After Company Set-up, Cost To Justify Your Own Wp?

[Papi]

Say I want to set-up my own co. so that I can have it apply for my own WP (actually 2; the other one for my business partner), but I really do not need the 4 workers I understand I must have to get each WP. How do I go about it and what is the effective cost.

Do I have to hire 8 people to do nothing and pay them the minimum salary (I guess I will ask them to stay home)? What would be the costs involved? How much do I have to give each employee and how much do I have to pay in benefits or other taxes.

Thanks

[Sunbelt Asia]

Do I have to hire 8 people to do nothing and pay them the minimum salary (I guess I will ask them to stay home)?

No

What would be the costs involved?

Airplane ticket or bus ticket to the border every 90 days

How much do I have to give each employee and how much do I have to pay in benefits or other taxes.

As you don't have to employ any Thais to get a work permit the answer is none.

www.sunbeltasia.com

[Indo-Siam]

Sunbelt's answers are correct. As long as company has 2,000,000 baht REGISTERED capital, and is not foreign majority-owned, it can support multiple work permits for directors - but all work permit holders will have to exit Thailand, and then reenter on a valid non-immigrant visa, every 90 days.

Any and all companies that are foreign majority owned must now have Thai employees - and must document via an absurdly clumsy "Technology Transfer Plan" document their proposed plan for training Thai employees. This form alone should convince people to not attempt to operate as a foreign majority-owned company.

Proceeding in 90-day increments this will prohibit you from accumulating required "time in Thailand" for purposes of applying for permanent residency (which requires minimum of three consecutive years in extended entry status).

If you did want two foreigners to obtain extended entry permits - and neither is married to a Thai (which allows another approach - for that individual), then you will need:

1. 2,000,000 baht paid in capital for each such foreigner sponsored for an extended entry permit

2. Four Thai employees for each sponsored foreigner.

3. You must each be paid a minimum qualifying salary - it's 50,000 baht per month, for Europeans or Australians/NZ.

The way that Thai employees must be documented is that they will ask to see the most recent three month's social fund pay-in forms, and pay-in receipts. They will only count as "scored" Thai employees, those individuals for whom you have paid in social fund contributions for each of the past three months.

Social fund contributions are 5% withheld from salry, plus 5% matching contribution by employer, with a maximum of 1,500 baht total, per person.

Although it is actually slightly less than this amount, for planning purposes, figure "ghost" employees at 6,000 baht per month - meaning that for complete "ghosts," thecost to carry them on your books is 600 baht each, per month.

One last thing: For your initial extended entry permit,it is very likely that an Immigration Field Inspector will show up at the company's registered business address - and he will expect to see the foreigner being inspected, and the majority of company's Thai employees at that location. He is actually requireed to take a group photograph of the inspected foreigner, and the Thai employees - and check Thai employee identity documents against the social fund list. If Thai employees are missing, and there is a reasonable explanation, he will direct that those absent employees personally report to Immigration Office, present identification, and sign in on your case file.

Inspectors will not hesitate to disapprove your application, if they visit your official registered office address, and it appears upon their inspection that you are not actually operating a reasonaly substantive and "mature" company there. A "gratuity" might help overcome minor shakiness, but they will generally NOT approve an obviously "notional" company (with respect to Thai employees).

Good luck!

Steve Sykes

Mananging Director

Indo-Siam Group

Bangkok

[email protected]

www.thaistartup.com

[Sunbelt Asia]

Inspectors will not hesitate to disapprove your application, if they visit your official registered office address, and it appears upon their inspection that you are not actually operating a reasonaly substantive and "mature" company there. A "gratuity" might help overcome minor shakiness, but they will generally NOT approve an obviously "notional" company (with respect to Thai employees).

Correct Indo-Siam and good detailed points. That’s why we feel ghost employees make no sense. Easier to do a visa run every 90 days and be legal having a work permit.

If you did want two foreigners to obtain extended entry permits - and neither is married to a Thai (which allows another approach - for that individual), then you will need:

1. 2,000,000 baht paid in capital for each such foreigner sponsored for an extended entry permit

Steve, a number of our clients have gotten by with 2 million baht paid up capital, no matter how many foreigners are sponsored for the extension of stay visa based on business. That’s the way; our lawyers read the law as well. Simply, we have had many companies approved with more than 1 foreigner working and they had just 2 million paid up capital. By the way, the regulations state as well that 1 million Baht is expected to be in the bank as cash to be used for working capital.

www.sunbeltasia.com

[Indo-Siam]

I concur that companies that have only 2,000,000 paid paid up capital, but with significant income and retained earnings, such that assets are significantly higher than 2,000,000 baht - can sponsor more entended entry permits.

Meaning - if a company has only 2,000,000 baht registered capital, but earns 50,000,000 in income during its first year, and ends the year with a 35,000,000 baht bank balance - Immigration throws out the "paid in capital" rule - because it is completely irrelevant at that point.

I also have direct experience with want-to-be farang clients who purchased a nearly bankrupt company that had 9,000,000 baht paid in capital - but only a couple hundred thousand baht worth of paper assets (lease deposits, office equipment, and some dubious accounts receivable) - and were unable to get even one entry permit extension - unless they injected significant cash into the company - which they were unable to do. I believe that their company then had its VAT registration revoked, due to insolvency - and I think the farangs gave up and departed Thailand (I never heard from them again).

For brand-new start-up companies seeking to sponsor two extended entry permits right from the start - my experience is that you need 4,000,000 baht paid-in capital. But - I guess there is room for some discretion by Immigration. But - I believe that is the official rule.

Cheers!

Steve

Indo-Siam

[Sunny Valentine]

Just to recuperate this in order to get the point for me:

In order to get a WP (without extended stay, i.e. hop to the border and back every 90 Days) I need:

1.) A Company set up

2.) 500 000 or 1 000 000 Capital paid into an account at a Thai Bank, can be used for pracically everything thereafter.

3.) Someting resembling an Office (can be a room at the house I rent, with a writing desk, a computer and some piles of Paper.)

4.) A work permit, which I can get then.

How about the Visa then? Will I get a 1Y Multi B at every Consulate?

Do I need to renew my WP after each 3 Month?

In case the Company stays practically dormant for a Year or 2, would that be a Problem?

How much would that cost me for fees, and Lawyer?

How much would be the yearly costs of such a construction (fees, taxes, lawyers) in the case the Company stays dormant?

Is it possible to start a company like this in a way that it can run basically every (legal) profession? Kind of "put in everything thinkable in the paper, see what really happens later?

Sunny

[Indo-Siam]

Concerning the registered office location: In order to obatin your tax and VAT registrations (which are necessary in order to open a bank account, or to obtain a work permit), you must submit a documentation packet including:

1. Street map in Thai language, showing office location.

2. Glossy photo of entrance to office, inclufing company name sign and either office number, or street address number.

3. Certification packet from OWNER of building - including documented proof of ownership (title, bill of sale, or tambien bahn), copies of personal identify documents, and letter/certficatestating that named business is a registered tenant of the building.

In most cases, you will not be able to obtain Item #3 above for a residential property - landlords do not like having their operations fall under scrutiny of Revenue Department inspectors for"commercial properties", as opposed to "residential properties".

I know that as of mid-July 2004, it was possible to get a on-year multiple-entry Class B visa at Penang - if you have a work permit. I do not know for sure about any others, but I think you can forget Manila, Singapore, and Vientienne - none of which issue one year visas under any circumstance.

If you live in 90 day "chunks", you will have to revalidate your work permit every 90 days. As long as you do this before previous 90 day work permit expires,it is fairly easy. Government fee is 750 baht each time.

"Carrying costs" for a mostly dormant company consist of office rent, and bookkeeping fees every month, plus personal income tax and social fund withholding for all employees. Annually, there is also a required audit.

All processes can be accomplished without a lawyer - although we use an outsourced lawyer to sign the one form that allows someone other than a director to process papers for the company. A lawyer is NOT needed for company registration, work permit, or entry permit processing - any more than for applying fora driver's liacense.

Office rent and payroll witholding amounts will depend on your situation. Monthly bookeeping can be obtained for 5,000 baht or less, and annual audit for 12,000-15,000 baht. We support several "dormant" companies (with no proponents even present in Thailand - meaning no employees) for 15,000 baht per month (including maintaining legally sufficient registered office address, handling required monthly bookkeeping submissions, and providing "custodial" Thai directior servives - i.e. one of our Thai staff is a signatory director, to accomplish necessary signature actions here, and answer up to Revenue Department inquiries).

A Thai Private Co. Ltd. set up with at laest 51% majority Thai shareholders has tremendous flexibility - it can pursue virtually any activity. The only consideration is that you must keep the Revenue Department updated concerning your actual current activities, because they are sensitive to which category of corporate tax withholding applies to your company activities. I will not give the full explanation here, but - every time a Thai company invlices another Thai company, the payee withholds a specifiedpercenatge of payment - and pays this to government instead. Basically, every Thai company collects corporate income tax withhholding from its vendors - collecting on behalf of the government - and this amount varies depending on the vendors' business classification. If your company initiates fresh activity in a radically different business field, you must notify Revenue Department of this new activity classification, or they may penalize you for operating with incorrect withholding calssification.

Good luck!

Steve Sykes

Managing Director

Indo-Siam Group

Bangkok

[email protected]

www.thaistartup.com

[Petropolis]

Why is there such a lack of clarity about the criteria?

Indo Siam says that BOTH THB 2 million registered capital and 4 workers are required per Expat work permit, but this is disputed by the next respondent, who says that in practice THB 2 million baht paid up registered capital per work permit suffices. In my discussions with several lawyers, the latter is what I have been repeatedly told.

But I have also heard others mention another criteria:

"An expatriate having an income and duty to pay personal income

tax to the Revenue Department of equivalent or more than 18,000 Baht, or

already paid personal income tax in the past year of equivalent or more

than 18,000 Baht."

This was posted on www.thaivisa.com.

However, our firm's lawyer told me that the tax criterion would not apply for getting a NEW work permit -- but rather for just renewing a work permit on an annual basis.

What is the real story? If I have paid > THB 18,000 tax in the past year, can my company get a work permit for me, and avoid the THB 2 million registered capital requirement?

[Zmegma]

Petro,

I guess we will never get an answer to your question. You see, the experts that apparently know; only like to reply to the initial question asked and then move on to other new posts.

They seem to stay away from question that start to get complicated. Wish you luck. If you find out, please let me know by PM.

Cheers

[Indo-Siam]

This is an interesting thread to pop back up. At the time it was oiriginally running, Petro attributed to me something that I never said - that 4 Thai employees were required for a work permit. I figured he was just smoking crack, and ignored him.

Or - maybe he could not understand the difference between "work permit" and "extended entry permit".

What is interesting is that the other guidance given in this thread - which was correct pack in mid-to-late summer - became outdated in October. Effective in October, 2,000,000 baht registered capital is now required per EACH work permit issued. But - still no requirement for Thai employees.

Cheers!

Steve

Indo=Siam