Are you planning to register a sole proprietorship business in Thailand? If you are a Thai, you can do it anyway, but the same is not possible for foreign investors in Thailand. However, things are pretty different for US citizens. The US-Thai Amity Treaty holds certain provisions availing of which US Citizens can register a Sole Proprietorship Business in Thailand. Thai article will help you delve deep into the details.
US-Thai Amity Treaty Clauses for US Citizens to Register Sole Proprietorship Business in Thailand
The US-Thai Treaty of Amity and Economic Relations (AER) allows US citizens and businesses to operate in Thailand on the same basis as Thai nationals. The treaty also allows US citizens and businesses to establish a company or branch office in Thailand. The treaty also gives US citizens who want to form a limited company in Thailand certain rights and privileges that are often closed to other foreign nationals.
The 1966 amendment to the US-Thai Amity Treaty provides two major benefits:
- American companies are permitted to maintain a majority shareholding or to wholly own their company, branch office, or representative office located in Thailand.
- US citizens who register with the Thai Department of Business Development under the U.S. – Thailand Amity Treaty are allowed to run a sole proprietorship in most industries.
Note that, this is the only way for a foreigner to operate as a sole proprietor in Thailand. Doesn’t that sound cool?
Process and Cost of Registering Sole Proprietorship Business for US Citizens
The Thailand Board of Investment (BOI) establishes the guidelines for beginning a business in Thailand. The following is the procedure to register a sole proprietorship in Thailand, according to the guidelines.
1. Registering the Name of the Business/Company
Registering the entity’s name with the Department of Business Development (DBD) in Thailand is the first step towards establishing a sole proprietorship in that country. The procedure may need a maximum of two working days.
Three distinct names must be provided, ranked according to how you like them. The names submitted must not correspond to the royal family or any governmental body. Furthermore, they shouldn’t violate Thai society’s morals.
2. Obtaining a Certificate of Incorporation
After getting the name approved, the next step is to obtain a Certificate of Incorporation in Thailand. The DBD has made the process easier by providing an e-registration facility since 2017.
You can successfully register by uploading all the required documents to the e-Registration portal. However, the portal is not available in English. So, if you are not a Thai speaker, you may need a translator to complete the registration process. Therefore, it will be a wise decision to take the support of a local corporate law firm in Thailand that specializes in Amity treaty business registration.
3. Getting a VAT Certificate
A sole proprietorship in Thailand must register for VAT if the business generates more than 1,800,000 Baht in annual income. Additionally, sole proprietorships in Thailand are not subject to corporate tax. Instead, the proprietor must pay income tax according to the tax bracket for natural persons. Income of less than 150,000 Baht is tax-exempt, and the highest tax rate is 35% for income above 5,000,000 Baht.
4. Other Licenses
In addition to VAT, a sole proprietorship in Thailand may also require other licenses, depending on the type of business. For example, a restaurant business must obtain liquor and music licenses. Similarly, a shipping company cannot operate without an import-export license. You may also need an FDA license to import foods and drugs for your business. Each of these licenses can cost between 600 and 2,000 Baht.
(Please note that the company/business and tax registration fees are subject to change and the figures mentioned are the latest ones as of the date of publication of this article.)
The Amity Treaty makes it convenient for US Citizens to register sole proprietorship businesses in Thailand. Furthermore, to add to the ease, you must seek support from a corporate law firm in Thailand. This will make the process easier and faster for you. Email us your requirements at [email protected] and our team will get back to you with a complete solution to register your sole proprietorship business in Thailand.
