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Starting a Fintech business in Thailand: What you need to know
05/10/2023
Fintech is a popular industry for new businesses, and with its regulatory framework and supportive government, Thailand is the ideal destination for starting a Fintech company. Thailand’s Board of Investment (BOI) further aided this by incentivizing Fintech companies to establish their presence here.
This article will explore the advantages offered to companies by the BOI application, with a specific focus on tax incentives, supported industries, fintech business classifications, regulatory challenges, and the application procedure.
Key points
- Thailand’s Fintech industry is thriving due to government support, a growing user base, and a robust startup ecosystem.
- Fintech firms can qualify for BOI promotions under Section 8.1.
- The BOI offers incentives like 100% foreign ownership, reduced hiring restrictions, land ownership permits, and streamlined processes for Fintech companies.
- FinTech companies are subject to business licence requirements from the SEC or BOT.
Why is Thailand a good choice for FinTech companies?
The fintech industry in Thailand has seen substantial growth recently, propelled by a combination of supportive government policies, wide adoption of FinTech products by the Thai population, and a well-supported startup ecosystem.
Digital transactions have surged significantly and almost become the de facto payment method for Thais. E-wallets and mobile payment platforms have become extremely popular, and peer-to-peer lending networks are now recognized as a viable alternative to traditional bank loans, streamlining access to credit.
The Thai government has also played an important role with its support for developing the FinTech ecosystem. This is demonstrated through funding channels, mentorship initiatives, and startup incubation programs.
The government’s support is further supported by the launch of the Thailand 4.0 initiative, aimed at enhancing the country’s financial infrastructure and fostering the growth of fintech businesses. Thailand 4.0, has introduced various methods to encourage investment in specific sectors and drive innovation. These measures include tax advantages, funding for research and development, support for startups, and establishing special economic zones to promote economic advancement in designated regions.
Therefore, FinTech businesses in Thailand could be eligible for the incentives and more from the Board of Investment.
What is the Board of Investment?
Thailand’s Board of Investment is a special government agency that focuses on promoting foreign investment within Thailand. A BOI promotion removes many barriers to doing business in Thailand, such as the restrictions of the Foreign Business Act.
More detailed information relating to the Foreign Business Act can be found here.
Furthermore, the BOI provides the following incentives for qualifying projects that could offer significant advantages to qualifying companies.
Incentives available to all include:
- 100% foreign ownership
- Reduced requirements for hiring foreign staff
- Permit to own land
- Streamlined visa and work permit processes
- Permit to remit money abroad in foreign currency
Tax Incentives are available for certain business activities and promotions as well. Examples include:
- Exemption or reduction of import duties
- Exemption of a juristic person’s income tax and dividends
- Double deductions from the costs of transportation, electricity, and water supply
- Up to Eight-year corporate income tax exemptions
For more information about the BOI, please check the following blog posts:
BOI Company Formation in Thailand
What BOI Promotions are available for FinTech companies?
The BOI provides promotional programs for various technology sectors under Section 8.1, encompassing software development, digital platforms, and digital content.
For more information on Section 8.1, please check out our post here.
What examples of Businesses would qualify for a section 8.1 promotion from the BOI?
The BOI actively encourages and supports investments in specific segments of the fintech sector, recognizing their strategic importance and potential to stimulate economic growth in the country. Here are some of the promoted business categories within the fintech sector:
Digital Payments and E-wallets: Among the fintech categories receiving special attention from the BOI, digital payments and e-wallets stand out. The BOI incentivizes companies specializing in secure and efficient digital payment solutions through its framework. This support encourages innovation in payment technologies and enhances the convenience and accessibility of digital financial services for the Thai population.
Peer-to-Peer (P2P) Lending Platforms: The BOI’s support extends to fintech firms facilitating P2P lending activities. This category holds significant potential for democratizing access to finance, enabling individuals and small businesses to secure loans or investments from a network of peers. By promoting investments in P2P lending platforms, the BOI diversifies Thailand’s financial landscape and fosters greater financial inclusion. These platforms benefit from regulatory guidance, support for scaling their operations, and recognition of their role in promoting alternative lending solutions.
Blockchain Technology: Another area actively encouraged by the BOI within the fintech sector is adopting and utilizing blockchain technology. Companies leveraging blockchain for various applications, including supply chain management, smart contracts, and identity verification, receive a boost from the BOI’s promotional efforts. Blockchain’s inherent transparency, security, and efficiency have the potential to revolutionize multiple industries beyond finance. The BOI fosters innovation and advances Thailand’s technological capabilities by supporting blockchain-focused businesses.
What incentives are available to companies awarded a promotion under Section 8.1?
Should a FinTech company be awarded a promotion Under Section 8.1, they would be eligible for the following incentives.
100% Foreign Ownership: While regular Thai Limited companies are typically limited to 49.9% foreign ownership due to the Foreign Business Act, BOI-promoted companies face no such restriction, allowing complete foreign ownership.
Foreign Business Certificate: BOI-promoted firms receive a Foreign Business Certificate, exempting them from the 50+ restricted business categories under the Foreign Business Act. This opens up opportunities for a wider range of business activities in Thailand.
No Employee Quotas: Unlike other structures, BOI-promoted companies face no quotas when hiring foreign skilled employees. For example, Thai Limited Companies typically need a 4:1 ratio of Thai to foreign employees, but this requirement doesn’t apply to BOI-promoted businesses.
Other incentives:
- Permit to own land
- Streamlined visa and work permit processes
Successful applicants will also be eligible for the following income tax exemption.
The corporate income tax exemption cap of 100 percent of the actual expenditure for the incentive is as follows:
- Expenditure on salaries for Thai information technology personnel additionally employed in comparison with Thai information technology personnel employed before the application submission date for investment promotion.
- Expenditure on the information technology development-related training course to develop Thai personnel’s skills.
- Expenditure on the operation to acquire the standard quality system certificate ISO 29110 or CMMI from Level 2 or other equivalent international standards.
What are the requirements for a promotion under Section 8.1?
For a FinTech company to be eligible for a promotion under Section 8.1, applicants must be able to satisfy the following requirements:
- Each project must meet a minimum annual investment capital requirement of 1,500,000 baht. This calculation is based on the additional salaries incurred for Thai information technology personnel after the investment promotion application. Please note that foreign specialists, shareholders, and directors are not included.
- Have a capital investment (excluding land, working capital, and vehicle) of not less than 1 million baht. However, a minimum capital investment of 1,500,000 THB is often required.
- The project must involve the development of software, digital platforms, or digital content in Thailand in accordance with the guidelines set by the BOI.
- This investment promotion does not encompass the retail and wholesale of various product types.
What are the Business Licence Requirements for FinTech companies?
It is important to note that FinTech companies will be subject to business licenses depending on their business activities. For example, an E-Wallet would require a payment gateway business license. These business licenses are provided by either/or the Bank of Thailand or the Securities and Exchange Commission.
Failure to obtain the correct business license could result in penalties being imposed on the company.
How can Belaws help?
For more information about starting a FinTech 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
What are the advantages of starting a fintech business in Thailand?
Starting a fintech business in Thailand offers several advantages, including government support, a growing user base, and a robust startup ecosystem. The Thai government promotes fintech through funding channels, mentorship initiatives, and startup incubation programs.
How does the Thai government support the fintech industry?
The Thai government supports the fintech industry through various initiatives, including funding for research and development, mentorship programs, and startup incubation. It also launched the Thailand 4.0 initiative, which includes tax advantages, funding support, and special economic zones to encourage investment and innovation in specific sectors.
What incentives are available to fintech companies in Thailand?
Fintech companies in Thailand can qualify for incentives offered by the Board of Investment (BOI), such as 100% foreign ownership, reduced hiring restrictions, land ownership permits, and streamlined visa and work permit processes. Tax incentives, including exemptions or reductions of import duties and income tax, may also be available.
How can I apply for a promotion under Section 8.1 of the BOI for my fintech business?
To apply for a promotion under Section 8.1 of the BOI, fintech businesses must meet specific requirements, including a minimum annual investment capital, a minimum capital investment, and involvement in the development of software, digital platforms, or digital content in Thailand. Detailed information about the application process can be found in the article.
What types of fintech businesses are promoted by the BOI in Thailand?
The BOI actively encourages and supports investments in various segments of the fintech sector. Promoted business categories within fintech include digital payments and e-wallets, peer-to-peer (P2P) lending platforms, and companies leveraging blockchain technology for applications like supply chain management and identity verification.
Are there any restrictions on foreign ownership for fintech companies in Thailand?
Fintech companies promoted by the BOI in Thailand can enjoy 100% foreign ownership, which is different from regular Thai Limited companies that are typically limited to 49.9% foreign ownership due to the Foreign Business Act.
What are the business license requirements for fintech companies in Thailand?
Fintech companies in Thailand may be subject to specific business license requirements depending on their activities. For example, an e-wallet business would require a payment gateway business license. These licenses are issued by either the Bank of Thailand or the Securities and Exchange Commission, and it’s important to obtain the correct license to avoid penalties.
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