within 1 year from the date of requesting to join the Flexible Plus Program or from the date of approval to be a special member with a total investment value not less than USD 1,000,000 which consists of 3 types:
Investment in real estate according to the rights of foreigners;
Investment in a limited company or a public limited company; or
Investment in stock exchanges such as ordinary shares, debentures, or investment units which has been approved by the Securities and Exchange Commission.
An alien must have all qualifications under the law on foreigners working management.
On 29 September 2021, the Cabinet has approved a draft Announcement of the Office of the Prime Minister and the Ministry of Interior (MOI) regarding Limitation of Numbers of Alien Annually having residence in Thailand as proposed by MOI.
The aliens under nationality of each country having residence in Thailand of the year 2021 will be limited to not exceeding 100 persons per country and stateless aliens will be limited to not exceeding 50 persons.
This Announcement is structured to be in accordance with Section 40 paragraph one and Section 41 of the Immigration Act B.E. 2522 (1979) and Section 5 paragraph one of the Immigration Act B.E. 2522 (1979), as amended by the National Council for Peace and Order Announcement No. 87/2557 dated 10 July 2014.
Elite Membership is one of the visas schemes for tourists managed by the Tourism Authority of Thailand (“TAT”) having varieties of package ranging from 5-10 years of membership.
TAT has proposed for extending its privileges to the Cabinet for approval in order to magnetize wealthy foreigners around the world to visit and stay in Thailand for long term periods.
On 8 June 2021, the Cabinet approved in principle for such proposed Flexible Plus Program as one of the national economic reliefs responding to the effect from Covid-19 pandemic. The Thailand Flexible Plus Program has 4 target groups, i.e. Wealthy Global Citizen, Wealthy Pensioner, Work-from-Thailand-Professional, and High-Skilled Professional.
Details of the project after working with the working team under supervision of the Deputy Prime Minister Supattanapong Punmeechaow was referred to the Cabinet but was rejected by the Secretariat of the Prime Minister thereafter. The Secretariat of the Prime Minister deemed that the matter is related to the Ministry of Interior and, therefore, ordered the TAT to schedule a meeting for further discussions in which the meeting was held on 9 July 2021.
The proposed plan includes a new type of Long-term Resident Visa (LTR VISA) and establishment of the LTR service unit to accommodate this plan. The LTR service unit will be established in a form of private entity having a concession granted by the Ministry of Finance to specifically manage this project. The key current requirements for the Elite Flexible Plus Program, as far as the TAT can confirm to the public at this moment, are making investment in Thailand in real estate, shares both in limited companies and stock market, debentures, or depositing in the bank accounts for a minimum of 1 million USD or around 30 million THB. The investment can be diversified and collectively reaches the minimum amount or can be invested wholly in one category. Other details will be announced later once it becomes clear.
With the current situation in Samut Sakhon Province, which has large numbers of new infections among migrant workers, it is expected that the 6 provinces around Samut Prakarn Province including Bangkok, Samut Prakan, Nonthaburi, Nakhon Pathom, Ratchaburi, and Samut Songkhram will be affected. This situation is a threat to public order and safety, public health security and Thailand’s economic and social system affecting the employers to temporarily pause their businesses and the insured employees who contributes the funds to the social security system will be unemployed and unpaid.
The Ministry of Labour then has proposed a Draft Ministerial Regulation on Unemployment Benefits in the Event of Force Majeure arising from the Outbreak of Dangerous Diseases under the Communicable Disease Act B.E. …. (the “Draft Ministerial Regulation”) to the Cabinet in order to alleviate suffering of insured employees affected by the outbreak of COVID-19 and it was approved by the Cabinet on 22 December 2020.
Summaries of the Draft Ministerial Regulation are as follows:
The Draft Ministerial Regulation was effective retrospectively from 19 December 2020 onwards.
A definition of “Force majeure” will include “A danger arising from the outbreak of dangerous communicable disease under the Communicable Disease Act, which creates effect to the public and to the extent that the insured employees are unable to work or the employers are unable to operate their businesses normally.
In case that force majeure event occurs and the government and authorities order to lock down the area in order to prevent spreading out of outbreak of dangerous communicable disease under the Communicable Disease Act in which it creates non-payment of wage to the insured employees, such insured employees will be entitled to receive the benefit at the rate of 50% of their dairy wage rate. Such benefit will be payable during the whole period of time that government and authorities order to lock down, but within one calendar year, will not be more than 90 days for each occurrence of force majeure event.
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