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ResourcesCorporate and Tax AdvisoryThailand Corporate LawFurther Updates on Thai Work Permits and Amity Treaty Companies

Further Updates on Thai Work Permits and Amity Treaty Companies

Transcript of the above video:

As the title of this video suggests, we are discussing Thai Work Permits in the context of Amity Treaty Companies and I bring this up on the heels of a recent article. The article was published Sunday March 10, 2019. The title of the article is: Phuket Law: Misunderstandings Regarding the New Foreign Worker Law and just so I am clear, I want to go ahead and make sure that I point out the author of this is Sutapat Kongkaew; my hats off to the author of this article. This is quite good information. It is very good analysis.  Just as and I'll get to this at the end, I would slightly differ in my overall analysis but as far as the depth to which this author went to, I thought this was very good. I would slightly tweak my analysis and I will get to that at the end of the video.  

So, again Phuket Law: Misunderstandings Regarding the New Foreign Worker Law. Foreign Directors of Amity treaty, IEAA and IPA Companies holding foreign business certificates are still required to have work permits.  Quoting directly:  "In recent months we have noted two different articles by legal commentators that clearly misunderstood the extent to which Emergency Decree 2 has made the labour law environment in Thailand more foreign friendly." Now, a side note from me personally.  The Emergency Decree they are talking about came out last year.  It pertained directly to Work Permits. I believe the same outfit that made this article went ahead and wrote an article at that time regarding the changes to some of the Work Permit Laws most notably things like the ending of the notion of the geographic scope for the work permit as well as the liberalizing of various things that can be done once one was work permit and work authorized. But emergency decree 2 is what we are talking about when we use the shortened version, ED 2. Quoting further:  "One of the articles proclaims the "good news" that Directors of Companies that are exempted under the Foreign Business Act pursuant to the Treaty of Amity and economic relations between the United States and Thailand, no longer require a Work Permit. For reasons we explain below, this is not true." Quoting further: "Section 8 of the FBA, that is the Foreign Business Act, restricts "foreigners" from doing business in Thailand without a Foreign Business "License". Quoting further, "as defined and detailed in section 4 of the FBA. However, there is one other exception to the prohibition against foreigners operating a business in Thailand under the FBA. Section 4 of the FBA defines a Foreign Business Operating Certificate which is not a license but which nonetheless allows foreigners to operate a business in Thailand.  Who is eligible for a certificate?  Section 10 of the FBA provides quoting "foreigners defined in list annexed hereto by virtue of a Treaty to which Thailand becomes a party or by which Thailand is bound in consequence of obligations therefrom, shall be exempt from the application the provisions of the sections specified in paragraph 1 and shall be governed by the provisions of and conditions set forth in such Treaty. Thus an Amity treaty company does not operate its business in Thailand by holding a license rather it does so by holding a certificate, a completely different category under the FBA and one that is not accepted under section 4-8 of ED 2,  Emergency Decree 2." So quotation concluded there, and again my hats off to the writer of this article. Again Phuket Law: Misunderstandings Regarding the Foreign Worker Law and this can be found at the Phuket News, or I should say thephuketnews.com.  

So getting back to this.  One thing I would tweak just a touch, and I totally agree with the analysis, but its analysis that happens just a step later than I made my analysis, especially in a video we did back in December of 2018 with respect to Amity Treaty Companies. My original analysis and I maintain this, is that the Treaty just exists. The Foreign Business Act is irrelevant to the terms of the Treaty. A Treaty, like in the United States, Treaty Law supersedes Statutory Law. So if there is a Treaty that exists, that was signed by the President of the United States and that was ratified by the Senate, that law supersedes any act of Congress or any other act of Congress. It just exists notwithstanding any other law. It is a similar set up here in Thailand. I am not going to get into the analysis because quite frankly I am not a Thai attorney but that being said, it is a similar set up. Treaties just exist. They are there. Moreover, another sort of pillar to this argument is the Treaty of Amity existed prior to the Foreign Business Act.  It existed prior to the Alien Business Law which was the precursor to the Foreign Business Act. 

So the reason I bring this up is that Treaty Companies are dealt with under the Treaty. There may be other legislation and regulation that comes out pertaining to the Treaty, but the main law you deal with respect to Amity Companies is the Amity Treaty between the United States and Thailand and within the provisions of that the parties agree, namely the United States and Thailand, with some exceptions, things like land holding, various things that concern National defense, mass communication, professions, etc., the Treaty itself provides National treatment to the Nationals of either country.  Therefore, those Americans who set up a Company in Thailand, that Company and those Americans are granted National treatment. So they are treated, again it is a legal fiction, but they are treated as if they are Thai. So it is as if an Amity Company is a Thai Company. But then again based on legal fiction created by the Treaty but that is the foundation upon which the Treaty was implemented or these provisions in the Treaty were implemented or promulgated I should say. 

As they point out in this article, and it is a very good article, the Foreign Business Act speaks directly to this and creates a regulatory framework surrounding the Treaty. Now it is great analysis and it is right on point. I really am thankful to the author of that article for writing that up and getting that word out so the people understood the differences at play here.  

But that being said, I don't even think we have to get to that analysis. The Treaty is good enough on its own. You can just analyze the Treaty.  That is between Thailand and the United States. All the parties agree.  Signed by the Heads of States, both Governments or both countries I should say, and it was all duly ratified etc. So the Treaty in and of itself to me is where the analysis can begin and in but that said there is this further analysis that brings us down to the statutory level and we see that, yes Treaties are a different animal than Foreign Business Licensees which I said from the beginning and those Treaty Companies are not to be treated as Foreign Business License Companies and therefore Work Permits are still going to be required for those who are working in or Directors of an Amity Treaty Company.