Thailand has made significant changes to its foreign business ownership rules in recent years, allowing for greater foreign investment and liberalizing the market. As of my knowledge cutoff in September 2021, I can provide you with information on the progress made until then, but please note that regulations may have evolved since that time. It’s important to consult with legal professionals or government authorities for the most up-to-date and accurate information.
Obtain a Foreign Business License
If the company’s operations are granted a Thai Foreign Business License (FBL), the restriction that foreign investors are only permitted to own up to 49% of a Thai company may be waived or surpassed. An FBL is typically given to foreign-owned companies that stand out from the crowd and don’t compete with Thai companies.
Avail Board of Investment Promotion
Thailand’s government promotes international investment through the Board of Investment (BOI). Unlike acquiring an FBL, Thailand BOI certification comes with a number of advantages, including an 8-year exemption from business income tax, a waiver or reduction of import tariffs, and a streamlined application process for non-immigrant visas and work permits. Above all, BOI certification can allow 100% foreign ownership even when local or locally-owned businesses would typically be the only ones allowed to conduct business.
Companies that want to apply for BOI promotion must have a minimum THB 1 million (roughly USD 30,000) capital investment, at least three registered shareholders, be registered in Thailand, and work in one of the eligible industries, which includes but is not limited to, manufacturing, agriculture, mineral exploration, and technology development.
Historically, Thailand imposed restrictions on foreign ownership in various industries, requiring a certain level of Thai ownership or involvement in many business activities. However, in 2018, the Thai government introduced the Foreign Business Act (FBA) of 2018, which aimed to facilitate foreign investment and enhance the ease of doing business in Thailand. The FBA introduced a new framework for foreign business ownership, allowing for 100% foreign ownership in certain industries.
Under the FBA, businesses in certain industries are classified into three categories: List 1, List 2, and List 3. The lists categorize business activities based on the level of foreign involvement allowed, with List 1 being the most restricted and List 3 being the least restricted.
For businesses in List 3, which includes a wide range of activities such as services, manufacturing, and technology-related industries, foreigners are generally permitted to have 100% ownership without the need for Thai partnership or involvement. This means that you can establish a wholly foreign-owned company in these industries without a Thai partner.
However, it’s important to note that certain activities within List 3 still have specific regulations or licensing requirements that need to be fulfilled. Therefore, even though 100% foreign ownership is permitted, additional industry-specific regulations may apply.
For businesses in List 1 and List 2, which include industries like agriculture, mining, and transportation, certain restrictions on foreign ownership still apply. In these cases, obtaining approval from the Thailand Board of Investment (BOI) or other government agencies may be required to establish a foreign-owned company. The level of foreign ownership allowed in List 1 and List 2 may vary depending on the specific industry.
It’s worth mentioning that while Thailand has taken steps to liberalize foreign business ownership, there may still be other regulatory considerations and restrictions related to company registration, taxation, work permits, and licensing requirements. It’s advisable to engage with legal and business professionals who specialize in Thai corporate law to navigate the specific requirements for your intended business activities.
Certainly! Here are some additional points to consider regarding 100% foreign business ownership in Thailand:
- Board of Investment (BOI): The BOI is a government agency that promotes and facilitates investment in Thailand. It offers various incentives and benefits to eligible foreign-owned businesses, including streamlined procedures, tax incentives, and exemptions from certain restrictions. Engaging with the BOI can be beneficial for businesses seeking 100% foreign ownership in restricted industries.
- Restricted Industries: While Thailand has made progress in liberalizing foreign ownership, there are still some industries in which foreign ownership is restricted or subject to specific conditions. These industries include national security-related activities, certain service sectors, media and telecommunications, banking and finance, and retail businesses. These sectors may require specific licenses, partnerships, or approvals from regulatory authorities.
- Treaty-Based Protection: Thailand has entered into bilateral investment treaties (BITs) with several countries, offering additional protection and incentives for investors from those countries. These BITs may provide safeguards against unfair treatment, expropriation, and other investment-related issues. Investors from countries with such treaties should review the provisions to understand the benefits and protections available to them.
- Compliance and Regulations: Even when 100% foreign ownership is allowed, businesses must comply with Thai laws and regulations. This includes company registration, tax obligations, labor laws, intellectual property protection, and any industry-specific regulations. It’s crucial to engage legal and accounting professionals to ensure compliance with all relevant requirements.
- Local Partnership: While 100% foreign ownership is permitted in many industries, some businesses may choose to form partnerships with local Thai companies. This can be advantageous for navigating the local market, leveraging local expertise, accessing networks, and building relationships with suppliers and customers. Engaging a trusted local partner can provide valuable insights and support for business operations.
- Land Ownership: Ownership of land in Thailand is subject to certain restrictions for foreigners. Generally, foreigners cannot directly own land but can lease land for an extended period. It’s essential to understand the rules and limitations regarding land ownership and seek legal advice if it’s integral to your business activities.
Lastly, please keep in mind that regulations can change over time, and my information is based on the knowledge available up until September 2021. To ensure accurate and up-to-date information, it is always recommended to consult with relevant government authorities or legal experts familiar with the latest regulations in Thailand
Remember, the business landscape and regulations in Thailand can change, so it’s crucial to stay updated with the latest laws and consult professionals with expertise in Thai business regulations to ensure compliance and a successful business venture.
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