Business Incorporation and Relevant Registrations in Thailand
Setting up a company in Thailand requires at least 3 or more individuals to subscribe their shares at the incorporation stage. Then, such subscribers shall conduct a statutory meeting for a company establishment to appoint the director(s) of the company and hand over the business to the director(s). The director(s) shall call for shares subscription either in kind or in cash and register for incorporation within 3 months from the statutory meeting.
The company’s director(s) can be both Thai and foreigner. This does not affect the ownership of shares in the company or types of the company whether it is a Thai company or a foreign company under Thai law. However, in the event that the director(s) is a foreigner and receive salary from the company, this shall be considered as an employee who is required to apply for a work permit in order to work in Thailand legally.
Once the company has already been established and if the company has an employee, social security registration is required. In addition, if the company has its income more than 1,800,000 baht per year, the company is required to register for value added tax (VAT) number.
Last but not least, other registrations or procedures may be required for any other specific types of business. For example, specific licenses are required for operating the restaurant business, securities business, tourism business, etc. The business owners need to seek consultation and check the relevant laws whether the business requires any other specific registrations or procedures.
Key Issues You Need to Know When Doing a Business in Thailand
On the scenario that a foreigner is exploring the business opportunity and would like to establish a company for operating its business in Thailand, if more than 49% of shares are held by foreigner(s) (either individual(s) or entity(ies)), the company is considered as a foreign company under the Foreign Business Act B.E. 2542 (“FBA”). In this case, certain restrictions in doing businesses will be applied and the company cannot hold ownership over the land subject to international agreements/treaties that the country of nationality of such foreigner(s) has entered into with Thailand and/or privilege policies granted by the government of Thailand.
For some restricted business under the FBA, if the foreign company would like to do so, a specific foreign business license is required. However, some types of business are exempted from the provisions of FBA such as the businesses related to the securities exchange and financial institutes. but, those exempted businesses from the provisions of FBA may be, on the other hand, regulated, supervised or monitored by other specific laws and regulations of relevant authorities such as the Bank of Thailand.
It is noteworthy that the numbers of foreign individual working or representing the company, even as a director or authorized director, will not impact the ownership of shares in the company.
The requirements on visa and work permit for foreign employee(s)/director(s) play a significant role on the elements of business operation. The specific ratio of Thai employees to each foreign employee will be applied when considering the matters of visa and work permit. The size of investment is also a matter attribute to the requirements for granting visa and work permit to the foreign employee(s)/director(s).
Last but not least, the issues of tax and dividend are among major questions and concerns how the laws and practices work here in Thailand. The corporate income tax is currently imposed in the range of 15% – 20% of the net profit subject to certain exemptions. Also, the dividend distribution is subject to tax implications, but may be deducted or credited under the applicable double taxation agreement that Thailand have entered into, and regulatory corporate provisions before its distribution.
In the nutshell, the business and investment opportunities in Thailand is wide open for foreign investors. You are totally welcome here in Thailand, but it is for your best advantage to be fully aware of restrictions with good strategies and structure planning.
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