Setting up a business in Thailand
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Updated 7 months ago

There is a lot of potential to start up a successful business in Thailand if you have a strong business plan and ample funds. Working knowledge of the Thai language will also help you a great deal. As a consumerist society that is following the lead of China's growth, there is a growing middle class in Thailand with cash to spend, and consequent opportunities for expatriate entrepreneurs.

Things to consider before setting up a business in Thailand

However, if you are looking to start your own business in Thailand, it is essential to be patient, open-minded and respectful of Thai culture and laws. There are strict penalties if you do not adhere to restrictions or procedures, which could result in a prison sentence and/or a substantial fine.

It is also important to consider where you want to start your business as the costs in Bangkok ' especially to rent a space in a prime location ' will be higher than in the rest of the country. However, depending on your business, it is also where you can potentially make the most money. Do thorough research beforehand and consider attending networking events and meet-up groups to connect with other people who can help you. It is also advisable to have a realistic exit plan in case things don't turn out exactly how you would wish them to.

Types of companies in Thailand

There are three common business structure in Thailand: Partnership, Limited Companies, and Joint Venture:

Partnership

The concept of partnership in Thailand is not far enough different from that of the Western countries. In Thailand, there are three types of business structures for partnership: 1) unregistered ordinary partnership ' partners are both liable for all responsibilities of partnership 2) registered ordinary partnership ' if the partnership becomes a legal entity, it creates a separate and distinct unit from both parties 3) limited partnership ' individuality of partners is restricted to the amount of capital they have contributed only.

Limited companies

There are two types of limited companies in Thailand:

  1. Privately held companies ' governed by Civil and Commercial code; it is also same as the Western Corporations as it is formed through a process which leads to the registration of Memorandum of Association (Articles of Incorporation) and Articles of Association (By-laws), as its constitutive documents

  2. Public companies ' governed by Public Company Act; it is registered in Thailand, and it is subjected to comply with the prospectus, approval, and other requirements, offer shares, debentures and warrants to the public and may apply to have their securities listed on the Stock Exchange of Thailand (SET).

Good to know:

Thai limited companies are the basic Thai corporate structure, and it must follow strict financial requirements. Annual financial statements must be certified by an auditor, approved by the shareholders, and filed with the Commercial Registration Department and the Revenue Department. Small limited companies may be exempt from this requirement.

Joint venture

This type of company is described as the word may seem. It is owned by a group of people, whether natural and juristic, having an agreement in order to carry out business together as a group. Its income is subjected to corporate taxation under Thailand's Revenue Code, although it has not been recognised as a legal entity under the Civil and Commercial Code.

According to the Foreign Business Act of 1999, foreigners are not permitted to engage in certain businesses, so be sure to do your research beforehand to check that your business activity will be legal in Thailand. However, if you have got the qualifications, experience and drive, there is still plenty of room for entrepreneurs in certain sectors ' from exporting goods to marketing consultancy.

Foreigners are not allowed to fully own a company in Thailand ' except for US citizens who register with the Thai Department of Business Development under the US-Thailand Amity Treaty. The only other ways to achieve 100% foreign ownership are for the business to be promoted by the Board of Investment, or by obtaining a foreign business license.

In the event that you are unable to do either of these, a foreigner can set up a limited company, whereby the Thai partner(s) will have a 51% stake in the company as the majority, and the foreign associate will have just 49% as the minority. However, foreigners can control the company as a minority shareholder and can still be appointed as the company's managing director.

Forming a Thai majority company can have its benefits, as it requires less capital and paperwork to set up and maintain, and a Thai majority company is able to purchase land.

The minimum capital requirement for a Thai majority shareholder company is THB1 million, but if you require a work permit, then the limited company will need a minimum of THB2 million of registered capital.

Procedures for setting up a business in Thailand

The Thailand Board of Investment provides details in English as to how to set up a company. Procedures include reserving a corporate name, filing a Memorandum of Association, convening a statutory meeting, registering the company within three months of this statutory meeting, and finally registering for tax documents and an employer account under the Social Security Act. Be aware that several administrative procedures leading to the creation of your company come with fees.

Important:

Thailand also has strict labour regulations that you must adhere to once your business has been established, and the majority of your workforce must be Thai.

Useful links:

Siam Legal ' Requirements for opening a company in Thailand
Thai Embassy ' Business Types
Thai Embassy ' Business forming

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