Legal
What are the Hidden Costs of Company Creation in Thailand?
TL;DR: Company creation in Thailand involves more than simple registration fees. Foreign investors must budget for Foreign Business Act restrictions, minimum capital requirements, BOI investment conditions, work permits, VAT registration, accounting, audits, licensing, and ongoing labour law compliance. Proper structuring at the beginning helps avoid costly amendments and regulatory complications later.
Starting a business in Thailand presents exciting opportunities for entrepreneurs and investors looking to enter the country’s expanding economy and take advantage of its strategic location in Southeast Asia.
Thailand’s diverse business environment and supportive government policies for foreign investment provides a favorable environment for international expansion. However, hidden costs such as regulatory complexities, licensing fees, and ongoing compliance requirements, can lead to unexpected expenses.
In this article, we will take a look at some examples of hidden costs faced by foreign investors considering starting a business in Thailand.
Key Points
- Foreign businesses face ownership restrictions under the Foreign Business Act, with foreign ownership capped at 49.99% for certain activities, requiring either a Foreign Business License (difficult to obtain), BOI promotion, or a legitimate Thai partner.
- BOI promotion offers significant advantages including 100% foreign ownership and tax benefits, but involves costs for the Foreign Business Certificate and typically requires professional assistance.
- Work permit requirements create substantial hidden costs, as companies must usually have 2 million THB of paid up registered capital per foreign employee and hire four Thai employees for each foreigner (exceptions apply for BOI companies)
- Regulatory compliance requires business-specific licenses with varying fees, plus ongoing accounting services and annual audits.
- Visa processing for foreign employees involves unexpected expenses, as Non-Immigrant B visas often have to be obtained outside Thailand through the e-visa system, requiring travel costs and accommodation for 10-15 business days.
- You must have a registered address and a proper office to support VAT application and Work Permit application.
- If your company is registered for VAT or has employees, you must file taxes monthly, which requires monthly accounting and payroll services.
- Annual compliance obligations and audits, even if the company has no operations.
- Foreigners without a long-term visa may face difficulties opening a company bank account, often requiring a Thai local director.
- Purchasing an existing company can end up costing more in order to make the company align with your needs.
Overcoming the Restrictions For Foreign Businesses
While Thailand actively seeks to attract foreign businesses, certain business activities are reserved exclusively for Thai nationals. The Foreign Business Act (FBA) restricts foreigners or foreign-owned companies from engaging in over 50 categories of business activities in Thailand.
In relation to these restrictions, foreign ownership of a limited company is capped at a maximum of 49.99%. If a foreign investor owns 50% or more of a company’s shares, it is classified as a foreign company and will not legally be able to undertake these activities.
Please note, the use of nominee shares in Thailand is expressly prohibited by the Foreign Business Act.
While the Foreign Business Act does restrict foreign ownership, there are some exceptions which allow foreign owned companies to perform restricted business activities. However, these options will add additional costs to the project.
Foreign Business Licence
If a foreign owned business wishes to engage in any of the restricted activities contained within List 2 or 3 of the FBA, they may apply for a Foreign Business Licence (FBL). An FBL will allow 100% or majority owned foreign businesses to undertake restricted activities.
However, applicants must be aware that in practice it is difficult to obtain a FBL and there is no guarantee that the application will be successful.
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Fees for a foreign business license in Thailand vary based on the type of business activities. When applying for a Foreign Business Licence, the minimum capital requirement is 3 million Thai Baht. This is an important consideration because if the company is being newly set up, this capital must be fully paid-up. If the company needs to increase its capital later, the additional costs and government fees involved should also be considered (to be discussed in more detail later in the article).
The fees for the Foreign Business Licence are as follows:
- Application Fees:
- 1,000 – 2,000 THB.
- License Fees:
- For business who wish to engage in activities within List 2:
- Minimum fee: 40,000 THB.
- Maximum fee: 500,000 THB.
- Fee calculation: 10 THB for every 1,000 THB of registered capital.
- For business who wish to engage in activities within List 3:
- Minimum fee: 20,000 THB.
- Maximum fee: 250,000 THB.
- Fee calculation: 5 THB for every 1,000 THB of registered capital.
- For business who wish to engage in activities within List 2:
- Certificate Fees:
- Issuing the Foreign Business License: 20,000 THB
The Ministry of Commerce will make a decision regarding the application within 60 days from filing the application. The license will be issued within 15 days after the approval date. In practice, the process takes around 6 months and there is no guarantee the applicant will be successful in their application.
This extended application timeframe could result in additional or hidden costs as the company cannot begin to operate within the restricted areas until the FBL has been awarded. This could result in the company spending money on rent, wages and other costs without being able to make any income.
BOI Promotions
When starting a business in Thailand, checking your company’s eligibility for BOI promotion should be your top priority.
A common misconception among foreign investors is that the BOI only supports high-tech projects. In reality, many business activities qualify for promotion from the BOI, ranging from manufacturing, service, digital activities (including software), plus many more. The BOI even offers a catch-all promotion through the TISO program, which covers a wide scope of activities including various service industries.
BOI-promoted companies enjoy significant benefits not available to other company structures, such as:
- 100% foreign ownership,
- Foreign Business Certificate to navigate the restrictions of the Foreign Business Act,
- Land ownership,
- Potential tax exemptions and
- Relaxed rules for work permit and visas
The removal of the Foreign Business License requirement, combined with other BOI incentives, makes it significantly easier for foreign investors to establish and operate businesses in Thailand.
While the BOI clearly offers a major advantage for eligible companies, it is not a cheap option. While there are no official fees for applying for a BOI promotion, successful companies will have to pay 22,000 THB for the Foreign Business Certificate.
The biggest expense a company may face in relation to a BOI application is for professional assistance. While it is possible to apply for a BOI promotion without assistance, it is a long and complicated process.
The conditions of your approval, including minimum investment requirements and other obligations, will be determined based on the business plan you submit.
By working with experienced professionals who handle BOI applications regularly, you will be able to structure your business plan in a way that meets the BOIs criteria and therefore keep investment requirements manageable. While the minimum investment for most BOI promotions is 1 million THB, the actual amount required can vary depending on the details of your business plan, projected revenues, and the nature of your proposed activities. In some cases, the BOI may require a significantly higher investment than the minimum threshold, making careful planning essential to avoid unnecessary financial commitments.
Hiring a company who is experienced in handling applications can make the process smoother and more efficient as they know exactly what the BOI requires and can prepare everything accordingly. Applications which are not properly prepared can result in lots of back and forth between the applicant and BOI for extra information or answering avoidable questions.
Read more:
Thai Limited Company with a Thai Partner
A private limited company that has been properly structured is the most common business type for a business who wishes to perform restricted business activities.
A Thai limited company with a Thai partner who holds over 50% of the shares is not considered foreign owned and therefore, not subject to the restrictions of the Foreign Business Act.
While the official fees for registering a company in Thailand are THB 7,000 (this cost can be slightly higher if the company wishes to have a company stamp as well), the hidden costs that may affect the foreign investor come from the structuring of the company. In order for a foreign investor to protect their investment when starting a company with a Thai partner, it is highly recommended to draft a Shareholder Agreement and Articles of Association which clearly state the rights and obligations for both parties.
When starting a Thai limited company, legal fees can quickly add up, so it is highly recommended to check what’s included in your lawyer’s package. Many service providers offer incomplete company registration packages missing key elements like proper Articles of Association, Share Registrar Book and certificate of shares, , but investors should make the package they have chosen covers all their needs and services upfront. This is important because if you need to make changes later to fix an issue, this can result in unexpected costs.
For example, if you need to add or amend your company’s Articles of Association (AOA), this will be subject to additional costs. The provisions within an AOA state how the company is managed, protects investors, and outlines share transfer restrictions, drag-along and tag-along rights, and other essential governance rules.
If the company does not choose to have an AOA at the beginning, the company will be subject to the provisions of the Thai Civil and Commercial Code. If the company wishes to add some Articles of Association or make changes to their existing AOA, this will require an Extraordinary General Meeting (EGM), issuing shareholder notices, and formally submitting amendments, which will result in further costs.
Another often-overlooked cost involves the company’s shareholding structure. If you want different classes of shares with varying voting rights, this must be planned carefully at the beginning. Once a class of shares is created, it cannot be canceled or changed later. Any restructuring would require a capital decrease which is a complex legal process, leading to additional expenses.
These should all be prepared at the beginning of the company setup process. Once the company is established, obtaining shareholder agreements or signatures for necessary documents may become more difficult, resulting in delays or conflicts among the shareholders.
Another consideration when setting up a company in Thailand is signing a shareholder agreement. This is recommended because the agreement must be signed by all shareholders and are legally enforceable against the signatories. Again, it is recommended to complete this before registering the company, although it can be done at any time.
A Shareholders’ Agreement is a private agreement between the shareholders of a company that outlines how the business will be owned, managed, and operated. It areas such as voting rights, profit sharing, share transfers, financing, and conflict resolution.
If there is no shareholder agreement, there is a risk that the shareholders who initially agreed on certain terms may later change their minds, forget the details, or even refuse to sign. This can lead to serious issues and potentially costly legal disputes.
A Shareholder Agreement must be drafted in a way that provides the best protection for the foreign investor. Therefore, when drafting these kinds of documents, it is best to work with a professional legal team.
To hire experts to draft these kinds of documents, investors should expect to pay fees starting at THB 35,000 to more than THB 100,000 for complex agreements.
Purchasing a Company
Purchasing an existing company may seem like a great idea, however in reality it could result in many additional costs being incurred by the company on top of the initial purchase price.
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Due Diligence
When buying a business the new owner is at risk of being liable for unknown or hidden debts, such as lawsuits, tax obligations, or contractual obligations, that the seller may have incurred before the sale. Another drawback is the possibility of being held liable for the seller’s actions or misconduct before the purchase, even if the buyer had no involvement or knowledge of them.
Conducting thorough due diligence is highly recommended when buying an existing business. Due diligence allows you to confirm key details and assess the potential risks and opportunities associated with the target company.
When undertaking due diligence, the following areas should be considered:
Company Registration Details: Review the company’s registration details, including its legal status, current shareholder list, and directors.
Liabilities: Identify any pending legal actions or significant liabilities involving the company that the new owners would be responsible for. For example, debts, taxes, contractual obligations and legal claims.
Financial Analysis: Examine the company’s financial balance sheets, bank statements, and tax records to assess its financial health and stability.
Contracts and Obligations: Evaluate all contracts and agreements signed by the company, including employment contracts, vendor agreements, and lease agreements.
Legal and Regulatory Compliance: Inquire about any potential legal disputes, pending lawsuits, or outstanding tax liabilities that the company may be facing.
Restructuring the company
When you buy an existing company, the chances are that the company was set up and structured for different reasons than you require, therefore it will have to be restructured to match your needs. Purchasers of companies should carefully assess their chosen company and consider the costs associated with making amendments.
Common areas that may need restructuring for a company include:
Transferring the Shares
When purchasing an existing company one of the most important steps is to transfer the shares from the original shareholders to the purchasers of the company.
In order to complete the transfer of shares, a share transfer instrument must be completed in writing and be signed by the transferor and transferee (and signed by at least one witness).
Share transfers do not need to be prepared in Thai. However, they do need to contain the names of the transferor and transferee, the number of shares to be transferred, the share numbers, the price and the date.
Finally, the transferee’s name and address must be entered into the shareholder’s register and the list of shareholders (Bor Jor 5) updated with the Ministry of Commerce. The updated list of shareholders can be filed online on the Department of Business Development (DBD) platform.
Failure to register the transferee into the shareholders register will invalidate the transfer.
If you are considering purchasing a company, it is recommended to ensure that the service provider includes the share transfer process in the scope of services.
Read more:
Adding/removing directors
When purchasing a company in Thailand, adding or removing directors is necessary. The purchaser will typically want to appoint themselves or their chosen representatives to manage the company. Additionally, the removal of existing directors is required to transfer full control to the new owners.
The process to add and remove directors requires following several steps including calling an Shareholders Meeting (EGM), issuing shareholder notices, and formally submitting amendments, which will result in further costs.
Read more:
How to change a company director in Thailand
Capital increase
A foreign investor purchasing a company who wishes to obtain a work permit and work for their company must have a registered capital of at least 2 million THB. If the company’s registered capital is less than 2 million THB, you will need to increase it later to meet work permit requirements. This process incurs additional fees, so it’s important to anticipate and plan for it in advance.
Updating the company objectives
The company objectives are the activities that a company is registered to conduct. These objectives are listed in the company’s Articles of Association (AOA) and define the scope of its business operations. For example, if the company purchased was incorporated as a import/export company and the purchaser wishes to undertake manufacturing, they would need to update the company objectives.
When registering a company, it is required to state the business activities undertaken by the company. Failure to do so may carry the director’s liabilities for business activities outside the company objectives. Amending the objectives later requires an EGM (Extraordinary General Meetings of the shareholders).
Additional costs would be required to cover the cost of the EGM required to arrange this and any associated costs with updating the DBD and Revenue Department.
Updating or adding Articles of Association
If the company wishes to add some Articles of Association or make changes to their existing AOA, this will require an Extraordinary General Meeting (EGM), issuing shareholder notices, and formally submitting amendments, which will result in further costs.
Seeking Professional Assistance
While it is possible for a foreign business to obtain a FBL, BOI Promotion or start their own company on their own, it is recommended to seek professional help. Both the FBL and BOI applications are very long, in depth and technical and may be overwhelming for someone who hasn’t experienced them before.
By hiring local experts, foreign investors can take advantage of the local firms’ practical understanding of what makes an application successful and, conversely, what can cause delays or lead to unsuccessful outcomes. Helping to make the process smoother and more efficient for the applicant.
However, these services are often costly and may significantly increase the company’s initial startup expenses.
Business Licence Requirements
Starting a business in Thailand may require the company to obtain a business license or permit to operate legally. The specific licenses needed will depend on the company’s business activities.
Please note, these business licences are separate from the Foreign Business Licence/Certificate. The FBL/FBC are for performing restricted business activities as a foreign owned company, while business licences and regulatory requirements for businesses operating within specific sectors.
Some common examples of business licences include:
- Food Licence
- Hotel Licence
- Factory Licence
- Import/Export Licence
- Tourism Licence
The official fees for the business licences depend on each individual business licence.
Examples of some official fees for a business licence include:
- Tourism (TAT) Licence:
- Outbound: security of 200,000 THB and a government fee of 500 THB
- Inbound: security of 100,000 THB and a government fee of 500 THB
- Domestic: security of 50,000 THB and a government fee of 300 THB
- Restaurant Licence (yearly renewal required):
- Up to 10 square meters: 100 THB
- More than 10 square meters: add 5 THB per square meter
- Between 200 and 300 square meters: 2,000 THB
- More than 300 square meters: add 5 THB per square meter
- The government fee is limited to 3,000 THB
- Hotel Licence (excluding Non-Hotel Licence):
- Hotel and restaurant business: application fee of 20,000 THB
- Hotel, restaurant and seminar rooms: application fee of 30,000 THB
- Hotel, restaurant, seminar rooms, entertainment business: application fee of 40,000 THB
- An additional fee of 80 THB per room per year is due.
- The license has to be renewed every five years, and then half price of the government fee will have to be paid.
The prices of business licences vary significantly, so it is recommended to check what licence you may need and their expected cost as soon as possible.
Minimum Capital or Minimum Investment Requirements
Registered capital requirements are another hidden cost that foreign investors who are interested in investing in Thailand should be aware of.
For a regular Limited company in Thailand, in practice the required minimum capital amount is 50,000 THB (approx 1,500 USD). However, if the foreign investor wishes to work for the company, they are required to have a work permit.
In order to be able to apply for a work permit, the company must have a registered capital amount of 2,000,000 THB (approx 60,000 USD) per work permit. This is a mandatory requirement and represents a significant investment for investors.
If your company’s registered capital is less than 2,000,000 THB and you plan to hire a foreign employee in the future, you will need to increase the capital later to meet work permit requirements. This process incurs additional fees, so it’s something you should anticipate and plan for in advance.
It’s important to note that in Thailand, the registered capital for the purpose of supporting a work permit application must be ‘paid-up’ capital, meaning that the declared amount must be deposited into the company’s bank account. Once this money is deposited, it can be used by the business.
Minimum Capital Investment Requirement for BOI Companies
If a company is successful in their BOI application, the BOI will require the company to satisfy some conditions before being awarded the full BOI Certificate. As part of the requirements for the issuance of the BOI promotion certificate, the company must transfer the capital investment in order to obtain the BOI certificate. The amount of required investment is decided by the BOI and is stipulated within the BOI acceptance letter.
In relation to the capital investment for projects with foreign shareholders, the BOI requires that the minimum investment according to the percentage of ownership of the foreigners must come from abroad.
The minimum investment amount is at least 1 million THB (approx 30,000 USD), however, it can be more depending on the BOIs evaluation of your application and business plan. Additionally certain types of promotion have an already established minimum investment amount.
Companies who are interested in applying for a BOI promotion should factor in this investment requirement when planning their business. After accepting the Acceptance Letter from the BOI, the company must transfer the minimum investment within 3 months.
Visa and Work Permits
In order for a company to be able to hire any foreign employees, Thai Limited companies must meet capital and Thai-to-foreigner employee ratio requirements (please note, BOI companies are exempt from these requirements).
For a Thai Limited company to support each individual work permit, it is required to have the following:
- A registered capital of 2 million THB PER foreign employee (to hire four foreign employees, you would need 8 million THB in registered capital). This capital amount has to be paid up capital, which means you have to deposit the full 2,000,000 THB (or however much you need to support multiple work permits) first. Once this capital has been transferred the company can use it to run the business.
- Hire four Thai employees for every one foreign employee (if you want to hire four foreign employees, you would need to employ 16 Thai staff members to meet the employment ratio requirement).
- Be registered with Social Security and have made 3 months payments for the Thai Staff.
- Be registered for VAT.
Please note, the requirements for foreign nationals married to Thai citizens are reduced by 50%, to 1 million THB is registered capital and 2 Thai employees.
Supporting a work permit represents a significant hidden cost for foreign investors as they need to be able to cover the minimum capital, as well as the salaries and tax obligations for the Thai employees.
Do you need to hire full time Thai employees?
To sponsor a work permit for a foreign employee in Thailand, your company is required to hire 4 Thai employees per foreign employee (unless the foreign employee is married to a Thai national and only 2 Thai staff will be required).
However, simply listing employees on payroll is not enough, these employees must be legitimate workers registered with the Social Security Office by your company. These employees must have been registered with Social Security for at least three months before you can apply for a foreign employee’s work permit.
The Thai employees can work full-time or part-time, as long as they are officially employed by your business.
It is also important to comply with salary regulations. Each employee must be paid at least the minimum wage, and salaries should be appropriate for their job positions. If all employees receive the same salary regardless of their role, this could raise suspicion and result in an investigation by the Social Security Office.
Please note, that companies that have received a BOI promotion are not subject to these restrictions.
Read more:
Do you need a proper office to hire foreign employees?
If you plan to hire foreign employees in Thailand, one unexpected cost you may come across is the need to get a proper office address. When first registering the company, you can use a virtual office address as the company’s registered address, however, this isn’t a long term solution. This is especially the case if you are considering hiring foreign employees and applying for work permits.
In order to obtain a work permit, the company must be registered for VAT and VAT registration requires a proper office address.
As part of the VAT registration process, the Revenue Department requires photos of your company’s office, with a sign displaying the company name clearly. These photos are used to verify that the office is a legitimate and the actual business location. While physical inspections are rare, they are possible.
Additionally, when registering employees with the Social Security Office (SSO), photos of the staff and offices will also be required. It is also more common for the SSO to inspect the office within the first month to confirm the details.
Another potential cost related to VAT registration is the requirement for a letter of consent from the landlord or the Juristic Office if you’re using an office building. This letter is needed for the registration process, and in some cases, the landlord or Juristic Office may charge a fee for issuing it.
Can you get your business/work visa in Thailand?
Another often-overlooked cost is that, for most applicants, the Non-Immigrant B visa, required to work in Thailand with a work permit (unless holding a Marriage Visa or LTR Visa), must be obtained from outside Thailand.
Therefore, unless you have been managing the company registration process or working remotely from your home country, you will need to leave Thailand to apply for your Non-Immigrant B visa.
Due to new regulations all visa applications made at Thai Embassies and Consulates must be made using the e-visa system. However, one significant disadvantage of this new system is that applicants must be present in the country the application is being made, even though it is being made online.
This can be a problem because the processing times are currently taking longer than before using the old system. The current expected turnaround time is 10 to 15 business days, depending on the embassy or consulate handling the application.
For example, Kuala Lumpur is currently issuing e-visas in about 10 business days, however, this is slower than previously when the expected turnaround was 3 days. This means foreign investors who require a visa must pay for transport to a neighbouring country to apply for their visa, as well as accommodation for approximately 2 weeks and living costs e.g. food and drink. This can turn out to be quite an expensive process.
Please note, we expect the turn around time to be reduced at some points in the near future, as the e-visa online platform should allow officers to expedite Visa Application. However, at the time of writing this article this is still not the case.
Taxation and Accounting Fees
Managing taxation and accounting is an essential part of running a business in Thailand, and failing to meet compliance requirements can result in penalties. Foreign investors should be aware that these financial compliance requirements can add up over time, representing a significant hidden cost of company creation in Thailand.
All businesses in Thailand, regardless of whether they undertook any activities during their previous financial year are required to complete the annual filings requirements. The annual filing includes preparing financial statements, having these statements audited by independent auditors, holding an AGM and completing the annual filing.
- Companies are also required to undergo an annual financial audit, which must be conducted by a certified independent Thai auditor. The cost of an annual audit depends on the company’s size and transaction volume, typically ranging from THB 10,000 to over THB 100,000.
Read more:
How to Complete the Annual Closing Process for Company Accounts (Year-End Closing)
Another important consideration is that from the moment your company makes a payment for services, it may become subject to various taxes. Similarly, hiring employees means you must register them with the Social Security Office and satisfy the payroll tax requirements.
VAT registration is another important consideration. If your company is registered for VAT (mandatory requirement for hiring foreigners), you are required to file monthly VAT returns, even if your VAT for that period is zero. This means that from the moment you issue or receive an invoice subject to VAT, you must report and pay the tax in the following month.
Once you hire employees, you must withhold and remit their income tax and social security contributions on a monthly basis. These filings should be handled by a qualified accountant, as mistakes can lead to fines or additional scrutiny from the Revenue Department. The cost of hiring an accountant varies depending on the complexity of the business, but foreign investors should budget at least THB 7,000 for a company with few transactions and 40,000 up more for a company having numerous transactions.
Failing to deal with any required tax filings can result in late penalties and improper bookkeeping, which could result in additional tax risks in the event of an audit by the Revenue Department.
Technology Costs
Another often overlooked cost is technology-related expenses. Businesses rely on various digital tools and IT infrastructure to operate efficiently.
One of the main technology costs is software licensing. Depending on the activities of the business, companies may require professional software for accounting, project management, customer relationship management (CRM), or cybersecurity.
Popular software like Microsoft Office 365, QuickBooks, or Adobe Suite comes with recurring subscription fees that can range from a few thousand to tens of thousands of baht per year.
Hardware costs also need to be considered. Buying computers, servers, printers, and networking equipment is a necessary expense when setting up a business. High-quality laptops or desktops can cost anywhere from THB 20,000 to THB 80,000 per item, while additional items like external monitors, or office equipment will further increase initial startup costs.
Another important hidden cost for businesses in Thailand is the withholding tax (WHT) on software and service payments made to foreign companies. When a Thai company pays for software or other digital services from a provider outside Thailand, the payment is generally subject to up to 15% WHT (unless the relevant provisions of a Double Tax Agreement applies). If a foreign software service provider is not VAT-registered in Thailand, your company may be required to pay the 7% VAT on their behalf. In such cases, your accountant will include this amount during the monthly tax filing, adding 7% VAT on top of the service fee.
The Thai tax system considers that since the service is being used within Thailand, VAT should apply, and because the foreign provider does not pay corporate income tax in Thailand, the Thai company must withhold and remit the tax on their behalf. In practice, this means that if a business pays $200 per month for a software subscription, the actual cost to the company will be higher. The company must pay an additional 15% WHT on behalf of the foreign provider (which cannot usually be deducted from the invoice) and 7% VAT, increasing the total expense.
Some Double Taxation Agreements (DTA) between Thailand and other countries may provide exemptions or reduced WHT rates, but this depends on the country where the software provider is based.
For businesses with frequent international payments for software and services, one potential option is to set up a holding company in a jurisdiction such as Hong Kong to handle these expenses. Hong Kong’s tax system offers more flexibility in deducting expenses, particularly for travel and entertainment costs, which are more restricted under Thai tax regulations.
Renting an Office
Renting an office in Thailand comes with several upfront and ongoing costs that businesses should be aware of. In most cases, landlords require a two-month security deposit along with one month’s rent paid in advance. If renovations are needed before moving in, some landlords may offer one month of free rent to allow the company to complete the setup process.
Before signing a lease, it is recommended to conduct due diligence to ensure you are dealing directly with the property owner or an authorized representative. This helps avoid potential legal issues and ensures that the landlord can provide a Letter of Consent, which is required to register your company for VAT and Social Security Office (SSO) registration. Without this document, your business may face complications in registering for VAT and SSO.
Read more:
Why Due Diligence is Recommended When Purchasing a Property in Thailand
Understanding the Commercial Lease Agreements for Businesses in Thailand
Hiring Employees and Staff Turnover
Another hidden cost when starting a business in Thailand is human resources. The job market in certain sectors is highly competitive, making it challenging to recruit and retain employees.
Many businesses rely on recruitment agencies or job platforms such as JobsDB and ThaiJob to find suitable candidates. However, even after finding a suitable candidate, keeping them for the long term can be challenging.
A common issue in Thailand is that candidates often accept job offers while continuing to look for other opportunities. While the standard notice period is typically one month, new hires may withdraw at the last minute if they receive a better offer elsewhere, sometimes without even notifying the employer. This can leave businesses in a difficult position, and it’s often hard to find a replacement quickly.
Staff turnover is another major concern, as employees may leave with short notice, sometimes less than a month. Building a stable team in the early stages of a business can be particularly difficult, and high turnover rates can be costly due to the time and resources required for continuous recruitment and training. To try and reduce the chances of this happening, companies should focus on creating a positive work environment, offering incentives that align with employee expectations, and understanding local workplace culture.
What are the Salary and Employee Welfare Requirements in Thailand?
Once an individual starts employment with a Thai company, there are several financial contributions they will need to understand. Common examples include monthly payroll deductions such as personal income tax, social security contributions, and, where applicable, provident fund contributions.
Minimum Salary Requirements
In Thailand, the minimum wage for Thai and foreign employees are completely separate, with Thai employees subject to provincial daily wage rates and foreign employees subject to nationality-based minimum salary rules.
The minimum daily wage rates in each province for Thai employees are as follows:
| Minimum daily wage (THB) | Provinces / cities |
| 400 | Bangkok, Chachoengsao, Chonburi, Phuket, Rayong, Ko Samui (Surat Thani) |
| Hotel Business, Entertainment Place Business
(all over the country) |
|
| 380 | Mueang Chiang Mai (Chiang Mai), Hat Yai (Songkhla) |
| 372 | Nakhon Pathom, Nonthaburi, Pathum Thani, Samut Prakan, Samut Sakhon |
| 359 | Nakhon Ratchasima |
| 358 | Samut Songkhram |
| 357 | Khon Kaen, Chiang Mai (excluding Mueang Chiang Mai), Prachinburi, Phra Nakhon Si Ayutthaya, Saraburi |
| 356 | Lopburi |
| 355 | Nakhon Nayok, Suphanburi, Nong Khai |
| 354 | Krabi, Trat |
| 352 | Kanchanaburi, Chanthaburi, Chiang Rai, Tak, Nakhon Phanom, Buriram, Prachuap Khiri Khan, Phang Nga, Phitsanulok, Mukdahan, Sakon Nakhon, Songkhla (excluding Hat Yai), Sa Kaeo, Surat Thani (excluding Ko Samui), Ubon Ratchathani |
| 351 | Chumphon, Phetchaburi, Surin |
| 350 | Nakhon Sawan, Yasothon, Lamphun |
| 349 | Kalasin, Nakhon Si Thammarat, Bueng Kan, Phetchabun, Roi Et |
| 348 | Chai Nat, Chaiyaphum, Phatthalung, Sing Buri, Ang Thong |
| 347 | Kamphaeng Phet, Phichit, Maha Sarakham, Mae Hong Son, Ranong, Ratchaburi, Lampang, Loei, Si Sa Ket, Satun, Sukhothai, Nong Bua Lamphu, Amnat Charoen, Udon Thani, Uttaradit, Uthai Thani |
| 345 | Trang, Nan, Phayao, Phrae |
| 337 | Narathiwat, Pattani, Yala |
Minimum Wage Rates in Thailand for Foreigners
In Thailand, the minimum monthly wage for foreign employees varies by nationality. The applicable rates are as follows:
*Please note, the minimum wage requirements for foreigners are monthly and not daily like for Thai nationals.
| Minimum monthly wage (THB) | Nationality |
| THB 50,000 | USA, Canada, Western Europe, Australia, Japan |
| THB 45,000 | Hong Kong, South Korea, Singapore, Taiwan |
| THB 35,000 | Other Asian Countries (Excluding Japan, South Korea, Singapore, Taiwan, and ASEAN nations)
Eastern Europe, Russia, South Africa, Central & South America |
| THB 25,000 | ASEAN Countries (Cambodia, Laos, Myanmar, Vietnam) & Other African Nations |
Minimum Salary Requirements for BOI Promoted Companies
Companies promoted by the Board of Investment in Thailand follow their own specific rules and requirements regarding minimum salary levels for foreign employees.
The minimum salary requirements for a BOI promoted company are as follows:
| Position | New Criteria | Minimum Salary (THB/month) | Additional Clarifications |
| Executive | Must be at least 20 years old (27+ recommended).
No specific experience required. |
150,000+ | Chairman, CEO, and Managing Director roles are exempt from this requirement. |
| Management | At least 27 years old
5+ years of relevant work experience. |
75,000+ | With a relevant degree: salary can be reduced to 50,000 THB. |
| Operations Staff | Minimum age of 22
2 to 5 years of relevant work experience. |
50,000+ | — |
| Engineer | At least 22 years old.
Have an engineering degree. 2+ years’ of relevant work experience. Without an engineering degree 10 years of relevant work experience. |
75,000+ | With a degree and experience: salary can be 50,000 THB. |
| IT Specialist | Minimum age of 22
2 to 5 years of relevant work experience. |
50,000+ | If no relevant degree: at least 5 years of work experience required. |
| BPO / TISO / IBPO | Must be at least 22 years old
Be also to show proof of relevant training. |
35,000+ | — |
These salary requirements must be fully satisfied to obtain or renew BOI visa and work permit privileges, and they are reviewed during both the initial application and each renewal stage.
Social Security Contributions
As required under the Social Security Act, all employers (Thai and foreign) in Thailand must register and make contributions on behalf of their employees.
Companies are required to register with the Social Security Office (SSO) within 30 days of hiring their first employee. Once registered, both the employer and the employee contribute 5 percent of the employee’s monthly salary to the Social Security Fund, capped at a maximum contribution of 875 baht each per month.
The maximum monthly contributions are:
- For an employee: 5% of THB 17,500 = THB 875 per month.
- For an employer: 5% of THB 17,500 = THB 875 per month.
- Total maximum contribution (employer + employee): THB 1,750 per month.
Social Security filings and payments must be submitted by the 15th of the following month. Employers are also expected to maintain accurate payroll records to support compliance. Failure to comply with these obligations can lead to financial penalties and may create complications for companies employing foreign nationals, particularly when processing visa or work permit applications.
Employees Provident Fund
The Provident Fund is an optional retirement savings scheme designed to help employees build financial security for the future. Where applicable, contribution rates usually range from 2% to 15% of the employee’s monthly salary.
Employee Welfare Fund (EWF)
The Employee Welfare Fund is a newly introduced program under the Labor Protection Act to provide financial support to employees in cases of termination, resignation, or death.
Starting on the 1st October 2026, all employers in Thailand with 10 or more employees are required to register their staff with the fund, unless they already offer a registered provident fund or a comparable scheme that provides equivalent benefits.
An exemption is available for companies with alternative programs. However, this fund must cover all employees, not just a portion of the workforce.
Strict Labour Law Requirements
In Thailand, it is possible for an employer to terminate an employee’s employment at its discretion. However, should the dismissal be made without a statutory cause, as provided under the Labour Protection Act B.E. 2541, the company could be liable for statutory payments to be made to the employee, for example, severance pay, wages to the last working day and any unused vacation days.
Statutory Payments
When an employee leaves a company, whether with or without statutory cause, the employee may be entitled to specific statutory payments under Thai labour law. These may include severance pay, payment in lieu of notice, unused annual leave, and other mandatory entitlements depending on the circumstances of termination.
The details of these statutory payments can be found here:
| Statutory payments | With cause | Without cause |
| Wage until the employee’s last working day | Yes | Yes |
| Payment in lieu of advanced notice | No | Yes |
| Severance pay | No | Yes |
| Payment for unused annual leave | Only accumulated unused annual leave | Both accumulated and prorated annual leave |
| Other payments if any | If any | If any |
| Compensation for unfair dismissal | At the courts discretion | At the courts discretion |
Rates of Severance Pay
Employees who have worked for at least 120 days are entitled to severance pay if they are dismissed without statutory cause.
The severance pay rates are as follows:
| Employment period | Rate of severance pay |
| 120 days but less than one year | 30 days |
| One year but less than three years | 90 days |
| Three years but less than six years | 180 days |
| Six years but less than 10 years | 240 days |
| 10 years but less than 20 years | 300 days |
| 20 years or more | 400 days |
Indirect Costs to be Considered
As well as the fixed salary and statutory contributions, employers in Thailand should also be aware of several indirect labour-related costs that are often overlooked or not considered.
Public Holidays and Paid Leave
Thailand has a relatively high number of national public holidays each year. These are fully paid days off, and the total can vary depending on government announcements. For businesses these recurring paid holidays can reduce productive working hours and increase the need for overtime or additional staffing during peak periods.
Sick Leave and Attendance-Related Impact
Under Thai labour law, employees are entitled to up to 30 days of paid sick leave per year. Employees may take up to two consecutive days of sick leave without needing to present a medical certificate. While the sick leave requirements were intended to support employee welfare, it can also create challenges for employers, particularly in industries that depend on consistent staffing levels. Some companies experience attendance issues that lead to higher overtime expenses etc.
Our Thoughts
In Thailand, company incorporation is mainly an administrative process that involves following a series of fixed steps including reserving a company name, filing the required forms, and registering with the relevant authorities. In Thailand there are many service providers that offer this service at a very low cost.
However, foreign investors should understand that incorporation is not the same as structuring a business properly.
From the beginning, several important points need careful consideration: the registered address, the company’s stated objectives, the shareholding structure, capital requirements, and any licensing restrictions connected to your intended activities. Changing a registered address later, for example, involves additional filings, fees, and formalities. A poorly drafted structure can restrict future expansion, create compliance complications, or lead to costly amendments that could have been avoided with proper planning at the beginning.
There are also operational considerations that must be addressed from the outset. Accounting systems, monthly tax filings and internal corporate documentation are mandatory requirements that must be satisfied in order to avoid penalties such as fines or restrictions on renewing a visa or work permit. They are part of running a Thai company from day one.
Thailand remains a competitive jurisdiction, particularly in terms of employment costs and social contributions. With proper planning and realistic budgeting, it can be a highly efficient place to operate.
Our experts are available to help structure your company correctly from the start and to provide a clear understanding of the true startup and compliance costs, so that there are no surprises later.
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 about your company registration 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.
USD 150
Up to 1 hour
Online payment (Paypal or Credit card)
Legal consultation can be conducted in English, French or Thai
Legal consultations are handled by experienced lawyers from the relevant fields of practice
FAQ
How do I calculate import duty in Thailand?
Import duty in Thailand is calculated based on your product’s CIF value (Cost + Insurance + Freight). The duty rate varies from 0% to 80% depending on what you’re importing. For example, if you’re bringing in electronics worth 10,000 Baht with a 10% duty rate, you’d pay 1,000 Baht in import duty.
How can I check what import duty rate applies to my products in Thailand?
Thailand uses the Harmonized System (HS Code) to classify imports, specifically following the ASEAN Harmonized Tariff Nomenclature (AHTN 2022). You’ll need to find your product’s HS code to determine the exact duty rate. The rates are outlined in the Customs Tariff Decree of 2017.
What items are exempt from import duty in Thailand?
If you’re a BOI (Board of Investment) company or registered in Special Economic Zones (SEZs), you may qualify for import tax exemptions on machinery and certain raw materials. Additionally, goods imported under Free Trade Agreements may have reduced or zero duty rates if they meet the Rules of Origin requirements.
Does Thailand have import tariffs?
Yes, Thailand applies import tariffs ranging from 0% to 80% depending on the product category. The country uses either a specific duty (fixed amount) or an ad valorem duty (percentage of value), whichever is higher.
Do I need to pay import charges when bringing goods into Thailand?
Yes, you’ll need to pay multiple charges including import duties (0-80%), 7% VAT on all goods, and potentially excise taxes if you’re importing luxury items, alcohol, tobacco, or petroleum products. There’s also a 10% local tax on top of excise tax for certain items.
What is the VAT tax rate on imported items in Thailand?
The standard VAT rate in Thailand is 7%, applied to all imported goods regardless of value. This changed in July 2024 – previously, items under 1,500 Baht were exempt, but now everything is taxed.
Is there a duty-free allowance for imports into Thailand?
There’s no general duty-free threshold mentioned for commercial imports. As of July 2024, all imported goods are subject to 7% VAT regardless of their value, which eliminated the previous exemption for low-value goods under 1,500 Baht.
Do foreigners pay different import taxes than Thai nationals?
Import taxes aren’t different for foreigners versus Thai nationals. Everyone pays the same import duties (0-80%), 7% VAT, and applicable excise taxes. However, to import
Can I reduce my import taxes through Thailand’s trade agreements?
Yes, Thailand has signed numerous Free Trade Agreements with countries like Japan, India, Australia, and ASEAN nations, which can significantly reduce or eliminate duties on qualifying goods. You’ll need proper documentation like a Certificate of Origin to claim these benefits.
Why does Thailand charge import taxes?
Import taxes serve multiple purposes in Thailand – they protect local industries, ensure safety standards, generate government revenue, and help balance international trade relationships. The system is regulated under the Customs Act and Customs Tariff Decree.
What’s the formula for calculating Thailand import taxes?
Here’s a simple example: If you import goods worth 10,000 Baht (CIF value) with a 10% import duty, you’d calculate: Import Duty = 1,000 Baht, VAT Base = 11,000 Baht (CIF + Duty), VAT = 770 Baht (7% of VAT base), Total Tax = 1,770 Baht. For luxury items with excise taxes, the calculation becomes more complex.
Do I need to pay VAT on small-value imports to Thailand?
Yes, as of July 2024, you must pay 7% VAT on all imported goods regardless of value. The previous exemption for goods under 1,500 Baht no longer applies.
Who benefits from Thailand’s import tax system?
Import taxes benefit the Thai government through revenue collection and help protect local industries by making imported goods more expensive. However, businesses can benefit from reduced taxes through Free Trade Agreements and special programs like BOI company status or SEZ registration.
How is VAT calculated on imported goods in Thailand?
Thailand applies 7% VAT to the total value including the CIF value plus import duties and any other applicable charges. So VAT is calculated on top of the import duty, not just the product value.
What’s the difference between import duty and VAT in Thailand?
They’re separate charges. Import duty is calculated first based on your product’s CIF value (ranging from 0-80%). Then VAT (7%) is calculated on the total of the CIF value plus import duty plus any other charges. You pay both.
How do I know if I’m required to pay import tax in Thailand?
If you’re importing goods into Thailand commercially, you’ll definitely need to pay import taxes. You must register with Thai Customs, obtain a paperless license valid for 3 years, and use the e-Customs system. All commercial imports are subject to duties and VAT.
Which products qualify for reduced import duties in Thailand?
BOI companies and businesses registered in Special Economic Zones may get exemptions on machinery and certain raw materials. Additionally, goods qualifying under Free Trade Agreements with countries like Japan, India, Australia, or ASEAN nations may have reduced or zero duties if you have the proper Certificate of Origin.
What documents do I need to verify my import duty rate in Thailand?
You’ll need to identify your product’s HS Code under the ASEAN Harmonized Tariff Nomenclature (AHTN 2022). The specific duty rate depends on your product classification and can range from 0% to 80%. Thailand Customs maintains the official tariff schedules.
How do I calculate both import duty and VAT for Thailand imports?
Here’s the formula: First calculate Import Duty (CIF value × duty rate). Then calculate VAT base (CIF value + Import Duty + any fees). Finally, VAT = VAT base × 7%. For luxury goods, you’ll also need to add excise tax and a 10% interior tax before calculating VAT.
Are there any products I can import to Thailand without paying duty?
Items eligible for exemption include machinery and certain raw materials for BOI companies and SEZ-registered businesses. Products imported under Free Trade Agreements may also qualify for reduced or zero duties. You’ll need proper documentation like a Certificate of Origin to claim these benefits.
Can foreigners own 100% of a business in Thailand?
Yes, foreigners can own 100% of a business in Thailand, depending on the type of business and its structure. Activities such as export and manufacturing can be fully foreign-owned without restrictions, while other sectors may require a Foreign Business License (FBL) or Board of Investment (BOI) promotion.
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