Work Permit Question

[psdone]

Hi,

I would like to setup a Thai LP with myself 49% owner and my wife 51% owner. If I do this and do NOT take a salary (we will draw out a little profit to live on) do I have to have a work permit ? (To be in compliance with the law, I am not asking if I can get away with breaking the law)

I think I am OK with not getting one because I will not be getting a salary as an employee, but I just want to be sure about this, and I have a marriage visa now, so I do not need the work permit to stay in Thailand.

Thanks for any legal advice,

Phil

[CWMcMurray]

If you work in the company, you will need a work permit. If you do not work in the company, then no work permit is needed.

If you are going to work in the company and request a work permit, then they will require you to have a salary.

[JohnC]

What is the difference between paying a salary and drawing out some of the profit?? I think you are playing with semantics here plus if you are contributing to the company then you are working and need a work permit. On the other hand if you are having nothing to do with the company other than investing the start up capital and your wife does the work then she can pay herself a salary sufficient for both your needs (assuming the company makes enough profit)!

[PattayaParent]

If you work in the company, you will need a work permit. If you do not work in the company, then no work permit is needed.

If you are going to work in the company and request a work permit, then they will require you to have a salary.

I thnk it would be more accurate to say they would require him to pay tax on a salary, whether or not that is the salary he gets is another matter.

[psdone]

What is the difference between paying a salary and drawing out some of the profit?? I think you are playing with semantics here plus if you are contributing to the company then you are working and need a work permit. On the other hand if you are having nothing to do with the company other than investing the start up capital and your wife does the work then she can pay herself a salary sufficient for both your needs (assuming the company makes enough profit)!

John,

I guess I don't really know. The company would pay tax on the profit (or write off the salary), so it is not a question of not paying taxes, it is more of is this an acceptable way to avoid:

1) a lot of paperwork

2) leeches that use 1) to suck your blood.

3) a high minimum salary requirement imposed by <snip>. To answer an other poster, paying tax on a high salary that I am not actually taking is EVIL.

Is what I am talking common business practice over here ? Does anyone reading this own a business and have a work permit ?

Phil

[opalhort]

Working without WP is illegal, even if you don't receive any salary!

But: if your LP is registered at the same location as your home where you live who would stop you from occasinally helping your wife.

You can be a shareholder but NEVER EVER sign any documents relating to your wife's business, not even communication (e-mail, fax etc.). You also can not sign cheques drawn on the account of the LP.

opalhort

[psdone]

Hi All,

I did some further checking. Apparently the <snip> 50K a month min. salary is for using the WP to get a VISA. I don't need that because I already have a marriage VISA.

It is hard to get the facts straight because many websites are sloppy with their details or are looking for extra unnecessary work from customers ...

So will get the WP and set my salary at a more realistic 20K a month (which is still a lot where I live).

Thanks for the replies,

Phil

[raro]

moved over to the Visa an WP section.

The difference between a salary and living from earnings is, a salary will be aid every month,whether the company earns money or not, whereas living on earnings (i.e. dividends) will be paid only if there are any earnings.

As a foreigner you have to apply for a work permit if you want a salary. As a business owner (but not working!) you can live on dividends generated through your business. Since you have a marriage visa, this shouldn't be a problem. Again, you are NOT (NOT!!) allowed to do anything in the company if you have no WP.

[maxpowers87]

im just wondering if they will accept your years projections and profit margins in relation to your salary as a valid wage just a thought

[thaiphoon]

As said, a work permit is required for any form of working:

1) There is no salary requirement to obtain a VISA. Paperwork requirements vary from consulate to consulate, ranging from full company documentation to a simple letter of intent.

2) If applying for extension of stay based on employment at Thai immigration, there is a minimum salary requirement (50k/month for westerners, but varies depending on nationality). You would also need to provide 2 years audited accounts/tax receipts.

3) There is no salary requirement to apply for a work permit.

4) For work permit renewal you would need to provide labour office with personal tax return/company withholding tax forms. Minimum salary requirements vary from labour office to labour office. 20-30k/month has been seen, but some labour offices follow the immigration guidelines (50k/month for westerners, but varies on nationality).

[CWMcMurray]

I though that the tax rate for " company profit" was 30% while income taxes can be significantly less (would need to make 1 mil per yr before reaching 30% tax bracket).

Wouldn't that mean it would make more sense to pay yourself a salary for daily living expenses (that can be written off as a salary expense) and to put any big ticket assests in your company's name to decrease you corporate taxes?

[thaiphoon]

30% tax rate for most companies, but small companies (where paid up share capital is less than 5M baht) have banded tax rates:

- Net profit over 1 baht but not > 150,000 baht: Exempt

- Net profit over 150,001 baht but not > 1 m baht: 15%

- Net profit over 1m baht but not > 3m baht: 25%

- Net profit exceeding 3m baht: 30%

More information on BOI website here.