Starting a business in Thailand can be a complex and intimidating process, but the country is the second largest economy in Southeast Asia with huge potential and can be a very lucrative opportunity for entrepreneurs.
It is also an IndoChina hub with manufacturing, services, import and export and other sectors taking advantage of its position between China and Southeast Asia. There are huge opportunities for business in Thailand, but for those foreign entrepreneurs just expanding into this market there are a few factors to consider:
Understand local laws and regulations
The Foreign Business Act was established in 1999 and governs foreign business in Thailand. Under the law there are a number of businesses and sectors which cannot be carried out by foreigners without a license. In 2019 some of these provisions were relaxed, but it is important to understand what activity you need a license for beforehand
Foreign ownership of companies
In Thailand, foreigners are allowed to own no more than 49% of the company’s shares, although there are some sectors and licences where this requirement is relaxed, and non-Thais are able to own more of the company. Local companies are not required to provide any paid-up capital, firms with foreign ownership are required to provide a minimum of 2 million THB in paid-up capital
The type of company you can open
For foreigners, there are a few different types of company you can open in Thailand. A Registered Ordinary or Limited Partnership means one partner’s liability is limited while the other’s is unlimited. Representative Office, Branch Office or a Regional Office can be opened though they are subject to a limit on activities. Foreigners can open a Limited Company, either private (only a limited number of shareholders) or a Public Company (a minimum of 15 promoters is required). All company types must adhere to rules surrounding foreign ownership of shares
Visas and work permits
As a foreign entrepreneur you will need a non-immigrant ‘B’ (business visa) to live and set up a company in Thailand, assuming you are conducting an eligible business activity. Visas can be applied for at local Royal Thai Embassies around the world and can last up to one year. Should you wish to hire foreigners, the general rule is that the company should have a registered capital of 2 million Baht per work-permit holder
Compliance and taxation
All companies in Thailand have an obligation to prepare and keep accounts and file an annual audit. Companies should appoint a company-level auditor at the board’s discretion. Within four months of the financial year end, companies should hold their Annual General Meeting (AGM). The corporate tax rate in Thailand stands at 20%, though SMEs with annual turnover of less than 300,000 THB do not have to pay tax and companies with turnover of between 300,001 to 1 million THB are taxed at 15%
These are just some of the factors to look out for when considering expansion into Thailand. Of course, there are many other aspects including language, cultural boundaries and dealing with local employees and suppliers. Successive Thai governments have sought to reduce red tape and Thailand has slowly risen up the World Bank’s Ease of Doing Business rankings, nevertheless it is important to secure the counsel of an expert who can guide you through the process of establishing a company in Thailand.
For more information on setting up a company in Thailand, contact Alpadis Group