Thailand is the second largest Southeast Asian nation with a GDP of around $670 billion.
There are specific rules in Thailand depending on whether a company employs residents or non-residents. The key concerns for a company that needs to comply with tax laws in Thailand are net taxable income, social security contribution, value added tax (VAT), corporate income tax, specific business tax (SBT), and property tax.
In order to register a business in Thailand you will need to establish a legal entity which can sometimes take months. If more than 49% of all shares are held by foreign interest, the company will need to follow rules set out in Thailand's Foreign Business Act.
A non-resident company is permitted to process payroll for Thailand residents who are on its payroll. Another option for a non-resident company to payroll its employees in Thailand would be to use a fully outsourced service like a GEO or PEO which will employ and payroll the staff on their behalf.
In some cases, a company will register their business in Thailand under one of the forms available but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.
The Thai work week is usually Monday through Friday from 8:30 a.m. to 5:30 p.m., with a half day on Saturday. The maximum amount of working hours is 48 per week. Overtime compensation varies based on the day and number of hours worked.
All employees in Thailand must file an annual personal income tax return, known as a PND 91. This edition of ‘A Closer Look’ takes a deep dive into the requirements when preparing the PND 91 and considers what are the options available to employees to minimize their personal income tax. There are a number of tax allowances that employees cannot afford to overlook.
The Thai tax year runs from 1st January to 31 December. An income tax return needs to be made to the tax office by the 31st March, for the prior tax year. Payments need to be made immediately because there are penalties for delayed processing and settlement.
For those earning income from property selling or engineering, architecture, accountancy, fine arts and the art of healing, the tax return must be filed on or before the 31st of September, with the tax due on or before the 30th of June of the following year.
Foreigners should note that when renewing your work permit, you will need to show a copy of your tax submission for the previous year.
Although not mandated, employees will expect approximately 30 days of notice for termination. Unless an employee committed criminal activity or gross incompetence to their organization, they can expect severance depending on the amount of time spent in the company.
Insights by Propay Partners
