Steps for foreign entrepreneur to set up a business in Thailand

As a foreign entrepreneur, to set up your business in Thailand, there are many issues to be considered in order to run your business legally with your utmost advantage. We, W Law International (Thailand) could provide some guidance of primary knowledge needed for your business.

Setting up an Entity in Thailand

• Thai Limited Liability Company (LLC)

Thai company means a company incorporated under the Laws of Thailand with Thai majority shareholders holding not less than 51%, this company is considered as a Thai person having thoroughly right according to Civil and Commercial Code of Thailand such as owning the land, do all categories of business allowed for Thai individual, etc. Minimum no. of shareholder required is 3 persons (can be either individual or company) and minimum 1 director is required.

According to the Law, the registration process can be taken place in one day, however in practice, in order to proceed with the document of either shareholder or other application forms including process of name subscription, usually the registration process can be completed soonest in a week.

• Foreign Company registered under Thai Laws

A company which is incorporated under the Laws of Thailand with foreigner holding majority shares of the company, causes this company considered as a foreigner. Type of businesses allowed for such company are subject to the Foreign Business Act, as there are many restricted businesses for foreigner to perform in Thailand.

• Representative Office / Regional Office

Other options for a foreign company to set up an entity in Thailand are representative office or regional office, these types of entity do not cause the constitution of new juristic person apart from its headquarter however it is for purpose of convenient for its headquarter to perform some action in Thailand through its manager, however with limited actions allowed as the following:

Representative is forbidden to make any income except fund supported by its HQ and Representative is forbidden to receive any purchase order, make an offer or dealing in business with other person.

Representative Office:

There are 5 scopes of work allowing for representative office: (a) Report status of business in Thailand, (b) Advisory of product, (c) find sourcing of product and service, (d) inspection and quality-quantity control of product purchased by its HQ, and (e) Publishing the news of its HQ’s product or service.

Initial required information for the registration are as the following: 1. Aspect of business 2. Category and description of the services required in Thailand 3. Consistency of required service with the HQ’s business 4. Extent of study and/or report which to be performed for benefit of its HQ as well as description of advantages to Thailand 5. HQ’s identity and supporting document such as, corporate incorporation certificate, company’s objectives, association chart showing relation between HQ and representative office, previous purchase order by HQ (if any)

Foreign Business License (FBL)

Foreign Business Act B.E. 2542 stipulates some restriction of businesses to be performed by foreigner in Thailand. Foreigner by meaning of this Law i.e. (1) individual who does not hold Thai citizen (2) a company which is not incorporated under the Laws of Thailand (3) a company which is incorporated under the Law of Thailand, but major shares hold by (1) or (2), and (4) a company which is incorporated under the Laws of Thailand but major shares hold by (1), (2) or (3)

According to such Laws, there are 3 lists of types of business with different criteria.

List One: types of business that is strictly restricted foreigner to perform in Thailand

(1) The Press, radio broadcasting station or radio and television station business (2) Rice farming, plantation or crop growing (3) Livestock farming (4) Forestry and timber processing from a natural forest (5) Fishery, only in respect of the catchment of aquatic animals in Thai waters and specific economic zones of Thailand (6) Extraction of Thai medicinal herbs (7) Trading and auction sale of antique objects of Thailand or objects of historical value of the country   (8) Making or casting Buddha Images and monk alms‐bowls (9) Land trading

List Two: businesses related to national safety or security or having impacts on arts, culture, traditions, customs and folklore handicrafts or natural resources and the environment. These types of business can be allowed by resolution of the cabinet of Thailand.

Chapter 1: Businesses related to National Safety or Security (1) Production, distribution and maintenance of: (a) firearms, ammunition, gun powders and explosives; (b) components of firearms, ammunition and explosives; (c) armaments, ships, aircraft or vehicles for military use; (d) equipment or components of all types of war materials (2) Domestic transportation by land, water or air, including domestic aviation

Chapter 2: Businesses Having Impacts on Arts, Culture, Traditions, Customs and Folklore Handicrafts (1) Trading of antiques or artistic objects that are artistic works or handicrafts of Thailand (2) Production of wood carvings (3) Silkworm raising, production of Thai silk yarn, weaving of Thai silk or printing of Thai silk patterns (4) Production of Thai musical instruments   (5) Production of goldware, silverware, nielloware, bronzeware or lacquerware (6) Production of crockery or porcelains representing Thai arts and culture

Chapter 3: Businesses Having Impacts on Natural Resources or the Environment (1) Production of sugar from sugar cane (2) Salt farming, including non‐sea salt farming (3) Production of rock salt (4) Mining, including rock blasting or rock crushing (5) Timber processing for production of furniture and utensils

List Three: list three businesses in respect of which Thai nationals are not ready to compete with foreigners, these types of business can be allowed by the director-general by approval of foreign Business Commission

(1) Rice milling and production of flour from rice and economic plants (2) Fishery  only in respect of the hatching and raising of aquatic animals (3) Forestry from a grown forest (4) Production of plywood, veneer wood, chipboards or hardboards   (5) Production of lime (6) Provision of accounting services (7) Provision of legal services (8) Provision of architectural services (9) Provision of engineering services (10) Construction, with the exception of: (a) Construction of structures for delivery of infrastructure public services in the sphere of public utilities or transportation requiring the use of special apparatuses, machines, technology or expertise, with the minimum capital of five hundred million Baht or upwards from foreigners; (b) Construction of other types as prescribed in the Ministerial Regulation (11) Brokerage or agency businesses, with the exception of: (a) being a broker or an agent in the sale or purchase of securities or in services related to futures trading of agricultural commodities or financing instruments or securities; (b) being a broker or an agent in the sale, purchase or procurement of goods or services necessary for the production or the provision of services amongst affiliated enterprises;   (c) being a broker or an agent in the sale or purchase, procurement, distribution or acquisition of domestic and foreign markets for the distribution of domestically manufactured or imported goods, which is in character the operation of international trade, with the minimum capital of one hundred million Baht or upwards from foreigners (d) being a broker or an agent of other types as prescribed in the Ministerial Regulation (12) Sale by auction, with the exception of: (a) a sale by auction which, in character, involves international bidding of items other than antiques, objects of antiquity or artistic objects that are artistic works or handicrafts or objects of antiquity of Thailand or of historical value of the country; (b) sales by auction of other types as prescribed in the Ministerial Regulation 20 (13) Internal trade related to traditional agricultural products or produce not yet prohibited by law (14) Retail sale of goods of all types with the total minimum capital in the amount lower than one hundred million Baht or with the minimum capital of each store in the amount lower than twenty million Baht (15) Wholesale of all types with the minimum capital of each store in the amount lower than one hundred million Baht (16) Advertising business   (17) Hotel business, with the exception of the hotel management service (18) Guided touring (19) Sale of food and beverages (20) Cultivation, propagation or development of plant varieties   (21) Other service businesses, with the exception of service businesses as prescribed in the Ministerial Regulation

BOARD OF INVESTMENT (BOI)

A foreign company may apply for special privileges to the Board of Investment office, example of privileges such as

(1) Tax benefit: for example, exemption or reduction of import tax for the machinery used for manufacturing in Thailand, raw material, corporate income tax for specific period, etc.

(2) Foreign Employee: ratio of usual restriction of registered capital as well as no. of foreign employee to Thai employee can be exempted, and work permit & visa arrangement can be done with One Stop Service instead of going to either Immigration office or Labor department as usual company which has not been promoted by BOI. Furthermore, the director(s) of each BOI supported company is entitled to use fast track at the airport.

(3) Land ownership: some type of business may be able to get special privilege from BOI to have ownership on the landed property even outside the industrial zone.

Procedure and process in brief for BOI application:

1. Check the criteria of the available type of business that is supported by BOI as well as type of privilege available for each type of business.
2. Prepare all related information of the business, such as business introduction, qualification of each executive, previous financial record and supporting documents, requirement of machinery for the business, machinery’s information, requirement of foreign specialist, propose of obtaining BOI’s promotion, most important is benefit to Thailand from promoting such company as well as other involving information depending on each type of business and expected privilege.
3. After submission of all documents and information, BOI’s officer shall stipulate an appointment to interview the representative of the company, to describe all the company information, requirement of machinery and its specification, specialist and his qualification, need of raw materials, as well as other related information concerning the business and benefit to Thailand.
4. Afterwards, BOI will provide the responsive letter with the resolution, the applicant then shall proceed further process to obtain the certificate of promotion
5. After the company obtains the certificate of promotion, there will be designated time for operation start up.

Long Term Staying Permit and Working Permit

Type of staying permit granted to foreign employee is Non-Immigrant “B”, general condition which entitles one company to engage a foreign employee i.e. THB 2,000,000 registered capital per one foreign employee as well as ratio 1:4 for one foreigner to 4 Thai employees. The actual company owner, in order to apply for Non-Immigrant “B” and working permit also subject to this requirement.

However, another option for an investor is permit to stay for Investment, for any foreign investor who has invested minimum THB 10,000,000 in Thailand either in the form of deposit in Thai bank account, share acquisition of Thai company and government bond, etc.  

LICENSING

To do the business in Thailand, there are further requirements upon type of business, such as some business may require special license to do so, such as for the food and beverage business as well as cosmetic, personal care and etc. FDA approval will be required. Some products such as steel, electronic devices and etc. will be required TSI, for the manufacturing business, Factory license is required. Therefore, each company should check each criteria case by case.

Post Responsibility after business set up

Once your business has been set up, there are further responsibilities to do monthly and annually or upon requirement of each specific Laws for specific business.

Every month each company is responsible to submit Withholding Tax, Withholding Income Tax, Value Added Tax Form to the revenue department, and submit the social security money to the social security department. Annually, each company shall submit its annual report. Besides, for a company promoted by BOI, its duty is to report to BOI of its work result. Each company may be required to submit other report by requirement of each Law.

Information initially provided above, may be sufficient to be guidance for starting your business in Thailand. However, to protect your business, we, W Law International (Thailand) could always be your consultant, as we provide full legal services in Thailand, our team are well experienced in various types of business.

Contact us

Email: contact@w-lawthai.com

Line: @wlaw

Tel: (66) 026485111

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