Foreign Business Law of Thailand Q and A
The foreign business law of Thailand is quite in depth, so it is helpful to review a more detailed series of questions, especially some often over-looked points, for the benefit of foreign investors interested in doing business in Thailand.
Starting from what time can a foreign company that has received permission to operate business in Thailand, such as in the form of a Foreign Business License, operate business?
The foreign company can start operate business from the time it has paid the fee for the issuance of the Foreign Business License.
Must a foreign company that has received Board of Investment (BOI) promotion comply with the Foreign Business Act? And how so?
A foreign company that has received BOI promotion must notify the Director-General of the Department of Business Development (DBD) if its promoted business activity is restricted under List Two or List Three annexed to the Foreign Business Act. The Director-General will issue a Foreign Business Certificate pursuant to Section 12 of the Foreign Business Act for those restricted business activities specified in the BOI promotion certificate.
What is the minimum capital required for a foreign company?
The law designates the following required minimum capital for a foreign company:
- If the company engages in a type of business that is not specified in the lists annexed to the Foreign Business Act, then the minimum capital is 2 million baht.
- If the company engages in a type of business that is specified in the lists annexed to the Foreign Business Act, then the minimum capital is 3 million baht per each type of business.
What is the definition of the word “minimum capital”?
It is the actual amount of money required in order to start business operations in Thailand.
If a foreign company that hires another company to manufacture goods on its behalf for distribution, will the foreign company be considered the manufacturer?
If another company is hired to manufacture goods, it is not considered that the hirer, i.e. the foreign company, is the manufacturer. Therefore, if the foreign company distributes goods that it hired another company to manufacture, it shall be considered that the foreign company is engaging in retail according to Section (14) of List Three annexed to the Foreign Business Act or wholesale according to Section (15) of List Three. If a foreign company is to engage in such activities, it must apply for a Foreign Business License. However, it should be noted that the aforementioned restrictions apply if the retail or wholesale operations have a minimum capital less than 100,000,000 baht.
Foreign business laws in Thailand are complex. Foreign investors are recommended to consult with competent legal counsel before beginning business operations in Thailand.
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