Business in Thailand
The US News and World Report ranked first the Kingdom of Thailand in the 2020 Best Countries to Start a Business global perception-based survey. The survey related to these five attributes: affordability, bureaucracy, low manufacturing costs, global connection and access to capital.
The survey took note of the several factors why Thailand is the best country for business startup. Firstly, Thailand has been considered one of the most visited countries. It has a very stable agricultural sector as well as a booming and competitive manufacturing industry. Thailand is also the world’s largest exporter of rice and a leader in textiles, tin, and electronics.
The above survey was likewise corroborated with the data of Trading Economics ranking countries in the Ease of Doing Business. Thailand is ranked 21 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The Ease of Doing Business index ranks countries against each other based on how the regulatory environment is conducive to business operations, stronger protection or property rights. Being considered as the second-largest economy in Southeast Asia, Thailand is conveniently a business hub for the ASEAN region.
Business in Thailand continues to expand from time to time attracting more and more foreigners to invest or set up an enterprise. Foreigners not only invest in existing companies or put up their own establishment in Thailand. They also venture into the expansion of their branches.
Needless to say, Thailand continues to boom since its government consistently gives incentives to the business world. These incentives include the permission to own real estate property in the country upon satisfaction of all the requirements. Further, joint ventures are also encouraged thus giving business organizations more profitable options.
Starting a Business in Thailand
Business organizations in Thailand are classified into companies and partnerships. Other classifications include a branch office, a representative office or a regional operating headquarters. To decide on the most appropriate business organization to establish, the knowledge, expertise, and experience of a Thailand lawyer are required. They are equipped with the rudiments of Thailand laws as well as the realities of business practice. Also, they can be of valuable assistance in business registration, the first requirement that all businesses should comply with. Preparation of all the documentary requirements and proper filing in the concerned government agencies will be a breeze.
For foreigners looking to invest and start a business in Thailand, it is important to note that foreigners cannot own 100% of the business registered under Thai law. A different set of rules applies to a Foreign-owned business established or operating in Thailand under the Foreign Business Act. A foreign business is defined to be a business with over 49% foreign ownership. If the type of business you wish to operate falls under the categories set out in the Act, you may either be restricted from operation all together or will need to apply for a Foreign Business License (FBL) before you can commence operations and obtaining any business or industry-specific licenses with the Ministry of Commerce or apply for a business promotion with the Board of Investment (BOI) or if the investor is of US nationality, company registration under the US-Thai Treaty of Amity can likewise be an option for a foreigner to own more than 49% of the shareholding of the company.
Foreign Business Act
The Foreign Business Act (FBA) regulates the activities in which companies designated as “foreign” may engage in. A foreign company under Thai law is a company registered under the following laws:
- The laws of another country (including branches, representative offices and regional offices of companies abroad operating in Thailand).
- Thai law, but where 50% or more of its shares are held by foreign individuals.
The FBA identified three lists of activities in which foreign participation may be prohibited or restricted.
- Activities stated in List 1 are designated as business that foreigners are not permitted to conduct for special reasons. Foreign companies are completely restricted from engaging in the activities contained in List 1.
- Activities stated in List 2 are designated as businesses related to national safety or security, activities affecting arts and culture, traditional and folk handicraft, or natural resources and the environment. Foreign companies may only engage in the activities stated in List 2 with prior Cabinet approval.
- Activities stated in List 3 are designated as businesses in which Thai nationals are not yet ready to compete with foreigners. To engage in activities stated in List 3, the foreign company must apply for and obtain a foreign business license prior to the commencement of its company operations.
Companies promoted by the Board of Investment (BOI) are permitted to engage in certain business activities restricted under the Foreign Business Act by obtaining the foreign business certificate prior to conducting its business.
In matters of establishing a business in Thailand, Siam Legal is a reliable ally. Its team of Thailand and foreign lawyers can assist clients in every step of the process, from the simple process of business registration to the complex offshore investments. Not only that, but clients also receive a premium for getting the help and assistance of foreign lawyers who can take care of their affairs in their home country. Therefore, in case problems of securing documentary requirements from the home country arise, such can be resolved easily.
Siam Legal can also extend valuable assistance in handling the tax liabilities of companies. They have lawyers who are experts in the field; thus, can afford clients protection from an incorrect assessment of tax liabilities, overcharging and other similar occurrences. Tax exemptions and incentives provided by the Thai government can also be explained clearly to clients in terms easily understandable to them.
Indeed, using any of Siam Legal's services for the establishment of a business in Thailand is worth the investment. Efficiency, as well as cost-effectiveness, is assured in every step of the process. Clients have the luxury to sit back and relax as they witness the unfolding of their company, partnership, limited company, representative office or any other business entity in Thailand.