14 Nov ASEAN Today – Regional Legal and Business News – October 2018

ASEAN Today – Regional Legal and Business News for October 2018 including an Immigration Update covering the new strict Visa requirements for Indian Nationals and changes in the requirements for a Residence Certificate,  an overview of the updated Workmen’s Compensation Act, and litigation law and tax news. 

ASEAN Economic Community News

ASEAN Capital Market
The ASEAN Capital Markets Forum (ACMF) launched two new initiatives to help strengthen the ASEAN capital market. One is the framework to facilitate the cross-border movement of investment advisers. The first phase will be the introduction of the ACMF Professional Mobility Pass that will allow licensed professionals to provide advisory services within the participating ASEAN jurisdictions with fast-track registration and no additional licensing requirements. Currently, Malaysia, the Philippines, Singapore, and Thailand are the first ASEAN countries to participate in the initiative. The ACMF also launched the ASEAN Social Bond Standards and the ASEAN Sustainability Bond Standards which, together with the ASEAN Green Bond Standards launched in 2017, will provide a common foundation for developing sustainable finance in ASEAN.

Vietnam News
Fastest Growing Economy
A recent report by a multinational bank maintains that Vietnam will have the fastest growing economy in ASEAN in 2018 and 2019 due to double digit growth in manufacturing, strong FDI inflows, and the continued recovery of the agricultural sector. The bank also expects overall growth in the services sector which makes up 40% of Vietnam’s economy.

Simplified Business Registration Procedures
Vietnam issued Decree 108/2018/ND-CP which simplifies business registration procedures which came into effect on October 10, 2018. One major change is that companies can now set up business locations outside the cities or provinces where they were initially registered, which was previously prohibited.

Cambodia Update
EU Trade Status Loss
After launching a fact-finding mission to the country in July 2018, the European Union notified Cambodia that it will be revoking its preferential trade status due to its worsening human rights record. The EU said that they have launched the procedure for the withdrawal of Cambodia’s preferential trade status. If Cambodia does not make clear and demonstrable improvements, the EU will impose tariffs on Cambodian exports within a year.

Myanmar News
IP Laws
Draft laws that will update Myanmar’s intellectual property rights law covering trademarks, patents, copyrights, and industrial law are awaiting enactment by the House of Representatives of the Pyidaungsu Hluttaw in November 2018. Currently, Myanmar uses colonial British laws to protect IP rights in the country, the Registration Act of 1909 and the Copyright Act of 1914.

Singapore Bulletin
Top Ranked Sustainable City
Singapore ranks first in Asia and fourth world wide in the 2018 sustainable cities index compiled by a global natural and built asset design and consultancy firm. The index explores city sustainability from the perspective of the citizen. The report praised Singapore’s ability to sustain its own upkeep and growth through its own revenue for long-term sustainability.

Indonesia News
Tax Holiday
The Indonesian government has expanded the number of beneficiaries for a recent tax holiday scheme from 17 pioneer industries to all sectors including services that own large assets. The minimum investment to benefit from the tax holiday is IRP500 billion (US$34 million).

THAILAND LEGAL REVIEW

Immigration Update
Deadline Revocation
The Employment Department promulgated an unwritten Announcement on October 31, 2018 to revoke the Rule for the 15-day Deadline for filing a work permit application after entering the Kingdom. The new Rule becomes immediately effective on November 1, 2018. Now that the 15-day deadline rule has been revoked, any person entering Thailand with a Non-Immigrant “B” visa can file a new Work Permit application at any time after entering the Kingdom. There is no longer a deadline to apply for a Work Permit after entering Thailand so long as the Non-Immigrant “B” visa remains valid.

However, for persons who applied for a work permit under a pre-work permit approval (PWPA) application, they must ensure that last-step process for the issuance of a Work Permit booklet is made within 30 days from the issuance date of the PWPA letter.

New PWPA Application Requirement
The Employment Department announced a new requirement concerning an applicant’s passport copy when filing a Pre-Work Permit Approval (PWPA) application for a non-BOI application. To ensure that the applicant is not in Thailand while the company files the PWPA application, the Employment Department now requires the company to submit a copy of all pages of an employee’s passport. This new requirement is effective immediately.

Residence Certificate
Newly issued work permit booklets and the Digital Work Permit no longer include the official residential address of the work permit holder and cannot be used as proof of residence when applying for a Thai driver’s license or any other case that requires proof of residence. A Residence Certificate must be obtained from the Immigration Bureau. However, new stricter requirements for a Residence Certificate have been announced. Now, an applicant can only apply for a Residence Certificate if they have held a long-term visa for over one year and have filed at least one 90-day report. The processing time of a Residence Certificate is about 10 working days and a personal appearance is required for the submission request.

New Strict Requirements for Indian Nationals
The Immigration Department at the One Stop Service Center (OSSC) promulgated an unwritten Announcement this month concerning additional required documents for monthly tax documents and social security contribution to support long-term visa extensions for Indian nationals. Please note that this rule shall be implemented for all cases when Indian nationals apply for long-term visa extensions at the One Stop Service Center including first time applications, renewal applications, and change of sponsor (COS) applications. These new rule come into immediate effect on November 1, 2018 and apply to non-BOI visa applications.

The current requirement is the latest monthly salary withholding tax return, VAT tax return, and social security contribution documents, but now the Immigration Department at the OSSC will require an additional two months of these documents. Thus, the last 3 months of these documents will now be required. The tax document in items 1 and 2 below must be officially certified by the Revenue Department:

1. Officially certified copy of the form and receipt of monthly salary withholding tax for the last 3 months of all Thai and foreign employees (P.N.D. 1 ).
2. Officially certified copy of form and receipt of monthly Value Added Tax (VAT) return (Phor Por 30 form) for the last 3 months.
3. A copy of the form and original receipt for the monthly social security contribution for the last 3 months for all Thai and foreign employees.

The reason for the new stricter Immigration protocols for Indian nationals is because increasing numbers of forged documents and false statements made on visa applications for Indian nationals have been found over the last 12 months. There is a distinct possibility that Immigration will expand this requirement to the other 20 nationalities which comprise the “Watch List Nationals.”

Tax News
Tax Exemption Rules for Infrastructure Fund
The Revenue Department issued a notification on October 8, 2018 that adds on the rules, procedures, and conditions concerning the tax exemption from dividends received from infrastructure funds including exemption of Value Added Tax (VAT), Specific Business Tax (SBT), and revenue stamp for the transfer of property in an infrastructure fund. Under the new notification, the owner or right-holder of the property or the infrastructure fund who is the transferor or transferee, as the case may be, must jointly make a certificate of property transfer (“Certificate”) in order to be exempt from SBT and revenue stamp. All parties, including the transferor, shall follow these rules:
1. Notify and submit such Certificate together with duplicate of property transfer agreement to the land officer governing such registration.
2. Notify and submit such Certificate together with duplicate of property transfer agreement to the Director-General of the Revenue Department within 30 working days from said registration date.

Corporate Law News
New Update – Workmen’s Compensation Act
On October 10, 2018, the Workmen’s Compensation Act (No. 2) B.E. 2561 was published in the Royal Gazette and will come into force on December 9, 2018. Significant revisions under the new Act include:
●Extending coverage to any employees employed by government agencies, non-profit organizations, or local staff working for foreign governments or international organizations;
●Adding “Disaster” to the definition to clarify the meaning in order to decrease indemnity in disaster areas;
●Increasing the indemnity rate for medical expenses, rehabilitation expenses, and funeral expenses from 60% to 70% of a monthly salary for any employees suffering from perilous circumstances, sickness, or disappearance;
●Extending the period of compensation payment in the event that employee suffers a disability to a minimum of no less than 15 years. Previously, it was a maximum of 15 years;
●Extending the period of compensation payment in case of death or disappearance to the employee’s family from 8 to 10 years;
●Any employees who are unable to work shall receive compensation payment from the first day of such inability. Previously, it was 3 consecutive days or more;
●Increasing funeral expenses from the former rate in the amount of 100 times the minimum daily wage to a new rate to be further set by new Ministerial Regulation; and
●Reducing the surcharge to be paid by any employers from 3% to 2% per month. The ceiling limit for the surcharge amount will be equal to the outstanding contributed amount by such employers.

VAT Rate Remains at 7%
The Royal Decree regarding VAT reduction (No. 669) was issued on October 10, 2018, and the VAT rate of 7% (VAT 6.3% with local tax 0.7%) shall remain for one more year from October 1, 2018 to September 30, 2019, for all sales of goods, services and imports. The standard VAT rate is 10% as prescribed in the Revenue Code.

Litigation Law News
Draft Amendment of the Civil Procedure Code for Mediation prior to Prosecution
The essence of this draft is to amend the civil procedure code of Thailand which will allow the applicant to file a petition with the court requesting the appointment of a compromise party to settle a dispute before it is brought before the Court. If the parties can agree, the dispute can be settled by a contract or by a judgment. The purpose of this amendment is not only to reduce the number of the cases lodged with the courts, but also reduce costs and decrease the length of time for dispute settlement.

Under this amendment, the court can also examine a compromise agreement lodged by the parties to request a judgment. However, the court may refuse to agree with the a compromise agreement if the court considers that the aforesaid agreement would impact public policy, the protection of public interest, or the justification of why the interests of a third party are being affected by the compromise agreement.

Since there are no provisions on the mediation process prior to prosecution, a plaintiff has to lodge an application or plaint with the court and only then will the court ask the parties to use the mediation process for dispute settlement. The proposed amendment will provide another option for mediation prior to prosecution. It can take a long time to receive a judgement in the prosecution process in Thailand and thus the change will allow for a speedier option if the parties can use a mediation process and come up with a compromise agreement. Currently, due to the large number of cases filed, on average, the prosecution process takes at least one year after the plaint or application is lodged. The prosecution process can also be very expensive, so mediation before prosecution will also be an economical option.

This amendment would be one option to support the parties instead of prosecution. Nevertheless, if a party does not comply with the judgment resulting from the compromise agreement, the other party is empowered to proceed with legal action regarding the breach of the compromise agreement.

Disclaimer
The material contained herein is only provided for information purposes. No part thereof may be deemed to constitute legal advice or the opinions of this law firm or any of its attorneys. Whilst every effort has been made to verify the contents of the material contained herein, we do not represent, warrant, undertake, or guarantee that the information contained in this newsletter is correct, accurate, or complete. Legal advice must be sought before acting on any information contained herein.