Accelerating Entry to the Thai Market with PEO Services

Introduction

Expanding your business into the Thai market can be a promising venture. Still, getting started often involves significant administrative complexities. Engaging in a Professional Employer Organization (PEO) service can provide valuable assistance for those looking to begin their activities as quickly as possible. 

PEO services offer a streamlined and efficient approach to quickly entering the Thai market while undergoing the process of establishing a Thai entity.

What are PEO Services?

A Professional Employer Organization service, also known as an Employer of Record, provides a streamlined and efficient option for quickly and efficiently entering the Thai market.

PEO services provide valuable support in navigating the compliance requirements in Thailand, including the onboarding process for employees and managing essential accounting and payroll responsibilities.

What type of client would a professional Employer Organization Service be useful for?

PEO services are a valuable resource for corporate clients and high-level individuals looking for quick access to the Thai market. A PEO service offers the perfect opportunity for an individual to come to Thailand and begin operations quickly before undergoing the company registration process for their own entity or company. 

The company registration process can be time-consuming and could delay a business’s initial entry into the market by up to 4 months. By engaging in a PEO service, clients can begin their operations quickly while also establishing their entity, ensuring a smooth transition upon registration of their entity. 

PEO services also provide an opportunity for clients to test the Thai market and establish whether it would be a good opportunity for their project.

How can a PEO expedite entry to the Thai market?

Often, corporate clients seek the quickest way to enter the Thai market and begin their operations as quickly as possible. Typically, the most practical way of achieving this is by forming a company in Thailand. However, choosing this option can be time-consuming. While it only takes a couple of business days to incorporate a company, it takes a further 3 further months to satisfy the requirements to support a work permit. 

The process for starting a company in Thailand that can support a work permit is as follows:

Company Registration: The company registration process typically involves determining the business and corporate structure and registering with the Department of Business Development and the relevant authorities. This typically takes a few days.

Satisfying the Criteria for a Work Permit: After a Thai company has been successfully incorporated, it must satisfy the following to support each Work Permit. They must:

• employ 4 Thai staff
• have 2 Million THB in registered
• the company must be registered with the Social Security Office and have paid tax contributions for the Thai staff for at least 3 months.
• The company must be registered with the VAT

*Please note if the work permit applicant is married to a Thai national, the staff quota and minimum capital requirements are reduced by 50%.

Furthermore, it is important to note that those wishing to obtain a BOI promotion may have to wait even longer, typically a minimum of 6 months. This is due to the extended process for obtaining the BOI certificate and any relevant business licenses. While BOI companies experience significantly less restrictions upon hiring foreigners, the timeline for being able to do so is longer than that of a Thai Limited company.

As mentioned above, engaging a PEO service can irradicate this delay and be a great way to get started in Thailand while your company registration process is underway. A PEO service will allow the client to be onboarded in Thailand and begin undertaking their operations as soon as they arrive. 

Typically, the onboarding process for a PEO service takes approximately 1 to 2 months. This can be quicker if all the initial documents are collected quickly.

Can anyone use a PEO service?

PEO services are a useful resource for fast entry into the Thai market. Typically, SMEs starting their operations in Thailand will opt to use a PEO as a starting point. PEOs could be a practical option for companies that are clients or partners with Thai companies. In such a situation, the foreign client/partner may need foreign staff based in Thailand to work alongside the Thai company. A PEO service would provide an efficient option for such a scenario.

However, when looking to engage a PEO service, the Client and the Service Provider must understand that selling or facilitating a work permit to foreigners in Thailand is prohibited. 

Any foreign contractor who engages in a PEO service must be the service provider’s genuine and legitimate employer. It is vital that all parties understand that:

• The Thai entity remains accountable for the actions of the foreign contractor.
• The foreign contractor must follow the Thai entity’s HR policies and work rules.

It is entirely possible for the Thai entity to employ a foreign contractor whose primary role involves delivering services to the client under a valid service agreement. However, both the client and the service provider must ensure that:

• The foreign contractor’s services align with the service provider’s business objectives and licenses.
• The position assigned to the foreign contractor is legitimate and restricted for foreigners under Thai law.

Our Thoughts

Professional Employer Organizations (PEOs) offer a dependable and efficient way for businesses to begin operations and limit their initial risk when entering the Thai market, providing the PEO service is legitimate. 

PEOs have garnered significant interest among clients seeking to begin business operations in Thailand swiftly. PEOs offer a strategic entry point, enabling individuals to get started and, later, register a company efficiently and properly consolidate their business activities.