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Starting a Tourism Business in Thailand
09/02/2023
Thailand is a popular destination for travelers; as a result, tourism businesses such as tour guide operators, diving shops, and hotels in Thailand have proved profitable over the years.
However, several regulations and requirements must be met to establish and run a tourism business in the country successfully. This blog post will explore the steps required to start a tourism business in Thailand, including obtaining the necessary permits, finding a suitable location, and navigating the local market.
Key points
- Foreigners cannot generally own 100% of a business related to tourism in Thailand as specified by the Foreign Business Act.
- The BOI offers some promotions for a limited number of business activities related to tourism, allowing up to 100% foreign ownership.
- A Thai company with at least one Thai national shareholder (who owns > 50% of the shares) can carry out a tourism business .
- Tourism businesses require business licenses/certificates to operate legally.
Can a foreigner 100% own a tourism business?
Unfortunately, operating a tourism business is restricted under the Foreign Business Act (FBA). Therefore, the FBA makes it generally not possible to have a 100% foreign-owned tourism business for most activities, including:
- travel agencies,
- tour operators,
- hotels and resorts.
There is an exception for a limited number of business activities promoted by the BOI, as explained in the next section.
However, while it is restricted, foreigners can invest in a tourism business with a Thai partner. The Thai partner must hold more than 50% of the shares and shall not be a nominee.
For more information about the FBA in Thailand, please see this post.
BOI promotions for tourism projects
Thailand’s Board of Investment (BOI) offers promotions for tourism companies in Thailand. The BOI provides various incentives, such as 100% foreign ownership, tax exemptions and reductions, investment privileges, and assistance with government procedures to encourage investment in targeted industries, including tourism.
Projects eligible for BOI promotions related to tourism have been split into two groups; Tourism promotion services and activities to support tourism.
Tourism Promotion Services includes the following:
- Ferry services or Tour boat services (or rental of the ferries or boats).
- Tour boat port services.
- Amusement parks with a minimum investment of 500 million baht.
- Thai cultural or craft centers with a minimum investment of 30 million baht.
- Open zoo with a minimum investment of 500 million baht.
- Museum with a minimum investment of 30 million baht.
- Race tracks with the Federation International de L’Automobile (FIA) or Federation International de Motocyclisme (FIM) standard.
- Cable cars with a minimum investment capital of 100 million baht.
- Cruise terminal.
- Man-made attractions with a minimum investment capital of 100 million baht.
Activities to Support Tourism includes the following:
- Hotels with a minimum of 100 rooms and a minimum investment of 2 million baht per room. Or a hotel with less than 100 rooms with a minimum investment of 500 million baht.
- Convention halls with a minimum convention area of 4,000 square meters.
- International exhibition centers with a minimum indoor area of 25,000 square meters.
What incentives does the BOI offer for tourism projects?
Tourism businesses are eligible for 100% foreign ownership and a 5-year exemption from corporate income tax (CIT) equal to 100% of the investment (excluding land cost and working capital). Additionally, there may be exemptions on import duties for machinery and raw materials used for export production. However, this exemption is not limited to tourism businesses and applies to most businesses in other categories.
For hotels, the CIT exemption policy varies based on location. In provinces that are popular tourist destinations, there is a 0-year CIT exemption, but hotel owners have the right to use the land freely and employ craftsmen. In other locations, the CIT exemption is four years, and there may also be exemptions on import duties for machinery and raw materials used for export production.
Provinces that are considered famous for tourism are Krabi, Bangkok, Kanchanaburi, Chachoengsao, Khon Kaen, Chon Buri, Chiang Mai, Nakhon Pathom, Nakhon Ratchasima, Nonthaburi, Pathum Thani, Prachuab Khiri Khan, Phra Nakhon Si Ayutthaya, Phang-nga, Phetchaburi, Phuket, Rayong, Songkhla, Samut Prakan, Samut Sakhon, Saraburi, and Surat Thani.
Choosing the best business structure for a tourism business
A Limited Company is Thailand’s most popular business structure for entrepreneurs due to the flexibility offered to business owners. Foreigners can either establish a Limited Company as a joint venture with a Thai National or as a 100% foreign-owned entity (subject to the Foreign Business Act as discussed above).
Limited Liability means that the shareholder in a Thai Limited Company can only ever be liable for the capital they invested only.
As mentioned above, the Foreign Business Act limits the activities of 100% foreign-owned entities, with tourism as one example. As a result, a Limited Company would need to have most of its shares owned by a Thai national (nominee shareholders are not permitted).
Under the Foreign Business Act, Foreigners can have majority voting rights and control in a Thai limited company through preference shares and weighted voting rights.
Just like any other business, a retail business in Thailand must be registered with the Department of Business Development (DBD) before being allowed to operate. Our team of experts will be able to help foreign investors to gather the necessary documentation and to apply for business registration.
What do you need to run a tourism-related business in Thailand?
To run a tourism business in Thailand, you may need to obtain the following permits and licenses:
- TAT tourism license
- Work permit for foreign employees
- Hotel or tourism-related licenses (where applicable)
Note that the specific permits and licenses required may vary depending on the type of tourism business you plan to run, so it’s best to consult with a local lawyer or business consultant to ensure that you have all the necessary approvals.
What is the TAT tourism license in Thailand?
The TAT tourism license in Thailand refers to the Tourist Authority of Thailand (TAT) license, a license issued by the Thai government to authorize a business to operate in the tourism industry. The TAT license is a key requirement for businesses operating in the tourism sector, including hotels, travel agencies, and tour operators, among others.
The license helps ensure that the business meets specific standards and regulations and allows the government to monitor and regulate the industry. A business must complete the necessary paperwork to obtain a TAT license, pay the required fees, and pass any inspections or assessments deemed necessary by the TAT.
Anyone interested in operating a tourist business must apply for a TAT license (Tourism Authority of Thailand) with the Tourist Business and Guide Registration Office.
To apply for a TAT tourism license, a business must be:
- Being registered under Thai Law
- Having as its business purpose is to support business tourists in Thailand
- All unlimited liabilities must be of Thai nationality
- For a limited company, at least half of the directors must be of Thai Nationality, and natural persons of Thai nationality must own at least 51% of the capital.
The following fees apply for businesses applying for a TAT tourism license:
- 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
Do I need any other business licenses for a tourism business?
A tourism business may need further licenses outside the TAT tourism license. However, the required licenses depend on the activities of the business.
For example, a hotel will require a hotel license and a restaurant license should the hotel contain a restaurant.
Hotel License: A hotel business license in Thailand permits a business to operate a hotel or similar accommodation. The license is issued by the Tourism Authority of Thailand (TAT) and is mandatory for all hotels operating in the country. To obtain a hotel business license, the hotel must satisfy the following requirement:
- Building and safety regulations: The hotel must meet the building and safety standards set by the local government.
- Health and hygiene regulations: The hotel must meet the health and hygiene standards set by the local health department.
- Business registration: The hotel business must be registered with the Department of Business Development.
- Tax ID number: The hotel must obtain a Tax ID from the Revenue Department.
- Insurance: The hotel must have liability insurance.
- Environmental Impact Assessment (EIA): Some hotels may be required to complete an EIA to assess the potential environmental impacts of hotel operations.
The hotel business license is valid for one year and must be renewed annually. Failure to obtain a hotel business license or renew the license can result in fines or the closure of the business.
Restaurant License: A restaurant business license in Thailand is a government-issued permit to operate a food service establishment in the country. It certifies that the business meets the requirements and regulations set by the government, such as health and safety standards and taxes. Obtaining a restaurant business license is mandatory for all restaurants operating in Thailand. For more information, please take a look at this article.
Can I hire foreign staff?
One of the essential requirements for opening a business in Thailand is related to hiring employees. The requirements for hiring foreigners in Thailand largely depend on the structure used to incorporate the company.
Assuming the tourism business will be incorporated using the most common structure, the Thai Limited Company, the following criteria must be met to hire foreign employees.
- A ratio of 4 Thai employees per foreign employee hired is generally required to support a Work Permit.
- There is also a minimum capital requirement of 2 million Baht per foreign employee.
Once these requirements have been satisfied, the employee can apply for a business visa and work permit.
How can Belaws help?
You can talk directly to one of our experts for more information about how our experts can help you start a tourism business in Thailand.
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 a foreigner 100% own a tourism business?
Unfortunately, operating a tourism business is restricted under the Foreign Business Act (FBA). Therefore, the FBA makes it generally not possible to have a 100% foreign-owned tourism business for most activities, including:
- travel agencies,
- tour operators,
- hotels and resorts.
However, while it is a restricted activity, some options are available to foreign entrepreneurs. For example, establishing a company with a Thai partner (who owns more than 50% of the shares) or obtaining a BOI promotion.
How much does it cost to start a business in Thailand?
The cost of starting a business in Thailand can vary greatly depending on the type of business and its size. Some initial costs to consider include company registration fees, legal and accounting fees, visa and work permit costs, and operational costs such as equipment and office space.
What kind of business can I start in Thailand?
A foreigner can start a variety of businesses in Thailand, including tourism, manufacturing, and services. Popular industries include food and beverage, real estate, and IT.
Can a foreigner open a restaurant in Thailand?
Yes, a foreigner can open a restaurant in Thailand. They are required to comply with local regulations and laws, including registering the business, obtaining necessary licenses and permits, and obtaining a work visa if required.
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