Thailand has emerged as a vibrant hub for international business in Southeast Asia, attracting entrepreneurs and investors with its strategic location, robust infrastructure, and business-friendly environment. The country’s unprecedented economic growth over the years has led to an increase in company registrations as investors look to maximize returns while addressing Thailand’s growing market demands. Whether you’re a local entrepreneur or a foreign investor, understanding the process of company registration in Thailand is essential for establishing a legal business entity and operating successfully in this dynamic market.
This comprehensive guide will walk you through the entire process of registering a company in Thailand, providing you with expert insights, practical steps, and valuable information to ensure a smooth and compliant business setup.
Understanding Business Structures in Thailand
Before initiating the registration process, it’s crucial to understand the various business structures available in Thailand and select the one that best aligns with your business objectives and requirements.
Thai Limited Company
A Limited Company, particularly a Private Thai Limited Company, is the most popular form of business structure in Thailand. Its key features include ownership by a minimum of three shareholders, with the liability of each shareholder limited to the par value of their shares. This type of business entity is similar to a Limited Liability Company (LLC) in the United States or a Private Limited (Pte. Ltd.) in Singapore.
Foreigners can either establish a Limited Company as a joint venture with Thai nationals or as a 100% foreign-owned entity, depending on the nature of the business activities.
Foreign-Owned Companies
The legal landscape in Thailand allows for several different types of legal entities to be incorporated depending mainly on the ownership structure and industry of activity:
- Board of Investment (BOI) Promoted Companies: If your company operates within one of Thailand’s Board of Investment’s targeted industries, you may apply for BOI sponsorship, which allows for a majority to up to 100% foreign ownership as well as industry-specific incentives.
- Foreign Business License (FBL) Holding Companies: By securing an FBL, you can operate a company with up to 100% foreign ownership in one of Thailand’s business sectors that are normally restricted to foreign investors.
- Representative Offices: If you have a foreign company, you can establish representative offices in Thailand to engage in non-trading activities. These offices can be 100% foreign-owned but are limited to specific functions such as sourcing goods or services in Thailand for your head office.
Other Business Structures
Other business structures include Branch Offices, Regional Offices, and Joint Ventures, each with specific requirements and limitations.
The Foreign Business Act and Ownership Restrictions
Business laws in Thailand reserve certain rights only for Thai nationals. Therefore, foreign investors face certain restrictions when doing business in Thailand. Under the Foreign Business Act (FBA), foreigners are prohibited from engaging in most business categories in Thailand, unless an alien business operation permit has been obtained from the Director-General of the Department of Commercial Registration with the approval of the Foreign Business Committee.
Under the Foreign Business Act (FBA), foreign ownership in some sectors including national security, culture, art, and natural resources, is limited. For most businesses, foreigners can own up to 49% of the shares, while Thai nationals must hold at least 51%.
The FBA divides various types of businesses into three categories:
- List 1: Businesses strictly not permitted to foreigners
- List 2: Businesses related to national safety or security or having an impact on arts, culture, traditions, customs and folklore, handicrafts, or natural resources and the environment
- List 3: Businesses in respect of which Thai nationals are not yet ready to compete with foreigners
Exceptions to Ownership Restrictions
There are several ways foreign investors can obtain exemptions from the ownership restrictions:
- Thailand-US Treaty of Amity: The US-Thailand Amity Treaty allows for American-owned companies to engage in business on the same basis as Thai companies, with some exceptions. 100% ownership is permitted, but the company must be registered as an American-owned company adhering to the treaty provisions.
- Board of Investment (BOI) Promotion: The Thailand Board of Investment (BOI) is another exemption which might allow foreigners to operate their businesses in Thailand by holding the majority of shares.
- Foreign Business License: Foreigners wishing to engage in businesses indicated in List 2 or List 3 of the Foreign Business Act in Thailand need to obtain a “Foreign Business License” from the relevant authorities before starting their business operations.
Step-by-Step Guide to Registering a Limited Company in Thailand
Step 1: Company Name Reservation
The company registration process starts with reserving your company name with the Department of Business Development (DBD). The name you choose for your company does have some restrictions. For example, it must not be identical to or resemble the name of a pre-existing registered partnership or company.
Usually 3 names are given, ranked by preference, and approval of the name will usually take up till 3 days. Certain names associated with the royal family, names of ministries and other governmental units, names with Thailand, names close to that of other companies, names against public moral, or names that are misleading, are not allowed.
Step 2: Filing the Memorandum of Association
After registration with the Ministry of Commerce (MOC), the company can register its memorandum of association. The MOA must contain:
- The name of the company
- The location of the company in Thailand
- The objectives of the company
- A declaration that the liability of the shareholders will be limited
- The amount of share capital
- The number of shares prescribed by each promoter
Step 3: The Statutory Meeting
The company must also submit its by-laws and articles of incorporation which must be drafted in a statutory meeting. It is also during the said meeting that the board of directors and auditor of the company are appointed.
Step 4: Company Registration
The company registration must be lodged on the same day that the Memorandum of Association is registered at the Ministry of Commerce (MOC) provided that the Statutory Meeting has already been convened. The application for registration must be submitted no later than 90 days from the date of the statutory meeting.
This process includes paying a registration fee and acquiring a Certificate of Incorporation from the registrar, certifying your business as a legal entity. This step usually concludes within 3-5 business days, depending on the quality of your documents and the processing efficiency of the DBD.
Step 5: Tax Registration
Tax ID cards and VAT certificates must be filed after registration. The company will be required to apply for and obtain a tax ID and VAT certificate within 60 days of incorporating or starting operations. If the company turnover is greater than 1.8 million Baht, registration for VAT with the Revenue Department must also be done within 30 days of crossing this threshold.
Step 6: Opening a Corporate Bank Account
After receiving your Certificate of Incorporation, it’s essential to open a Thai bank account in your company’s name. Opening a Thai bank account is crucial for managing local transactions, ensuring compliance with regulations, and establishing your business’ credibility.
Capital Requirements
The capital requirements for company registration in Thailand vary depending on the ownership structure and business activities:
Minimum registered capitalization of 2 million THB for foreign businesses operating non-restricted and 3 million THB for restricted businesses under the Foreign Business Act. Thai-owned companies are not subject to such requirements (but will need to meet financial requirements to support a work permit for a foreign worker).
If a foreign company would like to apply for a Foreign Business License, the total minimum capital requirement for the formation of such a company in Thailand is THB 2 million.
Timeframe for Company Registration
The registration process can take about one to two weeks, depending on how quickly you can gather the necessary documents and the efficiency of the DBD. A company can be set up in 1-2 weeks but the application of a foreign business license can take at least 6 months depending on the business activity.
Costs Involved in Company Registration
Here’s a breakdown of the costs to help you prepare effectively:
- Government fees: THB 6,000–10,000 for registering a private limited company, depending on capital
- Legal services: If using a consultant, expect to pay THB 10,000–25,000 for registration support
- Notary fees: Notarizing documents can cost THB 2,000–5,000 per set
- Accounting services: Monthly bookkeeping starts at THB 5,000, depending on transaction volume
- Auditing: Annual audits are mandatory for limited companies and cost THB 20,000–50,000
Ongoing Compliance Requirements
After registering your company, there are several ongoing compliance requirements you need to fulfill:
Once the business is registered, you will be required to submit withholding tax and VAT filings with the Revenue Department and pay social security contributions for your employees on a monthly basis. You will also need to ensure that proper bookkeeping records are maintained in order for an auditor to sign off on the financial statements which must be submitted to the Revenue Department and Department of Business Development annually.
The director of a company is required to submit the updated list of shareholders to the Registrar of the Ministry of Commerce (MOC) at least once a year, and no later than 14 days after the date of the annual general meeting of shareholders.
Work Permits and Visas for Foreign Employees
For foreign employees, a work permit costs THB 3,000 per year, with additional visa processing fees. For a Limited Company to be authorized to employ a foreigner, a 4 to 1 ratio applies, i.e., at least four Thai nationals shall be employed in order to hire 1 foreigner.
Foreigners require a non-immigrant ‘B’ visa or a Smart Visa to do business in Thailand. The Smart Visa is a good alternative to the regular programs and was launched in February 2018, targeted at experts in the science and technology fields, investors, and start-ups.
Benefits of Registering a Company in Thailand
Thai Limited Company Registration in Thailand offers several benefits that can enhance business operations and growth:
- Juristic Person Status: A Thai company enjoys the same rights as a Thai citizen, allowing it to enter contracts, own property, and acquire land.
- Limited Liability Protection: Shareholders’ personal assets are shielded from company liabilities, minimizing financial risks.
- Visa and Work Permit Facilitation: Thai companies can sponsor visas and work permits for foreign employees, enabling them to reside and work legally in Thailand.
- Tax Benefits: Private limited companies can claim tax deductions in various categories, potentially reducing tax burdens.
Alternatives to Traditional Company Registration
An Employer of Record (EOR) can significantly reduce administrative and operational costs. By eliminating the need for entity registration and managing compliance, payroll, and taxes, an EOR consolidates expenses into one predictable service fee. Using an EOR not only saves time and money but also streamlines the complexities of operating in Thailand’s regulatory environment.
Conclusion
Company registration in Thailand offers entrepreneurs and investors a gateway to one of Southeast Asia’s most dynamic economies. By understanding the process, requirements, and considerations outlined in this guide, you can navigate the registration process with confidence and set up your business for success in Thailand.
Whether you choose to establish a Thai-majority company, seek BOI promotion, or explore other business structures, it’s essential to ensure compliance with Thailand’s regulations and seek professional assistance when needed. With the right approach and preparation, your business can thrive in Thailand’s vibrant and growing market.
Key Terms to Remember
- Thai Limited Company: The most common business structure in Thailand, similar to an LLC
- Foreign Business Act (FBA): Regulates foreign ownership and business activities in Thailand
- Board of Investment (BOI): Provides incentives and exemptions for qualifying businesses
- Foreign Business License (FBL): Permit for foreign-owned businesses to operate in restricted sectors
- Department of Business Development (DBD): Government agency responsible for company registration
- Memorandum of Association (MOA): Document outlining the company’s basic information and objectives
- Tax ID and VAT Registration: Required tax registrations for conducting business in Thailand
- Work Permit: Required for foreign employees working in Thailand
- Smart Visa: Special visa program for experts, investors, and entrepreneurs in targeted industries
By following the steps and guidelines in this article, you’ll be well-positioned to establish a legal business entity in Thailand and take advantage of the many opportunities this vibrant market has to offer.
