Do NOT open a business in Thailand - part 8

in #getyerlearnon5 years ago

I realize that the last post was entirely too long: This is what happens once I access parts of my own memory and most of those memories were bad memories, expensive and stressful memories. This is the 2nd part of the story of my own problems owning two businesses in Thailand. Remember, I was one of the lucky (perhaps a bit smart) ones and managed to get all the money I put into it back out of it. Most people are not so lucky.

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Phase 4: Taxation

At the start, this was actually a nice surprise since the tax rate is only 7% here in Thailand. It would have been less if i had registered my company slightly different but that is a boring story. The good part is that the tax is only 7%, the bad part is that even if you tell the truth about your sales (and nobody tells the whole truth) it is assumed you are lying so they can audit you. When you are audited, there are no documents or any proof on the part of the accuser. You can keep every receipt and they wont even look at them because they aren't there to enforce the law, they are there to steal from you one way or another.

Thailand-taxes-600x270.jpg

Here is the problem with my tax paradigm. When you are a foreigner working over here, you have to have a work permit etc, well get to that later. The amount of salary you are required to pay yourself on the books is based entirely on the country that you come from (it is irrelevant whether or not you actually made enough to pay yourself that much.) These figures are pretty laughable, and again, appear as though some government official chose these numbers out of the sky based on his or her perception about how wealthy you SHOULD be based on where you come from. You are then taxed 10% on that income, whether it is real or not.

This introduces problems for small businesses like mine. My shops were seasonal, in the low season there would be months where we actually lost money but I had to lie on my tax submissions because the business had to make enough money to pay my fictional salary. My required fictional salary was 60,000 Baht a month and in some months the shop made negative money.

Therefore I had to lie about income that didn't exist and pay tax on it in order to pretend to pay a salary that I did not actually receive - and then pay tax on that as well.

Confused yet? I know that I was when it was going on. Basically, because of this silliness I never really felt confident in any sort of cash that the business had made during the busy times of year and I lived like a pauper because I never knew when the government was going to come by to have it off me.

Phase 5: Work Permits

I understand the need for protecting your country's own people first. I am not going to get on anyone's case about that. But I wonder if the Labor Department felt as though they were missing out in the whole under-the-table-cash thing so they invented a wonderful way to ride that gravy train

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The list of requirement is dauntingly long. It takes a while to gather all the items they want and some of the items are completely absurd like they need to have a picture of you working and also need to see your desk and a name placard on it. The fact that your job may not have a desk or a name placard is immaterial - get one for the photo anyway. it's dumb, trust me.

The best thing about the list of requirement is item number 16 which simply says another requirement is "any other document deemed necessary by the officer." Which just opens a world of hurt for the person applying for a permit. I must have spent weeks running around gathering this paper and that paper and more and more silliness until one day when i was about to freak out in the labor department I asked my case officer "look, what is is going to take to get this done? do you want money? Do i need to put something under the table for you?" to which he responded

You can put it on top of the table, it is ok

Love it, not even ashamed or even covert in an office full of people (conveniently enough there are no cameras though!) So there I was, right in front of a whole mess of people, breaking the law by bribing a government official. Several hundred dollars later, my paperwork was approved and a few days later I had a work permit. I don't even mind paying the hundreds of dollars but it is the fact that this gentleman was NEVER going to allow me to have a work permit without that bribe. That is just the way it works.

Phase 6: ending up on lists

Remember before how I said that I was getting audited and hit with completely arbitrary "back taxes" and what not? Well i accidentally found out that I ended up on a list by bothering to comply with the law. For about 4 years I worked in my shop in a covert fashion and did so without a work permit. As it turns out we were submitting our taxes incorrectly and nobody even seemed to care - that's what we had an accountant for.

This all changed when i got a work permit. Because I was attempting to "do the right thing" and obey the law I ended up on a list that you do not want to be on. This invited all the corrupt rats out of the woodwork with their hands open looking for what they call "tea money" in Thailand.

Once i had all but automated my shops, had a great management team and a training system in place, i no longer needed to work there (which i suppose is the dream, right?) I cancelled my work permit because well, I didn't want to pay this ludicrous tax on my fake salary anymore. This process was made intentionally difficult (no surprise there) and I had to pay bribes again in order to cancel the work permit. It really is silly.

Anyway, a few months after my work permit was no longer in the books, and i was no longer the managing director of the company.... like magic, the harassment stopped. No more people coming by looking for an audit, no more random visits from people looking for bogus licenses. It is quite saddening to me that by doing what you are supposed to do, i was actually punished for it and if i had simply worked illegally, everything would have been fine. If anyone had caught me working I think it would have been much cheaper to have simply paid whoever that person was to go away than to go through the years of crap that I had to deal with by trying to play by the rules.


The saddest thing about all of this was that we didn't really make very much money. We were extremely small potatoes. I think if i was having a really really good year I might have personally made $20,000 or so. Certain times of year I made nothing at all and actually had to pull from my own personal accounts in order to pay my staff. It just made me really angry (and still does) that the government was completely willing to ruin me and have the 11 people I employed be jobless, in their constant greed.

This story ended up too long again. I suppose I'll make a 3rd part where the story has kind of a happy ending.

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The amount of salary you are required to pay yourself on the books is based entirely on the country that you come from

pfft.. What the f... That is a seriously arbitrary value. You could come from Nigeria as a billionaire, or America as a welfare recipient. What a bizarre metric.

they need to have a picture of you working and also need to see your desk and a name placard on it.

Okay, dude. I can take care of this for you. I already did mine.

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hahahaha, oh that's great. I should have submitted that pic

Anytime, buddy. I can make green cards too.

I have seen a lot in this problem. Although the company has completed legal documents, But they are regularly checked by the authorities. And they will certainly have to prepare the money for those people, to business unhindered.
I will wait to read your next section

Interesting read
You must have liked something in thailand if you have stayed for more than 10 years.
I know I’m jumping, will wait for the next part

oh i don't hate the country. Quite like it here actually. I just don't think it is a good (or safe) place to open a business. Even if you are good at it there is a good chance it will not be allowed to succeed. There is an old saying here that a good way to become a millionaire in Thailand is to arrive as a billionaire.

I like this series a lot, glad you started writing about this stuff again, very useful and interesting.

To listen to the audio version of this article click on the play image.

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