Hiring Thai Staff

[Expat2B]

Can anyone comment about the implications of hiring Thais via my UK company. My starting assumption is that this should be relatively straightforward, since I have no work permit issues to worry about, and can make direct gross payments without having to withold Tax or Social Security payments, since my UK based business has no obligation to the Thai Authorities.

This does however seem a bit too straightforward, this makes me suspicious because nothing in this country ever turns out to be straightforward. I am thus clearly missing something but what? I do want to ensure that things are kosher from the UK end since I want to ensure that the salary costs form part of my business expenses for tax purposes.

Any assistance would be appreciated.

[Indo-Siam]

Will your Thai staff be performing work that involves invoicing and collecting money from clients inside Thailand? If not, then you might be able to operate by forming a Thai Represntative Office of your overseas firm. This then becomes the entity inside Thailand to pay salaries, with personal income tax withheld.

The cost to form such an entity is maybe US $1,500 total - provided that your overseas company does not have huge capoitalization (there is a Thai government fee of 2,000 baht, plus 5 baht per 1,000 baht of parent company capitalization - with a combined minumum of 22,000, and a combined maximumof 252,000 baht).

If this sounds like what you need, send me a messgae to which I can reply with attachments, and I will send you details.

Good luck!

Steve Sykes

Managing Director

Indo-Siam Group

Bangkok

[email protected]

www.thaistartup.com

[Expat2B]

Will your Thai staff be performing work that involves invoicing and collecting money from clients inside Thailand? If not, then you might be able to operate by forming a Thai Represntative Office of your overseas firm. This then becomes the entity inside Thailand to pay salaries, with personal income tax withheld.

The cost to form such an entity is maybe US $1,500 total - provided that your overseas company does not have huge capoitalization (there is a Thai government fee of 2,000 baht, plus 5 baht per 1,000 baht of parent company capitalization - with a combined minumum of 22,000, and a combined maximumof 252,000 baht).

If this sounds like what you need, send me a messgae to which I can reply with attachments, and I will send you details.

Good luck!

Steve Sykes

Managing Director

Indo-Siam Group

Bangkok

[email protected]

www.thaistartup.com

Steve

All invoicing and collections will be done ex London, with Thai staff used only to maintain contact with clients, provide administrative support etc. and most importantly provide translation servces.

So are you saying that the only way a foreign company can employ Thais is via a representative office? How about if I were to employ staff on a freelance basis? I am basically seeking to avoid getting sucked into Thai beauracracy and accompanying potential tax liabilities etc. If I have to set up a rep office then I probably won't bother, seems more trouble than it is worth to me. I could support operations in Thailand from elsewhere in Asia. I will not be seeking any banking presence in Thailand with all salaries/fees paid electronically from London.

Surely I can choose to pay fees/salary to anyone in any country I choose? The declaration of this income for tax purposes is a matter for the individual concerned rather than my company? There will be an audit trail of electronic transactions which I suppose the tax office could query with the individuals, but this isn't directly my concern is it?

[Indo-Siam]

Hi -

What you propose is certainly possible. But I suspect that you are in for some surprises concerning how Thai employees view working as you describe. Managing individual Thai employees here will probably not work out as you expect (the "herding cats" syndrome).

What is entirely possible is that you find an existing Thai company that provides exactly the type of services you are looking for - you pay them, they pay the employees. They will know how to control the individuals, and give them reassurance.

But - I will let you discover this on your own.

Good luck!

Steve

Indo-Siam

[Expat2B]

Steve

Thanks for this, the individuals I have in mind are very well known to me, but I am aware of the potential pitfalls, having dealt with much larger labour problems in BKK for a large UK corporation I used to work for. In due course I will probably look to establish a Thai company effectively as a subsidiary of my UK company. I see the primary benefit of this however as facilitating immigration and a work permit, when I choose to base myself in BKK permanently.

I have been through a whole cycle of wanting to move to Thailand, checking opportunities, becoming increasingly despondent about the inherent difficulties of doing business in a straightforward way etc. In the current climate I concluded that I really can't be bothered jumping through endless hoops just for the privilege of contributing lots of tax $ to the Thai Government. My current solution seems to me to be the best way to dip my toe into the water and remain legal.

Fundamentally I have got to the point where I think sod em, if they really don't want foreigners here and come up with all sorts of ways to make life difficult, why the ###### should I bother hiring a lot of Thais and paying Thai Tax etc.

[Indo-Siam]

If you already know the Thai individuals, then you will probably be OK. Or if you pay on a piece-rate basis, as completed work is delivered to you.

But - if you were to effetively pay them "salary" - a regular payment, off the books, wired to their bank account - then what I would expect most Thais to do would be to treat this income as "gravy" - and they would then contiinue to look for a "real job" for a Thai employer. You would get whatever effort they could muster over and above/around that which they devoted to their "real job."

I suppose there are exceptions, but most Thais need the reasurrance of a familial company scenario, in order for them to feel really part of something to which they owe a modicum of loyalty.

The day you have an employment/payment dispute with one of your freelance employees, and if they are motivated enough to try to hurt you, you could find yourself in trouble. They would argue that you hired them illegally, as individuals, in a conscious effort to avoid collecting and paying-in withheld personal income taxes, and required employer matching contributions to Thai social fund. You would have to argue that you were in fact hiring independent contractors, who - as far as you knew - were sole proprietors - and you assumed they would take care of any in-country regulatory responsibilities. In this regard, the best way for you to operate would be for you to insist that your "contractors" sent you a monthly invoice for payment. You would then be reasonably "bulletproof."

Hey - good luck!

Steve

Indo-Siam