It is quite obvious that any individual or group must seek local government permission before starting a business. This rule is applicable throughout the world. This article will answer some most frequently asked questions on Business License in Thailand.
What should I do before starting a business in Thailand?
You must have a strong and fool-proof business plan before you start incorporating your business in Thailand. Knowledge about the legalities in the process is essential along with the cultural differences you need to consider to operate in Thailand. As a foreigner, you must be very conversant with the legal framework and protocols applicable for business in Thailand in order to avoid penalties.
After all these, you have to know about the business structure which fits best with your idea to operate in Thailand. The structure must be in adherence with the corporate framework of Thailand so that you can run a legitimate business in Thailand.
Which legal structure should I select?
You should select the legal structure for your company based on the type of business you are planning to start in Thailand. The structure can be different in case you plan to set up a trading or commercial entity. Moreover, for a trading entity, you must comply with the Foreign Business Act. However, the Foreign Business Act has certain restrictions for foreigners in doing business in Thailand.
If your business idea falls within the scope of such restrictions, you may not be able to set up your business in Thailand. Even whether you are eligible for a Foreign Business License or you need that is decided by the Foreign Business Act in Thailand.
For non-trading entities like a representative office for your business in your country, you may not adhere to the Foreign Business Act so strictly. Apart from that, you will have exemptions from the Corporate Income Tax policies as well. So wisely select the legal structure for your business in Thailand so that you can legitimately operate in Thailand.
What are the applicable business registration or licensing obligations?
If your business is restricted under the Foreign Business Act, you have to acquire a Foreign Business License in Thailand. This is a crucial requirement for foreign companies who want to have the major shareholding in their business in Thailand. To check whether your planned business activities fall under the restrictions or not, check with the list of restricted businesses as follows:
List 1: This list comprises the businesses which are not permitted to foreigners.
List 2: In this list, those businesses are categorized which are permitted to foreigners but under a certain set of terms and conditions. To start business activities enlisted here, you have to take permission from the Cabinet of Thailand.
List 3: To operate the business activities in this list, the foreign investor needs to have permission from the Director-general of the Commercial Registration Department (CRD). Generally, this list comprises businesses that are yet to be allowed to be operated by a foreign business unit.
Business activities in Thailand are subject to limitations whereby a foreigner can invest in up to 49% of a company. The businesses with restrictions for foreigners seek a majority Thai share in the firm. If any foreigner wants to hold more than 49% share in their business in Thailand, possession of the Foreign Business License becomes mandatory.
When do I need special permits and licenses in Thailand?
There are certain specific business licenses in Thailand that are under the regulations of government agencies. You will surely need these to operate your business. Following are the businesses that require such specialized licenses:
- Food and Beverage
- Travel and Tourism
- Liquor
- Childcare
- School
- Medical Industry
You may also need multiple licenses for your business if it covers multiple dimensions. For example, you can plan to open a hotel with its own bar and restaurant. For this, you must have a license for tourist accommodation along with a food and alcohol license.
Are there any financial criteria that I need to apply for each business license?
The financial criteria are on the basis of the type of business license and business you are planning to do in Thailand. For example, your business in the real estate industry of Thailand will have different financial criteria than the same for the medical industry.
Is the Board of Investment (BOI) License limited to Thai companies only?
The Board of Investment License is never having limitations only to Thai companies. A foreign juristic company is equally eligible to obtain this license if it meets all the criteria set by the BOI.
What is the meaning of Alien or Foreign Juristic Person?
The Foreign Business Act of Thailand classifies the following entities as Alien or Foreign Juristic persons:
- Individuals of Non-Thai Nationality.
- Any juristic person without registration in Thailand.
- Any juristic person with registration in Thailand with a half share partnership with a non-Thai national. He/she can be a juristic person without registration in Thailand.
- A juristic person registered in Thailand, with at least half of shares is from either a non-Thai nationality individual. The juristic person can be without registration in Thailand or the juristic person with registration in Thailand. However, at least half of the shares are from either non-Thai nationality individual or the juristic person which was not registered in Thailand.
What kinds of businesses are allowed under the US-Thai Amity Treaty?
Under the US-Thai Amity Treaty, an American entity can obtain protection for almost all types of business activities except the following:
- Transportation
- Logistics
- Taking care of the property for the benefit of others
- Banking
- The exploitation of land or other natural resources
- Internal trade on local agricultural products.
Do I need a local Director to apply for the Foreign Business License (FBL)?
To apply for and obtain a Foreign Business License in Thailand, at least one Director of Thai nationality is mandatory.
Importantly, you and your intentions must comply well with the local legal and corporate regulations. In that case, none of your applications can be rejected. Many times, you may not be able to understand the regulatory frameworks or know the alternatives to achieve your goal. For that, you need strong legal counsel. This becomes more important if you are planning to start your business in a foreign nation.
Sometimes it becomes essential to explore business opportunities in Thailand.
For all types of assistance and processing of your Foreign Business License in Thailand, mail us at [email protected]. You should note that your first session of consultation with us is going to be free.
