Update on Work Permit, Visa and Employment Laws. BCCT Eastern Seaboard Briefing 24-Aug-2018 John Casella, Chutinun Wannapirun - PKF Thailand

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2 Update on Work Permit, Visa and Employment Laws BCCT Eastern Seaboard Briefing 24-Aug-2018 John Casella, Chutinun Wannapirun - PKF Thailand

3 right people right size right solutions PKF in THAILAND Global Reach. Local Expertise. Page 3

4 Update on Work Permit, Visa and Employment Laws 1 Overview and update of Visa and Work Permit 2 Smart Visa 3 Single Window Visa & Digital Work Permit 4 EEC Update 5 Employment laws Termination vs. Retirement Tax Implications for Termination / Retirement Accounting Provisions for Termination / Retirement PKF in THAILAND Global Reach. Local Expertise. Page 4

5 Overview and Update of Visa and Work Permit Obtaining a VISA for Thailand Immigration Bureau Fundamentals Changes to Visa Laws, Regulations & Enforcement Steps/Timing for Work Permit & 1-year Visa Application Obtaining a WORK PERMIT in Thailand Labour Dept. Fundamentals Changes to Work Permit Laws, Regulations & Enforcement PKF in THAILAND Global Reach. Local Expertise. Page 5

6 Obtaining a VISA for Thailand Types of Visas / Immigration Status 1. Tourist Visa 2. Non-Immigrant Business Visa ( Non-B ) - for business and employment purposes 3. Non-Immigrant Other Visa ( Non-O ) - Retirement, accompany spouse/family, or voluntary services 4. Non-Immigrant Education Visa ( Non-ED ) - for study, training, or internship in Thailand 5. Permanent Residency 6. Others Diplomatic Visa / Courtesy Visa / Transit Visa / Smart Visa PKF in THAILAND Global Reach. Local Expertise. Page 6

7 Overview of Visa and Work Permit Non-Immigrant Business Visa ( Non-B ) Requires sponsoring company/branch: Paid-up registered capital (Company 2 MB; Branch 3 MB) Ratio of Thai-national to foreign employees (std. is 4:1) Apply at Royal Thai Embassies/Consulates Can apply for extension in Thailand, upon Work Permit Must report earned salary and pay Personal Income Tax (PIT) in Thailand Possible to convert Tourist Visa to Non-B inside Thailand PKF in THAILAND Global Reach. Local Expertise. Page 7

8 Overview of Visa and Work Permit Non-Immigrant Other Visa ( Non-O ) Accompany spouse of Thai-national ( breadwinner ) For spouse supporting their Thai-national spouse/family Maintain deposit in Thai bank account at least THB400,000 Retirement Aged 50 years & over, without intention to work in Thailand Maintain deposit in Thai bank account at least THB800,000 Or purchase Condominium more than 10MB Accompany foreigner spouse/family (dependent) For spouse or family members accompanying breadwinner who is working, studying or living in Thailand Applicant participating in Voluntary Services in Thailand PKF in THAILAND Global Reach. Local Expertise. Page 8

9 Permanent Resident Benefits Able to buy a condominium in Thailand without transferring money from abroad (according to Section 19 of the Condominium Act) Allow to stay in Thailand without any visa run or extension of stay Exempted from 90 days report Will receive a certificate of alien registration book Able to have name in a blue house registration book which will be able to apply for a Thai citizenship 5 years after name is registered in a blue book A child whose parents both received a permanent resident will receive a Thai nationality according to the Nationality Act of Thailand Still need to have a Work Permit if working in Thailand and still CANNOT own land PKF in THAILAND Global Reach. Local Expertise. Page 9

10 Permanent Resident Requirements and Process Normally open once a year, around December, with maximum quota 100 people per country Cost - around 200,000 Baht / Timing - about 1 year General Requirements Must work and hold Non-Immigrant B visa in Thailand for at least three years consecutively Must be able to speak and listen Thai language Specific requirements based on each type of permanent residency applied for Before traveling out of Thailand, must apply for a re-entry endorsement in the Blue Residence Book which valid for 1 year The Alien Book (red book) must be renewed every 5 years PKF in THAILAND Global Reach. Local Expertise. Page 10

11 Notification of staying in Thailand over 90 days Must be reported to Immigration Office (or Police Station, if Immigration Office is not available) or by Registered Mail 90 days counts from latter of: (i) latest arrival date in Thailand, or (ii) every 90 days from last report Applicable to foreigners with valid visa beyond 90 days (e.g., Non-Immigrant Visa) Notification must be made within 15 days before or after 7 days the date of 90-day expiry If foreigner stays over 90 days without notifying Immigration Bureau within set period: subject to fine of THB2,000.- If a foreigner who did not make the notification of stay over 90 days is arrested, they will be fined THB4,000.- PKF in THAILAND Global Reach. Local Expertise. Page 11

12 Immigration Bureau Fundamentals Paper Intensive documents required: 1-yr B Visa Extension List of documents for extension of 1-year Non- B Visa in Thailand 1 st Year Renewal List of documents for extension of 1-year Non- B Visa in Thailand - CONTINUATION 1 st Year Renewal ORIGINAL PASSPORT X X COPY OF SOCIAL SECURITY RETURNS (LAST 3 MONTHS) X X ORIGINAL WORK PERMIT X X COPY OF FINANCIAL STATEMENTS (SBC.3) X X COPY OF COMPANY AFFIDAVIT X X COPY OF CIT RETURN (PND.50) X X COPY OF SHAREHOLDERS LIST X X COPY OF PIT RETURN (PND.91) X COPY OF WHT RETURNS (PND.1) (LAST 3 MONTHS) X X COPY OF EMPLOYER S ID CARD / WORK PERMIT X X COPY OF VAT RETURNS (PP.30) (LAST 3 MONTHS) X X PHOTOS OF OFFICE AND RELEVANT EMPLOYEES X X LOCATION MAP OF THE COMPANY X X MARRIAGE CERTIFICATE / BIRTH CERTIFICATE (FAMILY MEMBERS) X X PKF in THAILAND Global Reach. Local Expertise. Page 12

13 Changes to Visa Laws, Regulations & Enforcement Additional requirement for a criminal record check at the Royal Thai Police for South African (not required before) PKF in THAILAND Global Reach. Local Expertise. Page 13

14 Changes to Visa Laws, Regulations & Enforcement Additional request for a copy of office lease agreement to prove existing of business operation place In case the company has foreign directors on Affidavit: copy of passport of all directors, and if it shows that he holds Non-Immigrant B Visa, he must have work permit for every companies that he is a director. In case of working with more than one company, request for a copy of payroll documents of the additional company to check the using of same Thai employees PKF recommends application pre-screen each year PKF in THAILAND Global Reach. Local Expertise. Page 14

15 Obtaining WORK PERMIT in Thailand Work permits are granted by the Alien Occupation Division of the Employment Department, under the Ministry of Labour and Social Welfare In order to legally work in Thailand, a foreigner must have a Work Permit Definition of work under the Working of Aliens Act, B.E (2008) is very broad: engaging in work by exerting energy or using knowledge whether or not in consideration of wages or other benefits New definition of work under the Emergency Decree B.E (2018) engaging in any profession, with or without employer, but excluding operation of business of a licensee under the Foreign Business Law PKF in THAILAND Global Reach. Local Expertise. Page 15

16 Obtaining WORK PERMIT in Thailand Covers any work-related activity, permanent or temporary Exceptions to work include: Participating in conferences and seminars Visiting exhibitions or trade fairs Visiting business sites or attending business meetings Attending special or academic lectures Attending lectures or seminars on technical training Purchasing activities at trade fairs No Work Permit required for a Smart Visa holder Arrests of foreigners for Work Permit violations do occur, particularly in contentious situations Criminal penalties for working without Work Permit include fine of THB 5,000 to 50,000 and deported from the country (employer 10,000 to 400,000 per 1 expat) PKF in THAILAND Global Reach. Local Expertise. Page 16

17 Labour Department Fundamentals General Requirements Every work permit must be sponsored by a Thai national, entity or organization registered in Thailand. Sponsoring employer in Thailand must comply: Minimal Paid-up Registered Capital (Company 1 or 2 MB; Branch 3 MB) Ratio of Thai-national to foreign employees (std. is 4:1), except in cases of Branch, BOI and IEAT Typically, cannot exceeding 10 foreign employees, except: o o o Tourism business which bring not less than 5,000 tourists into Thailand Business that paid tax not less than 3 MB Business that hiring not less than 100 Thai employees PKF in THAILAND Global Reach. Local Expertise. Page 17

18 Labour Department Fundamentals Standard Work Permit has a duration of 1 year In some cases of Top Management in BOI and IEAT companies, Visa and Work Permit duration can be 2-3 years 5-Year Work Permit under the EEC Act, but not yet implemented. If more than 1 employer: Foreigner must register multiple employers in their Work Permit PKF in THAILAND Global Reach. Local Expertise. Page 18

19 Labour Department Fundamentals Paper Intensive documents required: Work Permit List of documents for applying work permit New WP Renew WP List of documents for applying work permit - CONTINUATION New WP Renew WP ORIGINAL PASSPORT X X COPY OF VAT RETURNS (PP.30) (LAST 3 MONTHS) X X ORIGINAL WORK PERMIT X LOCATION MAP OF THE COMPANY X ORIGINAL MEDICAL CERTIFICATE X X COPY OF SOCIAL SECURITY RETURN (LATEST MONTH) X EVIDENCE OF WORK EXPERIENCES AND EDUCATION X COPY OF FINANCIAL STATEMENTS X X COPY OF COMPANY AFFIDAVIT X X COPY OF PIT RETURN (PND.91) X COPY OF SHAREHOLDERS LIST X X COPY OF EMPLOYER S ID CARD / WORK PERMIT X X COPY OF VAT REGISTRATION (PP.01) / (PP.09) X PKF in THAILAND Global Reach. Local Expertise. Page 19

20 Changes to Work Permit Laws, Regulations & Enforcement PKF in THAILAND Global Reach. Local Expertise. Page 20

21 Changes to Work Permit Laws, Regulations & Enforcement Emergency Decree on Foreigner s Working Management No.2 B.E (2018) Work Permit is not required for: Persons who enter Thailand from time to time to hold or to attend a meeting, training, seminar, art or cultural exhibitions, or sports competition Persons who enter Thailand to operate business or to make investment or who have knowledge, ability, or high skills, which would be beneficial to the development of the country Representatives of a foreign company with a Foreign Business License under the Foreign Business Act PKF in THAILAND Global Reach. Local Expertise. Page 21

22 Changes to Work Permit Laws, Regulations & Enforcement Must return of work permit within 15 days as from the last working date of foreign employee No longer required to submit application for amending Work Permit for: Changing of Position Changing of scope of work / job description Changing of address of the company Provided that the expat still work with the same employer PKF in THAILAND Global Reach. Local Expertise. Page 22

23 Changes to Work Permit Laws, Regulations & Enforcement Urgent Duty Work Permit can now be extended for another 15 days Reduce maximum penalty for working without work permit From: Imprisonment for five years or a fine of THB 2,000 to 100,000 or both To be: A fine of THB 5,000 to 50,000 and deported from the country Reduce penalty for employer From: THB 400,000 to 800,000 for each foreigner employed without Work Permit To be: THB 10,000 to 100,000 for each foreigner employed without Work Permit PKF in THAILAND Global Reach. Local Expertise. Page 23

24 New List of Emergency Work can extend 15 days NEW LIST 1. organizing meetings, trainings or seminars 2. special academic lectures NEW LIST 9. machinery repair or installation 10. technician work for electricity vehicle system NEW LIST NEW LIST NEW LIST 3. aviation management 4. internal audits work from time to time 5. follow-up and solving of technical problems 6. goods quality inspection work 7. manufacturing inspection or manufacturing improvement work 8. inspection or repair of machinery and electric generator equipment system 11. technician work for aircraft or equipment 12. consultancy for machinery repair or machinery controller system 13. machinery testing 14. filming motion pictures and photography work 15. selecting recruitment persons for sending to work overseas 16. testing skills of technicians for sending to work overseas PKF in THAILAND Global Reach. Local Expertise. Page 24

25 Changes to Work Permit Laws, Regulations & Enforcement Plan to remove 12 occupations from the list of 39 prohibited occupations 1. Labour work 2. Masonry, Carpentry, or other construction work 3. Cultivation, animal breeding, forestry and fishery work 4. Supervising, auditing or providing services in accounting 5. Mattress and quilt blanket making 6. Knife making 7. Shoemaking 8. Hat making 9. Civil engineering works 10. Architectural work 11. Dressmaking 12. Pottery or ceramic ware making PKF in THAILAND Global Reach. Local Expertise. Page 25

26 Remaining 27 prohibited occupations and add 1 1. Wood carving; 2. Driving motor vehicles or non-motorized carriers, except for piloting international aircraft; 3. Shop attendant; 4. Auctioneering; 5. Gem cutting and polishing; 6. Hair cutting, hairdressing and beautician work; 7. Hand weaving; 8. Mat weaving or making of wares from reed, rattan, kenaf, straw or bamboo pulp; 9. Manufacture of manual fibrous paper; 10. Manufacture of lacquerware; 11. Thai musical instrument production; 12. Manufacture of nielloware; 13. Goldsmith, silversmith and precious metal work; 14. Manufacture of bronzeware; 15. Thai doll making; 16. Alms bowl making; 17. Manual silk product making; 18. Buddha image making; 19. Paper and cloth umbrella fabrication; 20. Brokerage or agency work, except in international business; 21. Manual cigarette rolling; 22. Tourist guide or tour organizing agency; 23. Hawking business; 24. Thai character type setting; 25. Manual silk reeling and weaving; 26. Clerical or secretarial work; 27. Legal or litigation service, except arbitrator; and, 28. Thai massage. NEW LIST PKF in THAILAND Global Reach. Local Expertise. Page 26

27 SMART VISA PKF in THAILAND Global Reach. Local Expertise. Page 27

28 SMART VISA - BENEFITS PKF in THAILAND Global Reach. Local Expertise. Page 28

29 SMART VISA STAMP PKF in THAILAND Global Reach. Local Expertise. Page 29

30 SMART VISA - PROCESS Timing: Approximately days Process: Submit application online to request for Approval Letter from STC at or at One Stop Service Center (OSS) or at the Thai Embassy/Consulate OSS will coordinate to get a certification of qualification from related authorities, criminal clearance check with Ministry of Foreign Affairs, and blacklist check with the Immigration Bureau After approved, the foreign expert contact OSS for the visa stamp process within 60 days PKF in THAILAND Global Reach. Local Expertise. Page 30

31 SMART VISA ANNOUNCEMENT BOI Announcement No. Por. 4/2561 Re Qualifications, Criteria and Conditions for Smart Visa BOI Announcement No. Por. 5/2561 Re Process of Certification of Qualification for Foreigners Wishing to Apply for a Smart Visa BOI Manual/Guideline on How to Apply for a Smart Visa BOI Check List of the Required Documents for Each Type of Smart Visa Ministry of Labour Announcement effective on 1 st February 2018 PKF in THAILAND Global Reach. Local Expertise. Page 31

32 DIGITAL WORK PERMIT Legislation supporting Digital Work Permit Ministry of Labour Announcement on 21 st September 2017 Immigration Announcement on 15 th March 2018 BOI Announcement No. Por. 3/2560 Q: What if the police officer doesn t know Digital Work Permit? A: Show a copy of Announcement to the officer. Q: What if your smart phone run out of battery? A: Take a photo and keep in your pocket. Work Permit Card - Better solution? PKF in THAILAND Global Reach. Local Expertise. Page 32

33 SINGLE WINDOW VISA & WORK PERMIT Only for BOI company Previous E-expert Visa & Work Permit No need to submit documents to Immigration and MOL anymore Just bring your passport and smart phone Apply at One Stop Service Center in Bangkok, Chiangmai and Phuket only Other provinces plan to start in October 2018 Now 200 queues per 1 day - In case of emergency must contact the officer directly All foreign experts who renew their visa must return their original work permit book and change to be Digital Work Permit PKF in THAILAND Global Reach. Local Expertise. Page 33

34 DIGITAL WORK PERMIT PKF in THAILAND Global Reach. Local Expertise. Page 34

35 SINGLE WINDOW VISA & WORK PERMIT General Qualifications 1. Management/Executive Level Age not less than 22 In case education background consistent with position applied, must have experience of at least 2 years in the same field of work In case education background is not consistent, must have at least 5 years experience 2. Expatriate Level Age not less than 27 Experience at least 5 years in the same field of work 3. Both Management and Expat Level Must provide education certificate and employment certification letter from previous employer (or from parent company) to prove the qualifications above. PKF in THAILAND Global Reach. Local Expertise. Page 35

36 EEC Eastern Economic Corridor PKF in THAILAND Global Reach. Local Expertise. Page 36

37 TAX BENEFITS FOR EEC BOI Announcement No. Por. 6/2561 dated 3 rd August Special Services Promotional Zone (EEC-A, EECi, EECd) Additional tax holiday for maximum 4 years and 50% tax deduction for 5 years after that 2. Industrial Promotional Zone (21 industrial estates) Additional tax holiday for maximum 2 years and 50% tax deduction for 5 years after that 3. Other Industrial Estate located in EEC other than 2 (such as Wellgrow and Gateway Industrial Estate Chachoengsao) Additional tax holiday for maximum 1 year and 50% tax deduction for 3 years after that 4. Personal income tax benefit not yet announced PKF in THAILAND Global Reach. Local Expertise. Page 37

38 NON-TAX BENEFITS Non-Tax Benefits under EEC 5-year Visa & Work Permit not yet implemented / now apply smart visa via BOI Land ownership not yet announced Condominium ownership not yet announced Land Lease period of years not yet announced PKF in THAILAND Global Reach. Local Expertise. Page 38

39 EEC ZONE 1. EEC Areas - Eastern Special Development Zone: 3 provinces - Chonburi, Chachoengsao and Rayong 2. Special Economic Promotional Zone (SEP) If stay outside of this zone, no EEC benefits 3. Declared SEP Zone Chonburi Hemaraj, Eastern Seaboard, Amata, Pinthong, Yamato Rayong Hemaraj, Eastern Seaboard Rayong, CP Chachoensao TFD Industrial Estate Smart Park Rayong (EECd) WangChan Valley Rayong (EECi) U-Tapao Airport (EEC-A) PKF in THAILAND Global Reach. Local Expertise. Page 39

40 HOW TO APPLY FOR EEC? 5 th July 2018 BOI Explanation on How to apply for benefits under EEC Act Only new investment applied after 1 st January 2018 Must operate business in 10 S-Curve Business (current BOI promoted activities) Must have cooperative plan with education institute, research institute or Center of Excellence for Talent Mobility Program, Work-integrated Learning (STI WiL), Cooperative Education Program or Dual Vocational System as specified by the BOI Must have a MOU between the company and education institute as specified by the BOI Must submit application by the end of 2019 / potential extension not sure Submit application through BOI Chamchuri Square, 18 th Floor PKF in THAILAND Global Reach. Local Expertise. Page 40

41 Employment Laws Update PKF in THAILAND Global Reach. Local Expertise. Page 41

42 Overview of Thai Employment Laws The rights of workers in Thailand are covered by several labour legislations, including: Labour Protection Act B.E (1998) Labour Relations Act B.E (1975) The Act Establishing the Labour Court and Labour Court Procedure B.E (1979) Provident Fund Act B.E (1987) Social Security Act B.E (1990) Workmen s Compensation Act B.E (1994) Alien Working Act (2008) Thai Civil and Commercial Code PKF in THAILAND Global Reach. Local Expertise. Page 42

43 Labour Protection Act The Labour Protection Act regulates the minimum rights of both the employee and employer, including: General Provisions Employment of Labour in General Employment of Women Employment of Young Workers Wages, Overtime Pay, Holiday Pay and Holiday Overtime Pay Wage Committee Welfare Occupational Safety, Health and Environment Supervision Suspension from Work Severance Pay Lodgement and Consideration of Complaints Employee Welfare Fund Labour Inspectors Delivery of Notices Penalties PKF in THAILAND Global Reach. Local Expertise. Page 43

44 Labour Protection Act (Key Points) Holidays normal working day (6 days/week) normal working hour (8 hours/day or 48 hours/week) suspension from work for investigation (7 days/investigation) minimum weekly holidays (1 day/week) minimum traditional holidays (13 days/year) minimum annual holidays (6 working days/year) Leave Sick leave: fully paid not exceeding 30 working days/year. Maternity leave: 90 days including holidays/each pregnancy, but only 45 days paid. Leave for sterilization: fully paid for the period as recommended by doctor. Leave for military service: fully paid not exceeding 60 days. Leave for training: 30 days or 3 times/year, with pay or without pay, but child employees must be paid. Leave for business or casual leave: subject to work rules. PKF in THAILAND Global Reach. Local Expertise. Page 44

45 Labour Protection Act (Key Points) Working Rules and Regulations: An employer with 10 or more employees must establish written work rules. Working Rules and Regulations, must include: working hours, rest periods and working days rules on overtime work and holiday work sick leave maternity leave employee welfare termination and dismissal of employees discipline and disciplinary action etc grievances and severance pay or special severance pay. PKF in THAILAND Global Reach. Local Expertise. Page 45

46 3 Kinds of Dismissal Employee termination can be view in 3 different ways: 1. Dismissal With Cause 2. Termination / Retirement 3. Wrongful Dismissal PKF in THAILAND Global Reach. Local Expertise. Page 46

47 Dismissal The Labour Protection Act is very employee friendly Thailand s labour law is largely inflexible rules based and prescriptive in nature. FORM over SUBSTANCE In practice, dismissal with cause. Practical risks of wrongful dismissal Severance pay Additional compensation for unfair termination Additional damages claim from the lost of job PKF in THAILAND Global Reach. Local Expertise. Page 47

48 Termination / Retirement Thai law provides that a fired employee is entitled to severance, unless the termination is justified under the Labour Protection Act, as calculated below: salary up to the termination date severance payment payment in lieu of advance notice repatriation cost payment for unused annual leave contractual payment/benefits Severance Payment: Years of service MORE THAN 120 DAYS AND 1 YEAR AT LEAST 1 YEAR AND LESS THAN 3 YEARS AT LEAST 3 YEARS AND LESS THAN 6 YEARS AT LEAST 6 YEARS AND LESS THAN 10 YEARS AT LEAST 10 YEARS Severance Pay 30 DAYS SALARY OR WAGES 90 DAYS SALARY OR WAGES 180 DAYS SALARY OR WAGES 240 DAYS SALARY OR WAGES 300 DAYS SALARY OR WAGES PKF in THAILAND Global Reach. Local Expertise. Page 48

49 Retirement Legal Requirements Labour Protection Act Section 118/1 amended by the Labour Protection Act No. 6 B.E Effective on 1 September 2017 Fixed retirement age for all employees at a default of 60 years old Once the employee turns 60 yrs. they will be entitled to Severance Pay Retirement is considered the same as the termination of an employment. Amounts of Severance Pay for the retired employee must be not less than the rate specified in Section 118 of the Labour Protection Act. PKF in THAILAND Global Reach. Local Expertise. Page 49

50 Retirement apply to company policy We can summarize into 4 different situations: 1. In the event that there is no policy on retirement before, the employer shall make such policy on retirement at the age of In the event that the existing policy fix the retirement age at more than 60 years old, the policy must be changed to be at the age of In the event that the existing policy fix the retirement age at less than 60 years old, the policy could be changed to be at the age of 60 with a written consent from all employees. 4. In the event that the amount of compensation for retirement or early retirement is less than the rate of Severance Pay for termination case in Section 118, it must be changed to be consistent with Section 118. PKF in THAILAND Global Reach. Local Expertise. Page 50

51 Retirement FAQ Question: If a Company s policy has set their Retirement Age at 55 before 2017, based on the new regulation, should the Company amend the Retirement Age from 55 to 60? Answer: The Company should not change the policy on Retirement Age from 55 to be 60, as it will be less favourable to the Employees according to the Labour Relation Act, Section 13. However, if all Employees give written consent to the Company on such change, it is possible to change the policy without any issue. PKF in THAILAND Global Reach. Local Expertise. Page 51

52 Retirement FAQ Question: In the case where the Company is considering to change the Retirement Age from 55 to 60 as per the new law, can the Company also write an Early Retirement Policy to support those Employees who wants to retire during the age of 55-59? Answer: Yes, the Company can have an Early Retirement Policy in which the Employees can choose to resign before reaching their Retirement Age and the Company gives them retirement benefits. PKF in THAILAND Global Reach. Local Expertise. Page 52

53 Retirement FAQ Question: If the Company wants to continue hiring the Retired Employee after their Retirement, what should they do? Answer: After Retirement, should the Employee desire to continue working as a Retired member of the Company, then the Company should establish a new contract that is made in the form of a Fixed-term Annual Service Contract or a contract under specific projects. Note: If the new contract is an open-ended contract, then the Employee will be entitled to a second severance pay when they are later terminated by the Company! PKF in THAILAND Global Reach. Local Expertise. Page 53

54 Thailand s Tax Implications for Termination / Retirement PKF in THAILAND Global Reach. Local Expertise. Page 54

55 Tax implications - Termination If employee has worked for your Company LESS THAN 5 YEARS, the Exempt Income must not exceed 10-months salary / wages and not exceed THB 300,000. Also, must not be the case of Retirement or end of employment contract. If employee has worked FOR 5 YEARS OR MORE, excess portions will be treat as one-time payment under Section 48(5) of Thai Revenue Code. Example: Severance Pay 4,000, Exempted income ( 300,000.00) 1st Part Expenses (7,000 * 20 yrs working for Co.) ( 140,000.00) Sub-Total 3,560,000.00_ 2nd Part Expenses (50% of Sub-Total ) ( 1,780,000.00) Income Taxable on Severance Pay 1,780, PKF in THAILAND Global Reach. Local Expertise. Page 55

56 Tax implications - Retirement If the employee reaches RETIREMENT AGE, there is NO Exemption of THB 300,000. If the employee reaches RETIREMENT AGE, their Retirement Payment will be treat as a one-time payment, under Section 48(5) of the Thai Revenue Code. Example: Retirement Pay 4,000, st Part Expenses (7,000 * 20 yrs working for Co.) ( 140,000.00) Sub-Total 3,860, _ 2nd Part Expenses (50% of Sub-Total ) ( 1,930,000.00) Income Taxable on Retirement Pay 1,930, PKF in THAILAND Global Reach. Local Expertise. Page 56

57 Other Considerations: Any Company found to have failed to make Retirement Payments due to retiring employees will be subject to: imprisonment for a term not over 6 months or a fine not over THB 100,000, or both; also applies to related persons, such as authorized directors, who fail to implement rules. In May 2018, we expect an announcement that Severance Payments and Retirement Payments for employees who have worked with a Company FOR 20 YEARS OR MORE, will be to entitled to 400 days salary or wages. PKF in THAILAND Global Reach. Local Expertise. Page 57

58 Accounting Provisions for Termination / Retirement PKF in THAILAND Global Reach. Local Expertise. Page 58

59 Accounting Provisions for Termination / Retirement Thai Financial Reporting Standards require that companies recognize their obligations for the payment of future employee benefits of estimated Terminations & Retirements. It should be noted that employees approaching retirement but with less than 10 years of service are recognized as entitled to Legal Retirement Pay, thus, these obligations should also be accounted. The amount of these liabilities shall be determined in accordance with the Labour Protection Act (1998) and includes the years of service up to reaching retirement age. PKF in THAILAND Global Reach. Local Expertise. Page 59

60 Summary of Accounting Rules for Employee Benefits Non-Publicly Accountable Entities PUBLICLY Accountable Entities Termination / Retirement Benefits Disclosures Relevant accounting standard Need to comply with TAS 19 Have 2 options to comply with: 1. TAS 19 Employee benefits ; or 2. TAS 37 Provisions, contingent liabilities and contingent assets Recognition of expenses Best Estimation Examples include: current salaries without any discount to present value, service years, current age, est. years to retirement, est. salary in the future. Actuarial Calculation of Assumptions More advanced than best estimation Based on demographic assumptions and financial assumptions (e.g., turnover rate and death rate). 1 st year adoption Retroactive adjustment Prospective Approach Disclosure in Notes to F/S? Yes - is required Yes - is required Termination / Retirement Benefits, paid during the year Recognition of Exp. Actual expenses: recognize in the books of account as expenses at the time when a payment is made. PKF in THAILAND Global Reach. Local Expertise. Page 60

61 Example of Financial Statement Note Disclosures PKF in THAILAND Global Reach. Local Expertise. Page 61

62 Example of Financial Statement Note Disclosures PKF in THAILAND Global Reach. Local Expertise. Page 62

63 Example of Financial Statement Note Disclosures PKF in THAILAND Global Reach. Local Expertise. Page 63

64 Example of Financial Statement Note Disclosures PKF in THAILAND Global Reach. Local Expertise. Page 64

65 Example of Financial Statement Note Disclosures PKF in THAILAND Global Reach. Local Expertise. Page 65

66 Example of Financial Statement Note Disclosures PKF in THAILAND Global Reach. Local Expertise. Page 66

67 Example of Financial Statement Note Disclosures Thai Financial Reporting Standards require that companies recognize their obligations for the payment of future employee benefits of estimated Terminations & Retirements. It should be noted that employees approaching retirement but with less than 10 years of service are recognized as entitled to Legal Retirement Pay, thus, these obligations should also be accounted. The amount of these liabilities shall be determined in accordance with the Labour Protection Act (1998) and includes the years of service up to reaching retirement age. PKF in THAILAND Global Reach. Local Expertise. Page 67

68 our contact Please contact us: 28 th Fl., Sathorn Square Office Tower, 98 North Sathorn Road, Silom, Bangrak, Bangkok thailand@pkf.com john.casella@pkf.com 63/14-15 M.10 South Pattaya Road Nongprue Banglamung Chonburi Thailand esb@pkf.co.th pkf.co.th PKF in THAILAND Global Reach. Local Expertise. Page 68

69 Questions and Answers PKF in THAILAND Global Reach. Local Expertise. Page 69

70 right people right size right solutions บร ษ ท พ เคเอฟ แอ ดไวเซอร ร (ประเทศไทย) จำก ด, บร ษ ท พ เคเอฟ ออด ท (ประเทศไทย) จำก ด, บร ษ ท พ เคเอฟ โฮลด งส (ประเทศไทย) จำก ด และ บร ษ ท พ เคเอฟ แท กซ แอนด คอนซ ลท ต ง เซอร ว สเซส (ประเทศไทย) จำก ด เป นบร ษ ทสมำช กในเคร อข ำยของ พ เคเอฟ อ นเตอร เนช นแนล ล ม เต ด ซ งเป นกล มบร ษ ทท เป นอ สระต อก นตำมกฎหมำย และไม ร บผ ดชอบหร อร บผ ดในกำรกระทำหร อไม กระทำของบร ษ ทสมำช กอ น หร อบร ษ ทท เก ยวขอองอ น แต อย ำงใด PKF Advisory (Thailand) Ltd., PKF Audit (Thailand) Ltd., PKF Holdings (Thailand) Ltd. and PKF Tax and Consulting Services (Thailand) Ltd. are member firms of the PKF International Limited family of legally independent firms and do not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.