Stricter work permit requirements imposed on companies with foreign directors
8 Sep 16
IMPACT – HIGH
What is the change? Foreign nationals serving as company directors who do not have a Thai work permit will no longer be allowed to sign corporate income tax and financial statement documents.
What does the change mean? Work permit applications will be declined if they are supported by tax documents signed by a foreign national director who does not have a work permit.
- Implementation time frame: Immediate and ongoing.
- Visas/permits affected: Work permits.
- Who is affected: Companies with directors who are foreign nationals who do not hold a Thai work permit.
- Impact on processing times: The recent change may cause significant delays.
- Business impact: Affected businesses should consider the options available to them and update internal processes to avoid unnecessary delays.
Background: Thailand’s Employment Department found that, in some cases, foreign national company directors were signing corporate income tax and financial statements even though they did not hold a Thai work permit. This was a problem because “signing documents” is considered productive work in Thailand. Thai authorities have now made it clear that foreign nationals cannot sign company tax documents or financial statements without a work permit.
This new rule mostly affects companies with foreign nationals working as directors while residing outside of Thailand. In such instances, two options are available. First, corporate income tax and audited financial statements can be notarized by a notary public outside of Thailand and then legalized or authenticated at a Thai embassy or consulate in the country where they were notarized. Second, companies can enter into a power of attorney agreement that authorizes a Thai national within the company’s management to sign corporate income tax and audited financial statements in Thailand.
BAL Analysis: The added requirement may cause significant delays in completing new or renewal work permit applications for affected companies. Those who are affected by the change may contact BAL to discuss the options that are available.
This alert has been provided by the BAL Global Practice group and our network provider located in Thailand. For additional information, please contact your BAL attorney.
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Source: Berry Appleman & Leiden LLP