M&A Monthly Report : June 2018

Labor

Occupations to be removed from prohibited work list

Ministry of Labor is re-considering to remove 12 occupations from the work list of 39 occupations prohibited to foreign workers, the expected list are: agriculture, animal husbandry, forestry or fishery (except work requiring specialized knowledge), bricklaying, carpentry, mattresses or quilts making, shoemaking, hat-making, garment-making etc. These unlocked occupations shall be permitted to foreigners who are being employees only and such occupations must not display Thai identity or intellect.  Not only removal, but newly added prohibited occupation list will be Thai massage. The Ministerial Regulation about lifting of the 12 occupations should be issued and taken effect within June 30, 2018.

 

Foreign Business

To operate business support of affiliates under Regional Office in Thailand

Q: A foreign company, registered outside of Thailand, would like to operate a Regional Office in Thailand to service its affiliate companies. The Regional Office will not charge service fee to the affiliate companies but will receive supporting money from Head office.  In this case, the Regional Office will require to obtain the Foreign Business License or not?

 

A: 1) Providing supporting services to the affiliate companies by the Regional Office is a service that is exempted from obtaining the Foreign Business License prior to operation, according to the Foreign Business Act B.E. 2542 (1999) and the Ministerial Regulations (No. 3) B.E. 2560 (2017), Article 2 (9) Regional Office of the foreign company in international trade service pursuant to the Regulation of the Office of the Prime Minister in Establishment of visa and work permit service center B.E. 2540 (1997)

2) According to the Regulation of the Office of the Prime Minister in Establishment of visa and work permit service center (No.3) B.E. 2544 (2001), the Regional office is restricted from earning service income and not allowed to accept purchasing order or to make an offer to sell or to negotiate to carry out the business with persons or juristic persons in the country which it is established. Regional office can only receive money from Head office for office expenses and can operates service business for branch office or affiliates in the same region by the following business activities: 1. Communicating, coordinating and directing, on behalf of the head office, 2. Providing services in consulting and management, 3. Training and personnel development, 4. Financial management, 5. Marketing control and sales promotion planning, 6. Product development, 7. Services in research and development

However, to operate service business other than the above-mentioned and it is considered to be the service business under List three of Foreign Business Act B.E. 2542 (1999), and must obtain approval of the Foreign Business License prior to operation.

 

Sell, rent, or lease of goods and operating factoring service by a foreign company

Q: A foreign company registered overseas would like to confirm whether it will need to obtain the Foreign Business License in accordance with the Foreign Business Act B.E. 2542 to engage in the following businesses or not:

In case 1) the foreign company sells products to customers in Thailand without engaging in any activities within the country.

In case 2) the foreign company rents goods to customers in Thailand with condition to return or purchase at completion of the rental period.

In case 3) the foreign company leases goods to customers in Thailand and goods will belong to  the customer when the lease payment is completed.

In case 4) the foreign company operates the factoring services either by itself or by appointing another to operate on its behalf.

A: In case 1) the foreign company does not require to obtain the Foreign Business License prior to operation because there is no selling transaction in Thailand.

In case 2) Rental business is considered as doing the service business under Annex List III of the Foreign Business Act B.E. 2542, the foreign company is required to obtain the Foreign Business License prior to operation.

In case 3) Leasing is considered as doing the service business under Annex List III of the Foreign Business Act B.E. 2542, the foreign company is required to obtain the Foreign Business License prior to operation.   

In case 4) Factoring service is considered as doing the service business under Annex List III of the Foreign Business Act B.E. 2542, the foreign company is required to obtain the Foreign Business License prior to operation.

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