The Treaty of Amity and Economic Relations between the United States and Thailand, commonly known as the Treaty of Amity, offers a unique opportunity for American businesses seeking to establish their presence in Thailand. This treaty, signed in 1966, allows U.S. companies to maintain a majority share or to wholly own a company, branch office, or representative office located in Thailand. This article provides an in-depth guide on the Treaty of Amity’s restrictions, capital requirements, and procedures to obtain certification in Thailand.
Treaty of Amity Company Restrictions
While the Treaty of Amity provides U.S. investors with significant freedoms, there are exceptions. U.S. companies are prohibited from owning businesses in the following sectors:
- Fiduciary functions
- Banking involving depository functions
- Exploitation of land or other natural resources
- Domestic trade in indigenous agricultural products
These exceptions ensure that essential industries remain under Thai control. However, for most sectors, American businesses can enjoy the same rights as Thai companies.
Capital Requirements under the Treaty of Amity
While there is no minimum capital requirement specified in the Treaty of Amity, the Thai government typically expects a reasonable amount of capital for the business’s nature and size. For American companies, the capital should be sufficient to cover the entire operation costs until the business becomes self-sustaining.
Furthermore, the Ministry of Commerce requires U.S. companies to have a minimum capital of THB 2 million if they aim to hire foreign employees.
Procedures to Obtain Treaty of Amity Certification
- Company Registration: Register your business with the Thai Ministry of Commerce, ensuring it adheres to the ownership structure required by the Treaty, i.e., majority or wholly American-owned.
- Obtain Necessary Documents: This includes the company affidavit, list of shareholders, articles of incorporation, balance sheets, and other related documents.
- Apply for Certification: Submit the completed application form to the U.S. Commercial Service, accompanied by a letter explaining your company’s operations, proof of American nationality of individual or corporate shareholders, and copies of the documents obtained from the previous step.
- Verification and Certification: The U.S. Commercial Service will verify the documents, confirm the majority American ownership, and issue a certification letter.
- Final Approval: Submit the certification to the Thai Ministry of Commerce, which will provide final approval and issue a Foreign Business License.
- Company Incorporation: Once you receive the Foreign Business License, you can start your company incorporation process.
The Treaty of Amity certification process can take several weeks to months, so it’s recommended to begin the process well in advance of when you plan to start operations.
While the Treaty of Amity offers distinct benefits, it’s critical to note that all companies, regardless of the benefits they enjoy under this treaty, must abide by Thai law, including the payment of taxes. It is advisable to work with a local legal or business consulting firm to ensure your business is compliant with local regulations.
In conclusion, the U.S.-Thailand Treaty of Amity presents an exceptional opportunity for American businesses to enter the dynamic Thai market, offering significant advantages over the typical foreign investment restrictions in Thailand. By understanding and following the correct procedures, U.S. businesses can leverage this treaty to its full potential.