Deciding to start a business in Thailand can be a very profitable decision. Apart from the attractiveness of the tropical climate and unhurried lifestyle, Thailand has an economy that makes it easy to do business.
According to the World Bank’s ease of doing business rankings, Thailand is ranked as the 21st – out of 190 – easiest economies to do business in. A high ease of doing business ranking means, among other things, that the laws and regulations in Thailand are conducive to businesses.
This includes affordable business and operational costs like renting office space. There is also a very reasonable rate of corporate tax, a business has to pay to the Thai government. It ranges depending on how much profit the business makes.
Thailand has the proper infrastructure and facilities required to run a business. The country’s IT networks, ease of internet connectivity, cheap and convenient transportation, all foster an excellent working condition.
In addition to all of the above, Thailand is a very safe place to live in and do business. If you are looking to put your roots down and start a business in Thailand, this is for you. To do business in Thailand, there are some basic things you need to know.
Choosing the type of business you would like to set up is one of the first things to consider. To help foster this decision-making process, you should be aware of Thailand’s Foreign Business Act of 1999. It states businesses that foreigners and foreign companies are prohibited from conducting. You can see the full list of prohibited businesses here.
You should also consider which company structure will be best suited to you and the business. There are many different company structures foreigners can choose from, one of those includes a partnership.
A partnership offers different kinds of structures. An unregistered partnership means you and your partners are jointly responsible for any debts incurred. In this case, all your business and personal tax is considered as one. While a registered partnership divides your personal and business tax affairs by registering your business as separate from you. Although, you’d still be responsible for any debts owed.
A limited liability partnership is one that is often considered because it means that the tax and debt liability of partners is limited to the amount of capital invested. Do remember that to set up a partnership in Thailand, all partners have to contribute something. Be it labour or capital.
How to Register a New Company in Thailand
To begin the process of company registration in Thailand, there are certain steps you need to take. One of these steps is to first reserve your company name by registering it. You can do this online by opening an account with the Department of Business Development.
New company names are usually approved or rejected within 1-2 days. The only exception to this norm is if the company name has words that may require external revision. Some of these words may include leasing, recruitment agency etc. If your company name falls under this category, you might be requested to change it.
To avoid any delay, it is better to choose a company name that is not contrary to state policy, public order or morals. After all considerations are met, you then search and preserve the company name. You also print out and sign the Notice of Reservation, which is valid for 30 days.
It can take some time to register a company in Thailand. You shouldn’t be in a hurry as it can take about 7 days for a private company and up to 30 days for a public company. The next step is to prepare necessary documents like:
- Articles and Memorandum of Association
- Application form and list of shareholders
- Director Forms signed by each director of the company
- Declaration of Business Operation Form
- Company name reservation
- Details of the offices and branches of your business.
Please note that you would also need a company stamp which will serve as your company signature when conducting business.
You will be required to pay at least 25% of the initial investment capital into a corporate bank account, you will also obtain the taxpayer identification number for your company. The documents required of you may vary slightly depending on the type of business. It is always a good idea to take advice, before proceeding to register your company. You can find some helpful guidelines here.
Bank Accounts, Visa, and Work Permits
Obtaining a work permit in Thailand requires a minimum amount of paid-up capital which is 2 million Baht. This will allow your company one work permit.
Gaining entry to do business in Thailand requires a non-immigrant ‘B’, which is a business visa. This makes you legally accepted to conduct business activities. You can apply for this visa at a Royal Thai Embassy or you can make consultations in your home country. The Visa Fee is 2,000 Baht for a single entry with 3-month validity and 5,000 Baht for multiple entries with 1-year validity.
Opening a bank account is simple, but if your company is small, you may not get a checking account. The bank may only give you a savings account in which you can only withdraw cash. With a company account, you will not get an ATM card. To withdraw money from this account, you have to go to the bank with a withdrawal slip that is signed by you and stamped with your company stamp. The bank can write up individual checks should you request it. It is difficult to obtain loans from Thai banks, you will have better luck getting a loan from your bank overseas. Even though the money will be transferred to Thailand.
Once your business is registered, you have to inform the tax authorities of your company. According to the Revenue Department, companies are required to pay Corporate Income Tax (CIT). They must file their tax returns (Form CIT 50) within 150 days from the closing date of their accounting periods. An accounting period is usually 12 months.
Can a Foreigner own 100% of a Thai Company?
Contrary to popular opinion, a foreigner can own 100% of a Thai company. But some of the methods are time-consuming and sometimes the outcomes are unpredictable. There are three major ways to achieve complete ownership:
Obtain a Foreign Business License
A Foreign Business License can be said to be a form of work permit. As it has been previously established that foreigners in Thailand can only engage in certain business lines, foreign companies are also included in this rule. But if a Foreign Business License is obtained, the can operate completely in these areas
Board Of Investment (BOI) Promotion
This division of the Thai government promotes business start-ups in areas that are important to the economic outlook of Thailand. This division makes provisions for tax and non-tax incentives. Non-tax incentives from the BOI include 100% foreign ownership( except certain businesses and industries), the permit to own land, and the permit to bring in skilled personnel to work in Thailand.
Registration through the Treaty of Amity (For US citizens only)
The Treaty of Amity is an agreement between the USA and Thailand that allows American companies or businesses to have major shareholding or full ownership of a company in Thailand.
Doing Business in Thailand is fairly easy but it is not without hurdles. Succeeding takes more than just lower business costs. It would do a wealth of good if you take time to learn the language, find a reliable Thai partner to help with cultural boundaries and seek out legal and business advice. To learn more about the business and regulatory environment in Thailand, contact Siam Legal International for help. You can reach our experienced business attorneys at +6622548900 or contact us online here.