New Regulations For 1 Year B Visa?

[MHM]

I got chatting with an officer from Kanchanaburi immigration today in the supermarket line, she casually asked if I knew about the new regulations which come in from 1st Oct. I said that I have heard something about taking photos of all staff and... she cut me short and looked at me as if I was mad. She said that from Oct the balance sheet must show the business to be making a profit. I have a small business, currently running for 2 1/2 years, employing 1 British passport holder, 5 Thai employees, set up under the 49/51% Thai majority shareholding. She said to go and see her 2 months before the 1 year B visa is due and she have a look at the balance sheet. I don't want to wait that long, she has agreed to talk with my accountant tomorrow over the phone. I'll let you know if I get any useful feedback. Anyone else heard about this?

[andy1308]

I heard this (profit as opposed to paid-up capital or anything else) a while back relating to the issuing of work permits. My company has around 80 Thai staff and three non-Thai staff on WPs. We've just invested a huge some of money in several new projects so are not going to show a profit in the next set of financial accounts. I hope some common sense will be shown and this taken into account - if what the OP is saying is in any way going to be enforced.

[midas]

I heard this (profit as opposed to paid-up capital or anything else) a while back relating to the issuing of work permits. My company has around 80 Thai staff and three non-Thai staff on WPs. We've just invested a huge some of money in several new projects so are not going to show a profit in the next set of financial accounts. I hope some common sense will be shown and this taken into account - if what the OP is saying is in any way going to be enforced.

Andy this should be very interesting to see i.e. whether some " common sense " will be shown

I can understand them ( though I don't necessarily agree ) with them enforcing this on newly

established companies but if they start giving people like you are hard time then we will certainly

know the direction for the future and it will be a disturbing development

[Maestro]

I have seen many posts of Sunbelt’s mentioning this profit requirement for the annual extension of stay of a foreign employee. The way I remember it, the last year’s profit must be not less than the foreigner’s annual salary.

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Maestro

[Maestro]

The following quote from a post by Sunbelt indicates that it can actually vary from one Immigration office to another:

In Bangkok, if the audited balance sheet does not show an net equity of one million Baht or the gross turnover exceeds the foreigner salaries on the annual audit, than they no longer qualify for the extension of stay based on business.

In Pattaya, its not gross sales that needs to be higher than the foreigner salaries, it is net profit for the previous year.

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Maestro

[wolfmanjack]

I have seen many posts of Sunbelt’s mentioning this profit requirement for the annual extension of stay of a foreign employee. The way I remember it, the last year’s profit must be not less than the foreigner’s annual salary.

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Maestro

So you are saying the company needs to pay the foreigners salary and then have the same amount as profit that they then would have to pay 30% tax on ? So in the case of the european, Japanese or north american the foreigner would pay tax on the 600,000 baht yearly salary and the company would have to make an additional profit of 600,000 baht and pay 30% on that ?

I hope the multiple entry "b" visas do not go that way or i will have to figure out another way. Like i said before i am legal today but who knows about tomorrow.

[Sunbelt Asia]

The following quote from a post by Sunbelt indicates that it can actually vary from one Immigration office to another:

Glad you clarified this, as we stated, this is followed only in Pattaya now( net profits need to be higher than the employees salaries in Pattaya) In other regions up to now, they follow the gross sales. The Police Order reads...In overall the total revenue must show an amount higher than the total salary and benefit paid the foreign employee.

www.sunbeltasiagroup.com

[Sunbelt Asia]

So you are saying the company needs to pay the foreigners salary and then have the same amount as profit that they then would have to pay 30% tax on ? So in the case of the european, Japanese or north american the foreigner would pay tax on the 600,000 baht yearly salary and the company would have to make an additional profit of 600,000 baht and pay 30% on that ?

Yes in Pattaya but for SMES it would be 15% tax for the first milion in net profits, 25% for net profits from one million to three million. SMEs are co's registered for less than 5 million Baht capital.

www.sunbeltasiagroup.com

[andy1308]

It it's revenue then that's reasonable - in our situation we generate more than 50 million baht in gross revenue which is obviously much more than the salary paid to our three WP staff. However it the 'profit' interpretation gets enforced in Bangkok then our most recent balance sheet will show a sizeable loss because of the investments we have made.

Sunbelt - thanks as always for your information and comment. How likely do you think it will be that 'profit' will be taken into account in Bangkok? Without our three non-Thai staff then I can really see the company ceasing to exist.

[JR Texas]

It it's revenue then that's reasonable - in our situation we generate more than 50 million baht in gross revenue which is obviously much more than the salary paid to our three WP staff. However it the 'profit' interpretation gets enforced in Bangkok then our most recent balance sheet will show a sizeable loss because of the investments we have made.

Sunbelt - thanks as always for your information and comment. How likely do you think it will be that 'profit' will be taken into account in Bangkok? Without our three non-Thai staff then I can really see the company ceasing to exist.

JR Texas: There is absolutely nothing "resonable" about the new rule. It will foce some companies to shut down (no more jobs for Thais) or not to invest in existing projects (no improvements). It will compel entrepreneurs thinking about risking their capital in Thailand to go to Vietnam, Cambodia, Singapore, Malaysia, China, etc. The rule is stupid beyond imagination.

[midas]

It it's revenue then that's reasonable - in our situation we generate more than 50 million baht in gross revenue which is obviously much more than the salary paid to our three WP staff. However it the 'profit' interpretation gets enforced in Bangkok then our most recent balance sheet will show a sizeable loss because of the investments we have made.

Sunbelt - thanks as always for your information and comment. How likely do you think it will be that 'profit' will be taken into account in Bangkok? Without our three non-Thai staff then I can really see the company ceasing to exist.

JR Texas: There is absolutely nothing "resonable" about the new rule. It will foce some companies to shut down (no more jobs for Thais) or not to invest in existing projects (no improvements). It will compel entrepreneurs thinking about risking their capital in Thailand to go to Vietnam, Cambodia, Singapore, Malaysia, China, etc. The rule is stupid beyond imagination.

OK i second that !

I bet there are not many 100% Thai owned businesses who constitently make profits every year ?

This is like the list of occupations in which Thai's are " not yet ready to compete " - when will they

ever be ready - it seems they always want the foreigner to burdened with some handicap in business:(

[LPCustom69]

I'm sure that there are some "sham" companies that the Thais would like to eliminate, and this may be a first step in eliminating them and the associated visa/WP. However, this has the potential to really hurt legitimate small businesses that are just getting started, or going through growing pains. I guess that a wait and see attitude is best right now.

It it's revenue then that's reasonable - in our situation we generate more than 50 million baht in gross revenue which is obviously much more than the salary paid to our three WP staff. However it the 'profit' interpretation gets enforced in Bangkok then our most recent balance sheet will show a sizeable loss because of the investments we have made.

Sunbelt - thanks as always for your information and comment. How likely do you think it will be that 'profit' will be taken into account in Bangkok? Without our three non-Thai staff then I can really see the company ceasing to exist.

JR Texas: There is absolutely nothing "resonable" about the new rule. It will foce some companies to shut down (no more jobs for Thais) or not to invest in existing projects (no improvements). It will compel entrepreneurs thinking about risking their capital in Thailand to go to Vietnam, Cambodia, Singapore, Malaysia, China, etc. The rule is stupid beyond imagination.

[wolfmanjack]

It it's revenue then that's reasonable - in our situation we generate more than 50 million baht in gross revenue which is obviously much more than the salary paid to our three WP staff. However it the 'profit' interpretation gets enforced in Bangkok then our most recent balance sheet will show a sizeable loss because of the investments we have made.

Sunbelt - thanks as always for your information and comment. How likely do you think it will be that 'profit' will be taken into account in Bangkok? Without our three non-Thai staff then I can really see the company ceasing to exist.

JR Texas: There is absolutely nothing "resonable" about the new rule. It will foce some companies to shut down (no more jobs for Thais) or not to invest in existing projects (no improvements). It will compel entrepreneurs thinking about risking their capital in Thailand to go to Vietnam, Cambodia, Singapore, Malaysia, China, etc. The rule is stupid beyond imagination.

It is just as reasonable as the revenue department looking at the size of my building and deciding that i must be making at least 100,000 baht per month. My sales are more than that but my profit isn't and that is the amount they insist i pay taxes on.

I am leaving the country every 15 months and getting a new multiple entry "b" visa. With these new rules I bet many more will be joining me.

[wolfmanjack]

I'm sure that there are some "sham" companies that the Thais would like to eliminate, and this may be a first step in eliminating them and the associated visa/WP. However, this has the potential to really hurt legitimate small businesses that are just getting started, or going through growing pains. I guess that a wait and see attitude is best right now.

It it's revenue then that's reasonable - in our situation we generate more than 50 million baht in gross revenue which is obviously much more than the salary paid to our three WP staff. However it the 'profit' interpretation gets enforced in Bangkok then our most recent balance sheet will show a sizeable loss because of the investments we have made.

Sunbelt - thanks as always for your information and comment. How likely do you think it will be that 'profit' will be taken into account in Bangkok? Without our three non-Thai staff then I can really see the company ceasing to exist.

JR Texas: There is absolutely nothing "resonable" about the new rule. It will foce some companies to shut down (no more jobs for Thais) or not to invest in existing projects (no improvements). It will compel entrepreneurs thinking about risking their capital in Thailand to go to Vietnam, Cambodia, Singapore, Malaysia, China, etc. The rule is stupid beyond imagination.

Getting rid of sham companies is easy. All of the companies are registered with addresses. Make a visit. If there is no activity then shut it down. This new rule is just to get rid of us work permit holders from countries that the immigration decided needed to earn high wages. Mostly North America and Europe.

They want to get rid of all of the small companies that we set up in order to have a job and a visa. What it will do is as JR Texas said. Most small business do not make a profit in there first 3 years of business. Most fail in the first 3 years. Many more fail in the first 5 years. This new rule will prevent people from starting up new businesses. If the pattaya version is put into effect throughout the country many small businesses will be closing. There are many that I know of that are not making an extra 600,000 baht profit per year after paying the falangs salary. Sure I can show that I am making that much by getting rid of receipts but it would mean paying an extra 90,000 baht per year in taxes. this will reduce my upkeep of the machinery. With the strong baht and high gas prices things are tough already.

[monty]

Just to be clear, the only thing happening when you don't meet the gross revenue (or profit in Pattaya) requirement, is that you cannot get the 1 year extension.

You can still work, do a border run every 90 days, along with re-syncing your workpermit to your new entry stamp (if you have a multiple entry 1 year visa).

Any new upstart company WILL have their foreign employees do 90 day visa runs for the first year (or less, depends when you incorporated your company and started trading), as they will not have any audited balance sheets yet!

Beats me why they want to put additional burdens on struggling companies!

[ludosiam]

One of the requirements to get a Visa extension based on business is Pos. 4: In overall the audit must show owner’s equity of no less than 1 Million Baht. It seems that owner's equity is sometimes mistakenly set equal to profit by some immigration officers, as it was in my case (upcountry immigration)

At a business dictionary total equity is referred to as: The total interest in a business, incl. capital and reserves, which is attributable to the ordinary shareholder, partner or proprietor.

"My" immigration officer has informed me that this year he will grant me another extension but for next year the balance sheet have to be better, or else no extension.

I put up with the poster who believe sit and wait is the best option here, new rules do need some time to be understood by everybody, so far too many interpretation are around. And sometimes regulations are being intentionally misinterpreted to be able to offer help for a small donation.

If an extension will not be granted I see 2 options for me: 3 month Visa run or extension based on marriage, since I am married anyway might go for the first option, and gulp down a few Beer Lao instead Thai beer.

But there is one point i really do worry about: what if the rumors of not issuing Visas for non residents in neighboring countries does come true, then we will be really f....d, German beer is a little overpriced when counting the ticket in.

[midas]

The point is - on top of the stress of running a business who needs this extra hassle

of Thai immigration officers cracking the whip i.e. the balance sheet must be better

next year or else !!!! ?

[ludosiam]

The point is - on top of the stress of running a business who needs this extra hassle

of Thai immigration officers cracking the whip i.e. the balance sheet must be better

next year or else !!!! ?

Absolutely right! If I didn't decide to expand before that auspicious occasion with immigration, now sure wouldn't invest a single penny in the company, probably would be better off in the stock market and speculate on the future crash to be happening if this policy will continue.

[MHM]

Thanks to all who replied. Spot on Midas, I felt like throwing the towel in after I had spoken to the immigration officer earlier in the week. Since then I've taken the Auditor's report to immigration and all is well - Sorry I can't tell you what magic figure she was looking for - the office was busy and she didn't have time to explain. She said that all the application forms have changed - there's something to look forward to.....

Good luck to all small business owners - we need it

[bruceboy]

I heard this (profit as opposed to paid-up capital or anything else) a while back relating to the issuing of work permits. My company has around 80 Thai staff and three non-Thai staff on WPs. We've just invested a huge some of money in several new projects so are not going to show a profit in the next set of financial accounts. I hope some common sense will be shown and this taken into account - if what the OP is saying is in any way going to be enforced.

I'm in similar position. I've made a major investment but its early days and the books may not show a profit for the first year or two.