If your company wishes to operate in Thailand, and it is wholly or majority-owned by foreigners, then there is a good chance that you will be required to obtain a Foreign Business License. Three important variables that come into play here are the nature of the industry, the nature of the business-related activities that will be undertaken within Thailand, and the country in which the company is incorporated.
The nature of the industry
The Foreign Business Act of 1999 sets out the parameters for controlling the operations of foreigners undertaking business in Thailand, and is essential reading for any company considering operating here. A very important component of the Act is a set of lists of particular business activities, namely:
List One – These are types of business that are absolutely prohibited to foreigners unless there is an exemption contained in a special law or treaty.
List Two – In the Act this list is described as “businesses related to the national safety or security or affecting arts and culture, tradition, folk handicraft or natural resource and environment.” This list encompasses some foreign-owned businesses that were operating prior to the enactment of the Foreign Business Act. An allowance was made for these businesses to apply for a Foreign Business license so that they might continue operating. Foreigners are not, however, permitted to start new businesses listed in this category without special permission from the relevant Minister with the approval of the Cabinet.
List Three – In the Act this list is described as those “businesses in which Thai nationals are not yet ready to compete with foreigners.” Such businesses receive a similar treatment to those in List 2, except that the power to grant a Foreign Business License to foreigners who wish to start a new business is vested with the Director-General and a committee. Again, some exemptions are possible due to free trade agreements or treaties.
The nature of business activities to be undertaken within Thailand
The regulations differentiate a number of different types of business presence here in Thailand, and these include ‘Representative office’, ‘Regional office’, ‘Branch office’, and ‘Joint venture’. One important variable here is the extent to which the company will be involved in revenue generation within Thailand, as against for example, disseminating information or sourcing goods and services for operations in other countries.
The categorization that best fits your intended activities has a bearing on things like the nature of approval required, treatment under the Thai tax regime, and the need for work permits.
The country in which the applicant’s company is incorporated
This issue is important as some countries have agreements with Thailand that accord them special treatment. One example is the United States where, due to the Treaty of Amity and Economic Relations, companies may seek a ‘Certificate of Business Operation’ rather than a Foreign Business License.
Applications for a Foreign Business License call for the submission of quite detailed information concerning a company’s existing and proposed operations, and compiling them is a time-consuming and challenging process. Each application contains details of your company’s profile, characteristics of business and stages of operation, capital and business structure, technological transfers, and employment potential. Applicants are also required to provide many supporting statements and affidavits.
Interactive has experienced staff on hand to help you every step of the way. We ensure that the process of compiling and submitting your application is completed correctly, smoothly and quickly – thus avoiding any unnecessary cost or delay.