Be Aware Expats

[Serendipity2]

From the 'other' site......

"Checks on foreign business tieups in Phuket

PHUKET: -- A fact-finding effort is underway in Phuket to compile information about local businesses in which Thai people are hired by foreigners as their nominees - a practice considered suspicious and possibly illegal.

Provincial governor Wichai Phrai-sa-ngob, who ordered the investigation, said he was not discriminating against foreign investors, but guarding against illegal nomination which exploited loopholes in Thai laws for personal gain.

Under the business nomination law, foreigners can hold no more than 49-per-cent ownership of any business they jointly invest in with Thais. An ongoing practice is that foreigners later gain control over Thais illegally, and enjoy a lower tax burden than when holding a minority ownership.

To scrutinise foreign businesses, the local revenue office is checking on their tax payments, while the treasury office is scrutinising ownership of condominium space. Immigration police are checking visa and residence status.

Local authorities and the Interior Ministry will look into all information and decide on what to do if the fact-finding reveals illegal business nomination activities, said the governor.

There are now 19,653 joint Thai-foreign businesses in Phuket, which have invested around Bt62 million."



I'm guessing that Bt62 is THB 62 Billion!? If there are 19,653 joint Thai - foreign owned business just in Phuket that means the 'average' joint venture is less than US$100,000. Actually,it's US$92,433 and most likely the farang put up ALL of the investment capital.

That's THB 62 Billion that Thailand would not have had to invigorate/reinvigorate Phuket. Is this for real? The Provincial Governor seems intent on killing the goose that laid the golden egg to ferret out those pesky rich foreigners. Does he not realize this will most likely dramatically reduce the amount of capital foreigners will be willing to bring into the county and the corresponding loss of jobs, the increase in poverty and crime.

Sounds to me like Provincial Governor Wichai Phrai-sa-ngob is jealous of farangs. With all of the restrictions in Thailand I don't think I'll be bringing much money into the country so that the government can seize it. The motto of the Thai government [and the Democratic Party here in the USA - "We're not happy until you're not happy."

Serendipity2

[Mindaugas]

The hot potato of the moment is the Thai Nominees issue and there has not been one day for the past two weeks without an article or another in Thai press on the subject.


Today (2nd of September) there is an article in the Nation about the nominees issue in Phuket. This issue, is complicated enough in itself and the least we could expect from the Nation (a very good newspaper) is an article on the subject which makes sense.

Firstly there is no such a thing as the “business nomination law”. Secondly there is no law in Thailand, that would stipulates that foreign investors may not hold more than 49% of any businesses they invest into.

What there is the Foreign Business Act which regulates the business activities which are fully prohibited or which exercise by foreign investors in the form of a majority foreign owned business is submitted to the obtaining of permission that is to say a foreign business license or certificate depending of the circumstances?

Now the activities which are prohibited or restricted are listed in the FBA list 1, 2 and 3. To the contrary any activity which is not listed into the FBA attachments list 1, 2 and 3 may be exercised by foreign investors in the form of a 100% foreign ownership. For example, among businesses that may be exercised under the form of a 100% foreign investment are most manufacturing businesses. In other words, it is incorrect to say that foreign investors may not hold more than 49% of any business they invest into.

Secondly, the nation article also mention that “foreigners’ later gain control over Thai illegally, and enjoy a lower tax burden than when holding a minority ownership”. This is the strangest explanation I have ever seen. There is no correlation between ownership of a company and the amount of taxes said company will paid. Foreign or Thai are subjected to the same tax rates.

Thirdly, the reporter says that “there are now 19,653 joint Thai foreign businesses in Phuket, which have invested around THB 62,000,000”. I have a problem with this figure because it would mean that each Thai foreign Joint Venture in Phuket has invested a total of 3,154.75 THB (or 92 USD each). I guess that the figure of foreign investment in Phuket must be more in the range of several billions THB

What is true is that foreign investors may not hold more than 49% in a company that own land.

Actually the requirement is of the double majority and a company that own land must have 51% of Thai shareholders holding together 51% of the company shares. It is also true that the Land Law provide sanctions that are applicable to those that would be in violation and that have purchased land through Thai companies with Thai shareholders that may be deemed nominees.

What is also true is that “land trading” is a business that is prohibited to foreign investor under the Foreign Business Act List 1. This means that foreign investors may only own 49% participation into said business and that if they exercised said business with company that have Thai shareholders that may be deemed as Thai nominees they would also in addition face sanctions under the FBA Section 37 and followings.

There is definitively a problem in Thailand about how many foreign investors have structured their businesses and this issue has to be solved but starting a witch hunt and reporting nonsense as the Nation did this morning is certainly not the best way to deal with it.

[frogblogger]

Bit ofrepitition above cos two threads were started on same topic, now merged...

[Mindaugas]

Originally Posted by frogblogger

Bit ofrepitition above cos two threads were started on same topic, now merged...

Please check time who was first

[Mindaugas]

Serendipity2 may you born in China that you able so fast make "copy in other words" ?

[oddball]

We are picky aren't we ? Why not be pleasant by refering to an old adage " Great minds think alike " . Should we all keep in our minds the basic goings on in Thailand , the land of the lost (True) smile , life will continue in a pleasant vein , THAILAND IS FOR THAIS , foriegners will not actualy own one iota of anything that constitutes Thailand per-se , keep your thoughts and propositions to yourself , deposit your money in the general funds pot and leave , which way would be most desirable for your good self .

[Serendipity2]

Originally Posted by Mindaugas

Serendipity2 may you born in China that you able so fast make "copy in other words" ?

Mindaugas,

I'm a very fast guy!

I think the amount was THB 62 Billion not THB 62 million - which would be an absurd amount to worry about - but $92,000 is a significant amount.

The article didn't specify businesses or land but did use condos in the article as an example but condo owners do not own the land - just the inside of their units. Unless condo ownership in Thailand is different than in the west - which I doubt.

Still, I'm sure the majority of that THB 62 Billion was invested by foreigners. Talk about a Provincial Governor shooting himself in the foot with worry. Government - the bane of our existence.

Serendipity2

[adrianmark]

Great info. I'll be sure to pass it on to a few friends who are considering the Thai option.