Setting Up a Company in Thailand: A Practical Guide for Foreign Investors

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Thailand is one of the most dynamic economies in Southeast Asia, with a strategic location, solid infrastructure and an active investment promotion policy. Foreign entrepreneurs who want to do business there usually start with the same question: how do I set up a company, and what should I plan for? This article gives an overview.

1. The usual vehicle: the private limited company

Most foreign investors use a private limited company governed by the Thai Civil and Commercial Code. Since the 2023 amendments, a private limited company can be formed by at least two promoters, who become its first shareholders. Liability is limited to the unpaid amount of the shares.

Other options include a branch office, a representative office or a regional office of a foreign company, each with its own scope and conditions.

2. Foreign ownership and the Foreign Business Act

Under the Foreign Business Act B.E. 2542 (1999), a company in which foreigners hold half or more of the shares is treated as a foreign company. The Act lists activities that are reserved for Thai nationals or that require prior permission. Its three lists cover, among others, activities linked to national security and culture, and many service activities.

Foreign investors who want majority ownership in a listed activity have several lawful routes:

• A Foreign Business License granted by the Department of Business Development.
• Promotion by the Board of Investment (BOI), which can allow full foreign ownership in promoted activities and offers tax and non-tax incentives.
• The Treaty of Amity, which gives US companies specific treatment.
• A genuine joint venture with Thai partners. Arrangements in which Thai shareholders only hold shares on behalf of a foreigner (nominees) are prohibited and should be avoided.

3. Capital

As a general rule, a foreign-owned company must have a minimum capital of THB 2 million, or THB 3 million for activities that require a Foreign Business License. Separately, to obtain work permits for foreign staff, the authorities usually look at the company’s paid-up capital and the number of Thai employees. BOI-promoted companies follow their own rules.

4. Step by step

1. Reserve the company name with the Department of Business Development (DBD).
2. File the Memorandum of Association.
3. Hold the statutory meeting, adopt the articles and appoint the directors and auditor.
4. Register the company. The registration number also serves as the tax identification number.
5. Register for VAT if annual turnover is expected to exceed THB 1.8 million.
6. Open a corporate bank account, register with the Social Security Office and apply for visas and work permits for foreign staff.

5. Practical points for foreign investors

• Choose the activity carefully. Whether an activity falls under the Foreign Business Act determines the structure, so it is worth analysing it before incorporating.
• Language. Filings and many official documents are in Thai, so good local support and certified translations are important.
• Licences take planning. A Foreign Business License or BOI promotion involves an application and review, so it should be built into the timetable.
• Work permits. Foreign directors and employees need the right visa and work permit before they start working.
• Ongoing compliance. Thai companies must have their annual financial statements audited by a Thai certified auditor, hold an annual general meeting and file their statements and tax returns on time.

With the right planning, Thailand offers foreign investors a welcoming environment and a clear legal framework. The key is to choose the structure that fits the activity from the start.

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The views expressed are personal and do not necessarily represent the position of NET CRAMAN. This article is for general information only and does not constitute legal or tax advice. Rules change over time; seek specific advice before acting.