Italian cuisine consistently places among the top ten in any global ranking of people’s favorite foods. It therefore comes as no surprise that there are a lot of Italian restaurants in Thailand. You may also try for other cuisine specialties and expect sure success. It is due to the huge influx of international tourists all around the year. This article intends to explain the process to open a restaurant in Thailand. We have also indicated the cost involved in every step as that will help you in your budgeting process.
Choose an entity
Process
A sole proprietorship, an unregistered partnership, a registered partnership, a limited partnership, or a private limited company are just a few of the different business entities we can choose from. Because the owner’s personal assets are protected, the limited company is the most common type of business organization. Liabilities of the company are also restricted to its registered capital.
Cost
There is no cost incurred in this step as it is up to you and your business idea to decide upon the type of entity. If you are a foreigner, you may consult with any corporate lawyer in your country for guidance.
Governmental Agency and Government Law
Process & Requirement
The Department of Business Development (“DBD”), which is part of the Ministry of Commerce, is the principal government body in charge of registering new businesses and any changes to existing businesses, such as the replacement of directors or shareholders or the modification of the authority of directors to sign documents. The Civil and Commercial Code (CCC) governs the creation and operation of companies.
Cost
Being a foreigner, it is quite natural that you may not have a complete knowledge of the CCC. For this you must hire a reputed corporate law firm in Thailand. Some of these firms charge on hourly basis, while a few work on contract basis.
On an hourly basis, the charges of these firms are 1500-3000 THB per hour. For a full project, they may charge around 60000-100000 THB, that includes the completion of your entire paperwork as well.
Setting Up A Company to Open a Restaurant in Thailand
Process & Requirement
A minimum of three people, known as “promoters,” are needed to start a private limited company, according to the CCC. The promoters will eventually become shareholders in the newly formed company. One of the promoters should apply for a name reservation with the DBD. The DBD takes into account whether the proposed company name is the same as or very similar to those of already existing registered companies. If not, the promoter could carry out the remaining company incorporation steps. The Memorandum of Association (“MOA”) is then registered by the promoters with the DBD within 30 days. The MOA contains information about the company, including its name, the capital to be registered, the names of three promoters, the province in which the company will be based, and its business goals.
Cost
The registration fee is 0.05% of the registered capital, with a minimum registration fee of 500 Baht and a maximum registration fee of 25,000 Baht. After the MOA registration, the promoters call a shareholder meeting known as the “Statutory Meeting.” Note that, the company’s Articles of Association (AOA), shareholder list, shareholding percentage, costs incurred and/or advanced by the promoters in the company formation, type of shares, and initial payment of shares are all presented for approval at this meeting.
Generally, this meeting decides the name of auditor and directors that will form the board of the company. Furthermore, the Board of Directors must request for the payment of company shares. Moreover, according to the Thai Law, all shares must be issued and at least 25% paid up. Within three months of the date of the Statutory Meeting, the promoters must submit the incorporation application at the DBD after making the initial payments for the shares.
A minimum fee of Baht 5,000 and a maximum fee of Baht 250,000 apply to the application registration fee, which is equal to 0.5% of the registered capital. However, it only takes the DBD one day to review and approve the submitted documents. DBD Registrar issues a Certificate of Incorporation and other corporate registration documents, such as an Affidavit, a Memorandum of Agreement, an Articles of Association, and a list of shareholders on the same date of filing the incorporation application. However, on completing all CCC requirements, you can register the MOA and incorporation application on the same day to make business operations even easier.
Foreign Shareholder Permissions to Open a Restaurant in Thailand
Process & Regulations
The law that governs a foreigner or foreign company doing business in Thailand is the Foreign Business Act B.E. 2542 (1999) (“FBA”). Restaurant business falls under the list of restricted businesses under the FBA. Therefore, this will not allow foreign majority ownership companies to operate this business without a Foreign Business License (“FBL”).
In general, to open a restaurant in Thailand, you will not receive the FBL considering its activities do not meet the criteria under the FBA. Generally, these activities includes technology transfer, size of investment, research and development etc. Therefore, the restaurant operator chooses to set up a Thai-majority owned company with at least 51% Thai shareholders for operation of the restaurant business in Thailand. In this case, the FBI shall not apply and a Thai-majority owned company can operate the business right away subject to specific licenses required for a restaurant mentioned below.
Thai law limits foreign shareholding in a company that operates restaurant business to not more than 49%. However, even if the company holds Thai-majority ownership, where a foreigner owns a minority of the shares or is a director of the company, all Thai shareholders must show a form of financial documents demonstrating that they have the ability to pay for the shares. However, this is to prevent the nominee arrangement in a Thai company under the DBD’s regulation.
Cost
As per our mention earlier, you need to take the help of some reliable law firm in Thailand for this matter. You have to pay them according to the prevalent market rates in terms of consultation and government fees. For the Foreign Business License, the government fees are as following:
| 1. License application | 1,000 – 2,000 THB |
| 2. License | |
| a) License for certain foreigners | 5,000 THB |
| b) License for List Two Businesses | 40,000 THB |
| Natural persons | 10 THB for each registered capital of 1,000 THB with the minimum of 40,000 THB and the maximum of 500,000 THB |
| Juristic persons | Fraction of capital of 1,000 THB is treated as 1,000 THB |
| c) License List Three Businesses | 20,000 THB |
| Natural persons | 5 THB for each registered capital of 1,000 THB with the minimum of 20,000 THB and the maximum of 250,000 THB |
| Juristic persons | Fraction of capital of 1,000 THB is treated as 1,000 THB |
| 3. Certificate | 20,000 THB |
| 4. Replacement of License of Certificate | 5,000 THB |
Apart from the government fees, you may also have to pay consultation fees on hourly basis to the law agencies whom you entrust your task upon.
What else do you need to Open a Restaurant in Thailand?
VAT Registration for Restaurant in Thailand
The restaurant operation company may or may not need to register for VAT with the Revenue Department (“RD”), depending on its revenue. In the event that the company’s annual revenue is less than Baht 1.8 million, it may decide not to register for VAT with the RD. However, if the company’s revenue exceeds that amount, there is requirement for VAT registration.
Alcohol License to Serve Alcohol in Restaurant in Thailand
Italian wine seems to be a necessary component of a complete Italian meal. According to the Alcohol Act B.E. 2493 (1950), a restaurant that serves wine or other alcoholic beverages needs to obtain a license from the Excise Department.
Licenses to Operate Restricted Commercial Undertakings
Given that a restaurant is one of the restricted commercial undertakings under the Bangkok Metropolis Regulation, assuming it is located there, it must also apply for a license from the Bangkok Governor to conduct restricted commercial undertakings. The restaurant would have to abide by local laws if it were located somewhere other than Bangkok.
Cleanliness and Drainage of Restaurant in Thailand
The Bangkok Metropolis Regulation and the Public Health Act B.E. 2535 (1992) provide specifics on the drainage system, walls, sinks, cookware, and dining tables and chairs in restaurants. In conclusion, the restaurant must be clean with a good drainage system. Moreover, it must have an adequate number of sinks and toilets.
Let us indicate that if you hire a law firm for the process to open a restaurant in Thailand, their service fees include their fees for the issuance of all of these licenses and permissions. All you need is to pay the nominal government fees for each of them.
Konrad Legal has a team of lawyers and legal experts to provide just the legal service you need. To learn more about us, please visit www.konradlegal.com. You can also email us your requirements at [email protected] to open a restaurant in Thailand.
