The FARANG Speaks 2 Much

When I first came to Thailand I taught English… it sometimes feels like every Westerner you meet here did.

For me, three months of teaching morphed into a sales job, then a managment role.

A bad vibe from the business owner made me look for an alternative and I found it in the form of being a virtual worker. I am excercising my ability to do technical writing by working for a company in the US. My only requirement is my laptop & internet connection.

Working for someone else made the business of work permit easy ~ the business paid for the work permit & visa, prepared the paperwork, and had a young Thai woman do all the administrative work to keep me here.

WHAT FOLLOWS ARE SOME NOTES THAT DRAW ON MY EXPERIENCE TO EXPLAIN SOME OF THE CONSIDERATIONS OF BEING A “VIRTUAL WORKER” IN THAILAND.

As a virtual worker, having a visa/work permit to stay in Thailand is more problematic. There are a few options, but I stay away from the shadier ones. The most sensible answer for me seemed to be to set up a company and run my income through it. If you’re gonna run a bar, this is almost a necessity, but as a ‘virtual worker’ its basically just added trouble and expense.

Because I have a US passport, I can set up an “Amity” company (a company that iss allowed under the Treaty of Amity between US & Thailand). This allows me to have a company that I can own 100% — indeed, it requires at least 51% US citizen ownership.

The problem with Amity company is that:

1. It takes 3 to 6 months to set it up
2. The cost (using a service provider) runs to about 100,000 baht (almost US$3,000)
3. The paperwork involved in the setup is daunting.

The alternative is to set up a Thai Limited Company. The biggest problem with a Thai Limited Company is that the majority of shares need to be owned by a Thai citizen. If your Thai citizen owns at least 61% of the company, no justifcation of means is necessary (in other words, your bar girl buddy could be the owner if you REALLY thought that was a good idea).

If the Thai citizen owns between 51% and 60%, they have to supply paperwork to show that they have the financial means to have purchased those shares.

When I worked in Australia, that would have been funny — we set up a company with two shares @ $1 each.

But to qualify for a WORK PERMIT, you need THB 2 million (about US$59,000) paid up capital for each work permit issued. So your Thai shareholder needs to be able to demonstrate that they have at least 1 million baht available for investment.

(For those currently counting on their fingers and toes, you need 4mil for 2 work permits, and 6mil for three).

Obviously, control of your Thai Limited Company would be a concern. There are ways to deal with it, but I’ll leave that to someone else to discuss.

For setting up a Thai Limited Company:

1. It takes 10 to 21 days to process
2. The cost is about 60,000 baht (including work permit appllication, government fees, etc… about 60% the cost of an ‘amity’ company)
3. You need at least 7 shareholders. If you have (say) two… you and a Thai friend, the Accounting/Legal Services company will supply the other 5 at no extra charge.

If you don’t have 2million baht to put into your company, one option is to put in the cash that you have available, (for example, 250,000 baht, and create a loan account for the balance (1.75m baht) from the company to you as a shareholder. This is obviously skirting both the letter and the spirit of the law, and may cause you a problem in an audit. A reasonable solution is to use your income (initally) as paid-in-capital to repay the loan.

For people who don’t understand accounting, I am probably already getting confusing. Those who understand will realize I am oversimplifying, so I’ll stop there.

I strongly suggest you hire an Accounting/Legal Services firm to help you set up your business if you aren’t intimately familiar with Thai business law. The cost is reasonable and it will help you (a) stay out of trouble; and (b) cross the inevitable language barrier.

As an example: if you plan to work from your home (as I do) and you want to use it as your registered business adress, and you are in an apartment building/condo, you will need written permission from the building manager/owner. A fairly arcane type of law, and an issue fraught with language difficulties. The Service will help you avoid all the sandtraps — or at least get through them.

So, if you are a ‘virtual’ worker, you now have a company, a stream of income and (presumeably) a work permit. So far you’ve invested between 60,000 and 150,000 baht to get set up. There’s still a couple of minor points.

First is your visa. You have a work permit, so you won’t have any trouble getting a non-immigrant B visa, but you have to leave the country and return to get it (or get it in your home country before you move here).

If your company has no Thai employees, and you travel to another SE Asian country for your visa, you will probably only get a 90-day visa. You will need to leave Thailand every 90-days to renew it. Added cost.

If you go to Australia, NZ, UK, US you may well get a 1-year visa.

The only way I know to avoid this hassle of the 90-day visa is to have at least 4 Thai employees. When you take bar girls into account, this may be easier and cheaper than it sounds at first, but when you really ponder it, you’ll find its not a great option.

First, and surprisingly to me, workers in Thailand have rights. When you start paying them, you have to pay tax and provide benefits. Also, if you teminate employment without cause, you have to give notice or pay in lieu of. As an example, if somone works between 12 and 24 months, you need to pay 3 months notice.

If you don’t pay it, and they file a complaint, you will lose.

So, unless you legitimately need the staff, don’t go this route. Travel to a neighboring country every 3 months. Learn some new culture, like the difference between hookers in Phnom Phen and Macau.

Also, you will now have to charge Value Added Tax (VAT). It is currently 7%, but tipped to rise to 10% in the near future (subject to the political stability of the governement). Either you or your customer has to wear this tax.

Of course, you will need to pay income tax. If you think you’ll avoid this by running your business at a loss, you’ll find your work permit revoked.

Smitty has used the blog before to moan about how difficult Thai banks can be. Setting up a bank account in Thailand can be an adventure.

Whether its banks, immigration, or the cable TV company, Thais want lots and lots of photocopies to prove lots and lots of things. I had to supply more paper to get a telephone in my apartment than I did to get a mortgage when I lived in Australia. Again, an Accounting/Legal Services firm can reduce the Admin burden for you.

All in all, the costs of set up and operation, VAT, personal income tax, and travelling out of the country every 90 days mean that a virtual business in Thailand are significant. I don’t think I’d undertake it for much less than US$40,000 per year in income. Hopefully you’d be aiming at a whole lot more.