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Thailand, once known as Siam, and officially the Kingdom of Thailand, is a Southeast Asian nation with a geographical area of 513,120 square kilometers (198,120 square miles) with a population of almost 70 million people. It shares borders with Myanmar and Laos to the north, Laos and Cambodia to the east, the Gulf of Thailand and Malaysia to the south, and the Andaman Sea and Myanmar to the west. Thailand's marine boundaries include Vietnam to the southeast and Indonesia and India to the southwest. Thailand has been subjected to a number of coups and military dictatorships. Thailand has been a nominally parliamentary constitutional monarchy since 2019. However, structural advantages in the constitution have secured the military's grasp on power in reality. Bangkok is the capital and biggest city in Thailand.
From the 11th century, Tai peoples moved from southern China to mainland Southeast Asia. The area was dominated by Indianised kingdoms such as the Mon, Khmer Empire, and Malay nations, who competed with Thai states such as the Kingdoms of Ngoenyang, Sukhothai, Lan Na, and Ayutthaya. A Portuguese diplomatic expedition to Ayutthaya, which established a regional power by the end of the 15th century, initiated European interaction in 1511. Ayutthaya reached its zenith under the reign of the cosmopolitan Narai, then progressively declined until it was destroyed in the Burmese–Siamese War. Taksin rapidly reunified the region and formed the brief-lived Thonburi Kingdom. In 1782, Buddha Yodfa Chulaloke, the first ruler of the present Chakri dynasty, succeeded him.
Throughout the period of Western imperialism in Asia, Siam was the only country in the area to resist colonization by foreign powers, despite being compelled to surrender land, economic, and legal concessions in unequal treaties. During Chulalongkorn's reign, the Siamese government was centralized and turned into a modern unitary absolute monarchy. Siam allied with the Allies in World War I, a political choice intended to repair the unequal treaties. Following a bloodless revolution in 1932, it became a constitutional monarchy and changed its name to Thailand, which was a Japanese ally throughout World War II. A military revolution led by Field Marshal Sarit Thanarat in the late 1950s resurrected the monarchy's traditionally significant role in politics. Thailand became a key US ally and played an anti-communist role in the area as a member of the unsuccessful SEATO, but has worked to repair ties with Communist China and Thailand's neighbors since 1975.
Thailand has cycled between democracy and military control on a regular basis, with the exception of a short period of parliamentary democracy in the mid-1970s. Thailand has been embroiled in a series of bitter political conflicts since the 2000s, culminating in two coups (in 2006 and 2014), the establishment of its current constitution, and a nominally democratic government following the 2019 Thai general election, and ongoing pro-democracy protests that began in 2020.
Thailand is a global middle power and a founding member of ASEAN, and it scores high on the Human Development Index. It has the second-largest economy in Southeast Asia and the 22nd-largest in the world in terms of purchasing power parity. Thailand is characterized as a recently industrialized economy, with manufacturing, agriculture, and tourism as the most important industries.
An employee who has worked consistently for a year is entitled to six days of yearly vacation. The employee's yearly leave is prorated if he or she works for less than a year. Employers occasionally grant employees more than 6 days of yearly leave on their own initiative. If employees do not use their annual leave vacation within a year, it is carried over and added to the next year's annual leave. However, some businesses refuse to roll over unused annual leave to the following year, canceling it after the current year finishes.
Thailand recognizes 16 public holidays.
Employees are allowed to take up to 30 days of paid sick time per year. If an employee is away for more than three days in a row, the employer has the right to request a doctor's letter confirming the sickness.
Expectant women who are employed are entitled to a minimum of 98 days of maternity leave. 45 days are paid out of a total of 98 days. The employer's agreement with the pregnant employee determines whether the remaining days are compensated or not.
The rights that dads of newborn children have differ depending on the industry in which they work. Paternity leave is not available to fathers who work in the private sector. Fathers in the public sector, on the other hand, are entitled to 15 days of paternity leave to care for their newborn children.
There are no statutory regulations regarding paternity leave in Thailand.
Work-related injury leave. If an employee requires medical treatment as a result of a work-related injury or occupational illness, the employee's work-related injury leave shall not exceed 12 months. Work-related injury leave may be appropriately extended after certification by the local labor ability certifying committee in the event of significant injury or unusual circumstances.
Again, the extension will be limited to 12 months. Employees who are injured are paid 100% of their daily salaries while undergoing medical care. Employers are responsible for the whole cost of employee injury compensation.
An employment contract may be cancelled by either the employer or the employee at the conclusion of the contract period (if the employment contract is for a specified time). Employers may fire an employee for cause or misconduct without providing notice or paying severance. In any other case, the employer is required to provide notice. The notice time is determined by the employee's pay interval, which may not exceed three months. Severance pay ranges between 30 and 300 days, depending on the duration of employment of the employee.
The employee or employer may terminate by giving notice at or before any time of payment that the termination will take effect at the next time of payment. 30 days advance notice is customary, and some employers require a longer notice period of two or three months. Generally, the notice period is specified in the employment contract.
While Thailand does not require a probationary period, Thai law does provide for severance pay for employees who have worked for 120 days or more and are terminated without cause. As a result, many employers in Thailand establish probation periods of up to 119 days in order to avoid paying severance.
If employees are not terminated for the reasons specified in the preceding section, they are compensated with severance pay in accordance with the following scheme. If the employment period exceeds 120 days but does not exceed a year, the severance pay is equivalent to 30 days' salary. If the employment period is between one and three years, the severance pay is equivalent to 90 days' salary. If the employment period is between three and six years, the severance pay is equivalent to 180 days' salary. If the employment period is between six and ten years, the severance pay is equivalent to 240 days' salary. If the employment period is between 10 and 20 years, the severance pay is equivalent to 300 days' salary. If the employee has worked for the company for more than 20 years, the severance pay is equivalent to 400 days' salary. Employees who have worked for the same employer for less than 120 days are not eligible for the severance payment. Other employees who are not eligible for severance pay are those hired on a fixed-term basis. According to the Labour Protection Act, these employees must have a written contract with a maximum duration of two years. To qualify for such a contract, employees typically complete a special project that is not part of the employer's normal business. Alternatively, the employment must be temporary or seasonal. When an employer notifies employees of their impending termination and requires them to work until the end of the following month, employees can seek alternative employment and resign prior to the specified date. Employers do not pay severance pay to resigned employees in this case.
The maximum daily work hours are eight, for a total of 48 hours per week. Employees performing hazardous tasks work seven hours per day for a total of forty-two hours per week.
Employees are provided with a one-hour rest period during the workday. They can divide their rest period into segments, with a minimum of 20 minutes and a maximum of an hour. If the employee is performing work where interruptions could jeopardize production or quality, the employer may require the employee to work without breaks. Consent of the employee is required in this case.
An employee must consent to overtime and cannot work more than 36 hours per week. Overtime pay is due to employees who work overtime. Overtime pay is 150 percent of their regular rate or 200 percent for holiday work.
The daily minimum wage in Thailand varies according to location, ranging from 313THB to 336THB.
Thailand provides universal healthcare via three systems: the civil welfare system for government workers, social security for private employees (expats and nationals), and a universal health plan accessible to all other Thai citizens.
Employees are assigned a local hospital where they may get free treatment from the social security fund. The quality of treatment varies across hospitals, and many are overcrowded and lack a customer service approach.
As a supplementary benefit, a company may offer supplemental health insurance to an employee. Most executives and expats seek additional health and life insurance, and a small business may offer a stipend in place of obtaining insurance.
While not required, a provident fund is a popular employer perk that encourages retirement savings. Employer contributions must always be equal to or higher than employee contributions.
Employee contributions are advantageous since they are pre-tax. Employee contributions will be treated as pre-tax savings deposits. The contribution rate should be no less than 2% but no more than 15% of earnings (depending on an agreement between the employer and the trustee). Employer payments will be treated as a subsidy to employees. The benefit offering may be made subject to a variety of criteria, including working time, membership, job title, and pay rate.
In the event of retirement or termination, the Provident Fund's cumulative balance will be paid in a lump payment at the end of the membership period.
Companies established in Thailand are subject to global income taxation. A foreign-incorporated firm is taxed on earnings derived from or resulting from its operations in Thailand.
The corporate income tax (CIT) rate is set at 20%. A foreign firm that does not do business in Thailand is liable to a final withholding tax (WHT) on certain kinds of assessable income received from or in Thailand (e.g., interest, dividends, royalties, rents, and service fees). The tax rate is usually 15%, except for dividends, which are 10%, and additional rates may apply depending on the terms of a double tax treaty (DTT).
Thailand taxes both residents and non-residents on assessable income generated from work or business conducted in Thailand, whether paid in or outside Thailand. Residents who receive income from outside Thailand are taxed on such income if it is remitted to Thailand in the year in which it is received.
For a net income from 0 to THB 150,000, the taxpayer is exempt from the personal income tax.
For a net income between THB 150,000 to THB 300,000, the tax rate is 5 percent.
For a net income between THB 300,000 to THB 500,000, the tax rate is 10 percent.
For a net income between THB 500,000 to THB 750,000, the tax rate is 15 percent.
For a net income between THB 750,000 to THB 1,000,000, the tax rate is 20 percent.
For a net income between THB 1,000,000 to THB 2,000,000, the tax rate is 25 percent.
For a net income between THB 2,000,000 to THB 5,000,000, the tax rate is 30 percent.
For a net income of over THB 5,000,000, the tax rate is 35 percent.
The normal rate of VAT is 10%, however it is presently lowered to 7% until September 30, 2021. (unless further extended by the government). VAT is charged on the sale of products as well as the supply of services. Exports are tax-free, and a variety of products and services are excluded (e.g. basic groceries, education, healthcare, interest, leasing of immovable property, sale of real estate).
The Urgent Work Permit is the proper job license for short-term work activities lasting up to 15 days (UWP). If the urgent work is not done within the first 15 days, the UWP may be extended for another 15 days. Foreign nationals seeking a UWP, with the exception of visa-exempt nationalities, must acquire a Non-Immigrant B visa before entering the country.
A Labor Permit is necessary for work activities that last more than 30 days. Depending on the company's standing in Thailand, the Work Permit might be given for one to four years. All foreign citizens, including visa-exempt nations, who want to get a Work Permit must first obtain a Non-Immigrant B visa.
In Thailand, employment contracts may be either verbal or written. However, a written employment contract that includes all of the terms and conditions of work is suggested, and most employment contracts in Thailand are written in practice. Employment contracts may be for a certain amount of time or for an endless period of time, however fixed-term contracts have a time restriction.
There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.
Thai Baht
Setting up a subsidiary in Thailand may be a complex task. To begin, you must understand numerous business variables unique to Thailand. The Foreign Business Act restricts foreigners and specifies which sectors need special authorization. You should be aware of the minimum capital requirements and terms, as well as the free trade and economic cooperation agreements between Thailand and the United States, Thailand and Australia, and Thailand and Japan.
Because Thailand has various provinces, you need carefully select the location of your company. Different provinces often have their own set of rules, cost structures, and licensing processes. If you are unfamiliar with the different locations, consult with an expert or other company owners to determine which province is appropriate for your sector.
Partnerships, limited corporations, joint ventures, representative offices, branch offices, overseas headquarters, and joint ventures are the seven business structures available in Thailand for organizations wanting to incorporate. Each has its own set of benefits and drawbacks, but the majority of firms prefer to incorporate as a limited company.
The Thailand subsidiary establishment procedure is as follows:
1. Choose at least three promoters to sign the Memorandum of Association jointly in order to create and register it.
2. Transfer the company from the promoters to the directors.
3. Acquire share capital from promoters and subscribers.
4. Prepare a request for the registration of the company's formation.
5. Fill out the form and return it to the registrar.
Thailand's subsidiary rules for private limited liability businesses are extensive. A board of directors must administer this corporate structure, and the number of directors must be set at the shareholders' meeting. Some foreign directors are permitted, although at least two-fifths must be Thai natives.
There are no minimum or maximum share capital requirements for a limited liability business. However, if your company operations are confined to Thai citizens under the Foreign Business Act, foreign involvement is limited to 49 percent of the share capital. If your firm acquires a Foreign Business License, the proportion of foreign ownership may alter.
Every year, within four months of the fiscal year's conclusion, the directors of your business must call a general meeting to get shareholder approval of the firm's audited financial accounts. Within one month after having this meeting, directors must submit the final audited financial report and shareholder list.
