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On 13 December 2018, the meeting of the National Legislative Assembly ("NLA") passed the Draft Labour Protection Act 2541 B.E. (1998 A.D.) ("Amended LPA"). The Amended LPA is now pending publication in the Royal Gazette. Based on the draft Amended LPA publicly available, which is the draft proposed to the NLA for consideration, the Amended LPA will come into force 30 days after its publication in the Royal Gazette. However, based on media reports, the Amended LPA is expected to come into force around the end of January 2019.
The key amendments include the following areas:
- Severance pay
- Interest on money owed to employees
- Transfer and termination of employees
- Business leave and maternity leave
- Wages, overtime payments and payments for working on holidays
- Suspension and relocation of business
- Penalties against employers for breach of LPA provisions
November-December 2018 saw a number of notifications issued by the Trade Competition Commission to implement the new Trade Competition Act B.E. 2560 (2017) ("2107 Act"), which repealed and replaced the first competition law in Thailand, the Trade Competition Act B.E. 2542 (1999). Further implementing regulations and notifications were required to clarify and implement the full scope of the 2017 Act.
On 28 December 2018, seven Notifications of the Trade Competition Commission were published in the Government Gazette, giving further guidance on the criteria, procedures and conditions in areas such as mergers, market dominance, the acquisition of assets or stocks, bringing goods as samples, settlement fines and advance rulings from the Trade Competition Commission.
On 1 November 2018, there were five new Notifications of the Trade Competition Commission published in the Government Gazette. These five Notifications became effective on 2 November 2018. These Notifications cover the areas of market definition and market share, prohibited acts of market dominance, joint undertakings resulting in a monopoly or reduction of competition, and actions resulting in damage to other business operators.
On 11 December 2018, the Thailand Board of Investment ("BOI") announced a new investment promotion scheme, International Business Center ("IBC"), to replace the International Headquarters ("IHQ") and International Trading Centers ("ITC") scheme. The IBC under BOI is essentially the combination of IHQ and ITC schemes. No new applications for IHQ and ITC will be accepted by the BOI as of 11 December 2018.
The criteria and conditions under the IBC scheme are as follows:
- The promoted entity must have a business plan for providing services to affiliates with the following scope:
1.1 Organizational administration and management, business planning and business coordination;
1.2 Procurement of raw materials and parts;
1.3 Research and development;
1.4 Technical support;
1.5 Marketing and sales promotion;
1.6 Human resources and training;
1.7 Advisory relating to finance;
1.8 Economic and investment analysis and research;
1.9 Credit management and control;
1.10 Treasury center;
1.11 International trading center; and
1.12 Other services as announced by the Revenue Department.
- The promoted entity must have a paid-up registered capital of not less than THB 10 million;
- The promoted entity must permanently employ not less than 10 employees who have the necessary knowledge and skill for the IBC. In case the promoted entity provides only treasury services, not less than 5 similarly competent employees must be permanently employed;
- For engaging in international trading center, the promoted entity must also engage in at least one of the activities listed from 1.1 to 1.10 above;
- Duty exemptions on raw and essential materials imported for manufacturing and export are not granted; and
- The promoted entity is not eligible for merit-based privileges.
On 21 November 2018, an amendment to the Revenue Code was published in the Government Gazette, introducing a new transfer pricing regime in Thailand.
One of the key changes introduced is that companies deemed to be related parties as defined under the amendment will be required to prepare and submit transfer pricing disclosure unless they come under the threshold for such reporting. The reporting requirement will come into effect for those companies whose financial year starts from 1 January 2019.
Revenue Department auditors will have 5 years in which to seek further information regarding the transfer pricing filing.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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