The year 2014 has come to an end, full of events that did not always have a positive impact on business in Thailand in general and Russian businesses in particular. Nevertheless, the number of projects involving Russian entrepreneurs and investments continues to grow. Projects are becoming more complex and interesting, and client inquiries more diverse.
Based on our experience in 2014, we have compiled a list of questions that are difficult to find answers to online and are best clarified before starting a company in Thailand.
The company registration process has been described in detail in a previous issue of Real Estate Magazine, so we will focus here on several important nuances.
Company Office
Q: Is it possible to use a temporary address during company registration?
A: Theoretically, a legal firm’s office can be used as a temporary address until a lease agreement is signed, subject to agreement with the firm. However, having your own office is mandatory when applying for an annual business visa. Please note that all documents issued before changing to a permanent address will need to be updated, which involves additional time and costs.
Q: What are the requirements for an office?
A: There are no specific legal requirements. Generally, the office must correspond to the company’s activities: the number of workstations and equipment should match the number of employees. The office must have a separate entrance and a sign displaying the company name, address, and working hours in both Thai and English.
Q: Can a condominium unit be used as an office?
A: Condominium regulations may allow commercial activity only in designated areas, usually on the ground floor. The business must not disturb residents.
An exception is when a company owns a residential unit and does not conduct business activities — in this case, the residential address may be used as the company address.
Q: Can multiple companies share one office address?
A: This is common for affiliated companies with the same shareholders. Separate lease agreements or sublease permissions are required. However, the number of companies must remain reasonable — for example, placing many companies with multiple employees in a very small office is not advisable.
Employment
Q: What is the minimum salary in Thailand?
A: It depends on nationality. The minimum salary for Thai employees is approximately 300 THB per day. For foreign employees:
- CIS nationals — 35,000 THB per month
- European nationals — 50,000 THB per month
Q: What is considered employment? When do taxes and social contributions apply?
A: For Thai employees, employment begins upon registration with the Social Security Fund, after which salary tax and contributions must be paid.
For foreign employees, employment begins upon obtaining a work permit.
Note: Company directors are not registered in the Social Security Fund.
Q: When hiring a foreign employee, when must 4 Thai employees be employed?
A: Thai employees must be in place before applying for a one-year business visa. Copies of their ID cards are submitted to immigration, and their presence in the office may be required for inspection.
Q: Is it possible to work for multiple companies?
A: Yes, for both Thai and foreign employees. However, for foreigners, each employer must meet requirements:
- 2 million THB registered capital
- 4 Thai employees per foreign employee
All employers must be listed in the work permit.
Thai employees can work for multiple companies but can only be registered with one Social Security account.
Q: How many directors can a company have? Are there nationality requirements?
A: A company can have multiple directors (at least one is required). Directors can be Thai or foreign.
However, certain procedures may require a Thai director. For example, documents for a work permit application must be signed by a Thai director or a foreign director who already holds a work permit.
Bank Account
Q: Is opening a bank account mandatory after registration?
A: No, it depends on the company’s needs.
Q: Are there standard requirements for opening a bank account?
A: Requirements vary by bank and may change. Typically required:
- Company documents
- Shareholders’ resolution to open the account
- Director’s signature
- Work permit (if the director is a foreigner)
- Presence of shareholders holding a certain percentage of shares (e.g., 10% or 25%)
Taxes
Q: Is there a simplified tax system in Thailand?
A: No, Thailand does not have a simplified or imputed tax system in the traditional sense.
Q: What is the corporate income tax rate?
A: The standard rate is 20%.
Companies are divided into:
- SMEs (registered capital up to 5 million THB)
- Large companies
SMEs may benefit from progressive tax rates, while large companies pay a flat 20%.
Q: When must a company register for VAT?
A: A company must register for VAT within 30 days after reaching annual revenue of 1.8 million THB. Voluntary registration is also possible.
After registration, VAT must be reported and paid monthly.
Q: What are the reporting obligations?
Monthly:
- Salary tax
- Social Security contributions
- VAT
Annually:
- Financial statements
- Corporate income tax
Author: Alexandra Agapitova.
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