Thailand is a nation that has been growing quickly, with a robust economy and many options for international investors. However, for foreigners or expats, business registration in Thailand can be difficult and complex. Putting aside all linguistic and cultural difficulties, there are a number of laws and rules that must be complied with. The corporate culture and climate differ from what many foreigners are used to, and navigating the laws and regulations is not an easy task.
Challenges & Solutions for Expats: Business Registration in Thailand
Foreign Business License for Expats in Thailand
For expats or foreigners, launching a business in Thailand is a challenging procedure. The Foreign Business Act of 1999 is the main hurdle. It is because it limits and outlaws numerous commercial sectors and categories for foreign nationals. However, the statute permits foreigners to do business in these categories if they obtain a foreign business license in Thailand from the Foreign Business Committee and the Director-General of the Department of Business Development, Ministry of Commerce. Additionally, there is a distinct statute regulating foreign land ownership, banking, insurance, finance, and shipping.
BOI Benefits for Expats in Thailand
Nonetheless, the Thai government provides prospective entrepreneurs with sufficient capital, suitable infrastructure, and a productive labor force. Thailand’s Board of Investment is the primary government organization that encourages foreign investment in the nation. It offers incentives, services, and information to foreign businesses, among other auxiliary services. The incentives include everything from tax breaks to import and export duty exemptions on raw materials. To avail of these benefits, you must apply for BOI promotions in Thailand while registering your business here.
Registering a business in Thailand as an expat or foreigner is challenging and involves numerous obstacles that are hard to overcome. Several laws and regulations currently exist that must be followed in order for them to be in compliance. For business registration in Thailand, the barriers can be removed and the challenges can be met with a little preparation and persistence.
Key Steps of Business Registration for Expats in Thailand
Foreigners can start businesses in Thailand by following the rules and other requirements indicated below. It is necessary to meet the necessary compliance before starting a business in Thailand.
Find a Thai Partner
The Foreign Business Act prohibits foreigners from owning more than 49% of the shares in Thai companies. This suggests that the local Thai partner owns 51% of the company’s shares, with the foreign partner limited to 49% shares. Therefore, for your company to operate in Thailand, it must abide by the provisions of the Foreign Business Act. This makes it mandatory to have a local Thai partner who can be an active part of the company. The laws do not allow the foreign firm to operate in the same capacity as a single proprietorship.
Foreigners wishing to operate a small business in Thailand should ideally form an ordinary partnership, which has separate legal standing, rights, and obligations from the partners. An alternative structure for foreign firms to establish their business is a limited partnership, wherein their liability is restricted to the total amount of their investment. The last option available to a foreigner is to establish a limited company, wherein the funds must be in shares in accordance with Thai legislation, and the business registration involves three or more promoters and shareholders. To establish the business, any of these business models will require a local Thai partner.
Check the eligibility for BOI Promotions
The Board of Investment of Thailand grants privileges to foreign investors can hold 100% ownership of their business in Thailand. The board supports and advocates for small clusters of foreign businesses that provide them with work permits and visas. This also exempts corporate tax in order to support and safeguard foreign businesses. Anyone interested in starting a small business in Thailand can apply for the Board of Investment (BoI) promotion. The lengthy and intricate process requires the businesses registered under them to file or disclose the monthly report and to hire accounting firms or business attorneys to help them comply with the law.
Register your Business with the Department of Business Development of Thailand
Although the procedure may be challenging, it is necessary to guarantee that the company name is unique. The minutes of the meetings, evidence of share capital payment, and all documents pertaining to the list of shareholders and their shareholding pattern are among the documents necessary to register the business. One must register their business with the Department of Business Development in order to comply with the legislation (DBD).
It is necessary to apply for additional financial license registrations, such as VAT licenses, after receiving the company registration certificate in Thailand from relevant authority. If the company’s yearly sales exceed 1.8 million baht, VAT registration becomes mandatory. The Revenue Department of Thailand holds the authority to receive VAT Applications and grant licenses to businesses in Thailand. Depending on the kind and scale of the firm, a number of additional permits and registrations are applicable. Konrad Legal can assist you with incorporation services as well as evaluating license requirements.
Apply for a Visa and Work Permit
A letter from the local labor organization, a letter from the Thai business partner providing employment, and a list of the documents listed in the Thai embassy are all required for the visa application procedure. In addition, there is a $20 cost for double-checking of application documents. Moreover, a non-immigrant B visa is insufficient to obtain a work permit; one must instead obtain a work permit in Thailand. However, these standards are not applicable for the business and its partners to follow if the business has BoI promotion.
Open a Corporate Bank Account
Following a business license, a business can select a bank based on suitability, requirements, and preferences. While setting up commercial banking accounts, an accounting team or firm is helpful to ensure compliance with banking standards. Accounting businesses doing business in Thailand must establish appropriate bank accounts and adhere to banking regulations.
For foreigners, running a business in Thailand may be both rewarding and challenging. Thailand has made remarkable strides in both economic globalization and the construction of a robust infrastructure. However, Thailand has been quite strict with international company owners wishing to conduct business in Thailand. For foreign business owners, the maximum 49% shareholding and the drawn-out process of getting a letter of intent might be difficult.
Our team of specialists will respond to your inquiry regarding how to register a company in Thailand within the next 24 hours. Email us at [email protected].
