Setting up a company in Thailand could be a challenging task, especially if you are new to the country and are not sure where to start.
However, if done correctly could lead to an exceptionally rewarding and profitable future for your business.
The following is a thorough guide targeted mostly at foreigners on how to set up a company in Thailand, for those who are thinking of starting up their company here to entrepreneurs looking to expand their already existing business in a new environment.
Included in this article are types of businesses that are eligible to be set up, the requirements to set up your company and how to deal with registrations and taxes along with a lot more, we will have you covered.
What does Thailand have to offer?
If you are interested but unsure about the prospect of setting up a company in Thailand, we’ll give a brief introduction to the country itself and the main factors that make Thailand a compelling choice for the location of your startup or expanding business.
One of the main reasons that Thailand has become a target for businesses is due to its convenient and strategic location which allows it to serve as a gateway into Asia.
Trading between Thailand and ASEAN (Association of Southeast Asian Nations) countries such as China and India has become very convenient.
Over the years Thailand has greatly developed as an economy to the point where it is the country with the second-highest GDP in South East Asia according to the IMF, only behind Indonesia.
Thailand had a Gross Domestic Product (GDP) of 543.65 billion US dollars in 2019, according to official data from the World Bank.
The growth of Thailand’s economy is steady and consistent thanks to many factors such as the availability of natural resources, demand for exports, a bustling consumer market as well as a skilled, cost-efficient workforce are some of the many points that attract investors into the country.
Economic development has led to a diversification in new as well as previously established industries here in Thailand.
The tech industry specifically is expected to grow exponentially in the upcoming years due to increased interest in the Country from investors, entrepreneurs as well as large corporations.
Excellent Education and Healthcare services
Education in Thailand maintains a high-class standard through many international schools, colleges, and universities.
Most universities offer Business English which makes it relatively easy to find Thai employees with communication skills and knowledge in the business field.
In addition to education, Thailand's healthcare also displays a parallel standard with modern medical facilities and equipment as well as highly skilled doctors and medical staff
How Much Does it Cost to Start a Business in Thailand?
Before we get into detail of the steps to set up your business it may be an important factor to consider the costs.
As with a lot of things we cannot give an accurate figure as the costs of starting a business vary on many different factors such as the size, type, and location of business.
However, it can be safely said that for the majority of foreigners opening a company will be cheaper than doing so in your home country.
This is reflected in Thailand cost of living ranking which according to The Mercer Human Resource Consulting Cost of Living Survey Worldwide Rankings 2019 showed that the city of Bangkok in Thailand received a ranking of number 40.
As 8 of the top 10 most expensive countries to live in are in Asia, Thailand is an excellent alternative to enter the Asian market.
The board of investment (BOI) offers a useful chart outlining the typical costs of starting and operating a business in Thailand which can be found here.
Steps to Setting Up a Company in Thailand
1. What are the different types of companies that can be set up in Thailand?
Foreigners can choose from the following types of company:
- Representative Office, Regional Office or a Branch Office.
- Limited Company (Public and Private)
Unless your company is part of the Board of Investment (Section 3) program it is a requirement that the majority (51% minimum) of shareholders must be Thai.
There are 3 times of partnerships which are the following: Ordinary, Ordinary registered and Limited. The differences between the three are the tax treatment and degree of liability.
This type of company is not recommended for foreign investors as it is discouraged by the BOI.
Unregistered partnerships: Partners are fully liable for the responsibilities of the partnership. Personal tax on net profits are at rates of 5-35 percent.
Registered partnerships: The partnership is a legal entity, and therefore, is separate and distinct from the partners. Tax is payable at the company rate of 20 percent.
Limited partnerships: The liability of the partners is determined by the capital. This type of business must be registered. Tax is payable at the company rate of 20 percent.
Branch and Representative Office
A branch office is an extension of the activities for a foreign parent company. This means that the business activity is dependent and has to be the same as the parent company.
A representative office is another option in implementing a foreign company in the Thai market however they are not as popular as other forms as they are unable to perform trading and commercial activities, they may only engage in market research and reporting of information to the head office.
Shareholders who register for a limited company benefit from limited liability for the business’s debts, but it is important to know that the directors may have unlimited liability if the permitted documents prescribe so.
In terms of a Limited Company there are two types, Private and Public.
Public companies are regulated by the Public Companies Act and certain other Acts. They are owned by a minimum of 15 shareholders. Shares can only be transferred after 2 years of holding.
Private limited companies are regulated mainly by the Civil and Commercial Code. For this type of business at least 3 shareholders must be prevalent at all times.
For both, there is no specific registered minimum capital required.
2. Thailand’s Foreign Business Act
This is the law that governs setting up foreign businesses in Thailand which was set up by his majesty King Bhumibol Adulyadej. The full contents of the act can be found here.
It is vital to know the prohibited activities and businesses as well as the penalties upon non-compliance. This is in reference to companies that are majority-owned by foreigners.
3. Thailand Board of Investment (BOI) - incentives and benefits
The Thailand Board of Investment (BOI) is a Thai government division that aims to promote businesses in Thailand, specifically start-ups, with the hopes of increasing investments and boosting the Thai economy.
There are a variety of incentives and benefits offered for the applicable business which criteria can be found here.
These incentives include both tax and non-tax.
- Exemption of corporate income tax for up to 13 years (depending on the company’s activities and other conditions)
- A 50 percent reduction in corporate income tax for 5 years (only in special investment promotion zones)
- Exemption of import duties on raw or essential materials used in research and development purposes
- 100% foreign ownership (except certain activities and industries)
- The permit to own land
- The permit to bring in skilled workers and experts to work in Thailand.
4. Applying for a Visa and Work Permits
To enter Thailand with the purpose of doing business, you will require a non-immigrant ‘B’ (business visa). This will ensure that you can legally work in Thailand.
The visa fee is 2,000 Baht for single-entry (with three months’ validity) and 5,000 Baht for multiple entries (with a one-year validity). The application can be done through the Royal Thai Embassy or consulate in your country of origin.
SMART VISA - This is an alternative to the regular visa program. The program was launched in February 2018 and is targeted at experts in the science and technology fields, investors, and start-ups in an attempt to accelerate the development of specific industries in Thailand.
More information on the Smart Visa including the industries targeted and how to apply can be found here.
Smart Visa holders are permitted to stay in the country for a maximum amount of four years, are exempt from work permit requirements, and have access to other privileges.
5. Register Your Company
The registration process for your company can be divided into three sections.
Reserving a company name: The reservation of the company name can be done online at the Department of Business Development (DBD) website. The application for name reservation is normally approved within 1-3 days. Once the company name has been approved, it is only valid for 30 days and no extension is permitted.
Preparing the necessary documents: The documents required depends on the type of business that you plan to set up. The required documents may include the Memorandum of Association which includes:
- The name of the proposed company
- The proposed registered office of the company in Thailand
- The company objectives
- A declaration that the liability of the shareholders will be limited
- The amount of share capital with which the company purposes to be registered and the divisions thereof into shares;
- The names, addresses, occupations, and signatures of the promoters and the number of shares subscribed to by each of the promoters
An application form and list of shareholders, director forms signed by each director of the company, Declaration of Business Operation form, and the details of the offices and branches of your business, among others. You will also require a company stamp to act as a company signature for business activities.
Registering the company: This can be done at the business registration office where your company is located.
A taxpayer identification number will also be provided to you.
Registration of a company usually takes around a week for private companies and a month for public companies.
Registration through the Treaty of Amity (US citizens)
The US-Thailand Treaty of Amity is an agreement that allows American owned companies or entrepreneurs to have a majority or full ownership of a company in Thailand.
The details regarding the agreement can be found here.
6. Open a Bank Account to Organize your Capital
After you have successfully registered your company you will be able to open a corporate bank account in Thailand.
At first depending on the size of your company the banks may only offer a savings account for your company in which you can use to make withdrawals only.
You will also not have access to an ATM card.
A withdrawal slip must be provided to the bank with your signature and company stamp in which the bank will write a corresponding check by request.
Your clients must either be paid in cash or transferred funds at the bank.
Consider using a digital business account instead if this process is too inconvenient for your new Thai business.
7. Make sure to pay taxes
When your company is up and running you will have to pay Corporate Income Tax. This is a requirement according to the revenue department. This is a direct tax levied on companies or partnerships that are carrying our business in Thailand or obtaining certain types of income from Thailand.
Full information regarding Corporate Income Tax (CIT) can be found here.
Although doing business in Thailand may be easier, cheaper, and more efficient than in other countries, there are still responsibilities, laws, and requirements you'll need to gather before entering the Thai market.
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