You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

May 17, 2019

Amendments to Thailand’s Factory Act

Subscribe to Updates

The Factory Act (No. 2) B.E. 2562 (2019) and Factory Act (No. 3) B.E. 2562 (2019) were published in Thailand’s Government Gazette  on April 30, 2019. These will amend the Factory Act B.E. 2535 (1992). The Factory Act (No. 2) will become effective 180 days after publication—that is, on October 27, 2019—while The Factory Act (No. 3) became effective on May 1, 2019. 

The main changes introduced by Act (No. 3) are administrative, laying down the definitions, appointment procedures, and duties and responsibilities of the local government authorities tasked with enforcing the law related to factories. 

The key amendments of Act (No. 2), which has a more practical impact on business operators, are laid out below.

Definitions

Under the new legislation, the definition of “factory” is updated to mean a building, place, or vehicle using machinery of 50 horsepower or more, or having a minimum of 50 workers (increased from 5 horsepower or 7 workers under the previous legislation), with or without machinery, in its operations. In addition, “construction of buildings” will no longer fall within the definition of “factory set-up.”

Increased Exemptions

The following types of factories will now be partially exempted from complying with the Factory Act: 

  1. A factory belonging to a governmental authority;
  2. A factory for study and research;
  3. A factory for training at an education institute;
  4. A family-owned factory; and
  5. A factory necessary for or related to a non-factory business and located in the same space.

License Renewal

Prior to the amendment, a factory license was valid for a period of five years from the start of operations, subject to certain exceptions. However, under Act (No. 2) a factory license will not expire until the factory ceases doing business.

Private Inspector

Act (No. 2) authorizes machinery and factory inspection duties to be carried out by private inspectors who are qualified and licensed in accordance with requirements laid down in Act (No. 2).

These amendments mean that business operators will be able to set up factories with greater ease. The amendments will also apply to all currently valid factory licenses as well as applications now under consideration.

For more information on the Acts, or for any other enquiries, please contact our Bangkok office at [email protected] or +66 2056 5555.

Related Professionals

Practices

Corporate/M&A

Real Estate

Location

RELATED INSIGHTS​ 

December 13, 2023
Thailand’s economy in recent years has felt the impact of a seemingly endless list of challenges, such as the COVID-19 pandemic, global economic recession, repercussions from wars and armed conflicts, slumping exports, and recurring internal political turmoil. Many Thai companies simply went bankrupt during this time, but many others have gone through the process of business rehabilitation as laid out in Thailand’s Bankruptcy Act. This article outlines Thailand’s business rehabilitation procedures and explains how creditors can collect debts from companies involved in rehabilitation. Business rehabilitation in Thailand Under the Bankruptcy Act, a creditor, debtor, or government agency under certain circumstances can file a business rehabilitation petition when all of the following conditions are met: The debtor is insolvent or unable to pay the debt due for payment (cash-flow insolvency). The debtor is a juristic person indebted to one or more creditors for a total of at least 10 million baht. The debt can be determined in a definite amount, irrespective of whether it is due for payment immediately or in the future. There is a reasonable prospect of the debtor’s business being rehabilitated. “Insolvency” means a debtor has more debts than assets. However, the Bankruptcy Act also gives some criteria for being able to assume that a debtor is insolvent. Examples include debtors declaring to the court that they are unable to pay their debts, or debtors defaulting on debt payments after receiving at least two demand letters from a creditor (with at least 30 days between the letters). Once the court receives a business rehabilitation petition, the debtor will be protected under an “automatic stay.” This means that any creditor cannot sue or force the debtor to pay a debt, and the debtor is not allowed to pay any debt unless it falls into one of the exceptions
Read More
December 8, 2023
Thailand’s Ministry of Interior has extended the deadlines for payment of the 2024 land and building tax and related procedures by two months. The announcement was published in the Government Gazette on November 30, 2023. According to the new timeline in the ministry’s announcement, the official land and building tax assessment forms will be sent to taxpayers by the end of April 2024 (extended from February 2024) while the deadline for payment of land and building tax has been extended to June 30, 2024 (from April 30, 2024). For payments made in installments, the announcement also extended the deadline for each installment as follows: For more details on these measures, or any aspect of Thailand’s land and building tax, please contact Chaiwat Keratisuthisathorn at [email protected] or Supranee Arjjit at [email protected].
Read More
December 4, 2023
Thailand’s Ministry of Industry (MOI) has issued a notification adopting the polluter-pays principle for generators of industrial waste in factories. The Notification of the Ministry of Industry on Management of Waste or Unused Materials B.E. 2566 (2023), enacted under the Factory Act B.E. 2535 (1992), marks a pivotal shift in the responsibilities and liabilities of factory operators as waste generators, which under the new notification no longer end when the waste is collected by a third-party waste processor. The notification, which was first issued in May 31, 2023, took effect on November 1, 2023, after the expiration of a grace period set by the MOI. The new MOI notification extends waste generators’ responsibilities and liabilities for management and disposal of waste from the time the waste is generated until it is properly and completely disposed of. These responsibilities include delivering the waste to the waste processor and overseeing the waste disposal processing, as well as undertaking proper measures in the event of failure by the waste processor, accident, or loss of the waste. Similar to the rules under the previous MOI notification on factory waste, the transport of waste outside the factory premises for disposal still requires permission from the Department of Industrial Works (DIW). However, the permission under the new MOI notification can now be applied for either electronically via its customer registration system (“i-Industry system”) or in person at the DIW. The MOI’s adoption of the polluter-pays principle for industrial waste heralds a significant shift in waste management liability and the costs of pollution prevention to the waste generators, who now need to ensure compliance with the rigorous criteria and compliance procedures outlined in the new MOI notification. For more details on the new rules, or on any aspect of Thailand’s waste management or environmental regulations for
Read More
November 17, 2023
On October 3, 2023, Thailand’s Board of Investment (BOI) issued a new regulation clarifying the eligibility criteria for investment promotion under the BOI category “5.10 Development of software, platforms for digital services, or digital content.” To be eligible for BOI promotion under the digital activity category, projects must meet criteria related to local development, minimum investment amount, machinery and equipment, and development processes. These criteria for category 5.10 activities, along with the latest clarifications from the BOI, are detailed in the table below. Tax Incentives The BOI also clarified the method for calculating corporate income tax (CIT) exemptions. The CIT cap amount is calculated on an annual basis from the prescribed expenses incurred after applying for BOI promotion and occurring during the year for which the CIT exemption is claimed. The allowances include 100% of expenses for salaries for newly hired Thai IT personnel, technology-related training, and obtaining quality standards (such as ISO 29110). The revenue of projects that qualify for CIT exemption must be from sales or services directly related to software, platforms for digital services, or digital content developed as promoted by the BOI, including licensing fees, subscription fees, pay-per-use expenses, in-app purchase fees, usage fees, revenue sharing, advertising fees, and so on. For more details on BOI promotion for digital activities, or on any aspect of investment promotion in Thailand, please contact Athistha (Nop) Chitranukroh at [email protected] or +66 2056 5600, Napassorn Lertussavavivat at [email protected] or +66 2056 5662, or Thammapas Chanpanich at [email protected] or +66 2056 5561.
Read More