ebug2004

Hi,

want to setup a Thai majority company, it shall do engineering work, e.g. software and hardware development and mostly provide outsourcing services for European companies. Just got an offer for 25.000Bht for business registration incl. VAT registration from a lawyer in Korat who claims to have experience with this matter. Seems to be o.k. for, and is similar to what I heard from friends.

What bothers me is:

- I wan't to have full control over the company, and therefore it should have 2 kinds of shares with different voting rights, means the 51% share of the Thai partners will have less than 50% voting rights. Furthermore I will have 49% of the shares, while the 2 other shareholders have each less than 49%, means I'm the majority owner. This is so far o.k. according to Thai law, but the controversal proposal of the FBA Amendment of 2007 shall make it illegal for a foreingener to dominate a Thai owned business with the different kinds of voting rights, if this company is doing business restricted to Thais.

- Unfortunately "Engineering service business" is on the list 3 of the FBA restricted business for foreigners ("business which Thai nationals are not ready to compete with"). I have no idea how I can declare software and hardware development (electrical+mechanical engineering) in a way that it will not fall into this category, but it doesn't give a really safe feeling for the future of the business to know that it may be illegal soon.

Does anyone have experience with above mentioned matter? Any recommendation how to setup the company in a way that avoids violating the FBA Amendment?

By the way...the business will not be big enough for BOI support... ;-)

Another question: I need a working permit, but I don't have the 4 employees yet that I need to apply for it. Does any(!) employee do it, as long as he/she pays tax? E.g. is it enough to have 4 part time workers with 1000Baht monthly salary each?

Thanks a lot!

Matthias

I have a related question, but for different goods: I'm checking the possibility to import some steel parts into Thailand. These are special gas tanks, that i couldn't find in Thailand, and some control equipment/PLCs. In Thailand a machine should be made of this, some PLC programming and automation is necessary, and then the equipment should be exported to another Asian country.

What special tax and duty obstacles I have to consider? What do I have to assume as import duty, VAT payment etc. ? Seems I need to pay VAT when importing, and can get it back when exporting. Are there special Anti Dumping Duties on some goods in Thailand?

Thanks! Matthias

Hi, I want to start business in Thailand as preparation for a permanent stay in future. The business idea is to do outsourced software development work for my German company, but also sell technical products (measuring instruments), that i can buy for a good price in Germany. Tried this kind of business before with a local agent,but unsuccessful, because the agent was not active - now I hope doing this matter under own control is a better way.

I have already 2 people that would like to work in sales and software development. I would like to let them work as freelancers for my German company first (give them a name card with local office address in their house), cause I dont want to go through the difficult procedure of setting up a real company in Thailand before I know that the business is really working. What does the Thai law says about this, and what are the possible implications if I pay these guys a salary, but they are not officially my employees (I heard the Thai employer has to pay the income tax for the employee to the government..)?

The income tax is paid by the employee, but the employer does this normally on the employee's behalf in form of a Withholding Tax (Quellensteuer) - just like in Germany. The employee must file once a year his tax and income report with the Revenue Department (Lohsteuerjahresausgleich) - just like in Germany.

The employee has to be registered with the social security fund and the contributions (10% of the salary with a maximum of 1,500 Baht a month) are paid 50/50 by employer and employee. Again, the employer withholds the deductible amount - just like in Germany.

Since you do not have a legal entity in Thailand, both employees would be technically employed through your German entity and here it gets a bit difficult, I recommend you to consult a tax adviser (Steuerberater) in Germany.

Best of luck!

Hi Raro,

thank you for the information.

My problem is whether the Thai law requires that I have an official office in Thailand if I want to employ Thai people. Setting up an office is the same paperwork as making a new company, thats why I like to do this after(!) I know that the business can be sucessful.

The much easier way would be to employ the guys as freelancers - same as I hire freelancers in Germany, where you can have some kind of "one man company". Is this possible in Thailand, and what need to be done for it? The 2 people that I like to hire also don't know about the best way to do this, so I have to give them advice.

Thanks for the help!

Hi, I want to start business in Thailand as preparation for a permanent stay in future. The business idea is to do outsourced software development work for my German company, but also sell technical products (measuring instruments), that i can buy for a good price in Germany. Tried this kind of business before with a local agent,but unsuccessful, because the agent was not active - now I hope doing this matter under own control is a better way.

I have already 2 people that would like to work in sales and software development. I would like to let them work as freelancers for my German company first (give them a name card with local office address in their house), cause I dont want to go through the difficult procedure of setting up a real company in Thailand before I know that the business is really working. What does the Thai law says about this, and what are the possible implications if I pay these guys a salary, but they are not officially my employees (I heard the Thai employer has to pay the income tax for the employee to the government..)?