Thailand is an important player in southeast Asia. It is the second largest nation in the region behind Indonesia and has a gross domestic product of around US$670 billion.
How to register a business
In order to register a business in Thailand, it is necessary to set up a legal entity, which can at times take months. If more than 49% of the company’s shares are held by foreign investors, it must follow the rules set out in Thailand's Foreign Business Act.
Working hours/termination
The Thai working week usually lasts from 8.30am to 5.30pm Monday to Friday, with a half day on Saturday. The maximum number of hours that an individual is allowed to work per week is 48, but overtime payments vary based on the day and number of hours worked.
Although it is not mandatory, it is usual to provide employees with about 30 days notice when informing them of termination. Unless they have been dismissed for gross incompetence or committing criminal activity, it is usual to pay severance based on the amount of time spent at the organisation.
Payroll
Specific rules apply depending on whether a company employs residents or non-residents, but it is worth noting that non-resident companies are allowed to process payroll for the Thai residents they employ.
Another option is to use a fully outsourced service supplier such as a professional employer organisation or global employment outsourcing provider, which will employ and pay staff on their behalf. Some organisations also opt to register their business in Thailand but take on a third party provider administer their payroll, which includes undertaking payroll calculations, payments and filings.
Whichever path is taken, it is important to note that the company, as ’employer of record’, is still fully responsible for compliance with employment, immigration, tax and payroll regulations.
Taxation
Key tax considerations focus on net taxable income, social security contributions, value added tax, corporate income tax, specific business tax and property tax.
All employees in Thailand must file an annual personal income tax return known as a PND 91. Income tax in Thailand is based on ‘assessable income’, the definition of which relates to:
- Employment or services rendered;
- Professional fees;
- Interests, dividends and capital gains on securities;
- Royalties;
- Copyrights;
- Rental of properties/assets;
- Income from contractor-related activities;
- Others.
The Thai tax year runs from 1 January to 31 December. An income tax return for the prior tax year must be made to the tax office by 31 March. Payment should be made immediately as there are penalties if processing and settlement is delayed.
For those earning income from selling property or working in sectors such as engineering, architecture, accountancy, fine arts and the art of healing, tax returns must be filed on or before 31 September, with the tax due on or before 30 June of the following year.
Foreign workers should note that when renewing their work permits, it will be necessary to show a copy of their tax submission for the previous year.
Manish Mehta is co-founder and business director of Propay Partners, where he heads the design, compliance and HR outsourcing solutions wing. With more than 20 years of experience in the BPO industry, Manish is a well-established HR outsourcing expert within the ASEAN region. He holds a degree from the National University of Malaysia, where he specialised in in Business Administration.
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Thailand is an important player in southeast Asia. It is the second largest nation in the region behind Indonesia and has a gross domestic product of around US$670 billion.
How to register a business
In order to register a business in Thailand, it is necessary to set up a legal entity, which can at times take months. If more than 49% of the company’s shares are held by foreign investors, it must follow the rules set out in Thailand's Foreign Business Act.
Working hours/termination
The Thai working week usually lasts from 8.30am to 5.30pm Monday to Friday, with a half day on Saturday. The maximum number of hours that an individual is allowed to work per week is 48, but overtime payments vary based on the day and number of hours worked.
Although it is not mandatory, it is usual to provide employees with about 30 days notice when informing them of termination. Unless they have been dismissed for gross incompetence or committing criminal activity, it is usual to pay severance based on the amount of time spent at the organisation.
Payroll
Specific rules apply depending on whether a company employs residents or non-residents, but it is worth noting that non-resident companies are allowed to process payroll for the Thai residents they employ.
Another option is to use a fully outsourced service supplier such as a professional employer organisation or global employment outsourcing provider, which will employ and pay staff on their behalf. Some organisations also opt to register their business in Thailand but take on a third party provider administer their payroll, which includes undertaking payroll calculations, payments and filings.
Whichever path is taken, it is important to note that the company, as ’employer of record’, is still fully responsible for compliance with employment, immigration, tax and payroll regulations.
Taxation
Key tax considerations focus on net taxable income, social security contributions, value added tax, corporate income tax, specific business tax and property tax.
All employees in Thailand must file an annual personal income tax return known as a PND 91. Income tax in Thailand is based on ‘assessable income’, the definition of which relates to:
- Employment or services rendered;
- Professional fees;
- Interests, dividends and capital gains on securities;
- Royalties;
- Copyrights;
- Rental of properties/assets;
- Income from contractor-related activities;
- Others.
The Thai tax year runs from 1 January to 31 December. An income tax return for the prior tax year must be made to the tax office by 31 March. Payment should be made immediately as there are penalties if processing and settlement is delayed.
For those earning income from selling property or working in sectors such as engineering, architecture, accountancy, fine arts and the art of healing, tax returns must be filed on or before 31 September, with the tax due on or before 30 June of the following year.
Foreign workers should note that when renewing their work permits, it will be necessary to show a copy of their tax submission for the previous year.
Manish Mehta is co-founder and business director of Propay Partners, where he heads the design, compliance and HR outsourcing solutions wing. With more than 20 years of experience in the BPO industry, Manish is a well-established HR outsourcing expert within the ASEAN region. He holds a degree from the National University of Malaysia, where he specialised in in Business Administration.
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Everything you need to know about Thai employment contracts
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