Singapore and Thailand share excellent and multi-faceted bilateral ties. Both the nations also cooperate closely at regional and international fora. Strong economic links and robust defense ties are key pillars of the relationship. There exists extensive technical cooperation, including the Singapore Cooperation Programme and the Singapore-Thailand Third Country Training Programme. BY these, both the countries jointly provide technical assistance to other developing countries in the region. This makes it quite hassle-free for Investors from Singapore to Invest and Start a Business in Thailand.
The close bilateral relations are also reflected in the extensive cooperation among agencies. The Singapore-Thailand Enhanced Economic Relationship, launched in 2002, provides the framework for long-term strategic partnership in economic cooperation. The Civil Service Exchange Programme (CSEP), launched in 1998 is a key bilateral platform to build institutional linkages between the two civil services. Additionally, it oversees cooperation in the areas of education, environment, ICT, science and technology, legal and judicial, manpower, transport, as well as arts and culture.
Let us have a comprehensive glance on the process of an Investor from Singapore to Invest and Start Business in Thailand!
In Thailand, it is typically necessary for a foreign investor to have Thai involvement in their venture. However, 100% foreign investment is only possible in a select few important sectors. Therefore, one may conduct business as a sole proprietor, limited company, partnership, joint venture, branch of a foreign firm, or representative/regional office, whether they are Thai or foreigners.
Partnerships
The primary distinction among Thailand’s three forms of partnerships is the level of liability each carries. In an unregistered ordinary partnership, all of the members are jointly and severally liable for all of the partnership’s liabilities. However, this kind of partnership is taxable in the same way as an individual because it is not a legal entity. Due to its registration with the Commercial Registrar, an ordinary partnership is a legal entity with a different personality from each of the members.
Additionally, for income tax purposes, a registered ordinary partnership is regarded as a corporate entity. Moreover, in a limited partnership, each partner’s personal liability is constrained to the amount of their respective contributions, and any additional partners are jointly and severally liable for the firm’s whole debts. A limited partnership is taxed in the same way as a corporation.
Private Limited Company
A Thai Private Limited Company is comparable to a Corporation. Foreigners may own the entire business. However, foreign participation is permissible up to 49% in certain businesses that are exclusive for Thai nationals. The authorized capital’s par value is the maximum the shareholders’ obligation can exceed. However, in the company’s articles of incorporation or memorandum of association, the directors’ culpability may be without limit.
A board of directors oversees the limited company in accordance with the charter and bylaws of the organization. There isn’t a set minimum level of capitalization, but the private limited company’s capital must be enough to achieve its goals. There must be a subscription for every share, and at least 25% of the shares must be paid in full. Issuance of stocks may be in the form of either ordinary shares or preferred shares, but all shares must have voting rights.
Thai legislation forbids the issuance of shares with no par value and limits the issuance of shares to those with a par value of THB5 or more. Some aspects of Thai company law may be new to foreign businesspeople. Among these are the ban on Treasury Shares and the requirement that a Private Limited Company’s shareholders must always number at least three. Non-voting common or preferred stock is not allowed, and the entire amount of the original authorized capital stock must be subscribed.
Public Limited Company
A public limited company can be formed in a manner akin to a Private Limited Company. A private business may become a public corporation through the terms of the Limited Public Company Act of 1992. However, the main distinction between a public and private firm is that the public may not purchase shares from a private company. The table below displays several further variations:
| Private Limited Company | Public Limited Company | |
| Minimum Number of Promoters | 3 | 15 |
| Minimum Number of Shareholders (all-time) | 3 | 15 |
| Public Subscription of Shares | Not Allowed | Allowed |
| Public Subscription of Debentures | Allowed under certain conditions | Allowed |
Joint Venture
According to normal policy, a joint venture is a group of people (natural and/or legal) who enter into an agreement to operate a business together. Additionally, the Civil and Commercial Code don’t acknowledge it as a legal entity. However, the Revenue Code identifies a joint venture as a single entity under the Revenue Code, its income is subject to corporate taxation.
Branch of a Foreign Corporation
To conduct business in Thailand, a company formed under foreign law may open a Branch Office. Moreover, only the accounts related to the branch’s activity in Thailand must be maintained by branch offices. Furthermore, the Revenue Department may classify revenues directly earned by the foreign head office from sources within Thailand as subject to Thai tax, so it is crucial to establish upfront what is considered income subject to Thai tax.
Please note that, remittance of a minimum of THB 3 million into Thailand is must for an alien business license for a branch of a foreign corporation for approval. However, subsequent ministerial regulations may alter this amount. Up until the day of its dissolution, a branch office may continue to operate indefinitely.
Representative Office
For the limited purpose of engaging in non-revenue generating activities, a foreign entity may open a Representative Office in Thailand. These only include the following:
- Searching for local sources of goods or services for its head office, inspecting and controlling the quality and quantity of goods procured by its head office.
- Providing advice in various fields relating to products directly sold by its head office to local distributors or consumers.
- Disseminating information about new products and services of its head office.
- Reporting to its head office on local business developments and activities.
Representative offices are subject to the same minimum capital requirements as branches.
Regional Office
A global firm may open a Regional Office in Thailand to conduct a few limited non-revenue-generating activities. These only include the following:
- Contacting, coordinating, and supervising the activities of affiliated businesses in the region.
- Providing services to affiliated branches or subsidiaries such as: advisory and management services; training and personnel development; financial management; marketing control and sales promotion; and product research and development.
The multinational corporation’s head office must cover all costs spent by the regional office. Moreover, regional offices are subject to the same minimum capital requirements as branches.
If you are an investor from Singapore and willing to invest in Thailand, now is the time. Thailand is quickly recovering from the crisis stage of the pandemic. There are several business-centric announcements made by the Revenue Department and the Board of Investment of Thailand. Therefore, foreign investors can get special privileges on starting their venture in Thailand now.
Apart from a brilliant idea, capital and understanding of the Thai market, there is another important requirement. That is, local legal and accounting support. It won’t be possible for any foreign investor to understand and know all the nitty-gritties of Thai Civil and Commercial Code or the Revenue Code. Therefore, starting from Company Registration and all through the accounting and taxation procedure, you will surely need local Thai support. To have a quick and free consultation with the leading law firm in Thailand, email us at [email protected].
