It’s 5 pm on a Thursday, and you’ve just received an e-mail from your colleague in Bangkok. There’s an issue at the Thai office and your presence is urgently required to assist in the matter.
This issue has to be resolved immediately or there will be a widespread impact in the group’s supply chain: for each day that the matter remains unresolved, the group stands lose millions and, potentially, also lose key client accounts. Luckily, you have a valid tourist visa for Thailand, so you take the red-eyed flight and head over to the Thai office. This shouldn’t take more than a day or two, and you should be back in your home office by Tuesday of the following week. Easy, right? Sure, if this was 20 or 30 years ago. In 2018, it may not be that straightforward.
Principally, a foreign person travelling to Bangkok to engage in any business activity in Thailand is required to have a valid work permit (ie, unless the work permit rule is specifically exempt for that business activity). “Business activity” can cover the most seemingly inconsequential activity such as working for a few days at the hotel on your computer.
Over the past few years, there has been a notable escalation of cases whereby foreign persons travelling to Thailand for business reasons under tourist visas have been noticed by the Thai authorities. The number of business travellers to Thailand has steadily grown over the past few years. And, of such business travellers, a significant number are in violation of the Thai labour and immigration laws as they engage in ‘work’ related activities while entering Thailand on tourist visas and/or without valid work permits.
Foreign business travellers hoping not be noticed by immigration officers may now be running out of luck. In today’s world, the Thai immigration officers have been trained to ask seemingly innocuous questions designed to identify persons attempting to violate the Thai labour and immigration laws. A delinquent foreign business traveller may face penalties ranging from warnings to extensive monetary fines to deportation to being put on a blacklist or to a combination of such penalties. Recent changes in Thai labour and immigration laws, and the improved enforcement measures, have intensified the consequences on individuals who failed to obtain proper work permits and/or to file Thai tax returns. Also, the delinquent business traveller may potentially not be in compliance with Thai personal income tax regulations.
However, the exposure does not end there. All parties concerned (ie the foreign business traveller, the foreign employer, the Thai related company, etc) may also be investigated by authorities. At the very least, the resulting bad press may bring a negative spotlight to the relevant companies, which could further lead to detrimental consequences as many suppliers and/or customers may not wish to associate with companies that have been non-compliant. And, in case further investigation is conducted on the nature of the delinquent foreign business traveller’s activities in Thailand, there is a real possibility that all parties concerned could face significant liabilities in Thailand.
While the prospect of applying for a work permit to engage in business activities in Thailand may seem tedious, work permits are required to legally conduct most business activities in Thailand.
In a progressively globalised and connected world, where tax authorities of different jurisdictions are more willing to engage in an ‘exchange of information’, it has become even more important to be aware of how every cross-border activity can increase a company’s tax and non-tax exposures.
Go get that work permit.
Contributed by Mark Kuratana, Partner, Tax and Legal Services, Deloitte Thailand; Pornpun Niyomthai, Director, Tax and Legal Services, Deloitte Thailand; and Narisara Chansrichawla, Senior Consultant, Tax and Legal Services, Deloitte Thailand.