Business in Thailand
Doing business in Thailand has become increasingly interesting in recent years for several reasons. Not only is this a pleasant country in which to live and work, but in the modern world with all its recent financial problems, Thailand offers unrivalled opportunities both in terms of business & investment growth, as well as a comfortable lifestyle in a stable and beautiful country.
Over the past 8-10 years, Thailand’s economy has grown at a rate far exceeding countries in the West, and registration of new businesses has increased dramatically during this period. This surge in registration and has helped to service growing demand in all sectors of the Thai economy.
Foreign owned businesses obviously contribute to this growing economy due to the knowledge, skills and investments they bring, and foreign investment is actively encouraged by the Thai governments Board of Investment who offer good incentives and support (depending on the type of business and scale of investment).
This, and a constantly improving infrastructure and cost effective work force combined with its superb location, make Thailand an interesting proposition for those wishing to start businesses or invest in Thailand.
Under normal circumstances, you will need to establish a registered Thai company in order to carry out business in Thailand, and you will therefore need to understand your options with regard to the types of company you can register.
Here are the most common company registration options in Thailand:
The most popular type of company among foreign business owners is the Thai Limited Company. The two main advantages of this type of company are that firstly, the liability of the shareholders are limited to the value of the shares they possess, and secondly, the structure allows for the separation of the shareholder body and the management body which gives effective control of the company to the managerial body… i.e. you. Outlined below are the steps in applying for a limited company in Thailand. Please peruse it for your information and take it as the initial guidance.
A Thai limited company, particularly a Private Thai Limited Company is the most popular form of business structures in Thailand. Due to the fact that not only are the Shareholders’ liabilities limited to the amount of the shares they possess, but a Thai private limited company also allows separation between investor’s body and managerial body.
A private Thai Limited Company requires a minimum number of three Thai nominees and the company must file a memorandum of association, convene a statutory meeting, register the company and obtain an income Tax registration I.D. number.
In addition to the formation of a Thai Limited Company, the business must also comply with accounting procedures as set out in the Civil and Commercial code, the revenue code and the Accounts act. Basically, it is the same as anywhere else in the world where a balance sheet should be prepared each year and submitted to the department of revenue and Commercial Registration (the Tax man).
Companies are also required to withhold employee taxes from their salary, and pay national insurance (for want of a better term). This must be paid for a minimum of four employees, regardless of whether you have four or not.
Brief procedures to register a Thai company
1) Reserve your proposed company name: The Thai Limited Company name reservation must follow the guidelines of the Business Development Office in the Ministry of Commerce amongst other guidelines.
2) File a Memorandum of Association: The Memorandum of Association of the Thai limited company must to be filed with the relevant Thai authorities.
3) Convene a statutory meeting: The Thai limited company must convene a statutory meeting to make all the appointments.
4) Company Registration: To establish the Thai limited company it has to be registered with the Thai government.
5) Tax Registration: All companies in Thailand have to be registered for tax purposes.
An ordinary Thai Partnership can be set up by a minimum of two partners, but may be more if required. Unlike a Limited Thai Company, all partners involved share unlimited liability for the obligations of the company. Each partner is jointly and severally liable for the wrong doing of another partner, whether it be taxes, debts or other liabilities.
Registering a Thai Partnership is not mandatory, but partners can choose to do so as defined by section 1064 of the regulations. Unless otherwise stated in the partnership agreement, all parties must be mutual regarding becoming a member of the partnership. Unless otherwise provided in the partnership agreement, no one can become a member of the Thai partnership without the consent of all partners.
For obvious reasons, this type of contract is not generally recommended.
This partnership is basically what it says it is, and there are two options when forming such a partnership.
The first option is where only one of the partners holds sole limited liability, and the other is where liability is jointly shared.
Unlike an Ordinary Thai partnership, Limited Partnerships must be registered.
In the case where a foreign company wants to conduct business within Thailand, a representative office may be set up through which a Thai Business License may be obtained. This would normally only be required where a foreign business is sourcing products for export from Thailand, but other requirements are set, and at least one of the requirements must be met.
In order to set up a Representative Office in Thailand, certain conditions apply to those Thai representative offices which require an Alien Business License. It is important to clarify beforehand what constitutes income and subject to Thai taxes. In order to form a representative office, at least one of the following purposes would need to be sought for the purposes of limited “non-trading” activities.
1) The business is to source goods or services in Thailand for the headquarters.
2) To check the product ordered by the headquarters overseas
3) To give advices to the headquarters about the goods to order
4)To supply the information of the headquarters' products to the customers in Thailand
5)To report the economic movement in Thailand to the headquarters
6)To fully understand the conditions which pertain to a representative office in Thailand
If you want to do business in Thailand and need legal assistance in registering your company later, please contact us. We have associations with licensed Thai lawyers and foreign attorneys/solicitors willing to help you.
Doing business in Thailand can be very complicated and may take you several weeks to complete the process, this is mainly due to the registration procedures and the required documents and forms being in Thai.