As IDGIP already mentioned about HOW TO SET UP A COMPANY IN THAILAND, and now we realize that owning majority shares in Thai companies is also beneficial for foreigners who are interested in investment in Thai firms.

There are two ways to achieve 100% ownership:

  1. Obtain a Foreign Business License

A Foreign Business License (hereinafter referred to as “FBL”) can be loosely understood as a Work Permit for companies. Just as foreigners in Thailand can only engage in certain occupations and are required to have a Work Permit to be able to work, foreign companies can also operate merely in the selected categories and need an FBL.

FBL only allows you to operate the permitted business type in Thailand. There are other requirements like registered capital.

The Business Lists under the Foreign Business Act B.E.2542 (1999)

  • Business List 1: covers Business which foreigners are not allowed to operate.
  • Business List 2: foreigners can operate business if permitted by the Minister of the Ministry of Commerce with the approval of the Cabinet.

Foreign companies that wish to engage in business activities under list 2 can apply for the FBL by meeting the following criteria:

  • Minimum capital of THB 3 million
  • Not less than 2/5 of the total number of directors must be Thai nationals.
  • A minimum of 40% of Thai shareholding. The Minister together with the Council of Ministers’ approval may reduce the requirement, but to not less than 25% for certain cases.

Once the requirements are met, the foreign company can apply for the FBL through the DBD by submitting the application and supporting documents.

The Minister shall consider whether to approve within 60 days from filing the application. Once the Minister has approved the application, the license shall be issued within 15 days from the approval date. However, the full process may take up to four months.

If the Minister refuses to give permission to the foreign company, the Minister shall notify the foreign company and state the reason of refusal in writing and within 30 days.

In the case that the foreign company has received approval to engage in activities under List 2 from the BOI or a foreign trade agreement, the foreign company will only need to apply for the foreign business certificate.

Application Fee for Business List 2: 10 Baht for each registered capital of 1,000 Baht with the minimum of 40,000 Baht and the maximum of 500,000 Baht.

  • Business List 3: foreigners can operate business if permitted by the Director – General of the Department of Business Development with the approval of the Committee

The criteria to be met for foreign companies seeking to engage a List 3 business are:

  • A minimum capital of THB 3 million
  • At least one authorized director or member residing in Thailand
  • The foreign company must submit the application and necessary documents to the Director-General of the DBD.

The Director-General shall approve within 60 days of filing the application, and the Director-General shall issue the license within 15 days after the approval date.

If the Director-General does not approve the foreign company operating activities in List 3, the Director-General shall notify the foreigner and state the reason for such refusal in writing and within 15 days.

Similarly, to List 1 and 2, a foreign company that received approval to operate under List 3 by the BOI or under a foreign trade agreement only needs to apply for a foreign business certificate.

Application fee for Business List 3: 5 Baht for each registered capital of 1,000 Baht with the minimum of 20,000 Baht and the maximum of 250,000 Baht.

We would strongly advise you to discuss with our attorney to provide you with comments and evaluate which type of company is best suited for your business operation in Thailand.

  1. Board of Investment (BOI) Promotion

The Thailand Board of Investment (hereinafter referred to as “BOI”) is a division of Thai government that promotes business start-ups and projects in areas that are deemed desirable for the economic outlook of Thailand.

Nowadays Thailand Board of Investment offers promotional privileges in 8 key sectors:

  1. Agriculture and agricultural products
  2. Minerals, ceramics, and basic metals
  3. Light industry
  4. Metal products, machinery, and transport equipment
  5. Electronic Industry and the electrical appliances
  6. Chemicals, paper, and plastics
  7. Services and public utilities
  8. Technology and Innovation Development

Tax incentives given to promoted entities by Thailand BOI can be separated into two different categories:

  • Activity-based incentives that depend on the type of activity
  • Additional merit-based incentives that are provided to projects benefitting the country.

Some of the most important Tax and Non-Tax Incentives under BOI include:

  • Corporate Income Tax exemptions for a minimum of 3 years to a maximum of 8 years.
  • Exemption of Import duties on machinery
  • Exemption of import duties on raw materials used in R&D
  • Permission to bring to Thailand skilled workers and
  • Permit to own land
  • Permit to take out or remit money abroad in foreign currency

To receive the BOI investment promotion certificate, the applicant must establish a Thai company within six months of acceptance approval. The following documents must be submitted to the OBOI offices in due course:

  • Application form for BOI promotion certificate
  • Memorandum of association
  • Certificate of company registration
  • Certificate stating the registered capital, authorized directors indicating signing authority and the registered address
  • Shareholder list
  • Evidence of the transfer of funds from overseas, or an investment certificate issued by the Bank of Thailand
  • A Joint venture agreement, licensing or franchise agreement, technical assistance contract and/or technology transfer contract.

If the applicant is unable to submit the documents within the required time frame, an explanatory letter must be sent to the BOI, which will consider extending the deadline by 4 months at a time, up to a maximum of three times. The BOI will issue the investment promotion certificate after receipt of all specified documents, and the promoted company must follow the conditions laid out in the BOI investment promotion certificate.

Foreigners who want to own 100% of their business should consult with our BOI attorney on how to maximize your chance of success and get the most out of these incentives.

The Pros and Cons of Setting Up a Company in Thailand

There are certain advantages and disadvantages to setting up a company in Thailand, and it’s important to know what they are and whether the pros outweigh the cons for your situation.

Pros

  • Juristic Person. As a Thai-owned company, you can enjoy the same rights as a Thai person, including the ability to enter into contracts, own property, and purchase land in Thailand (though additional Thai shareholders may be required for land ownership).
  • Protection of Liability. By keeping personal funds separate from the company’s funds and dividing the company’s capital into shares, you can protect yourself from personal liability.
  • Visas and Work Permits. The company can sponsor visas (Non-Immigrant B) and work permits for foreigners, allowing them to stay and work legally in Thailand. However, specific requirements must be met, such as registering sufficient capital and employing Thai staff for each foreign employee.
  • Reduced Taxes. Private limited companies can claim tax deductions in various categories, such as training, research and development, entertainment expenses, donations, and wear and tear. This can help reduce the tax burden.
  • Trust. Registering your company in Thailand can enhance your business reputation, both domestically and internationally, by demonstrating your official status and liability.

Cons

  • Costs: Setting up a company in Thailand involves various costs, including paperwork, registration fees, and accounting services. These expenses can be significant, so it’s essential to assess whether the potential income generated by the company justifies these costs.
  • Time: Establishing and operating a company requires time and effort. It takes time to incorporate, obtain necessary permits, and navigate Thai business practices. Additionally, obtaining a work permit can take several months. Commitment and willingness to learn are crucial for success.
  • Complexity: Thai business practices may differ from those in other countries, and there are specific rules and regulations to understand. Mistakes can result in additional time and fees, so it’s important to familiarize yourself with the legal and operational requirements.

If you are considering setting up a company in Thailand, it is advisable to consult with an attorney to understand the process, requirements, and potential alternatives that may better suit your business needs. The initial consultation can provide valuable insights and guidance before embarking on the company registration process.

Get Your Free Consultation Now.

We provide one-stop support for foreign companies

expanding into the Thai market.

Contact Us