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ResourcesCorporate and Tax AdvisoryThailand Tax LawThai Minimum Wage Hike and the Possible Impact on Work Permits

Thai Minimum Wage Hike and the Possible Impact on Work Permits

Transcript of the above video:

In this video today, we are going to be discussing a recent article that I found on the Thai PBS, the Public Broadcasting Service here in Thailand. ThaiPBS.or.th website’s website. It is in English, thank you which is helpful for me to get into the nuance of some of these things. The title of the article is “New Minimum Wage Will Effect SMEs”. Quoting directly, “as the Government is going to increase minimum wage at least baht 15 higher as New Year’s gift to workers and to become effective at the end of this month’ (they were talking last month), “concern is growing among the employers that small and medium enterprises, SMEs, will bear the burden.” Mr. Tanit Soratna Vice President of the Employers’ Confederation of Thai Trade and Industry said SMEs which form up to 80% of Industries will bear the burden of higher minimum wage if it is increased Baht 15 higher or 5%.  For those who have been around Thailand for, you know, more than 10 years or so, this kind of is a periodic occurrence. The minimum wage goes up 2, 3, 5% about, the last time they did this was 4 or 5 years ago, maybe a little longer, maybe 6 years ago. It does happen in Thailand’s economy. It is just sort of a, it just sort of comes part and parcel with inflation if you will and economic growth. That is not the reason why I bring this article up though. This is important because proper accounting and proper bookkeeping are essential to work permit maintenance here in the Kingdom and I have seen situations when there are changes to things like social security contributions which are concomitant with the wages that the worker who is contributing and thereby the employer through that worker contributing to the Social Security pays and what I am trying to get at, errors on accounting and errors on Social Security filings can have an impact on a foreigner’s work permit here in the Kingdom and for that  reason, it’s rather important I think to keep ones  eye on these sorts of issues because as there’s a minimum wage increase now, generally speaking, in most SMEs, they are going to have between 4 and 20 Thai employees to maybe 1 – 3 foreign employees if any foreign employees at all.  But where there are foreign employees, and the Social Security filings have been done incorrectly or the underlying tax filings have been done incorrectly with respect to the employees who are a pre-requisite for work permit issuance or renewal, this can pose a serious problem with respect to application for a work permit or application for renewal of a work permit because those documents need to be in order. Of even further importance, especially here in Bangkok, especially in the last roughly 18/24 months since the implementation of the so called “good guys in, bad guys out” regime out at the Immigration Office, they take a pretty  hard line with respect to documentation operating and support of a visa application and for that reason, I have actually seen in the past, people who have had to leave the country, get a new visa and come back in, as a result of deficiencies and incorrections, basically inaccuracies if you will in documentation such as Social Security and tax documentation pertaining to the employees who operate as a prerequisite for visa and work permit issuance. So the thing to take away from this video is the minimum wage is going up. It is something to be aware of definitely from an accounting standpoint and of course from a business standpoint but for a foreign national who has to keep special considerations in their head with respect to operating here in the Kingdom, it is something to keep in mind because failure to correctly file things like Social Security and tax filings can result in problems with one’s work permit or one’s visa.