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5 Types of Companies for Foreigners in Thailand
07/11/2023
When considering starting a business in Thailand, one of the most important decisions you’ll face is choosing the right business structure. It’s a decision that can significantly impact your operations, legal obligations, and financial aspects of your venture.
Thailand has become a hotspot for both local and international entrepreneurs. But to truly thrive in this dynamic market, it’s essential to understand the different business structures available and select the one that aligns with your goals and vision.
In this blog post, we’ll explore 5 types of companies for foreigners in Thailand.
Key points
- Thai limited companies can be 100% foreign-owned; however, certain activities are restricted for such companies.
- The Treaty of Amity allows American citizens to hold 100% of the shares in a company and also operate a business on the same foundations as Thai companies.
- Companies that receive a BOI promotion are eligible for various incentives, including 100% foreign ownership and tax incentives.
Thai Limited Company
A Thai Limited Company is Thailand’s most popular form of business structure. This is due to the flexibility offered to business owners. Under the Thai Civil and Commercial Code, companies can be 100% foreign-owned and are not required to have a Thai Partner. However, the ability to operate a company like this is entirely dependent on the business activities of the company. Limited Companies are made up of both directors and shareholders.
Advantages
Quick and easy to set up: Setting up a Thai Limited Company can be achieved in a few business days.
Limited Liability: The liability of each shareholder is limited to the value of their shares.
Disadvantages
Requirements for hiring foreign staff: For each foreign member of staff hired, 4 Thai employees, 2 million THB is registered capital is required. The company must also be registered with the Social Security (3 months deductions made for Thai staff) and VAT>
Likelihood of needing a Thai partner: The Foreign Business Act of 1999 (FBA) regulates foreign investment in Thailand and prohibits foreign companies from engaging in approximately 50 specific business activities. Under the FBA, foreign ownership in a limited company is limited to 49.99% unless a Foreign Business License or BOI promotion is secured, potentially necessitating a Thai partner to hold the majority share.
BOI Company
When considering opening a company in Thailand, entrepreneurs should always consider applying for a Board Of Investment (BOI) promotion. Thailand’s BOI is a special government agency that promotes foreign investment within Thailand.
A BOI promotion removes many barriers to doing business in Thailand, such as the restrictions of the Foreign Business Act. However, only certain business activities are eligible for a BOI promotion.
Advantages
100% Foreign Ownership: BOI companies can be 100% foreign-owned and operate in restricted business activities due to the ability to apply for and be granted a Foreign Business Certificate.
The reduced quota for hiring foreign employees: Unlike other company structures, BOI-promoted companies are not subject to quotas when hiring foreign employees.
Tax Incentives: Certain business activities are eligible for tax incentives from the BOI, such as Corporate Income Tax exemptions, etc.
Other Incentives: BOI companies can own land, remit money abroad, and use the One Stop Service Center for work permit and visa collections.
Disadvantages
Not available to all businesses: BOI promotions are only available to companies undertaking certain business activities. Please see here for a comprehensive list.
Long application process: Applying for a BOI promotion can take approximately 6 months.
The Treaty of Amity
The Treaty of Amity aims to provide significant advantages for US investors and companies to enter the Thai market for both corporations and individuals. The Treaty of Amity allows American companies to hold most of the shares in a whole company, branch office or representative office established in Thailand. American companies may also operate on the same foundations as Thai companies.
Advantages
100% Foreign Ownership: American citizens can operate 100% foreign-owned companies.
Business Activities: Treaty of Amity companies may operate on the same foundations as Thai companies (except for restricted sectors e.g. real estate and fiduciary services).
Foreign Business Licence: Treaty of Amity companies do not need to apply for a Foreign Business Licence.
Disadvantages
Hiring of Foreign employees: A ratio of 4 Thai employees per foreign employee hired is required to support a Work Permit.
Structure Requirements: A minimum of 51% of shareholders and 50% of the directors must be American citizens.
Branch Office
A Branch Office is essentially a foreign company that registers its presence in Thailand as a branch.
The Branch Office is not considered as a separate entity from the foreign company and, therefore, is treated as the same entity as its parent. The head office is liable for any actions taken by the Branch Office in Thailand.
Advantages
100% Foreign Ownership: Branch offices can be 100% foreign-owned by the head office
Reduced quotas for hiring foreigners: A ratio of 1 Thai per foreign employee is required.
Branch Offices can generate profit: Unlike Representative Offices, branch offices can generate income
Disadvantages
Business Restrictions: Business activities are restricted to the business for which the Branch Office is registered.
Foreign Business Licence: A Foreign Business License is required for restricted activities.
Representative Office
As a non-trading entity, a foreign companies can established a Representative Office in Thailand to provide non-commercial services, primarily promoting and representing its parent company.
Representative Offices cannot generate any revenue, and the head office in another country fully funds their expenses.
Advantages
100% Foreign Owned: A Representative Office is 100% owned by a foreign head office.
A reduced ratio for hiring foreign staff: A ratio of 1:1 (1 Thai employee per foreign employee) must be satisfied when hiring foreign staff. In practice, Representative Offices can hire up to 3 foreign employees.
Capital Requirements: A minimum capital requirement of 2,000,000 THB is required within the first 3 years. 25% of this capital (500,000 THB) is required within the first 3 months, 25% by the end of the first year, 25% by the end of the 2nd year, and the final 25% by the end of the third year.
Not subject to corporate income tax: Representative Offices cannot generate income
Disadvantages
Limited Business Activities: a Representative Office can only perform “non-income related activities” there it cannot earn income in Thailand.
Are there any alternatives?
Professional Employer Organizations (PEOs) offer a dependable and efficient way for businesses to begin operations and limit their initial risk when entering the Thai market, providing the PEO service is legitimate.
PEOs have garnered significant interest among clients seeking to begin business operations in Thailand swiftly. PEOs offer a strategic entry point, enabling individuals to get started and, later, register a company efficiently and properly consolidate their business activities.
How can Belaws help?
For more information about how to start your small business in Thailand, why not talk to one of our experts now?
Please note that this article is for information purposes only and does not constitute legal advice.
Our consultations last for a period of up to 1 hour and are conducted by expert Lawyers who are fluent in English, French and Thai.
Consultations can be hosted via WhatsApp or Video Conferencing software for your convenience. A consultation with one of our legal experts is undoubtedly the best way to get all the information you need and answer any questions you may have about your new business or project.
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Frequently asked questions
Can foreigner get a job in Bangkok?
Yes, foreigners can get jobs in Bangkok. However, there are some restrictions on certain jobs and industries. Foreigners also need to have a valid work permit.
Can foreign companies operate in Thailand?
Yes, foreign companies can operate in Thailand. However, there are some restrictions on certain industries and activities. Foreign companies also need to register with the Thai government.
Can foreigners own 100% of a company in Thailand?
Yes, foreigners can own 100% of a company in Thailand, depending on the industry and business activity. However, there are some exceptions to this rule.
What businesses can foreigners own in Thailand?
Foreigners can own a wide range of businesses in Thailand, including:
- Manufacturing
- Construction
- Services
- Retail
- Tourism
- Real estate (with restrictions)
Can a foreign company open a bank account in Thailand?
Yes, a foreign company can open a bank account in Thailand. However, the company will need to register with the Thai government and provide certain documentation.
Can a foreigner start a business in Bangkok?
Yes, a foreigner can start a business in Bangkok. However, the foreigner will need to register the business with the Thai government and obtain a work permit.
How much money do I need to start a business in Thailand?
The amount of money needed to start a business in Thailand depends on the type of business and the industry. However, there is a minimum capital requirement of 2 million THB for most types of businesses.
Is Bangkok a good place for business?
es, Bangkok is a good place for business. It is a major economic hub in Southeast Asia and has a large and growing population. Bangkok is also home to a number of international companies and organizations.
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