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Cross-Border Transferring of Personal Data

Pursuant to our previous articles on the PDPC Notification on Criteria for Protection of Personal Data Sends or Transfers to a Foreign Country According to Section 28 of the PDPA (Draft Notification on Section 28) and the PDPC Notification on Criteria for Protection of Personal Data Sends or Transfers to a Foreign Country According to Section 29 of the PDPA (Draft Notification on Section 29) (collectively referred to as the Draft Notifications), whereby at the time were drafts for public hearing. Now, the Personal Data Protection Committee (PDPC) in Thailand has announced the official version of Draft Notifications, the effective date of which shall be on 24 March 2024. This article herein then intends to outline the essential differences between the Draft Notifications and their respective official versions.

Subordinate regulation pursuant to Section 28 of the PDPA:

As we have discussed in length regarding the provision of Section 28 of the Personal Data Protection Act B.E. 2562 (2019) (PDPA) prescribing a condition under which the data controller may cross-border transfer personal data, that is, if the destination country or international organization is deemed to have an adequate personal data protection standard, otherwise, other exemption would have to be relied upon (e.g., consent form the data subjects), and that what was deemed as adequate personal data protection standard, more information can be studied at the Draft Notification on Section 28. The official version and the draft version are substantially the same, except for the defined terms, which were added to exclude the sending or transferring of personal data of the following nature: (1) the sending or transferring of personal data by an intermediary as a data transit; (2) the sending or transferring of personal data that was done between the computer systems or data storages, provided that no third-party has access to such personal data. Examples of the exempted activities include the sending or transferring of personal data by the cloud computing service provider. By this exclusion, it releases intermediary and cloud computing service providers, as well as controllers or processors, burden compliance burdens.

Subordinate regulation pursuant to Section 29 of the PDPA:

In continuation to our previous article on the Draft Notification on Section 29, where we discussed that the PDPA provides two additional mechanisms for the cross-border transferring of personal data, that is (1) cross-border transfer of personal data within inter-affiliate companies, provided that the personal data protection policy (Binding Corporate Rules or BCR) is reviewed and certified; and (2) where in absence of whitelist country (i.e., per Section 28) and the BCR has not been reviewed or certified, a data controller may cross-border transfer personal data provided that an appropriate safeguard that ensure the enforceability of personal data subject’s rights and a legally remedial measures has been put in place.

We have also discussed that the appropriate safeguard could be achieved through the use of the Model Contractual Clause, namely (1) ASEAN Model Contractual Clauses for Cross-Border Data Flows; or (2) Standard Contractual Clauses for the Transfer of Personal Data to Third Countries issued pursuant to Articles 46 (1), (2) (c), and 28 (7) of Regulation (EU) 2016/679 or the European Union General Data Protection Regulation, commonly known as GDPR. The official version of subordinate regulation pursuant to Section 29 of the PDPA entails the required elements to be in such Model Contractual Clause. Notable elements required to be in the Model Contractual Clause include but not limited to the (1) measures for notifying the sending or transferring of personal data to the data subject; (2) measures for limiting the sending or transferring of personal data; (3) measures for specifying responsibility for the sending or transferring of personal data to be included in the contract; (4) measures to maintain security in the sending or transferring of personal data; (5) measures for ensuring effective remedial measures; and others. Moreover, revisions/amendments to the Model Contractual Clause are possible, provided that such revision/amendment is not contrary to the required elements as samples. Please be reminded that the Model Contractual Clause may be used as an alternative to the reviewed and certified BCR. Data controllers and processors have the choice to adopt the method deemed appropriate to their normal business operation.

The development of these subordinate regulations will not only change the course of normal business operations but also the paradigm of personal data protection in the digital era. Unifying the cross-border transferring of personal data’s requirements with those of international standards will not only ease Thai data controllers or data processors’ compliance with the PDPA and other personal data protection regulations internationally but also, allow the foreign data controller or data processor to easily comply with the Thai requirements, indirectly promoting the investment in Thailand.

Author: Panisa Suwanmatajarn, Managing Partner

Source: International Business April 2024

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Proposed Rehabilitation Processes for Small and Medium Enterprises (SMEs)

In 2016, the regulation concerning small and medium enterprises (“SMEs”) was initially introduced to aid SME owners in managing their debts through rehabilitation processes that safeguard the interests of both debtors and creditors.

However, as of 2023, there are over 3 million SMEs in Thailand, playing a critical role in driving the country’s economy. Recognizing this, the Legal Execution Department has expressed a keen interest in ensuring the well-being of SMEs. To this end, they have conducted a public hearing on the draft amendment of the Bankruptcy Act B.E. 2483 (1940), specifically focusing on the business rehabilitation processes for SMEs. Consequently, active efforts are underway to formulate regulations.

In the past, debtors seeking to manage their debts through rehabilitation processes were required to adhere to the provisions outlined in the Bankruptcy Act B.E. 2483 (1940). These requirements included being insolvent and indebted to one or multiple creditors. However, the recent introduction of business rehabilitation proceedings for SMEs has brought about a new rule by eliminating the requirement of being an insolvent person. This means that anyone, regardless of their solvency status, can now initiate the rehabilitation processes.

The recent amendment to the Bankruptcy Act B.E. 2483 (1940) aims to simplify the business rehabilitation processes, making it more accessible for small debtors. This simplification is driven by the current economic and social conditions, and it offers several benefits for debtors. Notably, it introduces a new section that includes an accelerated business rehabilitation processes.

The key summary of the amendments is as follows:

  1. Broadening the definition of debtors in Section 90/91: Previously, the term “debtor” was limited to those specifically prescribed by the Office of SMEs Promotion (OSMEP). The amendment expands the definition to include any juristic person, regardless of the legal classification of SMEs. This change provides SMEs business owners with the opportunity to participate in business rehabilitation, enabling them to restructure their debts and maintain the continuity of their businesses.
  2. Revision of the debt threshold in Section 90/92: When a debtor is unable to pay one or several creditors in aggregate, they may file a petition with the court for business reorganization. For individual debtors, the debt threshold has been lowered from 2 million baht to 1 million baht. For juristic persons, the threshold has been revised from not less than 3 million baht to not less than 2 million baht, with an upper limit of 50 million baht. These changes apply regardless of the debtor’s financial status or the number of creditors involved. However, both types of debtors must demonstrate a reasonable cause and prospects for the reorganization of their businesses.
  3. Extension of the Business Reorganization Plan (“Plan”) period in Section 90/96(9): Recognizing that a 3-year plan may be insufficient, the amendment extends the Plan period from 3 years to 5 years. This extension aims to enhance efficiency and provide debtors with more opportunities to effectively proceed with their reorganization efforts while ensuring that creditors receive full payment of their debts.
  4. Removal of certain rehabilitation processes in Section 90/95: Prior to the draft amendment, individuals seeking business reorganization has to wait for a court order granting absolute control over their property and approval of the Plan before filing a petition for reorganization. This process involved strict legal requirements, such as providing reasons for business reorganization, detailed asset information, and principles and methods, as per Section 90/96 of the Bankruptcy Act B.E. 2483 (1940). These requirements often proved time-consuming and costly. The draft amendment has eliminated some of these processes, allowing debtors or legally authorized individuals to initiate the plan. This change allows both debtors and one or several creditors of the debts arising from a business operation to take the necessary steps toward rehabilitation.

However, the recent amendment to the Bankruptcy Law B.E. 2483 (1940) is currently pending approval from the Council of Ministers. After this, the next stage will involve the draft amendment proceedings to the Members of the Parliament for consideration and approval before proceedings to the King’s endorsement and publish in the Royal Gazette.

Source: International Comparison December 2023 : Antea (antea-int.com)

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Thailand – Inheritance Taxation

Inheritance Taxation / Gift and Donation TaxationReal EstateFinancial AssetsCompany sharesAssets outside the CountryMiscellaneous
Taxable Events (personal and real obligation to contribute)Inheritance taxation: A person receives inheritance from each deceased person, whether on one or multiple occasions, if the value of each inheritance exceeds 100 millions.  

Gift taxation: A person receives money or assets as a gift exceeds 20 millions from parents, ascendants, descendants, spouse or exceeds 10 millions from others.                                                                         Donation taxation: N/A		Nothing to report.
TaxpayerInheritance taxation: Heirs / Legatees

Gift taxation: Receiver

Donation taxation: N/A		Nothing to report.
Taxable Base (Tax Valuation of Assets and Deductions)Inheritance taxation: Values on the day assets are received. 

Gift taxation: Values on the day assets are received.

Donation taxation: N/A		Inheritance taxation: Based on ministerial regulations issued by the authority of the Inheritance Tax Act B.E.2558. 

Gift taxation: Based on Property Valuation for the Public Interest Act B.E.2562.
Tax RateInheritance taxation: Ascendants and descendants are taxed at 5% of the portion over 100 millions, while others are taxed at 10% of the portion over 100 millions                                                                                                                                                                                               Gift taxation: 5% of the portion exceeding 20 millions or 10 millions                                                                                                                       Donation taxation: N/ANothing to report.
Deductions and Exemptions in Tax AmountInheritance taxation: Spouse and the members of the Royal Family ranked Praongchao and above are exempted.

Gift taxation: Charities and other organizatons are exempted.

Donation taxation: N/A		Nothing to report.
Deadline Declaration and Tax PaymentInheritance taxation: Within 150 days from the received date

Gift taxation: The same with income tax

Donation taxation: N/A		Nothing to report.
Internal Law and Agreements to Avoid Double TaxationThailand has several bilateral double tax treaties, which are distinctive to each member state.Nothing to report.

Source: International Comparison November 2023 : Antea (antea-int.com)

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ANTEA – 2023 International Business Newsletter

Thailand’s Carbon Credit Policy: The Push for Business Collateral

As a result of Thailand’s intention to reduce greenhouse gas (GHG) emissions at the 26th UN Climate Change Conference of the Parties, Thailand has established a Voluntary Carbon Market under the supervision of the Thailand Greenhouse Gas Management Organization (Public Organization), or TGO. The establishment of the market is a result of the cooperation of businesses and organizations to voluntarily participate in the trading of carbon credits. Thailand’s carbon credit policy is under the Thailand Voluntary Emission Reduction Program (T-VER), in which TGO will register T-VER and certify the number of greenhouse gases that can be reduced or stored from T-VER. The amount of greenhouse gas that can be reduced or stored is called “carbon credits”.

Since carbon credits are traded in the market, they can be counted as an asset. This makes it possible to apply carbon credits to the financial services of banks in the form of a factor in environmentally friendly financing projects. Carbon credits can also be pledged as credit enhancement in these transactions, which helps to ensure that the project can meet its financing requirements. Additionally, carbon credits can be used as collateral in loans, particularly those used for climate-resilient investment projects, as they provide a measurable way to assess and manage climate-related risk. However, the specifics of how carbon credits can be used as collateral will depend on the financing agreement and the relevant legal and regulatory framework.

According to the press release 2023 report on the Department of Business Development’s website, the Department of Business Development has discussed with relevant agencies pushing for “carbon credits” as business collateral. The carbon credit will likely be considered collateral in the future, said Mr. Tosapol Tangsubutr, Director-General of the Department of Business Development, who is urging people to plan.

Author: Panisa Suwanmatajarn

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“Employer obligations when employing workers abroad”

Thailand

1. Obligations as employer without permanent establishment/subsidiarywith permanent establishment/subsidiary
Registration as employer at Social Security OfficeYes
Registration at trade association for professional accident insuranceNo
Preparation of payrollYes
Withholding and payment of social securityYes
The contribution rate of 5% of the employee’s salary with the maximum amount of 750 per month.
Withholding and payment of wage taxYes
Observance of the regulations of national labor lawYes
Continued payment of wages in case of sicknessNot exceeding 30 working days per year
2. Wage taxes without permanent establishment/subsidiarywith permanent establishment/subsidiary
Wage tax is owed by employeeYesYes
Wage tax must be withheld and paid by the employerYesYes
Surcharge – Taxable Income 0 – 150,000 THB–
Surcharge – Taxable Income 150,000 – 300,000 THB5%
Surcharge – Taxable Income 300,001 – 500,000 THB10%
Surcharge – Taxable Income 500,001 – 750,000 THB15%
Surcharge – Taxable Income 750,001 – 1,000,000 THB20%
Surcharge – Taxable Income 1,000,001 – 2,000,000 THB25%
Surcharge – Taxable Income 2,000,001 – 5,000,000 THB30%
Surcharge – Taxable Income above 5,000,000 THB35%
Solidarity Surcharge on Income Tax (individual’s income from EUR 62.500)No
3. Social security expensesSocial security contributions have to be withheld and paid by the employerEmployerEmployee
Employer and employee usually owe half each
Pension InsuranceNoNo
Unemployment InsuranceYesYes
Nursing care Insurance with ChildrenNoNo
Nursing care Insurance without ChildrenNoNo
Dental careYesYes
Health InsuranceYesYes
Levy 1 – Reimbursement for continued pay in case of sickness (up to 30 employees)NoNo
Levy 2 – Reimbursement for maternity protection periods and employment bans (regardless of employee number)NoNo
Insolvency fund levyNoNo
Employers liability insurance association contributionsNoNo
The current contribution rate for Thailand is 5% of the employee’s salary, with a maximum contribution of 750 THB even if salary exceeds 15,000 THB. 5% is allocated in proportion to the benefits listed in the following columns:5%5%
Injury or sickness benefits, disability benefits, childbirth, child benefits, death benefits1.50%1.50%
Old age benefits0.50%0.50%
Unemployment benefits3%3%
*Please note that the benefits that insured person receives under the social security are various subject to terms and conditions under Thai law*
4. Main terms of employment contract                      Term of employment contractAs agreed by the employer and employee but not in conflict with the Civil and Commercial Code and the Labor Protection Act B.E. 2541 (1998)
Type and place of activityAs agreed by the employer and employee for the type and at the place of employe
Scope of activity (working hours)8 hours per day/48 hours per week
Amount of rumuneration/special payments (If any)No
Minimum Wage
328 THB to 354 THB
Thailand minimum wage varies by province, as determined by the Wages Committee
LiabilityAs specified by the Civil and Commercial Code and Labor Protection Act B.E. 2541 (1998)
Work rulesIf the numbers of employee are 10 or more, work rules is required to be prepared and registered with the Department of Labour Protection and Welfare
Minimum annual holiday6 days
Traditional holidayNot less than 13 days
Annual HolidayWorking for an uninterrupted period of one year is entitled to an annual holiday of not less than 6 working days or as agreed between the employer and employee but not less than 6 working days
Termination of Employmentbefore the next round of wage payment
Notice Periods/probationary periodsee below 5.
5. Rules for termination of the employment contractMinimum notice period for employeeAdvance notice in writing is required at or before the due date of wage payment, and the termination of employment shall be effective on the following due date of wage payment. Otherwise, the payment in lieu of notice must be paid to employee
Longer notice period depending on the duration of the employment relationshipThe aforementioned conditions shall be applied regardless of the term of employment
Probationary periodThe probation period is not determined under Thai law. The employer has the authority to place the employee on probation for any length of time, depending on the agreement between the employer and the employee. In practice, the probation period is 90-119 days
Notice period within probationary periodAdvance notice in writing is required at or before the due date of wage payment, and the termination of employment shall be effective on the following due date of wage payment. Otherwise, the payment in lieu of notice must be paid to the employee
Extraordinary dismissal for serious reasons (e.g. theft) is possible without notice after prior hearing of the employee. The number of employees determines the regulation for it.If the employee committs an extraordinary dismissal for serious grounds as follows, the employer is entitled to terminate employment without advance notice and regardless of the employee number: 1. Performing duty dishonestly or intentionally committing a criminal offence against the employer; 2. Willfully causing damage to the employer; 3. Committing negligent acts causing serious damage to the employer; 4. violating work rule, regulation or order of the employer which is lawful and just, and after written warning having been given by the employer, except for a serious case with no requirement for the employer to give warning; 5. Absenting from its duty without justifiable reason for three consecutive working days regardless of whether there is holiday in between; 6. Being sentenced to imprisonment by a fnal court judgment
   If maximum of ten employees, then termination without cause and without payment of severance pay is generally permissibleRegardless of the number of employees, the severance pay shall be paid if the employee has worked for an uninterrupted period as specified in the Labour Protection Act B.E. 2541 (1998) unless any extraordinary dismissal for serious reasons has been involved
   If more than ten employees, then termination is only permissible due to reasons listed in the Dismissal Protection Act (KSchG)No, the termination without cause and without severance pay can be conducted regardless of numbers of employees, but subject to the extraordinary dismissal for serious reaons as mentiond in the above column
Fixed-term employment contracts are permissible for up to a period of two years without a so-called material reason having to apply. This can be extended twice for each a year. After the end of the fixed-term, the employment contract ends without the need for termination.There is no maximum period for a fix-term employment contract and no law that specifies the maximum number of extensions. the fixed-term employment contract ends without the need for termination or any advance notice. If the employees are employed under fixed-term employment contracts and the work falls into one of the following categories, they are not entitled to severance pay: 1. Specific project which is not the normal business or trade of the employer and requires a definite date to commence and end the work; 2. Occasional work with a definite ending or completion; or 3. Seasonal work that the employment is made during the season. The aforementioned works must be completed within two years, and the employer must enter into a written contract with the employee at the beginning of the employment
6. Work permit for foreign employees employee residing in EEA State + Switzerlandemployee residing in non EEA State
Application for VISA needed for employeesYES
Non-immigrant B Visa or other types of visas that allowed the holder to work in Thailand.		YES
Non-immigrant B Visa or other types of visas that allowed the holder to work in Thailand.
Valid residence permit (limited validity) or settlement permit (unlimited validty)Not requiredNot required

Source: International Comparison July 2023 : Antea (antea-int.com)

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South China Morning Post – Thailand’s tricky consignment law leaves Hongkonger with US$120,000 hole in his pocket after Phuket developer goes under during Covid-19

Since Phuket is popular with foreigners and attractive parcels of land are limited and are available at very high cost, it is not unusual for developers with insufficient funds to purchase land under consignment, splurge on marketing to attract investors and use their down-payments to pay off the cost.

Afterwards, the developer will seek a loan from a bank citing the number of reservations from investor.

Panisa Suwanmatajarn said in South China Morning Post.

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