25th October 2019
Thailand, a country nicknamed the ‘Land of Smiles’ – is certainly putting a grin on the faces of international contractors. Boasting a growing economy, buzzing nightlife, and some of the most stunning scenery in the world – it’s perhaps no surprise that demand to work in the Southeast Asian nation has been on the rise.
However, the country has also been taking a number of steps to clampdown on tax and compliance, with a recent announcement revealing that contracting in Thailand may become more complex. According to the Department of Health, insurance will be mandatory for expats to obtain a long-stay visa. Here’s what professionals need to know about contracting in the country.
No Visa without Insurance
A new scheme is being introduced in Thailand, with officials announcing that from the end of October, health insurance will be mandatory for a large number of expats. The requirement will apply specifically to Non-Immigrant Visa “O-A” applicants, often used by workers contracting in Thailand. The pilot insurance project will also be applied to elderly tourists seeking a longer stay in the country. Currently, there are around 80,950 long stay visa holders in the country – and this number is expected to increase.
The insured amount for out-patients is set at a minimum of Bt40000 each – rising to Bt400,000 each for in-patients. Should individuals purchase insurance coverage from international insurance companies, the sum must not be lower than the minimum amounts required in Thailand.
To best support contractors, Thailand’s Health Department has agreed to create information and application websites, with links to other relevant organisations, to provide a one-stop service for tourists and expats. They will also provide all relevant material such as terms, conditions and benefits of health insurance.
What else you should know about contracting in Thailand
While this change to health insurance may make contracting in Thailand slightly more complicated, there are a number of existing compliance factors to take into account when working there.
Foreign persons wishing to work or physically operate a business in Thailand must obtain a work permit from the Ministry of Labour and maintain a valid non-immigrant visa while staying in the country. This means expats must acquire:
- A non-immigrant business (B) visa from any Royal Thai Embassy/Consulate abroad before entering Thailand.
- A work permit from the Ministry of Labour in Thailand before starting work.
The work permit application must be sponsored by an entity or individual who is registered in Thailand. Processing the application normally takes between ten and 14 days. This can be reduced to one day for companies that:
- Receive investment promotion.
- Have at least Bt30 million paid-up capital.
Government fees for a work permit are in the range of Bt850 to Bt6,100 depending on the period granted – which could be up to two years – plus minimal stamp duty.
A person (Thai or foreign) who resides in Thailand for a total period of 180 days or more (not necessarily consecutively) over the duration of a tax year is considered a resident of Thailand for tax purposes.
Tax resident employees
Tax resident employees are subject to personal income tax at progressive rates of 5% to 35%. The tax year is from 1 January to 31 December. Employers and employees must also both contribute an amount equal to 5% of the employee’s gross wages up to a maximum of Bt750 per month to the Social Security Fund.
Non-tax resident employees
Non-tax resident employees are subject to income tax in the form of a withholding tax on the gross amount of their Thai-source income at a flat rate of 15%.
A global challenge
While this move to ensure expats pay for health insurance may make contracting in Thailand more difficult – this is just a drop in the ocean when compared to the growing global compliance challenges for contingent workers. Preventing tax evasion has become a priority for governments and authorities globally, making it easier than ever to inadvertently fall foul of the law.
As a result, international contractors must be diligent in complying with an exceedingly complex system. To save your time, and allow you to legally pursue opportunities abroad – it’s wise to employ an expert in international tax and compliance to help your team achieve its goals.
Contact us today: