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Starting a Small Business in Thailand as a Foreigner in 2024
Starting a small business in Thailand as a foreigner presents unique challenges. The Foreign Business Act governs foreign participation in various business sectors and categories within Thailand. Despite these complexities, Thailand’s thriving economy and favorable business environment make it an attractive hub for entrepreneurs.
When starting a Small Business in Thailand, it is important to consider the following important points.
Key points
- Small businesses can set up a company in Thailand for as little as 50,000 THB without a work permit and visa.
- A BOI promotion removes many barriers to doing business in Thailand, such as the necessity of a Thai partner and the restrictions of the Foreign Business Act.
- Companies approved for a BOI promotion are eligible for special incentives such as 100% foreign ownership, tax incentives, and reduced requirements to support work permits.
- All foreigners require a proper visa to stay in Thailand. If they plan to work they must get a Work Permit.
Do you need a Thai Partner when starting a Small Business in Thailand?
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.
The Foreign Business Act of 1999 (FBA) regulates foreign investment in Thailand and restricts foreign companies from undertaking about 50 types of businesses, including service activities, consulting, restaurants etc.
In relation to the 50 restricted business activities established under the FBA, foreign ownership of a limited company is capped at a maximum of 49.99% (unless a Foreign Business Licence or a BOI promotion has been obtained). Therefore, a Thai partner may be required to hold the majority share (for more information, please see here).
How can 100% foreign-owned small businesses in Thailand perform restricted activities?
The Foreign Business License (FBL) is a permit issued by the Department of Business Development under the Ministry of Commerce in Thailand, which allows foreign businesses to engage in restricted business activities under the Foreign Business Act as a 100% foreign-owned entity.
However, businesses should be aware that it is very difficult to receive approval for an FBL, and the application criteria are very strict.
What are the requirements to start a small business?
To start a limited company in Thailand, you will need to satisfy the following criteria:
- 2 shareholders
- One or more directors (individuals, not corporate)
- 50,000 THB minimum capital (2M THB if you want to hire a foreign employee)
- A registered corporate address in Thailand
The shareholders must be individuals to register the company. Once registered, the shares can be transferred to corporate shareholders.
Is your business in Thailand eligible for a BOI promotion?
When starting a business in Thailand, the Board of Investment (BOI) should always be the first consideration. Companies approved for a BOI promotion are eligible for special incentives. These BOI incentives could significantly benefit foreign companies looking to establish a presence in Thailand. However, it is important to note that the BOI only offers promotions for specific business activities in specific target industries.
It is also important to note that the minimum capital requirement for a BOI company is 1 million THB. However, small businesses that work in software areas may be eligible for promotions under category 8.1, which is much more accessible for small businesses.
Incentives available include:
100% foreign ownership
BOI-promoted companies can be 100% foreign-owned.
BOI companies and the Foreign Business Act
Companies that receive a BOI promotion will be granted a Foreign Business Certificate, allowing them to undertake restricted business activities.
The reduced quota for hiring foreign employees
Unlike other company structures, BOI-promoted companies are not subject to any quotas when hiring foreign skilled employees. Thai Limited Companies cannot hire a foreign employee unless the following quotas are satisfied:
- A ratio of 4:1 Thai to foreign employees.
- 2 Million THB is registered capital
- 3 months of Social Security Registration payments
- Be registered for VAT
Removing this quota removes a massive barrier to employing foreign staff and is a huge advantage to a BOI promotion.
Other incentives:
- Permit to own land
- Streamlined visa and work permit processes
- Permit to remit money abroad in foreign currency
Tax Incentives:
Depending on the promotion offered to the company by the BOI, companies may be eligible for certain tax incentives.
Do you need a Work Permit and Visa when starting a small business in Thailand?
Work permits and the correct visa type are required for any foreigner working or who intends to work in Thailand.
Please note Thailand has a broad definition of work and employment, which isn’t linked to revenue or income. For example, a foreigner can be a shareholder and/or a company director and not require a work permit. However, should they do something such as sign a document on behalf of the company, this will be considered work and will be required to possess a work permit.
Failure to obtain a valid visa and work permit could result in punishments for the offending foreigner and their company.
To obtain a work permit, the applicant must:
Get a Non-Immigrant B visa: The applicant should obtain a Non-Immigrant B visa (90 days). This visa can be obtained from your home country’s Thai embassy or consulate.
Obtaining the work permit: After obtaining the Non-Imm B visa and arriving in Thailand, the applicant must apply for a work permit.
Extending the visa: a 1-year extension of the Non-Immigrant B can be obtained after the work permit has been issued.
Please note that holders of a Non-Immigrant O (based on marriage to a Thai Spouse) can also apply for a work permit using this visa type.
Please see here for more information about how to apply and what documents are needed.
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.
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Frequently asked questions
Can a foreigner start a business in Thailand?
Yes, foreigners can start a business in Thailand. However, there are some restrictions, depending on the type of business. For example, foreigners cannot own more than 49% of a company that operates in certain industries, such as retail and tourism.
How much does it cost to start a business in Thailand?
The minimum capital requirement to start a limited company in Thailand is 50,000 THB. However, if you want to hire a foreign employee, the minimum capital requirement is 2 million THB.
Can Americans start a business in Thailand?
Yes, Americans can start a business in Thailand. The same rules apply to Americans as to any other foreigner.
Can Americans own 100% of a business in Thailand?
American citizens can own 100% of a business in Thailand, but only if they have a Foreign Business License (FBL) or if the business is promoted by the Board of Investment (BOI).
Can a US citizen buy a business in Thailand?
Yes, a US citizen can buy a business in Thailand. However, they must comply with all of the same rules and regulations that apply to foreign business owners.
Why is it hard to do business in Thailand?
There are a few reasons why it can be difficult to do business in Thailand. One reason is the bureaucracy. It can be time-consuming and expensive to get the necessary permits and licenses. Another reason is the language barrier. Thai is the official language of Thailand, and many Thais do not speak English fluently. Finally, the Thai culture can be difficult for some foreigners to adapt to.
What is BOI promotion Thailand?
A BOI promotion can remove many of the barriers to doing business in Thailand, such as the necessity of a Thai partner and the restrictions of the Foreign Business Act.Companies approved for a BOI promotion are eligible for special incentives such as 100% foreign ownership, tax incentives, and reduced requirements to support work permits.
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