Entrepreneurs who bring innovations to the market offer a key value-generating contribution to economic progress. Compared with incumbent firms, new firms invest more in searching for new opportunities. Existing firms might be less likely to innovate because of organizational inertia, which numbs their responsiveness to market changes, or because new goods would compete with their established range of products.
Incumbent firms often miss out, sometimes intentionally, on opportunities to adopt new ideas because of the fear of cannibalizing their own markets. For inventors and innovators who sometimes come from established firms setting up their own business often appears to be the only way to commercialize their ideas. Entrepreneurs increase competition By establishing new businesses, entrepreneurs intensify competition for existing businesses.
Consumers benefit from the resulting lower prices and greater product variety. Researchers have developed a measure of market mobility, which identifies the effects of new business formation on existing firms [3]. A change in the ranking of established firms by number of employees indicates a transfer of market share and higher market mobility.
This effect is particularly strong when considering entrepreneurial activity five years prior to the start-up, which points to a substantial time lag in the effect of start-ups on market mobility. Furthermore, new business formation has an indirect competition-enhancing effect by pushing established firms to improve their performance. Entrepreneurs have positive employment effects in the short and long term, and negative effects in the medium term Entrepreneurs stimulate employment growth by generating new jobs when they enter the market.
Research has shown after disentangling all the potential effects that beyond this immediate effect there is a more complicated, S-shaped effect over time Figure 1 [4]. There is a direct employment effect from new businesses that arises from the new jobs being created. Following this initial phase, there is usually a stagnation phase or even a downturn as new businesses gain market share from existing firms that are unable to compete and as some new entrants fail.
After this interim phase of potential failure and displacement of existing firms, the increased competitiveness of suppliers leads to positive gains in employment once again. About ten years after start-up, the impact of new business formation on employment has finally faded away. New businesses boost productivity Competition between new and existing firms ideally leads to survival of the fittest.
Even though overall employment may decline, new firms can foster productivity [6]. This happens for two reasons. First, new firms increase competition in the market and thus diminish the market power of incumbent firms, forcing them to become more efficient or go out of business.
Second, only firms with a competitive advantage or firms that are more efficient than incumbents will enter the market. The subsequent selection process forces less efficient firms both entrants and incumbents to drop out of the market. These effects were found for a sample of 23 OECD countries [6] , and in single country studies for Germany, the Netherlands, and Sweden.
In the initial years following entry, the productivity effect can sometimes be negative, probably a result of adjustments to routines and strategies in response to the new entrants. The overall positive relationship is particularly strong for entrepreneurs with high-growth ambitions and a high degree of innovation; the effect on productivity is weaker for entrepreneurs with low-growth ambitions.
This pattern indicates that entrepreneurs generally increase the productive use of scarce resources in an economy, with the strongest impact coming from innovative entrepreneurs. Entrepreneurship encourages structural change Existing firms often struggle to adjust to new market conditions and permanent changes, getting locked into their old positions. The entry of new businesses and the exit of worn-out firms can help to free firms from a locked-in position.
Moreover, entrepreneurs may create entirely new markets and industries that become the engines of future growth processes. Only a few people have the drive to become entrepreneurs Entrepreneurs share certain traits, such as creativity and a high tolerance for the uncertainty that comes with developing new products. Four personality characteristics are particularly important for becoming an entrepreneur: willingness to bear risks, openness to experience, belief in their ability to control their own future internal locus of control , and extraversion [8].
Entrepreneurs are significantly more likely to have these traits for the following reasons: The success of each investment, particularly in innovative activities, is unpredictable. Every entrepreneurial decision is risky, and success is never assured. In contrast to ordinary managers, entrepreneurs often put their own funds on the line and risk losing money if the investment fails.
They have to be willing to bear risks. People who are open to experience—who seek new experiences and are eager to explore novel ideas—are creative, innovative, and curious. These attributes are vital for starting a new venture. Locus of control measures generalized expectations about internal and external control. People with an external locus of control believe that their future is determined randomly or by the external environment, not by their own actions.
People with an internal locus of control believe that they shape their future outcomes through their own actions. Entrepreneurs need to have an internal locus of control to propel them. All of these traits—being assertive, seeking leadership, and developing networks—are important if an individual aims to become an entrepreneur. Empirical research reveals that the most important personality characteristics influencing entrepreneurial success are lower levels of agreeableness, higher levels of need for achievement, higher levels of internal locus of control, and medium levels of risk acceptance: Agreeableness refers to having a forgiving and trusting nature and being altruistic and flexible.
Lower scores on agreeableness might help entrepreneurs survive by enabling them to bargain more for their own interest with their partners. For entrepreneurs, a need for achievement is expressed in the search for new and better solutions and the ability to deliver these solutions through their own performance. The same holds for having higher levels of internal locus of control. Entrepreneurs with a medium range of risk tolerance have the lowest exit probabilities.
The relationship between risk tolerance and the probability of entrepreneurial success is not linear but an inverse U-shape [8]. Too low a risk tolerance leads to low-risk projects with low expected returns, which makes entrepreneurship an unattractive option to dependent employment, and excessive risk tolerance leads to projects that are very high risk with high failure rates. Recent studies in Germany and in the UK have shown higher survival rates for new ventures in innovative industries [9].
There are several reasons why new businesses fail and close see Failure versus closure. Not everyone who tries to start a business has the right character traits to become a successful entrepreneur. Other impediments to success are restricted access to capital, lack of customers, and discouraging regulatory hurdles, including unfriendly entry regulations and difficult and time-consuming requirements for registering property and obtaining or extending licenses or permits.
The level of self-employment is not necessarily an indicator of entrepreneurial activity Self-employment is not synonymous with entrepreneurship. The level of entrepreneurial activity offers information about the dynamics of an economy, while the level of self-employment is not necessarily correlated with economic development.
In fact, most economies with high levels of self-employment are less developed. Less developed economies have fewer large firms which deliver economies of scale and scope and a greater number of small firms and self-employed individuals delivering fewer economies of scale and scope. Thus, a high level of self-employment does not necessarily correspond with a high level of entrepreneurial activity. High regulatory burdens and unsecured intellectual property rights are detrimental to innovative entrepreneurship Regulatory obstacles to setting up a business, such as the need to buy permits or licenses and other entry barriers, may discourage entrepreneurship.
Overregulation of commerce prevents entrepreneurship from flourishing because it increases the costs of starting a business and decreases flexibility and the ability to react quickly to opportunities as they arise, thus reducing experimentation. Similarly, frequently changing, complex, unclear, or opaque regulations make it difficult to understand the legal environment for entrepreneurial activity.
Sometimes, overregulation can even make entrepreneurship impossible by restricting or prohibiting entry into certain sectors of the economy through strict control of licenses. Permits and licenses can act as noncompetition agreements. Overregulated markets can turn potentially productive entrepreneurs toward unproductive non-wealth-creating activity. And because there are many potential markets for high-tech innovations all over the world, innovative businesses deterred by overregulation in one market can go elsewhere.
A high level of corruption can be a side effect of overregulation, with direct negative impacts on innovative activities [10]. Success in entrepreneurship and innovation—which are about new products or services—is uncertain. It explains what investment income is taxable and what investment expenses are deductible. It explains when and how to show these items on your tax return. It also explains how to determine and report gains and losses on the disposition of investment property and provides information on property trades and tax shelters.
The glossary at the end of this publication defines many of the terms used.. Investment income. This generally includes interest, dividends, capital gains, and other types of distributions including mutual fund distributions. Investment expenses. These include interest paid or incurred to acquire investment property and expenses to manage or collect income from investment property. Qualified retirement plans and IRAs. The rules in this publication do not apply to investments held in individual retirement arrangements IRAs , section k plans, and other qualified retirement plans.
The tax rules that apply to retirement plan distributions are explained in the following publications. Civil Service Retirement Benefits.
DIFFERENCE BETWEEN BRAND PLACEMENT AND PRODUCT PLACEMENT DEFINITION
The Revenue Department requires that accounts be in the Thai language. The books must be kept at a place of business for ten years. Value Added Tax Created in , the VAT is applied to each stage of the production process, and is paid on a monthly basis. Exports, domestic transportation and certain other sales are exempted from VAT. Personal Income Tax Every person, resident or non-resident, who derives assessable income from employment or business in Thailand, or has assets located in Thailand, is subject to personal income tax, whether such income is paid in or outside of Thailand.
Treaties to avoid double taxation Thailand has treaty agreements to eliminate double taxation with most EU countries. The treaties generally place taxpayers in a more favorable position for Thai income than they would be under the Revenue Code, as profits will only be taxable if the taxpayer has a permanent establishment in Thailand.
Employees are entitled to no fewer than 13 national holidays a year and a minimum of 6 days of annual vacation after working consecutively for one full year. Employees have the choice of whether they wish to work overtime or on holidays. A female employee is entitled to maternity leave for a period of 90 days including holidays, but the amount of paid leave shall not exceed 45 days.
These regulations usually take the form of permission and licensing. At present more than 50 classes of goods require import licenses from the Ministry of Commerce. The Ministry will notify when there are changes to the categories of goods. A license to import any of the specified items must be secured from the Ministry of Commerce. At present, close to 50 items require such control. Certain goods require export licenses under other laws, such as seeds, trees, and leaves of tobacco.
Certain goods, such as sugar and rice, are subject to export licenses under the Export Standard Act, which aims to ensure that such exports are of a set quality. In addition, the exporters of agricultural commodities may find that membership to trade associations is mandatory. These associations may in turn impose their own regulations for membership. The first case involved a concession agreement for a construction project filed under the Germany-Thailand bilateral investment treaty.
In addition, the semi-public Thai Arbitration Center offers mediation and arbitration for civil and commercial disputes. An amendment to the Arbitration Act that allows foreign arbitrators to take part in cases involving foreign parties came into force on April 15, Under very limited circumstances, a court can set aside an arbitration award.
The law authorizes restructuring proceedings that require trained judges who specialize in bankruptcy matters to preside. According to the law, bankruptcy is defined as a state in which courts permit the distribution of assets belonging to a debtor among the creditors within the parameters of the law.
Chapter 11 and does not criminalize bankruptcy. The law also distinguishes between secured and unsecured claims, with the former prioritized. The law stipulates that all applications for repayment must be made within one month after the Bankruptcy Court publishes the appointment of an official receiver. If any person opposes a filing, the receiver shall investigate the matter and approve, partially approve, or dismiss the application.
Any objections to the orders issued by the receiver may be filed with the court within 14 days after learning of the issued order. After the proposal for a composition has been submitted, the receiver calls for a meeting among creditors to consider whether or not to accept the proposal. If the proposal is accepted, the court will approve the composition in order to legally execute the proposal; however, it will only do so if the proposal includes clear provisions for the repayment of debts.
Despite these laws, some U. The NCB is required to provide the financial services sector with payment history information from utility companies, retailers and merchants, and trade creditors. The Board of Investment offers investment incentives to qualified domestic and foreign investors. The most significant privileges offered by the BOI for promoted projects include: corporate income tax exemptions; tariff reductions or exemptions on imports of machinery used in the investment; tariff-free treatment on imported raw materials used in production for export.
Moreover, grants are provided to support targeted technology development under the Competitive Enhancement Act. BOI offers a one-stop service to expedite multiple business processes for investors. The EEC is targeting twelve key industries:. The EEC Act authorized investment incentives and privileges.
Investors can obtain long-term land leases of 99 years with an initial lease of up to 50 years and a renewal of up to 49 years. The EEC Act shortens the public-private partnership approval process to approximately nine months. Foreign executives and experts who work in targeted industries in the EEC are subject to a maximum personal income tax rate of 17 percent. Foreign-owned firms generally have the same investment opportunities in the industrial zones as Thai entities.
Private developers are heavily involved in the development of these estates. The IEAT currently operates 14 estates, plus 45 more in conjunction with the private sector, in 16 provinces nationwide. Private-sector developers independently operate over 50 industrial estates, most of which have received promotion privileges from the Board of Investment.
Most major foreign manufacturing investors, including U. Businesses may import raw materials into, and export finished products from, these zones free of duty including value added tax. These zones are located within industrial estates and many have customs facilities to speed processing. In addition to these zones, factory owners may apply for permission to establish a bonded warehouse within their premises to which raw materials, used exclusively in the production of products for export, may be imported duty-free.
Business sectors and industries that can benefit from tax and non-tax incentives offered in the SEZs include logistics; warehouses near border areas; distribution; services; labor-intensive factories; and manufacturers using raw materials from neighboring countries. These SEZs support Thai government goals for closer economic ties with neighboring countries and allow investors to tap into abundant migrant labor; however, these SEZs have proven less attractive to overseas investors due to their remote locations far from Bangkok and other major cities.
The Thai government does not have specific laws or policies regarding performance or data localization requirements. Foreign investors are not required to use domestic content in goods or technology, but the Thai government has encouraged such an approach through domestic preferences in government procurement proceedings.
There are currently no requirements for foreign IT providers to localize their data, turn over source code, or provide access to surveillance. IT providers have expressed concern that the new laws might place unreasonable burdens on them and have introduced new uncertainties in the technology sector. As of April , the government is still in the process of considering and implementing regulations to enforce laws on Cyber Security and Personal Data Protection.
Thailand has implemented a requirement that all debit transactions processed by a domestic debit card network must use a proprietary chip. Property rights are guaranteed by the Constitution. While the government provides fair compensation in instances of expropriation, Thai policy generally does not permit foreigners to own land.
There have been instances, however, of granting such permission to foreigners under certain laws or ministerial regulations for residential, business, or religious purposes. Foreign ownership of condominiums and buildings is permitted under certain laws. Foreigners can freely lease land. Relevant articles of the Civil and Commercial Codes do not distinguish between foreign and Thai nationals in the exercise of lease rights.
Secured interests in property, such as mortgage and pledge, are recognized and enforced. Unoccupied property legally owned by foreigners or Thais may be subject to adverse possession by squatters who stay on that property for at least 10 years.
Thailand remained on the Special Watch List in although its single physical market listed in the Notorious Markets Report dropped off in The National Committee is chaired by the Prime Minister with two Deputy Prime Ministers as vice chairs while 18 heads of government agencies serve as committee members. Thailand has a robust legal and enforcement regime for IP rights. The process of patent examination through issuance of patents is slow, taking on average six to eight years.
The patenting process may take longer for certain technology sectors such as pharmaceuticals and biotechnology. Thailand protects trademarks, traditional marks, and sound marks. DIP historically takes 10 to 14 months to register a trademark. However, copyright owners may record their works with DIP to establish proof of ownership. Thailand protects GIs, which identify goods by their specific geographical origins. The geographical origins identified by a GI must be directly attributable to the reputation, qualities, or characteristics of the good.
In Thailand, a registered trademark does not prevent a similar geographical name to be registered as a GI. As of March , Thailand remained in the process of amending its Patent Act to streamline the patent registration process, to reduce patent backlog and pendency, and to help prepare for accession to the Hague Agreement Concerning the International Registration of Industrial Designs.
Furthermore, Thailand has increased the number of examiners to reduce the patent backlog. To address the use of unlicensed software in the public sector, Thailand adopted guidelines in November on the government acquisition of legitimate software. DIP recently adopted a new system of voluntary registration of copyright collective management agents to curb illegal activities of rogue agents.
To register, an agent must meet certain qualifications and undergo prescribed training. The roster of registered agents along with associated licensed copyrights is available on the DIP website. In , the Royal Thai Police conducted 1, raids and seized , items, the Department of Special Investigation conducted four raids on trademark violations resulting in , items being seized, and the Customs Department had 1, seizures that stopped 52,, IP-infringing items from entering Thailand.
The Thai government maintains a regulatory framework that broadly encourages and facilitates portfolio investment. There is sufficient liquidity in the markets to allow investors to enter and exit sizeable positions. Government policies generally do not restrict the free flow of financial resources to support product and factor markets. In theory, the private sector has access to a wide variety of credit instruments, ranging from fixed term lending to overdraft protection to bills of exchange and bonds.
However, the private debt market is not well developed. Most corporate financing, whether for short-term working capital needs, trade financing, or project financing, requires borrowing from commercial banks or other financial institutions. As of December , the non-performing loan rate was low around 3. The combined assets of the five largest commercial banks totaled USD In general, Thai commercial banks provide the following services: accepting deposits from the public; granting credit; buying and selling foreign currencies; and buying and selling bills of exchange including discounting or re-discounting, accepting, and guaranteeing bills of exchange.
Commercial banks also provide credit guarantees, payment, remittance and financial instruments for risk management. Such instruments include interest-rate derivatives and foreign-exchange derivatives. Additional business to support capital market development, such as debt and equity instruments, is allowed.
A commercial bank may also provide other services, such as bank assurance and e-banking. Apart from the 15 domestic commercial banks, there are currently 11 registered foreign bank branches, including three American banks Citibank, Bank of America, and JP Morgan Chase , and four foreign bank subsidiaries operating in Thailand. To set up a bank branch or a subsidiary in Thailand, a foreign commercial bank must obtain approval from the Ministry of Finance and the BOT.
Newly established foreign bank branches are required to have minimum capital funds of million baht USD 3. The number of expatriate management personnel is limited to six people at full branches, although Thai authorities frequently grant exceptions on a case-by-case basis. Non-residents can open and maintain foreign currency accounts without deposit and withdrawal ceilings.
Non-residents can also open and maintain Thai baht accounts; however, in an effort to curb the strong baht, the Bank of Thailand capped non-resident Thai deposits to million baht across all domestic bank accounts. However, in January , the Bank of Thailand began allowing non-resident companies greater flexibility to conduct baht transactions with domestic financial institutions under the non-resident qualified company scheme.
Participating non-financial firms which trade and invest directly in Thailand are allowed to manage currency risks related to the baht without having to provide proof of underlying baht holdings for each transaction. This will allow firms to manage baht liquidity more flexibly without being subject to the end-of-day outstanding limit of million baht for non-resident accounts.
Withdrawals are freely permitted. Recently introduced technologies under this scheme include standardized QR codes for payments, blockchain funds transfers, electronic letters of guarantee, and biometrics. The latter provide basic but expensive financial services to households, mostly in rural areas. These alternative financial services, with the exception of informal money lenders, are regulated by the government. There are no limitations placed on foreign investors for converting, transferring, or repatriating funds associated with an investment; however, supporting documentation is required.
Any person who brings Thai baht currency or foreign currency in or out of Thailand in an aggregate amount exceeding USD 15, or the equivalent must declare the currency at a Customs checkpoint. Investment funds are allowed to be freely converted into any currency. The exchange rate is generally determined by market fundamentals but is carefully scrutinized by the BOT under a managed float system. Thailand imposes no limitations on the inflow or outflow of funds for remittances of profits or revenue for direct and portfolio investments.
There are no time limitations on remittances. Thailand does not have a sovereign wealth fund and the Bank of Thailand is not pursuing the creation of such a fund. However, the International Monetary Fund has urged Thailand to create a sovereign wealth fund due to its large accumulated foreign exchange reserves. In , they employed , people, or 0. The law aims to reform SOEs and ensure transparent management decisions. The Thai government generally defines SOEs as special agencies established by law for a particular purpose that are percent owned by the government through the Ministry of Finance as a primary shareholder.
Of the 52 total SOEs, 42 are wholly owned and 10 are majority-owned. By regulation, at least one-third of SOE boards must be comprised of independent directors. Corporate board seats are typically allocated to senior government officials or politically affiliated individuals. Corporatization is viewed as an intermediate step toward eventual privatization.
Foreign investors are allowed to participate in privatizations, but restrictions are applied in certain sectors, as regulated by the FBA and the Act on Standards Qualifications for Directors and Employees of State Enterprises of , as amended. However, privatizations have been on hold since largely due to strong opposition from labor unions. The law aims to reform SOEs and ensure transparent management decisions; however, privatization is not part of this process. Thailand has two national plans for responsible business conduct.
The 4th National Human Rights Plan sets a framework on human rights for government agencies, the private sector, and civil society to reduce the incidence of human rights violations. The NAP aims to prevent adverse effects of business operations on human rights. The plan identifies four priority areas: 1 labor; 2 community, land, natural resources, and environment; 3 human rights defenders; and 4 cross border investment and multinational enterprises.
There are several local NGOs that promote and monitor responsible business conduct. Most such NGOs operate without hindrance, though a few have experienced intimidation as a result of their work. International NGOs continue to call on the Thai government and Thai companies to act more responsibly with respect to human and labor rights. In March the Thai Labor Minister signed an MOU with 13 private industry associations for prevention and elimination of child labor and forced labor in sectors including shrimp-farming, sugarcane, fisheries, and garments — all sectors identified as high risk in the U.
According to some studies, bribery and corruption are still problematic. Despite increased usage of electronic systems, government officers still wield discretion in the granting of licenses and other government approvals, which creates opportunities for corruption.
Thailand has a legal framework and a range of institutions to counter corruption. The Organic Law to Counter Corruption criminalizes corrupt practices of public officials and corporations, including active and passive bribery of public officials. The anti-corruption laws extend to family members of officials and to political parties. Thai procurement regulations prohibit collusion amongst bidders. Shares are indivisible.
A company cannot take its own shares in pledge. The whole amount of every share must be paid in money, unless approved by the statutory meeting or special resolution of the general meeting of shareholders, in case of an increase in registered capital.
A shareholder cannot avail themselves of a set-off against the company as to payments on shares. Other rights or restrictions may be given by the company's MOA, articles of association articles , or the general meeting of shareholders. Automatic rights attaching to shares. Automatic rights attached to shares include the rights to:. Receive a share certificate.
Transfer shares without the consent of the company, unless shares are entered in a name certificate and otherwise provided in the company's articles. Attend and vote at any general meetings of the shareholders. Inspect the register of shareholders and the minutes of the board of directors' and Submit an application to the court to cancel any resolution of the general meeting which is contrary to the law or company's articles.
Claim compensation against directors for injury to the company caused by them. Purchase new shares in proportion to the shares currently held by shareholders. Receive the remaining property of the company once the company has been liquidated. What is the standard management structure and key liability issues for the most common form of corporate business vehicle used by foreign companies in your jurisdiction?
Management Structure A private limited company is managed by a board of directors consisting of at least one director, who is elected by the shareholders in a general meeting and under the control of the shareholders and according to the company's articles.
The board of directors can appoint one or several directors or other persons to perform any act on its behalf, unless expressly stipulated otherwise in the company's articles. Management Restrictions Generally, there are no nationality requirements or restrictions for directors, except in certain businesses which have a quota for foreign directors. For example, inland transportation businesses, and other foreign companies permitted to engage in business under List 2 of the FBA, must have Thai nationals comprise at least half of all directors.
Directors' and Officers' Liability The directors are obliged to comply with all laws and objectives of the company, follow the company's articles, adhere to resolutions of the general meeting of the shareholders in good faith, and preserve the interests of the company.
In general, directors are not personally liable to a third party for their actions on behalf of the company, unless they are in breach of their authority as stipulated in the MOA and articles of the company or a shareholders' resolution. Directors can be criminally liable if the company commits a criminal offence under certain statutes, if the offence was from the director's instructions or actions or their failure to give instruction or take action resulting in the company committing an offence.
Under the Civil and Commercial Code, any shareholder in a limited liability company can file a petition against the director of the company for compensation if they can prove that the director caused any damage to the company provided that the company fails to do so itself. However, the director can relieve themselves from liability to the company or shareholder who claims compensation from them if they can prove to the court that they exercised the decision with faith that their action would benefit the company complied with duty of care, fiduciary and loyalty and that such action was approved by the shareholder who claimed for such compensation.
However, under Thai law, a parent company is only regarded as a shareholder, and is only liable for the debts and losses of its subsidiary which is considered as a limited company in Thailand up to the amount unpaid on its shares. Environment What are the main environmental regulations and considerations that a business must take into account when setting up and doing business in your jurisdiction?
There are numerous acts and regulatory notifications, involving various government bodies, that address environmental regulatory matters in Thailand, including the:. Factories Act B. Public Health Act B. Navigation in Thai Waters Act B. Act for the Cleanliness and Orderliness of the Country B. Hazardous Substances Act B.
Building Control Act B. Land Transportation Act B. Land Traffic Act B. Energy Policy Act B. Highway Act B. National Forest Act B. Plant Varieties Act B. Fisheries Act B. Forest Act B. Industrial Product Standards Act B. Thai Vessels Act B. Energy Development and Promotion Act B. Investment Promotion Act B. Energy Conservation Promotion Act B.
Town and Country Planning Act B. National Parks Act B. Minerals Act B. The NEQA provides a framework for protecting the environment by apportioning environmental responsibilities among various government agencies and establishing committees to deal with environmental issues. Among the requirements imposed under the NEQA are environmental impact assessments. The amended NEQA mainly improves the criteria for environmental impact assessment reporting and the system for environmental impact analysis, to be consistent with the provisions in Thailand's constitution.
The laws listed above are also still in effect and apply to various public and private entities in Thailand. This means that many business will have to comply with one or more of these laws, such as legislation governing factory operation and building construction. Factory Operation A factory is defined in Thai law as a "building, premises, or a vehicle using a machine, or machines, with total power or an equivalent of fifty horsepower or more, or which employs fifty workers or more, with or without machinery, to manufacture, produce, assemble, pack, repair, maintain, test, improve, process, convey, keep, or destroy anything in accordance with the type or kind of factory as prescribed in the Ministerial Regulations" Factory Act B.
In other words, the "factory" designation applies to a building, premises, or vehicle that either. Has machinery with a total of fifty horsepower or more. Employs fifty workers or more, for the purposes listed above. Businesses whose activities fall under this definition must notify the competent official, before the commencement of its operation, or obtain a factory licence from the competent official, according to its category as specified under the Factory Act.
These operators must also comply with zoning laws issued specifically for the location district or provincial , as each zone may or may not permit certain types and sizes of factory operations. The application for the factory permit must contain details on the waste or pollution that may result from the production process, as well as its disposal management. Construction Control Generally, no buildings can be constructed, altered, or removed without obtaining a permit from or notifying the government authority typically the local district or municipality administrative office.
Before issuance of a construction permit, several environmental factors will be considered, for example, the size and height of the building and the zoning classification of the land. The Ministry of Natural Resources and Environment requires an environmental impact assessment EIA reports from parties responsible for constructing certain building types including offices with a height of 23 metres or more, or a total floor area of 10, square metres, as well as certain other projects specified in the following:.
Liability and Strategies for Compliance Civil liability for environmental damage can be incurred under the Civil and Commercial Code and under various other laws, such as the:. Hazardous Substances Act. This law:. Factories Act. Under this Act, the Ministry of Industry:.
Business operators should also observe local regulations to assess whether their business is considered hazardous in that area, as certain activities could trigger additional local licensing requirements. Penalties Criminal penalties for environmental damage can include fines, imprisonment, or both. Liability for oil spills, for example, can accrue under multiple laws. Regardless of industry, those subject to Thai jurisdiction should take the necessary steps to ensure compliance with the applicable environmental statutes.
The number of laws can make this task appear daunting, but the reality is that, aside from EIAs, HIAs, and public consultations, many of the laws' provisions relevant to environmental matters impose environmental obligations as part of existing licensing or permitting obligations. Employment Laws, Contracts and Permits. What are the main laws regulating employment relationships? Foreign Employees Thai labour laws apply to all employees working in Thailand, regardless of their nationality or tenure.
Choice of law provisions are generally valid under Thai law, and the parties to an employment agreement can agree to have the agreement governed by a foreign law. However, Thai courts can refuse to apply a chosen foreign law if it is contrary to public order or the good morals of Thailand.
However, when a provision of a foreign law is more favourable for the employee than the provisions prescribed under Thai labour laws, the court can consider the choice of law provision as a clear intention of the parties to be bound by the additional requirements, and will apply that foreign law provision accordingly. The employment of non-Thai nationals working in Thailand is specifically regulated by the:. Employees Working Abroad Subject to certain exceptions, none of the Thai labour laws listed below are relevant to employment of Thai employees outside of Thailand or to employees regardless of nationality of Thai companies working outside of Thailand.
Mandatory rules of law The main laws regulating employment relationships in Thailand are the:. Labour Protection Act as amended in , No. Labour Relations Act as amended in , No. Social Security Act as amended in , No. Workmen's Compensation Act as amended in , No. Occupational Safety and Health Act In addition, most laws provide for the promulgation of ministerial regulations, which offer additional clarity and rules.
Is a written contract of employment required? Main Terms Employment contracts do not need to be in writing. Implied Terms In addition, the terms of an employment relationship can be defined by the parties' conduct implied terms. Collective Agreements A collective bargaining agreement can also apply. Work Permits Thai labour and immigration laws require that foreign persons wishing to work or physically operate a business in Thailand must obtain a work permit from the Ministry of Labour and maintain a valid non-immigrant visa while residing in Thailand.
A foreign person intending to work in Thailand must obtain:. A work permit from the Ministry of Labour in Thailand before starting work. The work permit application must be sponsored by an entity or sponsor that is registered as a business in Thailand. Processing the application normally takes between ten and 14 days. The processing time can be reduced to one day for companies that:. Receive investment promotion from the BOI.
Have at least THB30 million paid-up capital. Government fees for a work permit are in the range of THB to THB6, plus minimum stamp duty depending on the validity period granted, which could be up to two years. The requirement for a work permit can be relaxed for certain professional occupations for expatriates from member states of the ASEAN Framework Agreement on Mutual Recognition Arrangements, provided the requisite criteria are met. Residency Permits While staying in Thailand, a foreign national must comply with the period of stay that is initially granted 90 days from arrival stamped in the passport.
A one-year visa extension can be applied for within Thailand after a work permit is obtained, subject to renewal before the expiration date. Foreign nationals must leave Thailand before the visa expiration date or apply for an extension of stay in Thailand, otherwise, a fine of THB per day for overstaying can be imposed. Foreign employees are not required to apply for permanent residence PR permits.
Non-nationals with non-immigrant visas who have resided in Thailand consecutively for at least three years are eligible, but not required, to apply for a PR permit. In addition to conditions relating to national security, the following factors in relation to each applicant are considered when reviewing a PR application:. To be considered for a PR application under the category of employment, the applicant must:. Have worked in Thailand with a valid work permit for at least three consecutive years before the application.
Have been working with the current company for at least one year before the application. Receive an income of at least THB80, per month for a foreigner with a Thai family or THB, per month for a foreigner without a Thai family on average for at least two consecutive years before the application. Evidence of income tax filing is also required. Be able to understand and speak Thai to an average standard.
Each nationality is allowed an annual quota of PR permits, and the entire process takes at least one year from the date of submission. RPs for spouses and children under 20 years of age of Thai citizens or foreigners who have already applied for and received an RP cost THB95, Termination and Redundancy.
Employees are not entitled by law to management representation or to consultation in relation to corporate transactions. However, employees are protected in situations of termination of employment without cause, whether in relation to redundancy or other circumstances.
In addition, employee consent is required in situations of transfer of employment from one legal entity to another. How is the termination of an individual's employment regulated? Termination Employment can be terminated, regardless of the reason, provided the termination is conducted in accordance with Thai labour law. Termination is defined as any action taken by the employer that prevents the employee from working and being paid.
Fair Dismissal There is a difference between termination with cause and without cause, and termination that is fair and unfair. Fair and unfair terminations are undefined in Thai labour law, so their meanings are interpreted by the courts based on the facts and evidence presented for each individual case.
Termination with cause. Termination with cause is only permissible in certain specific situations. Reasons which justify termination with cause include:. Dishonestly performing duties or intentionally committing a criminal offence against the employer. Deliberately causing damage to the employer.
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How to Set up a Business as a Foreigner in ThailandBRADFORD WEST ELECTION BETTING POLLS
For more information on company registration and preparing your business application, please refer to Department of Business Development website. The degree of government control required varies depending on your type of business. To ensure environmental safety, cautious regulations are utilized for factories likely to output pollution. How do I register my factory or machinery business in Thailand? The Patent Act protects inventions, product designs and pharmaceuticals.
The Trademark Act governs the registration and protection for trademarks. Corporate taxes are due semi-annually. Financial statements must be prepared annually by a company auditor. The Revenue Department requires that accounts be in the Thai language. The books must be kept at a place of business for ten years.
Value Added Tax Created in , the VAT is applied to each stage of the production process, and is paid on a monthly basis. Exports, domestic transportation and certain other sales are exempted from VAT. Personal Income Tax Every person, resident or non-resident, who derives assessable income from employment or business in Thailand, or has assets located in Thailand, is subject to personal income tax, whether such income is paid in or outside of Thailand.
Treaties to avoid double taxation Thailand has treaty agreements to eliminate double taxation with most EU countries. The treaties generally place taxpayers in a more favorable position for Thai income than they would be under the Revenue Code, as profits will only be taxable if the taxpayer has a permanent establishment in Thailand.
Employees are entitled to no fewer than 13 national holidays a year and a minimum of 6 days of annual vacation after working consecutively for one full year. Employees have the choice of whether they wish to work overtime or on holidays. A female employee is entitled to maternity leave for a period of 90 days including holidays, but the amount of paid leave shall not exceed 45 days.
These regulations usually take the form of permission and licensing. Most such NGOs operate without hindrance, though a few have experienced intimidation as a result of their work. International NGOs continue to call on the Thai government and Thai companies to act more responsibly with respect to human and labor rights.
In March the Thai Labor Minister signed an MOU with 13 private industry associations for prevention and elimination of child labor and forced labor in sectors including shrimp-farming, sugarcane, fisheries, and garments — all sectors identified as high risk in the U. According to some studies, bribery and corruption are still problematic.
Despite increased usage of electronic systems, government officers still wield discretion in the granting of licenses and other government approvals, which creates opportunities for corruption. Thailand has a legal framework and a range of institutions to counter corruption. The Organic Law to Counter Corruption criminalizes corrupt practices of public officials and corporations, including active and passive bribery of public officials.
The anti-corruption laws extend to family members of officials and to political parties. Thai procurement regulations prohibit collusion amongst bidders. Shares are indivisible. A company cannot take its own shares in pledge. The whole amount of every share must be paid in money, unless approved by the statutory meeting or special resolution of the general meeting of shareholders, in case of an increase in registered capital. A shareholder cannot avail themselves of a set-off against the company as to payments on shares.
Other rights or restrictions may be given by the company's MOA, articles of association articles , or the general meeting of shareholders. Automatic rights attaching to shares. Automatic rights attached to shares include the rights to:. Receive a share certificate. Transfer shares without the consent of the company, unless shares are entered in a name certificate and otherwise provided in the company's articles.
Attend and vote at any general meetings of the shareholders. Inspect the register of shareholders and the minutes of the board of directors' and Submit an application to the court to cancel any resolution of the general meeting which is contrary to the law or company's articles. Claim compensation against directors for injury to the company caused by them. Purchase new shares in proportion to the shares currently held by shareholders.
Receive the remaining property of the company once the company has been liquidated. What is the standard management structure and key liability issues for the most common form of corporate business vehicle used by foreign companies in your jurisdiction? Management Structure A private limited company is managed by a board of directors consisting of at least one director, who is elected by the shareholders in a general meeting and under the control of the shareholders and according to the company's articles.
The board of directors can appoint one or several directors or other persons to perform any act on its behalf, unless expressly stipulated otherwise in the company's articles. Management Restrictions Generally, there are no nationality requirements or restrictions for directors, except in certain businesses which have a quota for foreign directors.
For example, inland transportation businesses, and other foreign companies permitted to engage in business under List 2 of the FBA, must have Thai nationals comprise at least half of all directors. Directors' and Officers' Liability The directors are obliged to comply with all laws and objectives of the company, follow the company's articles, adhere to resolutions of the general meeting of the shareholders in good faith, and preserve the interests of the company.
In general, directors are not personally liable to a third party for their actions on behalf of the company, unless they are in breach of their authority as stipulated in the MOA and articles of the company or a shareholders' resolution. Directors can be criminally liable if the company commits a criminal offence under certain statutes, if the offence was from the director's instructions or actions or their failure to give instruction or take action resulting in the company committing an offence.
Under the Civil and Commercial Code, any shareholder in a limited liability company can file a petition against the director of the company for compensation if they can prove that the director caused any damage to the company provided that the company fails to do so itself. However, the director can relieve themselves from liability to the company or shareholder who claims compensation from them if they can prove to the court that they exercised the decision with faith that their action would benefit the company complied with duty of care, fiduciary and loyalty and that such action was approved by the shareholder who claimed for such compensation.
However, under Thai law, a parent company is only regarded as a shareholder, and is only liable for the debts and losses of its subsidiary which is considered as a limited company in Thailand up to the amount unpaid on its shares.
Environment What are the main environmental regulations and considerations that a business must take into account when setting up and doing business in your jurisdiction? There are numerous acts and regulatory notifications, involving various government bodies, that address environmental regulatory matters in Thailand, including the:.
Factories Act B. Public Health Act B. Navigation in Thai Waters Act B. Act for the Cleanliness and Orderliness of the Country B. Hazardous Substances Act B. Building Control Act B. Land Transportation Act B. Land Traffic Act B. Energy Policy Act B. Highway Act B. National Forest Act B. Plant Varieties Act B. Fisheries Act B. Forest Act B. Industrial Product Standards Act B.
Thai Vessels Act B. Energy Development and Promotion Act B. Investment Promotion Act B. Energy Conservation Promotion Act B. Town and Country Planning Act B. National Parks Act B. Minerals Act B. The NEQA provides a framework for protecting the environment by apportioning environmental responsibilities among various government agencies and establishing committees to deal with environmental issues.
Among the requirements imposed under the NEQA are environmental impact assessments. The amended NEQA mainly improves the criteria for environmental impact assessment reporting and the system for environmental impact analysis, to be consistent with the provisions in Thailand's constitution. The laws listed above are also still in effect and apply to various public and private entities in Thailand. This means that many business will have to comply with one or more of these laws, such as legislation governing factory operation and building construction.
Factory Operation A factory is defined in Thai law as a "building, premises, or a vehicle using a machine, or machines, with total power or an equivalent of fifty horsepower or more, or which employs fifty workers or more, with or without machinery, to manufacture, produce, assemble, pack, repair, maintain, test, improve, process, convey, keep, or destroy anything in accordance with the type or kind of factory as prescribed in the Ministerial Regulations" Factory Act B.
In other words, the "factory" designation applies to a building, premises, or vehicle that either. Has machinery with a total of fifty horsepower or more. Employs fifty workers or more, for the purposes listed above. Businesses whose activities fall under this definition must notify the competent official, before the commencement of its operation, or obtain a factory licence from the competent official, according to its category as specified under the Factory Act.
These operators must also comply with zoning laws issued specifically for the location district or provincial , as each zone may or may not permit certain types and sizes of factory operations. The application for the factory permit must contain details on the waste or pollution that may result from the production process, as well as its disposal management. Construction Control Generally, no buildings can be constructed, altered, or removed without obtaining a permit from or notifying the government authority typically the local district or municipality administrative office.
Before issuance of a construction permit, several environmental factors will be considered, for example, the size and height of the building and the zoning classification of the land. The Ministry of Natural Resources and Environment requires an environmental impact assessment EIA reports from parties responsible for constructing certain building types including offices with a height of 23 metres or more, or a total floor area of 10, square metres, as well as certain other projects specified in the following:.
Liability and Strategies for Compliance Civil liability for environmental damage can be incurred under the Civil and Commercial Code and under various other laws, such as the:. Hazardous Substances Act. This law:. Factories Act. Under this Act, the Ministry of Industry:.
Business operators should also observe local regulations to assess whether their business is considered hazardous in that area, as certain activities could trigger additional local licensing requirements. Penalties Criminal penalties for environmental damage can include fines, imprisonment, or both.
Liability for oil spills, for example, can accrue under multiple laws. Regardless of industry, those subject to Thai jurisdiction should take the necessary steps to ensure compliance with the applicable environmental statutes. The number of laws can make this task appear daunting, but the reality is that, aside from EIAs, HIAs, and public consultations, many of the laws' provisions relevant to environmental matters impose environmental obligations as part of existing licensing or permitting obligations.
Employment Laws, Contracts and Permits. What are the main laws regulating employment relationships? Foreign Employees Thai labour laws apply to all employees working in Thailand, regardless of their nationality or tenure.
Choice of law provisions are generally valid under Thai law, and the parties to an employment agreement can agree to have the agreement governed by a foreign law. However, Thai courts can refuse to apply a chosen foreign law if it is contrary to public order or the good morals of Thailand. However, when a provision of a foreign law is more favourable for the employee than the provisions prescribed under Thai labour laws, the court can consider the choice of law provision as a clear intention of the parties to be bound by the additional requirements, and will apply that foreign law provision accordingly.
The employment of non-Thai nationals working in Thailand is specifically regulated by the:. Employees Working Abroad Subject to certain exceptions, none of the Thai labour laws listed below are relevant to employment of Thai employees outside of Thailand or to employees regardless of nationality of Thai companies working outside of Thailand.
Mandatory rules of law The main laws regulating employment relationships in Thailand are the:. Labour Protection Act as amended in , No. Labour Relations Act as amended in , No. Social Security Act as amended in , No. Workmen's Compensation Act as amended in , No. Occupational Safety and Health Act In addition, most laws provide for the promulgation of ministerial regulations, which offer additional clarity and rules.
Is a written contract of employment required? Main Terms Employment contracts do not need to be in writing. Implied Terms In addition, the terms of an employment relationship can be defined by the parties' conduct implied terms.
Collective Agreements A collective bargaining agreement can also apply. Work Permits Thai labour and immigration laws require that foreign persons wishing to work or physically operate a business in Thailand must obtain a work permit from the Ministry of Labour and maintain a valid non-immigrant visa while residing in Thailand.
A foreign person intending to work in Thailand must obtain:. A work permit from the Ministry of Labour in Thailand before starting work. The work permit application must be sponsored by an entity or sponsor that is registered as a business in Thailand.
Processing the application normally takes between ten and 14 days. The processing time can be reduced to one day for companies that:. Receive investment promotion from the BOI. Have at least THB30 million paid-up capital. Government fees for a work permit are in the range of THB to THB6, plus minimum stamp duty depending on the validity period granted, which could be up to two years. The requirement for a work permit can be relaxed for certain professional occupations for expatriates from member states of the ASEAN Framework Agreement on Mutual Recognition Arrangements, provided the requisite criteria are met.
Residency Permits While staying in Thailand, a foreign national must comply with the period of stay that is initially granted 90 days from arrival stamped in the passport. A one-year visa extension can be applied for within Thailand after a work permit is obtained, subject to renewal before the expiration date. Foreign nationals must leave Thailand before the visa expiration date or apply for an extension of stay in Thailand, otherwise, a fine of THB per day for overstaying can be imposed.
Foreign employees are not required to apply for permanent residence PR permits. Non-nationals with non-immigrant visas who have resided in Thailand consecutively for at least three years are eligible, but not required, to apply for a PR permit. In addition to conditions relating to national security, the following factors in relation to each applicant are considered when reviewing a PR application:.
To be considered for a PR application under the category of employment, the applicant must:. Have worked in Thailand with a valid work permit for at least three consecutive years before the application. Have been working with the current company for at least one year before the application. Receive an income of at least THB80, per month for a foreigner with a Thai family or THB, per month for a foreigner without a Thai family on average for at least two consecutive years before the application.
Evidence of income tax filing is also required. Be able to understand and speak Thai to an average standard. Each nationality is allowed an annual quota of PR permits, and the entire process takes at least one year from the date of submission. RPs for spouses and children under 20 years of age of Thai citizens or foreigners who have already applied for and received an RP cost THB95, Termination and Redundancy. Employees are not entitled by law to management representation or to consultation in relation to corporate transactions.
However, employees are protected in situations of termination of employment without cause, whether in relation to redundancy or other circumstances. In addition, employee consent is required in situations of transfer of employment from one legal entity to another. How is the termination of an individual's employment regulated?
Termination Employment can be terminated, regardless of the reason, provided the termination is conducted in accordance with Thai labour law. Termination is defined as any action taken by the employer that prevents the employee from working and being paid. Fair Dismissal There is a difference between termination with cause and without cause, and termination that is fair and unfair.
Fair and unfair terminations are undefined in Thai labour law, so their meanings are interpreted by the courts based on the facts and evidence presented for each individual case. Termination with cause. Termination with cause is only permissible in certain specific situations. Reasons which justify termination with cause include:. Dishonestly performing duties or intentionally committing a criminal offence against the employer. Deliberately causing damage to the employer.
Negligently causing severe damage to the employer. Violating the employer's work rules and regulations or lawful working orders, despite having received a written warning for the same offence within the immediately preceding 12 months for serious cases, the requirement of a written warning does not apply.
Abandoning work for three consecutive working days, whether or not a holiday is taken in between, without a justifiable reason. Having been sentenced to imprisonment by final court judgment. If the offence is committed by negligence or is a petty offence, it must be a case that causes the employer to incur loss or damage. In circumstances justifying termination with cause, the employer can terminate employment immediately, without paying severance.
Statutory minimum notice. Termination without cause. If the employer terminates employment without cause which is most frequently the case , the employer must:. Serve a notice of termination at least one pay period in advance, or as stipulated in the employment agreement whichever is longer. Alternatively, the employer can terminate the employment immediately by paying wages to the employee in lieu of the advanced notice.
Provide compulsory severance pay ranging from 30 days to days, depending on the employee's length of service, as follows:. Unfair Dismissal In addition to the above, there is also a risk that the employee will claim for unfair termination. The court can award compensation beyond mere severance, payment of wages in lieu of notice, and other amounts due on termination, at its own discretion. In making its determination, the court must consider the:.
Age of the employee. If the court finds a termination unfair, it can order reinstatement, if the employee requests this, or damages. To avoid claims for unfair termination, employers should negotiate with outgoing employees to reach an amicable end to the employment relationship. Grounds for unfair dismissal. This depends on courts' interpretation based on the fact and evidence on case-by-case basis. The court can order reinstatement of the employee if the employee requests it.
Class of Individuals The above principles apply to all employees, regardless of a class or group of individuals. Are redundancies and mass termination regulated? Redundancies and Mass Termination In general, redundancies and mass layoffs are regulated in the same manner as other circumstances in which termination occurs.
However, when employment is terminated due to restructuring related to deployment of new technology or machinery, employers must follow the procedures set out below. Procedural requirements Employers must:. Give the labour inspector 60 days' advance notice specifying the date of termination of employment, reasons for terminating the employment and names of employees. Give 60 days' advance notice to the affected employees, or pay wages in lieu of such notice. For this type of termination, normal severance pay is required see Question 16 , and the employer must also pay special severance to all employees who have at least six years' tenure.
Tax Taxes on Employment. In what circumstances is an employee taxed in your jurisdiction? Any person, regardless of their tax residence status, who derives employment income from working for a Thai employer in Thailand, is subject to personal income tax, regardless of whether this income is paid within or outside Thailand.
Tax Residence Under local tax law, an individual who stays in Thailand for a total of at least days in a tax calendar year is regarded as Thai tax resident. Ownership of property, nationality, or legality to stay in Thailand are not factors to be considered for tax resident status. What income tax, social security and other tax or contributions must be paid by the employee and the employer during the employment relationship? The tax year runs from 1 January to 31 December every year.
The rate of social security contribution can be temporarily reduced under circumstances such as COVID Employers Employers must withhold income tax at the applicable progressive rates and remit the amount to the Thai tax authority no later than the seventh day of the month following the month of payment.
Employers must contribute between 0. Business Vehicles. When is a business vehicle subject to tax in your jurisdiction? Tax Resident Business Companies incorporated in Thailand are considered to be tax residents of Thailand. Income tax is paid through tax withheld at the source, by the payer of income, at the time of the payment. Non-tax resident business entities that carry out business in Thailand for example through a branch or office are subject to corporate income tax in Thailand. The corporate income tax can be exempted if the non-tax resident business entity does not have a permanent establishment under an applicable tax treaty.
What are the main taxes that potentially apply to a business vehicle subject to tax in your jurisdiction? Corporate Income Tax Tax resident business vehicles are subject to corporate income tax in Thailand on worldwide income. Corporate income tax must be filed twice an accounting period half-year tax return and annual tax return. Half-year tax return must be filed within two months from the end of the first six-month of an accounting period.
Annual tax returns must be filed within days after the end of accounting period. Tax returns can be filed in hardcopy at an area revenue office or in softcopy through the website of the Thai Revenue Department. Sale of goods. Some business activities are exempt from VAT, such as the sale of agricultural products. Such businesses include:. Banking or similar activities.
Lending money on the security of a property mortgage in the ordinary course of business. Commercial sales of immovable property or sales of immovable property for profit. Dividends, Interest and IP Royalties. How are the following taxed:. Dividends paid to foreign corporate shareholders?
Dividends received from foreign companies? Interest paid to foreign corporate shareholders? Intellectual property IP royalties paid to foreign corporate shareholders? Dividends Received Dividends are taxed as the ordinary income of the Thai company. Tax exemptions are granted under certain conditions. Groups, Affiliates and Related Parties. Are there any thin capitalisation rules restrictions on loans from foreign affiliates?
Thailand does not have any thin capitalisation rules. Must the profits of a foreign subsidiary be imputed to a parent company that is tax resident in your jurisdiction controlled foreign company rules? There are no controlled foreign corporation rules in Thailand. A Thai parent company is only subject to tax on actual dividends paid to it by a foreign subsidiary. Are there any transfer pricing rules? In addition to the transfer pricing rules, the Thai Revenue Department also has the power to make assessments on unrelated party transactions regarding the:.
Transfer of assets without compensation. Rendering of services without a service charge. Additionally, it can make assessments, without justification, of other activities with compensation, service charges, or interest in an amount considered to be lower than the market value. Customs Duties. How are imports and exports taxed?
Customs duty is imposed mainly on imported good and on various selected exported goods. As a signatory to the General Agreement on Tariffs and Trade and a member of the WTO, Thailand complies with all relevant standards and codes when determining customs duty.
Is there a wide network of double tax treaties? Competition Are restrictive agreements and practices regulated by competition law? Is unilateral or single-firm conduct regulated by competition law? In principle, the TCA applies to all business operators in the industrial, commercial, financial, insurance, and service sectors all fall within the scope of the law.
The law is silent on the extraterritorial reach of its provisions, but the TCA can be interpreted as applicable to foreign entities if they commit any offence under the law and the offence has any anti-competitive effect in Thailand. The key concepts are fundamentally the same as those set out in the TCA. The rules related to restrictive agreements and practices are primarily governed by the text of the new TCA as follows:.
Section 50 prohibits business operators from abusing dominant positions by:. Sections 51 to 53 set out the key merger control regimes. Section 54 addresses the hard-core cartels and provides an exemption for single economic units.
Sections 55 to 56 address the non hard-core cartels and provide certain exemptions. Section 57 prohibits business operators from committing unfair trade practices including:. Section 58 prohibits business operators from carrying out a legal act or entering into a contract with a business operator in a foreign country without appropriate justification, where that action will result in a monopolistic conduct or unfair restrictions to trade, as well as cause serious harm to the economy and consumers' benefits as a whole.
The penalties for certain violations of the TCA are as follows:. Pre-merger approval section 51 : administrative fine of 0. Are mergers and acquisitions subject to merger control? Transactions Subject to Merger Control Under the TCA, mergers, acquisitions, amalgamations, entire and partial business transfers, joint ventures, acquisition of assets, and direct or indirect share acquisitions can fall within the definition of a "business merger.
Pre-merger approval. Any merger that could result in a monopoly or result in a dominant position in a market requires prior approval from the TCC. Post-merger notification. Any merger resulting in substantial lessening of competition must be reported to the TCC within seven days from the date of the merger.
Subordinate legislation clarifies the criteria on market share and sale turnover of merging parties which can trigger the merger filing duties, either pre-merger approval or post-merger notification. Exemptions are granted for internal restructuring and mergers between businesses which have a relationship in terms of policy and command, under the economic concept of the single economic entity. Foreign-to-Foreign Acquisitions The TCC and OTCC have suggested that the merger control regulations under the TCA could apply to foreign-to-foreign mergers if either party conducts any business activities in Thailand, or has a turnover and market share from the sale of goods or services in Thailand.
Such business activities could be carried out by the business operator itself or through other Thailand-based entities such as local subsidiaries in the same corporate group single economic unit , affiliates, branches or representative offices, agents, dealers or distributors. Specific Industries Generally, the merger control regime under the TCA applies to all business operators in the industrial, commercial, and service sectors, or other businesses prescribed by the TCC.
Despite this, certain sectors have their own merger control regulations, and thus do not fall within the scope of the TCA's merger control regime, including:. The public limited companies listed in the SET fall within the ambit of the merger control rules under the TCA, unless sector-specific regulations include merger control provision.
Anti-Bribery and Corruption Are there any anti-bribery or corruption regulations affecting business in your jurisdiction? Thai Penal Code. Sanctions for committing bribery in Thailand are as follows. Sanctions for committing a corrupt act in Thailand are. Additionally, anyone who continues to exercise such functions after being ordered to discontinue is subject to the same punishment.
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Starting a Business in Thailand as a Foreigner in 2022
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