Thailand’s Tourist Police Division Calls for Nominees Crackdown

Many foreign investors who run nominee companies here are from Russia, India and China and the number is increasing

 

CHIANG RAI – Thailand’s Tourist Police Division has asked the Ministry of Commerce and the Revenue Department to inspect tourism-related businesses that are run by foreigners.

The division commander Pol Maj Gen Roy Inkapairoj said some foreign tourists who visited the country frequently invested in tourism related business, but used a Thai to act as a nominee so they could hold all the equity.

“Most of them hide in tourism related businesses such as restaurants, guesthouses, hotels, massage or spas and gem shops,” the division commander claimed.

Chinese national Hung Jin Tia, also known as Mr Tawan, was charged with working illegally as a Phuket tour guide

More detailed checks should be made by the Ministry of Commerce and the Revenue Department to check the stakeholders of these businesses and their tax records, he said.

“It is a time to seriously look into travel related companies and see whether they are legitimate because they could be hurting the image of Thai tourism in the long-run.”

He warned that Thailand would earn nothing from these companies as the entire profit was repatriated to the owner’s country of residence.

“Many foreign investors who run nominee companies here are from Russia, India and China and the number is increasing. Therefore, changes to investment laws may be needed to suppress these nominee companies,” he said.

The commander did not back up his statements with any firm data on the extent of the problem, but recent news reports on scams in Phuket pointed the finger at Russian enterprises.

The problem has plagued Pattaya for decades, starting with German investors,  then Russian and later Chinese and Indians. Some Russians resident in Pattaya work legitimately in the hotel business, but have on the side travel firms that handle the inbound market directly for their partners in Russia. They usually marry Thai women and form a company under their wives’ names.

The Tourist Police commander’s concerns could cause and over reaction at government level, which in turn could damage the business of legitimate SME ventures in the country. There are thousands of small enterprises in tourism that are essentially family owned with one of the partners a foreigner, holding 49% and their Thai wives or “life partners” holding the majority.

Ministry of Tourism and Sports’ Department of Tourism has already warned tour operators to respect the business law in the Act of Tourism and Guide Registration 2008 particular the rule on foreigners holding a maximum 49% of a travel firm’s equity.

The tourism department deputy general director, Kajorn Weerajai, earlier told TTR Weekly the ministry has the legal authority to revoke a tour company’s license through its Bureau of Tourism and Guide Registration office.

“Today, the ministry is working closely with Royal Thai Police and the Police Tourist Division to keep an eye on this issue particularly in popular tourist destination like Phuket, Chiang Mai, and Pattaya.”

Once the ASEAN Economic Community is introduced in late 2015, foreign investors can easily take over a Thai travel firm through the Singapore backdoor.

Under Singapore law a foreign investor can hold 100% of the equity in a travel firm as long as it is registered, conducts business and pays tax in Singapore.

Using its Singapore company status, once AEC is activated, it could then open companies or branches in other ASEAN countries under a provision that allows an ASEAN based company to hold 70% of the equity. It would give them a commanding majority to control the business. It will also end the need to use nominees. – by Wanwisa Ngamsangchaikit  TTRweekly