Can a Thai Partnership own land and have staff with work permits?

[TravelerEastWest]

Can a Thai Partnership with a minority foreign partner own land and have foreign staff with work permits?

And if so is there a certain percentage limitation for the non Thai partner if land is purchased by the company?

Assume for this example that all taxes are paid and an actual profitable business is carried on as well as the correct number of Thai staff for the work permit.

[Arkady]

There different types of partnership in Thailand. The most basic is unregistered partnership (kana bukkhon) which is a group of individuals who do business together who file for tax jointly as if they were a collection of sole proprietors but are not registered as a legal entity with the Commerce Ministry. This cannot own land because it is not a legal entity. All the partners could own land jointly, except, of course, the foreign partner. I see no reason why a registered partnership (hang hoon suan) with a minority foreign partner could not own land. Legally it is quite similar to a limited company but its legal obligations and liabilities are slightly different. It is registered with the Commerce Ministry which will ensure that foreign partners are minorities so that it can comply with the Foreign Business Act and this make it a Thai entity. But what the Land Dept will or won't accept may be another matter. So you should put in a call to your local branch or go down there before spending any money on this. They are usually quite helpful.

All types of partnership can technically hire foreign workers and obtain work permits for them, as can sole proprietorships, but there again it depends on what your local Labour Ministry office will accept. If the business is fairly substantial, it should be no problem. If there is a foreign partner in any type of partnership structure, he should have a work permit. Unlike the shareholders in limited companies, partners are deemed to be working in the business. If you want to be a passive foreign investor in a business, set up a limited company. For anything larger than a small shop or restaurant, it is likely to be a more tax efficient structure anyway, if declaring income honestly, particularly now that corporate tax rates have gone down. Registered partnerships have the same obligation to file audited accounts as companies and they are a huge hassle in Thailand, if one of the partners dies. Most of the advantages are historic and many Chinese businesses are limited partnerships just because they always have been and don't to change things. Most are also filing fraudulent accounts.

[TravelerEastWest]

Arkady,

What a wonderful and detailed response - thank you sir.

My current service business is a Thai company and i am comfortable with audits and taxes etc.

The business is small and has only two Thai staff (I have a Thai wife).

But I prefer not to have a corporation because of the additional IRS filing requirements for Americans.

I wonder if the IRS will treat a registered partnership as a corporation? I vaguely remember reading that it was a flexible area - I will have to research that.

Hmm, maybe I will just stay with a Thai corporation if I will save on Thai taxes and pay a CPA to do the extra filing...

On the other hand why would a shareholder save with a corporation in Thailand - as they do not have S corp type entities here which means you will pay tax twice in Thailand - at the corporate level and on your personal tax return.

I understand you can have a company car and driver etc but there is only so far you can go with those type of corporate deductions.