Economy Profile Thailand

Ease of Doing Business Ranking – Thailand

Rankings on Doing Business topics – Thailand

Topic Scores

Starting a Business

This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city.

To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators.

The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Case study assumptions

Procedures to legally start and formally operate a company (number)

Preregistration (for example, name verification or reservation, notarization)
Registration in the economy’s largest business city
Postregistration (for example, social security registration, company seal)
Obtaining approval from spouse to start a business or to leave the home to register the company
Obtaining any gender specific document for company registration and operation or national identification card

Time required to complete each procedure (calendar days)

Does not include time spent gathering information
Each procedure starts on a separate day (2 procedures cannot start on the same day)
Procedures fully completed online are recorded as ½ day
Procedure is considered completed once final document is received
No prior contact with officials

Cost required to complete each procedure (% of income per capita)

Official costs only, no bribes
No professional fees unless services required by law or commonly used in practice

Paid-in minimum capital (% of income per capita)

Funds deposited in a bank or with third party before registration or up to 3 months after incorporation

To make the data comparable across economies, several assumptions about the business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes.

The business:

-Is a limited liability company (or its legal equivalent). If there is more than one type of limited liability company in the economy, the limited liability form most common among domestic firms is chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office.

-Operates in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

-Performs general industrial or commercial activities such as the production or sale to the public of goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily polluting production processes.

-Does not qualify for investment incentives or any special benefits.

-Is 100% domestically owned.

-Has five business owners, none of whom is a legal entity. One business owner holds 30% of the company shares, two owners have 20% of shares each, and two owners have 15% of shares each.

-Is managed by one local director.

-Has between 10 and 50 employees one month after the commencement of operations, all of them domestic nationals.

-Has start-up capital of 10 times income per capita.

-Has an estimated turnover of at least 100 times income per capita.

-Leases the commercial plant or offices and is not a proprietor of real estate.

-Has an annual lease for the office space equivalent to one income per capita.

-Is in an office space of approximately 929 square meters (10,000 square feet).

-Has a company deed that is 10 pages long.

The owners:

-Have reached the legal age of majority and are capable of making decisions as an adult. If there is no legal age of majority, they are assumed to be 30 years old.

-Are in good health and have no criminal record.

-Are married, the marriage is monogamous and registered with the authorities.

-Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population.

Starting a Business – Thailand

Figure – Starting a Business in Thailand – Score

Figure – Starting a Business in Thailand and comparator economies – Ranking and Score

Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators.

Figure – Starting a Business in Thailand – Procedure, Time and Cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (https://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Details – Starting a Business in Thailand – Procedure, Time and Cost

1 Search and reserve a company name online

Agency : Department of Business Development, Ministry of Commerce

Promoters can search and reserve a company name on the Department of Business Development’s Web site (https://www.dbd.go.th/dbdweb_en/main.php?filename=index). The name reservation in person at the Department’s Registrar is no longer available as of 14 January, 2013.

3 name options are submitted for approval. Once approved, the name reservation is valid for 30 days.

2 Deposit paid-in capital in a bank

Once the company gets approval for the memorandum and the articles of association, it must hold a statutory meeting. The promoters shall hand over the business to the directors after the meeting. The directors shall thereupon cause the promoters and subscribers to pay in at least 25% of the registered capital.

3 Register memorandum of association, apply and pay to register the company as a legal entity (final registration) and obtain TIN

Agency : Partnerships and Companies Registration Office, Department of Business Development, Ministry of Commerce

At the Single Point Service Center, entrepreneur can register the company, obtain TIN, register for social security and register for the Workmen’s Compensation Fund. All documents are submitted and received in one window, within 1 day.

Registration of the Company shall be made within 3 months of the day of the statutory meeting. Under the Civil and Commercial Code, Section 1111/1, for establishing the company, the director committee may require memorandum registration and company registration on the same day. If the promoters complete both steps on the same day, the required proceedings involving the memorandum promoters are as follows:

To have the subscribers of all the shares registered in the company;
Under Section 1108, to have a statutory meeting to consider any act of company, with all subscribers and all promoters presenting at the meeting and accepting such act in the statutory meeting;
To have promoters transfer all business to the director committee; and
To have the directors require every subscriber to pay the amount of shares under Section 1110 paragraph 2, and have such amount be fully paid.

The required documents for registration of the company which must be signed by the authorized director(s) and affixed with the company's seal (if required) shall include but not limited to the followings:

Application form;
Articles of Association;
List of shareholders;
New director form signed by each director;
Declaration of Business Operation form;
List of company registration;
Signed copies of the MOA and the Objectives;
Minutes of the Statutory Meeting signed by the Chairman and the Directors;
Confirmation of payment of share capital (at least 25%) by all subscribers;
Form for company name reservation
Form of certification of registration of limited company; and
Map(s) showing the location(s) of the registered office(s) of head office and branch office(s) (if any) of the company.

The promoters prepare the application for registration of the memorandum of association containing the details specified in procedure 2;

The first statutory meeting shall still be convened, provided that the notice to summon the first statutory meeting is not required;

The shareholders must pay at least 25% of the registered capital;

The promoters and authorized signatory director must sign the applications for registration of memorandum of association and for registration of incorporation, respectively, before Private Limited Companies Registrar, attorney at law, or auditor registered with the Registrar.

However, if the company has adopted complicated articles of association, the Registrar may take a few days to review the company's articles of association. In such case, the registration of company incorporation may be prolonged for a few days or more.

Under the Notice of the Director General of Revenue Department dated 11 January 2012, which is effective from 1 February 2012, company’s registration number shall be the same as its tax ID. Thus, the company is not further required to obtain taxpayer identification number or card anymore. Employers (with one or more employees) must register their employees for social security and workers’ compensation insurance at the Social Security Office, Ministry of Labor.

Work regulations are no longer required to be approved by the Department of Labor Protection and Welfare, however they must be announced and displayed on the wall within company's premises. ). Later during operations, labor inspectors can check proper implementation of the work regulations.

1 day – Fee for registration of memorandum of association: THB 500

Fee for registration of the company: THB 5,000
Stamp duty to be affixed on memorandum of association: THB 200
Stamp duty to be affixed on articles of association: THB 200
Certificate of Registration fee: THB 100
Affidavit fee: THB 200
Certification document fee: THB 50 per page.

4 Register for Value Added Tax

Agency : The Revenue Department

VAT registration is mandatory for all companies when the annual revenue exceeds the threshold of THB 1.8 million. The provision of the Thailand tax code can be found on the Revenue Department’s website: www.rd.go.th.

1 day

no charge

The company shall apply the application at Bangkok Area Revenue Office where the company office located and must submit the following documents:

• 01Application for VAT Registration in 3 copies (photocopy not accepted)

• Rental Contract (affixed with stamp duty) or Letter of Consent from owner of the Building and Household Registration of such Building.

• Photocopy of I.D. Card, Household Registration of the lessor.

• Documents showing ownership of the lessor such as sell and purchases contract, transfer of ownership.

• Map showing the location of the Building.

• Photograph of the office with signboard name and number of the Building.

• Copies of the Company documents certified by the Department of Business Development from the Ministry of Commerce (issued within 6 months) together with Articles of Association, regulation and details of the Objective of the company.

In case the company revenue less than 1.8 million THB, the company shall submit Por.Por.01- 1form.

Alternatively, the Revenue Department has recently introduced the possibility of VAT registration through an online system. The online registration process is as follows:

Complete an online application form for VAT registration (no user account is required for registration);
Submit the online application via the electronic service on the website of the Revenue Department (https://vsreg.rd.go.th/); and
The Revenue Department will notify the applicant for completion of VAT registration by e-mail within 15-days from the submission date of the online application.

However, the usage of the online platform for VAT registration is not yet widespread, and

entrepreneurs continue visiting the Revenue Department in person in order to register for VAT.

5 Register employees with the Social Security Office

Agency : Social Security Office

An employer and each employee must be registered as an insured person with the Social Security Office ("the SSO"). The employer shall collects the application form at Social Security Office where the company located and submit the registration form at the Zone Office of Social Security.

The employer is responsible to submit the following documents to the SSO within 30 days after hiring at least 1 employee:

employer and employee registration forms (Form SSO 1-01 and SSO 1-03)
a photocopy of company registration with objectives
map of working place
a photocopy of VAT registration (Pro.Por20, if applicable) or request of VAT registration (Por.Por.01, if applicable) or special business tax registration or license of factory establishment
letter of power attorney (if applicable) and photocopy of I.D. of the authorized person
lease agreement or letter of consent from the landlord (if requested).

1 day no charge

Takes place simultaneously with previous procedure.

Dealing with Construction Permits

This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information

What the indicators measure

Case study assumptions

Procedures to legally build a warehouse (number)

Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates
Submitting all required notifications and receiving all necessary inspections
Obtaining utility connections for water and sewerage
Registering and selling the warehouse after its completion

Time required to complete each procedure (calendar days)
Does not include time spent gathering information
Each procedure starts on a separate day—though procedures that can be fully completed online are an exception to this rule
Procedure is considered completed once final document is received
No prior contact with officials

Cost required to complete each procedure (% of income per capita)

Official costs only, no bribes

Building quality control index (0-15)

Quality of building regulations (0-2)
Quality control before construction (0-1)
Quality control during construction (0-3)
Quality control after construction (0-3)
Liability and insurance regimes (0-2)
Professional certifications (0-4)

To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used.

The construction company (BuildCo):

Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.
Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects or engineers. BuildCo is not assumed to have any other employees who are technical or licensed experts, such as geological or topographical experts.
Owns the land on which the warehouse will be built and will sell the warehouse upon its completion.

The warehouse:

Will be used for general storage activities, such as storage of books or stationery.
Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita.
Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further documentation or getting prior approvals from external agencies, these are counted as procedures.
Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements).

The water and sewerage connections:

Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built.
Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 gallons) a day.
Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection.

Dealing with Construction Permits – Thailand

Figure – Dealing with Construction Permits in Thailand and comparator economies – Ranking and Score

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Figure – Dealing with Construction Permits in Thailand and comparator economies – Measure of Quality

Details – Dealing with Construction Permits in Thailand – Procedure, Time and Cost

1 Obtain a Soil Test for the Foundation

Agency : Private Firm

A soil test is conducted prior to designing the foundation of the warehouse. Soil in Bangkok differs depending on the location and soil tests are considered important for adequately constructing the foundation as many areas are subject to flooding.

14 days THB 60,000

2 Request a building permit from the Bangkok Metropolitan Authority

Agency : Bangkok Metropolitan Authority

An application for a permit to construct, modified, remove, or reallocate a building is required for any building. For buildings of no more than 23 meters in height or 10,000 square meters in area, the application must be submitted to the relevant District Office with the following documents attached:

A copy of the applicant's corporate registration
A copy of the land title deed
The personal and tax identification cards of the applicant
Written permission of the architect and a copy of a valid professional license
Written permission of the design/calculation engineer and a copy of a valid professional license
Written permissions of the architect and engineer who will be the construction supervisors and copies of their valid professional licenses
Building plan
A calculation of building structure
For an industrial factory, hospital, fresh market, condominium, apartment, and any undesirable commercial building, details of the water treatment system and its calculation must be provided.

A notice to the local authority in lieu of the building permit could be made. The application could be submitted to the local authority in a situation where construction work must be commenced urgently.

The following supporting documents must be attached to the application to the local authority:
A copy of the applicant's corporate registration
A copy of the land title deed
Tax identification card of the applicant
Written permission of the senior professional architect and a copy of a valid senior professional license
Written permission of the senior professional design/calculation engineer and a copy of a valid senior professional license
Written permissions of the architect and engineer who will be the construction supervisors and copies of their valid professional licenses
Certificate of building design
Building plan
Calculation of the building area

Acknowledgement of the notification is normally granted within the day of filing the complete application. The cost is the same as for obtaining a building permit.

1 day THB 2,601

3 Receive pre-approval inspection from the Bangkok Metropolitan Authority

Agency : Bangkok Metropolitan Authority

Before the plan approval, the municipal authority inspects the site to confirm that the drawings submitted accurately represent the project on site. The building control officers of the Bangkok Metropolitan Authority process this approval.

1 day no charge

4 Obtain a building permit from the Bangkok Metropolitan Authority

Agency : Bangkok Metropolitan Authority

As of April 1, 2013 the Bangkok Metropolitan Administration (BMA) now allows district directors to act on behalf of the Bangkok Governor under Building Control Act B.E. 2522 (1979) for simple buildings. The district director can issue the building approval for buildings that are not more than 10,000 sq. m. and not taller than 23 meters. This fast-track option has significantly reduced the time to obtain the building permit.

30 days no charge

Details – Dealing with Construction Permits in Thailand – Measure of Quality

Getting Electricity

This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Case study assumptions

Procedures to obtain an electricity connection (number)

Submitting all relevant documents and obtaining all necessary clearances and permits
Completing all required notifications and receiving all necessary inspections
Obtaining external installation works and possibly purchasing material for these works
Concluding any necessary supply contract and obtaining final supply

Time required to complete each procedure (calendar days)

Is at least 1 calendar day
Each procedure starts on a separate day
Does not include time spent gathering information
Reflects the time spent in practice, with little follow-up and no prior contact with officials

Cost required to complete each procedure (% of income per capita)

Official costs only, no bribes
Value added tax excluded

The reliability of supply and transparency of tariffs index (0-8)

Duration and frequency of power outages (0–3)
Tools to monitor power outages (0–1)
Tools to restore power supply (0–1)
Regulatory monitoring of utilities’ performance (0–1)
Financial deterrents limiting outages (0–1)
Transparency and accessibility of tariffs (0–1)

To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used.

The warehouse:

Is owned by a local entrepreneur and is used for storage of goods.
Is located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.
Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway.
Is a new construction and is being connected to electricity for the first time.
Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square feet). The plot of land on which it is built is 929 square meters (10,000 square feet).

The electricity connection:

Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW).
Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more common in the area where the warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other owners’ private property because the warehouse has access to a road.
Does not require work to install the internal wiring of the warehouse. This has already been completed up to and including the customer’s service panel or switchboard and the meter base.

The monthly consumption:
It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh.
If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier.
Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation purposes only 30 days are used.

Price of electricity (cents per kilowatt-hour)*

Price based on monthly bill for commercial warehouse in case study

*Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity.

Getting Electricity – Thailand

Figure – Getting Electricity in Thailand – Score

Figure – Getting Electricity in Thailand – Procedure, Time and Cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Figure – Getting Electricity in Thailand and comparator economies – Measure of Quality

Details – Getting Electricity in Thailand – Procedure, Time and Cost

1 Submit application to MEA and pay the security deposit

Agency : Metropolitan Electricity Authority (MEA)

The customer can submit the application for connection in person, online or by a phone app.

7 calendar days

THB 8,824.52

The utility uses a GIS system to review and approve the connection. Upon approval of the application, the customer must pay a security deposit of THB 48,000, and an internal wiring inspection fee if it applies.

Documents required for the application are a copy of identification card, copy of census registration, copy of contract of sales, rent, lease, copy of company affidavit, power of attorney document as well as location map, single line diagram, load schedule and electricity line diagram, detail of use (e.g. areas, machine, electric equipment and type of building). Usually, the representative of the owner of the warehouse would submit the application.

The connection fee is based on standard flat rates. If the internal wiring is done by a licensed contractor, no fee is charged and no internal wiring inspection is needed. On the other hand, an internal wiring inspection is required if the installation was made by an unlicensed contractor.

No.

Procedures

Time to Complete

Associated Costs

2 Obtain external works and meter installation by MEA

Agency : Metropolitan Electricity Authority (MEA)

MEA can start the external wiring works after receiving payment of the security deposit, and connection fees when applicable. All cable and equipment for external connection are provided by utility. If a transformer needs to be installed, it would belong to the utility and other customers would use the transformer as well.

Once the connection works have been completed, MEA will proceed to install the meter and energize the warehouse without further interactions with the customer.

23 calendar days THB 0

Takes place simultaneously with previous procedure.

Details – Getting Electricity in Thailand – Measure of Quality

Reliability of supply and transparency of tariff index (0-8) 8

System average interruption duration index (SAIDI) 0.4

Total duration and frequency of outages per customer a year (0-33

What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 1.0

System average interruption frequency index (SAIFI) 0.7

Does the distribution utility use automated tools to monitor outages? Yes

Mechanisms for monitoring outages (0-1) 1

Does the distribution utility use automated tools to restore service? Yes

Mechanisms for restoring service (0-1) 1

Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? Yes

Regulatory monitoring (0-1) 1

Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? Yes

Financial deterrents aimed at limiting outages (0-1) 1

Are effective tariffs available online? Yes

Communication of tariffs and tariff changes (0-1) 1

Link to the website, if available online https://www.mea.or.th/en/pr

Are customers notified of a change in tariff ahead of the billing cycle? Yes

Note:

If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index.

If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index.

Registering Property

This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Case study assumptions

Procedures to legally transfer title on immovable property (number)

Preregistration procedures (for example, checking for liens, notarizing sales agreement, paying property transfer taxes)
Registration procedures in the economy's largest business city.
Postregistration procedures (for example, filling title with municipality)

Time required to complete each procedure (calendar days)
Does not include time spent gathering information
Each procedure starts on a separate day – though procedures that can be fully completed online are an exception to this rule
Procedure is considered completed once final document is received
No prior contact with officials

Cost required to complete each procedure (% of property value)

Official costs only (such as administrative fees, duties and taxes).
Value Added Tax, Capital Gains Tax and illicit payments are excluded

Quality of land administration index (0-30)

Reliability of infrastructure index (0-8)
Transparency of information index (0–6)
Geographic coverage index (0–8)
Land dispute resolution index (0–8)
Equal access to property rights index (-2–0)

To make the data comparable across economies, several assumptions about the parties to the transaction, the property and the procedures are used.

The parties (buyer and seller):

Are limited liability companies (or the legal equivalent).
Are located in the periurban (that is, on the outskirts of the city but still within its official limits) area of the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.
Are 100% domestically and privately owned.
Perform general commercial activities.

The property (fully owned by the seller):

Has a value of 50 times income per capita, which equals the sale price.
Is fully owned by the seller.
Has no mortgages attached and has been under the same ownership for the past 10 years.
Is registered in the land registry or cadastre, or both, and is free of title disputes.
Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required.
Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its entirety.
Will not be subject to renovations or additional construction following the purchase.
Has no trees, natural water sources, natural reserves or historical monuments of any kind.
Will not be used for special purposes, and no special permits, such as for residential use, industrial plants, waste storage or certain types of agricultural activities, are required.
Has no occupants, and no other party holds a legal interest in it.

Registering Property – Thailand

Figure – Registering Property in Thailand – Score

Figure – Registering Property in Thailand and comparator economies – Ranking and Score

Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators.

Figure – Registering Property in Thailand – Procedure, Time and Cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Figure – Registering Property in Thailand and comparator economies – Measure of Quality

Details – Registering Property in Thailand – Procedure, Time and Cost

1 Conduct a title search<

Agency : Land Office

The buyer conducts the title search at the Land Office.

2 Lawyer conducts a bankruptcy search

Agency : Bankruptcy Court

The lawyer would conduct a search at the Bankruptcy Court in Bangkok to ascertain whether the parties of the transaction had or are involved in an insolvency procedure. Although the records are computerized, lawyers do not have access to this database and therefore they have to visit the Court to search for this information.

3 Obtain certified copies of companies’ documents from the Ministry of Commerce

Agency : Ministry of Commerce

Parties obtain from the Ministry of Commerce the following documents:

Companies' Affidavits confirming the name, address, the amount of registered capital, names of directors and the authorized signatories. (THB 100)
Certified copies of the Memorandum and Articles of Association of each party (THB 50 per page, cost of certification)
List of shareholders of the company from the Ministry of Commerce to prove their nationality.

1 day

THB 900; (THB 200

(Affidavits) + THB 700 (MoA, AoA))

On average, the Memorandum of Association (MoA) has 2 pages and the Articles of Association

(AoA) about 5 pages.

This procedure is not mandated by law, nor required by the Lands Department. However, it is a common due diligence procedure to properly investigate any liability that could affect the transaction.

1 day THB 10

1 day no charge

4 Lawyers prepare the sale agreement and the parties sign it

Agency : Lawyer's office

It is common to require the services of an attorney to transfer the property. After conducting the due diligence, the lawyer drafts the sale agreement and the parties sign it

3 days THB 100,000

5 Parties apply for registration at the Land Office

Agency : Land Office

The seller and the buyer, or their representatives, must go to the Land Office where the land is located, to confirm the exact amount to be paid for taxes. The Land Officer calculates all the registration fees and expenses. The parties will have a bank draft issued for the payment and receipts are provided to the land officer on the day when the actual registration is taking place. The registration fee is 2% of the appraised value calculated by the Bureau of Property Valuation (GAV) and announced by the Treasury Department, Ministry of Financed every 4 years (Government Appraised Value (GAV)).

The seller has to pay a 1% withholding tax on sale price or GAV – whichever is higher. (Seller may apply this as a credit towards their corporate income tax on any capital gain). As the seller is a company, withholding tax is calculated on the greater of the appraised value and the sale price.

The seller has to pay stamp duty, which is 0.5% of the appraisal value if holding period for the individual is more than 5 years. If not, the transfer will be subject to the Specific Business Tax (SBT). This SBT implies that the Seller has to pay 3.3% of the appraisal value or the sales price, whichever is higher. The 3.3% SBT includes a 0.3% municipality tax.

The SBT is imposed on persons who sell their property for trade or a profit-seeking purpose. Companies who sell real property in Thailand are deemed to be selling for trade or profit and are subject to specific business tax. Even if a company sells property in order simply to move to a new place, it is still deemed to have sold for a trade or profit seeking purpose. Accordingly, the company who is the seller in this example will be subject to SBT. The registration fee, withholding tax and SBT are collected by the Land Office. The cheque for the taxes are payable to the Ministry of Finance but collected by the Land Office.

On the day of registration, the buyer and the seller submit the request for registration with all the required documents, including a copy of the construction permit and household registration of the building as evidence to transfer the building.

The Land Officer checks all the documents (from both the seller and the buyer) submitted with the application. He will also compare the original title deed with the original copy kept at the Land Office. All information in both original title deeds must be the same. If everything is consistent, he will proceed with the registration of the transfer of ownership. An official sales agreement is prepared and signed by the authorized representatives of the seller and buyer. The Land Officer then attaches the payment receipts to the application form, and submits all documents to the Chief in charge who is authorized to approve the registration of the transfer. Once the registration is approved, it is deemed completed. The seller will receive one copy of the registered sale agreement. The buyer will receive another copy of the registered sale agreement and the original Land Title Deed.

The officer then records the sales transaction at the back of the original land title deeds (both the land owner's and the Land Office's copies).

Takes place simultaneously with previous procedure.

3 days THB 707,453.37; (2% of

appraised value (registration fee) + 1% of sale price or appraised value, whichever is higher (withholding tax) + 3.3% of sale price or appraised value, whichever is higher (Specific Business Tax))

Details – Registering Property in Thailand – Measure of Quality

Getting Credit

This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Strength of legal rights index (0–12)

Rights of borrowers and lenders through collateral laws (0-10)
Protection of secured creditors’ rights through bankruptcy laws (0-2)

Depth of credit information index (0–8)

Scope and accessibility of credit information distributed by credit bureaus and credit registries (0-8)

Credit bureau coverage (% of adults)
Number of individuals and firms listed in largest credit bureau as a percentage of adult population

Credit registry coverage (% of adults)

Number of individuals and firms listed in credit registry as a percentage of adult population

Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit information index measures rules and practices affecting the coverage, scope and accessibility of credit information available through a credit registry or a credit bureau. The strength of legal rights index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary secured transactions system exists. Then two case scenarios, case A and case B, are used to determine how a nonpossessory security interest is created, publicized and enforced according to the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a secured lender, BizBank.

In some economies the legal framework for secured transactions will allow only case A or case B (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral.

Several assumptions about the secured borrower (ABC) and lender (BizBank) are used:

ABC is a domestic limited liability company (or its legal equivalent).
ABC has up to 50 employees.
ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.
Both ABC and BizBank are 100% domestically owned.

The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests).

In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets.

Getting Credit – Thailand

Figure – Getting Credit in Thailand – Score

Figure – Getting Credit in Thailand and comparator economies – Ranking and Score

Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index.

Figure – Legal Rights in Thailand and comparator economies

Details – Legal Rights in Thailand

Strength of legal rights index (0-12) 7

Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description

of collateral?

Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents No to security interests in movable assets exist in the economy?

May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the

original assets?

Yes

Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of collateral?

Yes

Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an

electronic database indexed by debtor's name?

Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered?

Yes

Does a notice-based collateral registry exist in which all functional equivalents can be registered? No

Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No party?

Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? Yes

Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes

Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell Yes the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt?

Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it?

Yes

Figure – Credit Information in Thailand and comparator economies

Details – Credit Information in Thailand

Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0.

Protecting Minority Investors

This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Case study assumptions

Extent of disclosure index (0–10): Disclosure, review, and approval requirements for related-party transactions
Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for prejudicial related-party transactions; Available legal

remedies (damages, disgorgement of profits, disqualification from managerial position(s) for one year or more, rescission of the transaction)
Ease of shareholder suits index (0–10): Access to internal corporate documents; Evidence obtainable during trial and allocation of legal expenses
Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of shareholder suits indices
Extent of shareholder rights index (0-6): Shareholders’ rights and role in major corporate decisions
Extent of ownership and control index (0-7): Governance safeguards protecting shareholders from undue board control and entrenchment
Extent of corporate transparency index (0-7): Corporate transparency on ownership stakes, compensation, audits and financial prospects
Extent of shareholder governance index (0–20): Sum of the extent of shareholders rights, extent of ownership and control and extent of corporate transparency indices
Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices

To make the data comparable across economies, a case study uses several assumptions about the business and the transaction.

The business (Buyer):

Is a publicly traded corporation listed on the economy’s most important stock exchange.
Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of Buyer where permitted, even if this is not speciﬁcally required by law.
Has a supervisory board in economies with a two-tier board system on which Mr. James appointed 60% of the shareholder-elected members.
Has not adopted bylaws or articles of association that go beyond the minimum requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory.
Is a manufacturing company with its own distribution network.

The transaction involves the following details:

Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to Buyer’s ﬁve-member board.
Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores.
Mr. James proposes that Buyer purchase Seller’s unused ﬂeet of trucks to expand Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of Buyer’s assets and is higher than the market value.
The proposed transaction is part of the company’s principal activity and is not outside the authority of the company.
Buyer enters into the transaction. All required approvals are obtained, and all required disclosures made—that is, the transaction was not entered into fraudulently.
The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and directors that approved the transaction.

Protecting Minority Investors – Thailand

Figure – Protecting Minority Investors in Thailand and comparator economies – Ranking and Score

Figure – Protecting Minority Investors in Thailand and comparator economies – Measure of Quality

Details – Protecting Minority Investors in Thailand – Measure of Quality

Paying Taxes

This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information.

What the indicators measure

Case study assumptions

Tax payments for a manufacturing company in 2018 (number per year adjusted for electronic and joint filing and payment)

Total number of taxes and contributions paid or withheld, including consumption taxes (value added tax, sales tax or goods and service tax)
Method and frequency of filing and payment

Time required to comply with 3 major taxes (hours per year)

Collecting information, computing tax payable
Preparing separate tax accounting books, if required
Completing tax return, filing with agencies
Arranging payment or withholding

Total tax and contribution rate (% of commercial profits)

Profit or corporate income tax
Social contributions, labor taxes paid by employer
Property and property transfer taxes
Dividend, capital gains, financial transactions taxes
Waste collection, vehicle, road and other taxes

Postfiling Index

Time to comply with VAT refund (hours)
Time to obtain VAT refund (weeks)
Time to comply with a corporate income tax correction (hours)
Time to complete a corporate income tax correction (weeks)

Using a case scenario, Doing Business records taxes and mandatory contributions a medium size company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax laws, time taken to comply with the requirements of postfiling processes and time waiting.

To make data comparable across economies, several assumptions are used:

TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the second year of operation (calendar year 2018). Taxes and mandatory contributions are measured at all levels of government.

The VAT refund process:
In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output VAT in June 2018.

The corporate income tax audit process:
An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period.

Paying Taxes – Thailand

Figure – Paying Taxes in Thailand – Score

Figure – Paying Taxes in Thailand and comparator economies – Ranking and Score

Figure – Paying Taxes in Thailand and comparator economies – Measure of Quality

Details – Paying Taxes in Thailand

Details – Paying Taxes in Thailand – Tax by Type

Details – Paying Taxes in Thailand – Measure of Quality

Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable.

The hours for Social Security include all the hours for labor taxes and mandatory contributions in general.

The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction.

N/A = Not applicable.

Trading across Borders

Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Documentary compliance

Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in origin economy
Obtaining, preparing and submitting documents required by destination economy and any transit economies
Covers all documents required by law and in practice, including electronic submissions of information

Border compliance

Customs clearance and inspections
Inspections by other agencies (if applied to more than 20% of shipments)
Handling and inspections that take place at the economy’s port or border

Domestic transport

Loading or unloading of the shipment at the warehouse or port/border
Transport between warehouse and port/border
Traffic delays and road police checks while shipment is en route

To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions:

Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours.

Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector experts in international trade logistics and are informed about exchange rates.

Assumptions of the case study:

For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy.
It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from its natural import partner—the economy from which it imports the largest value (price times quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000.
The mode of transport is the one most widely used for the chosen export or import product and the trading partner, as is the seaport or land border crossing.
All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process.
A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy.
Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities.

Trading across Borders – Thailand

Figure – Trading across Borders in Thailand – Score

Figure – Trading across Borders in Thailand and comparator economies – Ranking and Score

Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import.

Figure – Trading across Borders in Thailand – Time and Cost

Details – Trading across Borders in Thailand

Details – Trading across Borders in Thailand – Components of Border Compliance

Details – Trading across Borders in Thailand – Trade Documents

Enforcing Contracts

The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information.

What the indicators measure

Case study assumptions

Time required to enforce a contract through the courts (calendar days)

Time to file and serve the case
Time for trial and to obtain the judgment
Time to enforce the judgment

Cost required to enforce a contract through the courts (% of claim value)
Average attorney fees
Court costs
Enforcement costs

Quality of judicial processes index (0-18)

Court structure and proceedings (-1-5)
Case management (0-6)
Court automation (0-4)
Alternative dispute resolution (0-3)

The dispute in the case study involves the breach of a sales contract between two domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement.

To make the data on the time and comparable across economies, several assumptions about the case are used:

The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.
The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of adequate quality.
The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater.
The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater.
The Seller requests the pretrial attachment of the defendant’s movable assets to secure the claim.
The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods was not adequate.
The judge decides in favor of the seller; there is no appeal.
The Seller enforces the judgment through a public sale of the Buyer’s movable assets.

Enforcing Contracts – Thailand

Figure – Enforcing Contracts in Thailand – Score

Figure – Enforcing Contracts in Thailand and comparator economies – Ranking and Score

Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators.

Figure – Enforcing Contracts in Thailand – Time and Cost

Figure – Enforcing Contracts in Thailand and comparator economies – Measure of Quality

Details – Enforcing Contracts in Thailand

Details – Enforcing Contracts in Thailand – Measure of Quality

2. Mediation/Conciliation 1.0

2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or

section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig

2.a. Is voluntary mediation or conciliation available? Yes

2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)?

Yes

Resolving Insolvency

Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information.

What the indicators measure

Time required to recover debt (years)

Measured in calendar years
Appeals and requests for extension are included

Cost required to recover debt (% of debtor’s estate)

Measured as percentage of estate value
Court fees
Fees of insolvency administrators
Lawyers’ fees
Assessors’ and auctioneers’ fees
Other related fees

To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used:
- A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties.
- The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater.
- The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. The hotel cannot pay back the loan, but makes enough money to operate otherwise.
In addition, Doing Business evaluates the quality of legal framework applicable to judicial liquidation and reorganization proceedings and the extent to which best insolvency practices have been implemented in each economy covered.

Outcome
Whether business continues operating as a going concern or business assets are sold piecemeal

Recovery rate for creditors
Measures the cents on the dollar recovered by secured creditors
Outcome for the business (survival or not) determines the maximum value that can be recovered
Official costs of the insolvency proceedings are deducted
Depreciation of furniture is taken into account
Present value of debt recovered

Strength of insolvency framework index (0- 16)
Sum of the scores of four component indices:
Commencement of proceedings index (0-3)
Management of debtor’s assets index (0-6)
Reorganization proceedings index (0-3)
Creditor participation index (0-4)

Resolving Insolvency – Thailand

Figure – Resolving Insolvency in Thailand – Score

Figure – Resolving Insolvency in Thailand and comparator economies – Ranking and Score

Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index.

Figure – Resolving Insolvency in Thailand – Time and Cost

Figure – Resolving Insolvency in Thailand and comparator economies – Measure of Quality

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”

Figure – Resolving Insolvency in Thailand and comparator economies – Recovery Rate

Details – Resolving Insolvency in Thailand

Indicator

Answer

Score

Proceeding

reorganization

Mirage management will initiate reorganization as it serves to preserve the value of the hotel and keep the business; in addition, there is an opportunity under the reorganization process to compromise debts with creditors. As specified in Section 90/12 (6) of the Bankruptcy Act B.E. 2483, no secured creditors shall enforce payment of debt against the

asset which is security.

Time (in years)

1.5

The reorganization procedure will approximately take 1.5 years in total. After Mirage's petition to initiate reorganization, it takes around 4 months for the court to review the case, proceed with inquiries to relevant parties to examine the grounds for business reorganization, order the beginning of the reorganization proceeding and appoint an official receiver overseeing the entire process. Pursuant to Section 90/17, the Court would appoint the person who is nominated by Mirage as the plan preparer if suitable, which could take approximate 3 months. Creditors may file an application for repayment of debts for business reorganization within one month after the order of appointment of the plan preparer is published under Section 90/26. As specified in Section 90/43, within 3 months after the appointment, the plan preparer is required to submit the reorganization plan to the official receiver and creditors. In practice it will take around 1 years to prepare the creditor list, draft and vote the plan taking consideration of all possible objections and corresponding amendments to the plan. After the reorganization plan is approved by creditors and verified by the court, the implementation of the plan may take additional 6 months or more until BizBank is repaid some or all of the

money owed to it.

Outcome going concern The reorganization plan will be approved and the hotel keeps operating as a going concern.

Recovery rate

(cents on the dollar)

70.1

Cost (% of estate) 18.0 The costs associated with the case would amount to approximately 18%. Cost incurred during the entire insolvency process mainly include lawyer fees (7%), the fees of the insolvency representative (plan preparer) (5%), other professionals involved, such as accountants and financial advisors (5%) and court fees (1%). Expand

Details – Resolving Insolvency in Thailand – Measure of Quality

Employing Workers

Doing Business presents detailed data for the employing workers indicators on the Doing Business website (https://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business.

The most recent round of data collection was completed in May 2019. See the methodology for more information.

What the indicators measure

Case study assumptions

Hiring

(i) whether fixed-term contracts are prohibited for permanent tasks; (ii) maximum cumulative duration of fixed-term contracts;

(iii) length of the maximum probationary period; (iv) minimum wage;(v) ratio of minimum wage to the average value added per worker.

Working hours

(i) maximum number of working days allowed per week; (ii) premiums for work: at night, on a weekly rest day and overtime;

(iii) whether there are restrictions on work at night, work on a weekly rest day and for overtime work; (iv) length of paid annual leave.

Redundancy rules

(i) whether redundancy can be basis for terminating workers; (ii) whether employer needs to notify and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment.

To make the data comparable across economies, several assumptions about the worker and the business are used.

The worker:

Is a cashier in a supermarket or grocery store, age 19, with one year of work experience.
Is a full-time employee.
Is not a member of the labor union, unless membership is mandatory.

The business:
Is a limited liability company (or the equivalent in the economy).
Operates a supermarket or grocery store in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.
Has 60 employees.
Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them.
Abides by every law and regulation but does not grant workers more benefits than those mandated by law, regulation or (if applicable) collective bargaining agreements.

Redundancy cost

(i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected.

Employing Workers – Thailand

Details – Employing Workers in Thailand

Answer

Hiring

Fixed-term contracts prohibited for permanent tasks? Yes

Maximum length of a single fixed-term contract (months) No limit

Maximum length of fixed-term contracts, including renewals (months) No limit

Minimum wage applicable to the worker assumed in the case study (US$/month) 248.7

Maximum length of probationary period (months) 0.0

Ratio of minimum wage to value added per worker 0.3

Working hours

Standard workday 8.0

Maximum number of working days per week 6.0

Premium for night work (% of hourly pay) 0.0

Premium for work on weekly rest day (% of hourly pay) 0.0

Premium for overtime work (% of hourly pay) 50.0

Restrictions on night work? No

Restrictions on weekly holiday? No

Restrictions on overtime work? No

Paid annual leave for a worker with 1 year of tenure (working days6.0

Paid annual leave for a worker with 5 years of tenure (working days6.0

Paid annual leave for a worker with 10 years of tenure (working days)6.0

Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 6.0

Redundancy rules

Dismissal due to redundancy allowed by law? Yes

Third-party notification if one worker is dismissed? No

Third-party approval if one worker is dismissed? No

Third-party notification if nine workers are dismissed? No

Third-party approval if nine workers are dismissed? No

Retraining or reassignment obligation before redundancy? No

Priority rules for redundancies? No

Priority rules for reemployment? No

Redundancy cost

Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3

Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 4.3

Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 4.3

Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 15.0

Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 4.3

Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 30.0

Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 50.0

Unemployment protection after one year of employment? Yes

Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 31.7

PEO Thailand

Thailand has emerged as an attractive country for Professional Employer Organization (PEO) services, becoming a preferred destination for businesses seeking to expand their global operations. With its vibrant economy, strategic location in Southeast Asia, and business-friendly policies, Thailand offers a conducive environment for foreign companies to set up their presence. By partnering with a PEO in Thailand, organizations can benefit from streamlined HR and employment processes, enabling them to focus on core business activities without the burden of navigating complex labor laws and compliance issues. Additionally, Thailand’s skilled and diverse workforce, coupled with a robust infrastructure, enhances the country’s appeal as a PEO destination, fostering further business growth and success for international enterprises seeking to tap into the region’s potential.

PEO services, or Professional Employer Organization services, have emerged as a valuable solution for businesses operating in Thailand’s dynamic business environment. As a strategic gateway to the Southeast Asian market, Thailand attracts numerous international companies seeking to expand their operations. PEO services in Thailand offer a comprehensive range of human resource solutions, including payroll management, employee benefits administration, recruitment, and compliance with local labor laws. By partnering with a reputable PEO, foreign companies can leverage the expertise and local knowledge of the service provider to navigate the complexities of Thai employment regulations and cultural practices. This partnership streamlines administrative processes and allows businesses to focus on their core objectives, leading to increased operational efficiency and cost-effectiveness. PEO services in Thailand have become a vital asset for foreign enterprises looking to establish a strong presence and achieve sustainable growth in this thriving Asian market.

Business Reforms in Thailand

From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by

Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. =Doing Business reform making it easier to do business. = Change making it more difficult to do business.

DB2020

Dealing with Construction Permits: Thailand made dealing with construction permits easier by introducing legislation requiring phased inspections during construction.

DB2019

Starting a Business: Thailand made starting a business less costly by introducing fixed registration fees.

Getting Electricity: Thailand increased the transparency of electricity tariff changes. Thailand also made getting electricity easier by streamlining the number of procedures needed to obtain a new connection.

Paying Taxes: Thailand made paying taxes easier by enhancing its online platform for calculating and filing corporate income tax.

Trading across Borders: Thailand made trading across borders faster by introducing the E-Matching system for electronic cargo control, thereby reducing the time for border compliance.

DB2018

Starting a Business: Thailand made starting a business easier by abolishing the requirement to obtain a company’s seal and eliminating the need for approval from the Labor Department of company work regulations.

Getting Electricity: Thailand made getting electricity easier by streamlining procedures through the implementation of a geographic information system, eliminating the external site inspection.

Registering Property: Thailand improved the reliability of its land administration system by implementing a geographic information system and by scanning maps for most of Bangkok.

Getting Credit: Thailand strengthened access to credit by adopting new legislation that broadens the scope of assets that can be used as collateral. Thailand now allows a general description of assets granted as collateral and allows the security interest to automatically attach to the proceeds of the original asset. It also establishes clear grounds for relief from a stay for secured creditors during reorganisation procedures and allows out-of-court enforcement of collateral.

Protecting Minority Investors: Thailand strengthened minority investor protections by making it easier to sue directors in case of prejudicial related-party transactions, increasing shareholder rights and role in major corporate decisions and clarifying ownership and control structures.

Paying Taxes: Thailand made paying taxes easier by introducing an automatic risk-based system for selecting companies for a tax audit. It also made paying taxes less costly by reducing the property transfer tax rate.

Enforcing Contracts: Thailand made enforcing contracts easier by introducing a system that allows users to pay court fees electronically. Thailand also reduced enforcement times by increasing the automation and efficiency of enforcement processes.

Resolving Insolvency: Thailand made resolving insolvency easier by changing the voting procedures for reorganization plans.

DB2017

Starting a Business: Thailand made starting a business easier by creating a single window for registration payment and reducing the time to obtain a company seal.

Getting Credit: Thailand improved access to credit information by starting to provide credit scores to banks and financial institutions.

Resolving Insolvency: Thailand made resolving insolvency easier by introducing new restructuring for small and medium-size companies and by streamlining provisions related to company liquidation.

DB2015

Dealing with Construction Permits: Thailand made dealing with construction permits less time-consuming by introducing a fast-track approval process for building permits for smaller buildings.

DB2014

Paying Taxes: Thailand made paying taxes less costly for companies by reducing employers' social security contribution rate.

DB2013

Starting a Business: Thailand made starting a business easier by allowing the registrar at the Department of Business Development to receive the company’s work regulations.

Paying Taxes: Thailand made paying taxes less costly for companies by reducing the profit tax rate.

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DB2012

Starting a Business: Thailand made starting a business easier by introducing a one-stop shop.

Registering Property: Thailand made registering property more expensive by increasing the registration fee.

DB2011

Registering Property: Thailand made registering property more costly by repealing a 2-year temporary tax reduction for property transfers.

Paying Taxes:

Thailand temporarily lowered taxes on business by reducing its specific business tax for 12 months.

DB2010

Starting a Business:

Thailand made starting a business easier by merging 2 registration procedures in a single application form.

DB2009

Registering Property:

Thailand reduced the cost to transfer property through provisional cuts in 2 taxes: the transfer fee and the specific business tax.

Protecting Minority Investors:

Thailand strengthened investor protections by enhancing directors’ duties and increasing remedies in cases where related-party transactions harm the company.

Paying Taxes:

Thailand made paying taxes easier and less costly for companies by encouraging electronic filing and payment, by introducing an exemption from corporate income tax for companies with taxable income not exceeding 1.2 million baht and concessionary rates for newly listed companies and by reducing the special business tax on property transactions as well as property transfer and mortgage fees.

Trading across Borders:

Thailand reduced the time and number of documents for exporting and importing by upgrading the electronic data interchange system.

DB2008

Trading across Borders:

Thailand reduced the time required for trading across borders by implementing a system allowing electronic submission of customs declarations and simultaneous verification of data by different agencies.

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Economy Profile Thailand

Ease of Doing Business Ranking – Thailand

Rankings on Doing Business topics – Thailand

Topic Scores

Starting a Business

What the indicators measure

Case study assumptions

Procedures to legally start and formally operate a company (number)

Time required to complete each procedure (calendar days)

Cost required to complete each procedure (% of income per capita)

Paid-in minimum capital (% of income per capita)

The business:

The owners:

Starting a Business – Thailand

Figure – Starting a Business in Thailand – Score

Figure – Starting a Business in Thailand and comparator economies – Ranking and Score

Figure – Starting a Business in Thailand – Procedure, Time and Cost

Details – Starting a Business in Thailand – Procedure, Time and Cost

1 Search and reserve a company name online

2 Deposit paid-in capital in a bank

3 Register memorandum of association, apply and pay to register the company as a legal entity (final registration) and obtain TIN

4 Register for Value Added Tax

5 Register employees with the Social Security Office

Dealing with Construction Permits

What the indicators measure

Case study assumptions

Procedures to legally build a warehouse (number)

Time required to complete each procedure (calendar days)

Cost required to complete each procedure (% of income per capita)

Building quality control index (0-15)

The construction company (BuildCo):

The warehouse:

The water and sewerage connections:

Dealing with Construction Permits – Thailand

Figure – Dealing with Construction Permits in Thailand and comparator economies – Ranking and Score

Figure – Dealing with Construction Permits in Thailand and comparator economies – Measure of Quality

Details – Dealing with Construction Permits in Thailand – Procedure, Time and Cost

1 Obtain a Soil Test for the Foundation

2 Request a building permit from the Bangkok Metropolitan Authority

3 Receive pre-approval inspection from the Bangkok Metropolitan Authority

4 Obtain a building permit from the Bangkok Metropolitan Authority

Details – Dealing with Construction Permits in Thailand – Measure of Quality

Getting Electricity

What the indicators measure

Case study assumptions

Procedures to obtain an electricity connection (number)

Time required to complete each procedure (calendar days)

Cost required to complete each procedure (% of income per capita)

The reliability of supply and transparency of tariffs index (0-8)

The warehouse:

The electricity connection:

The monthly consumption:

Price of electricity (cents per kilowatt-hour)*

Getting Electricity – Thailand

Figure – Getting Electricity in Thailand – Score

Figure – Getting Electricity in Thailand – Procedure, Time and Cost

Figure – Getting Electricity in Thailand and comparator economies – Measure of Quality

Details – Getting Electricity in Thailand – Procedure, Time and Cost

1 Submit application to MEA and pay the security deposit

2 Obtain external works and meter installation by MEA

Details – Getting Electricity in Thailand – Measure of Quality

Reliability of supply and transparency of tariff index (0-8) 8

Total duration and frequency of outages per customer a year (0-33

Mechanisms for monitoring outages (0-1) 1

Mechanisms for restoring service (0-1) 1

Regulatory monitoring (0-1) 1

Financial deterrents aimed at limiting outages (0-1) 1

Communication of tariffs and tariff changes (0-1) 1

Note:

Registering Property

What the indicators measure

Case study assumptions

Procedures to legally transfer title on immovable property (number)

Time required to complete each procedure (calendar days)

Cost required to complete each procedure (% of property value)

Quality of land administration index (0-30)

The parties (buyer and seller):

The property (fully owned by the seller):

Registering Property – Thailand

Figure – Registering Property in Thailand – Score