Thailand’s Ministry of Commerce has always acted as a magnet for Foreign Direct Investment (FDI). The economy has always invited foreign companies and investors to register their business in Thailand. This has boosted the nation’s indices in terms of Ease of Doing Business (EODB). It also helped Thailand to mark a prominent place in south-east Asia in terms of foreign trade and collaborations.
Announcement on Minimum Capital Requirement for Foreigners
As an example of this virtue, the Thai Ministry of Commerce repealed previous three ministerial regulations with a single one. These regulations are on minimum capital requirement for foreign companies to start a business in Thailand. This initiative is to make compliance easier for the foreign businesses in accordance with the various treaties and trade agreements.
This new regulation came into effect on August 28, 2019. It has various attributes to help the foreign investors to start their business in Thailand. The new regulation provides them with a timeline to bring in or remit the minimum capital needed for their business in Thailand. It is in line with the applicable treaties and trade agreements.
The treaties and trade agreements covered by this ministerial regulation are –
- U.S.-Thailand Treaty of Amity and Economic Relations
- Australia-Thailand Free Trade Agreement
- Japan-Thailand Economic Partnership Agreement
- ASEAN Framework Agreement on Services
- ASEAN Comprehensive Investment Agreement
Foreign Companies in Thailand can bring in or remit the minimum capital required for their business in Thailand within August 29, 2029. Companies incorporated before August 28, 2019 are also eligible to take up this privilege. Foreign companies who are yet to bring in or remit the minimum capital to Thailand also falls eligible in this regulation.
The capital requirement and pay schedules stays unaltered for companies not incorporated by the above treaties and agreements. According to treaties and trade agreements, few business may not require foreign business license. Such companies must have a minimum capital of THB 2 million. Such foreign companies in Thailand must pay it up before they start their operations in Thailand.
Key-points of the New Ministerial Announcement for Foreigners
Flexibility:
The new ministerial regulation has brought about flexibility in the payment pattern of the minimum required capital for foreign companies in Thailand. Companies incorporated under the privileges of the above-mentioned treaties and trade agreements can pay the same in installments.
Process and Exemptions:
Foreign business license requirement for foreign companies in Thailand is 25% of the total estimated expenses for three years of operation or THB 3 million, whichever is higher. Before a company can start doing business in Thailand, it must first pay the necessary minimum capital.
International individuals and overseas companies’ branch offices may not make the entire capital payment at once. Instead they can carry in or remit their minimum capital in installments.
In the installment process, they should pay at least 25% of the minimum capital within three months. Foreign investors must pay at least 50% of the minimum within one year. Thereafter, they can pay at least 25% of the minimum capital per annum.
Deadlines:
Foreigners must also submit proof of the minimum capital remittance to the Department of Business Development. The deadline to do so is within 15 days of its incoming or remittance to Thailand.
Any foreigner who runs a company in Thailand violating these minimum capital requirements will attract fine of up to THB 1 million. Such a business will also be liable to pay a regular fine of up to THB 50,000 for the span of the violation.
Closing Thoughts:
The Ministry of Commerce of Thailand has widened the scopes of comfortable investment for foreign investors. It has also embedded flexibility in the processes.
Thailand is formulating strategies to deal with the economic retardation it faced due to COVID-19 outbreak. This announcement, although done before COVID can now support the nation in attracting FDI.
If you are thinking to invest in Thailand, now is the perfect time to do so and avail all the benefits the Royal Government of Thailand is readily providing. For any information or guidance in starting your business in Thailand feel free to mail at [email protected]
