THAI BUSINESS LICENSE
- Foreigners wishing to operate some types of businesses in Thailand must obtain a Thai Business License for foreign companies known as a “Foreign Business License” from the relevant authorities before starting their business operations.
- The types of business requiring a Thai Business License are specified in List 2 and 3 of the Thailand Foreign Business Act (see below).
The Thailand Foreign Business Act (FBA):
Foreign investors face restrictions when doing business in Thailand because business laws reserve certain rights for local Thai businesses:
Juristic Persons In Thailand:
Thai law categorises foreign companies in terms of juristic persons into two different kinds:
- Juristic person not registered in Thailand
Juristic person registered in Thailand having the characteristics as follows:
- Limited company or public limited company whereby over 50% of its capital shares are owned by foreigner(s),
- Limited partnership or registered ordinary partnership whereby over 50% of its capital is invested by foreigner(s), or
- Limited partnership or registered ordinary partnership having a foreigner as the managing partner or manager.
FOREIGN BUSINESS ACT RESTRICTIONS
According to the Thailand Foreign Business Act B.E. 2542 (FBA), there are three types of business activities:
- List 1: Business Not Permitted to Foreigners
- List 2: Business Permitted to Foreigners under Conditions
- List 3: Business Not Yet Permitted to Foreigners
Lists 1, 2, or 3 of the Foreign Business Act in Thailand are subject to the limitations imposed by this Act.
- Activities that fall under List 1 are strictly prohibited to aliens.
- List 2 are prohibited to aliens unless permission is granted by the Cabinet.
- Businesses that are covered by List 3 are prohibited to aliens unless permission is granted by the Director-General of the Commercial Registration Department (“CRD”).
Based on the above definition, if majority of the shares of a limited company are held by Thais, it is regarded as a Thai company and thus not subject to this Act.
This means that aliens are generally allowed to participate up to 49% in a company engaged in restricted businesses.
Beyond that, the approval requirement must be complied with.
Strictly speaking, any company with majority of foreign shareholders is required to apply for the Foreign Business License (FBL) if it engages in a restricted business.
The minimum capital requirement for a foreign investor is two million baht in general, and three million baht for those under List 2 or List 3.
Some exemptions allow a foreigner to establish business in Thailand where the majority of owners are foreigners.
The Thailand-United States Treaty of Amity is one of these exemptions.
Under this treaty, the majority of share and director have to be US citizens to be exempt from FBA requirements.
Similar to the Thailand-United States Treaty of Amity, the Thailand BOI (Board of Investment) is another exemption which may allow foreign investors to operate their businesses in Thailand if they own a majority share.
This type of BOI-promoted company will not be restricted under FBA.
APPLICATION PROCEDURES FOR A THAI BUSINESS LICENSE
- An application for a Thai Business License should be filed with the Commercial Registration Department, which will be reviewed by the Cabinet or Foreign Business Committee. It is a very complicated and time-consuming process.
- Various criteria are used to consider the impact of the proposed business operation, such as the advantages and disadvantages to the nation’s safety and security, economic and social development, size of enterprise, and impact on local employment and the environment.
- Approval of a Thai business license application is more likely when the authorities view the business as providing significant benefits and protect or promote Thai interests.
Do You Need A Lawyer to Obtain a Thai Business License ?
- Application for a Thai Business License can be very complicated if you have not done it before, and may take you several weeks to complete the process. This is mainly due to the registration procedures: detailed document requirements for Thai language. At TSL & Associates, our experienced lawyers (Expats and Thai) have the language and expertise to communicate in Thai on your behalf and successfully review your company registration.
- TSL & Associates can also provide assistance in applying for your Thai Business License. Our lawyers are experts in the field and can advise clients on the correct basis for assessment of tax liabilities, overcharging, exemptions and incentives provided by the Thai government.
Notes Regarding Application for a Thai Business License:
- Choosing a Thai law firm specialising in international law to assist you with your Thai Business License will ensure that it is properly conducted and avoid having legal difficulties in the future.
- If you would like assistance in applying for a Foreign Business Licence in Thailand please consult TSL & Associates.