Starting a business in Thailand: your gateway to ASEAN and beyond

One compelling route into Thailand for foreign companies is to secure promotion by the Board of Investment (BOI). There are three options for how to approach this:

BOI Promotion allows a private limited company to bypass the Foreign Business Act (FBA) and enjoy 100% foreign ownership. It targets activities that help modernise the economy, such as digital tech, green energy and advanced manufacturing.

Beyond the retention of full control, other advantages include tax holidays, import duty waivers on machinery, and the right to own freehold land, which is otherwise difficult for foreigners. Companies working in areas like robotics, aviation or the digital space can also benefit from Thailand's Smart Visa, which simplifies work permits for foreign professionals in key areas.

The IBC is a specialised vehicle for multinational corporations to establish regional headquarters in Thailand. It's issued by the Revenue Department. Incentives include tiered corporate tax reductions (as low as 3%), withholding tax exemptions on outbound dividends and a 15% flat personal income tax for foreign employees in Thailand. To qualify, you need capital of THB 10 million and minimum local operating expenses of THB 60 million annually.

Foreign investors seeking to use the IBC will typically aim to secure the BOI too. While you do not need BOI certificate to benefit from the IBC's tax breaks, you do need it to bypass the FBA's strict limits on foreign ownership.

This vehicle allows you to perform almost all the same activities as a representative office (see below), while also allowing for 100% foreign ownership and streamlined work permits via the BOI One-Stop Service Centre. Unlike a representative office, a TISO can earn revenue from its affiliates.

Foreign companies may also set up in Thailand without the benefit of BOI promotion. However, this will require some preparation and understanding of the relevant licences, laws and restrictions.

This is a structure where foreigners own 50% or more of the shares. Under the Foreign Business Act, and without BOI promotion, it requires a Foreign Business License (FBL) from the Department of Business Development to operate in restricted sectors.

This pathway demands a minimum capital of THB 3 million. While it offers 100% control, the FBL process is discretionary and rigorous. You will need to demonstrate unique technology transfer or significant economic benefits to Thailand.

The U.S.-Thailand Treaty of Amity offers advantages for American investors, allowing them to bypass FBA limits on foreign ownership and own 100% of a Thai company. Amity companies operate on nearly the same terms as Thai-owned entities. However, entry into certain sectors such as land ownership, inland transportation and banking remains restricted.

A 51% Thai company (or Thai-majority company) is often used to bypass FBA restrictions, allowing foreign investors to access restricted sectors like retail and tourism without an FBL. While this approach provides for a faster and more cost-effective setup, it is also risky due the fact that nominee arrangements are illegal under Thai law and that other arrangements (for example, maintaining operational control by using preferential share structures to secure majority voting rights) may fall in grey areas of the Foreign Business Act. Such legal risks can warrant obtaining a legal opinion from a Thai lawyer.

Branch offices are allowed to trade and earn income in Thailand.

Without the benefit of BOI promotion to which they are not eligible, most branches of foreign companies hence still require an FBL to operate, which can be difficult and slow to obtain. You will need to remit at least 3 million THB into Thailand.

Suitable for companies that want a presence in Thailand without generating any income there. As the representative office is a non-trading cost centre, it doesn't fit the criteria for BOI incentives. However, if you're sourcing goods, providing technical advice or reporting market trends back to head office, this could be a viable choice.

Representative offices are generally exempt from corporate income tax. You will need to remit at least 2 million THB into Thailand over three years to qualify.

The public limited company allows for the free transfer of shares and is designed for high liquidity. It is the mandatory legal vehicle for businesses seeking to list on the Stock Exchange of Thailand.

A public limited company requires at least 15 promoters to initiate registration and its board must have five or more directors. There is no nationality requirement for directors, but at least half of them must be resident in Thailand. Shareholders' liability is limited to the remaining unpaid amount on their shares.

The public limited company is suitable for businesses seeking to raise capital, such as via a stock exchange listing.

Starting your business in Thailand involves a range of costs, which will vary depending on your chosen legal structure, specific business activity, selected jurisdiction and operational requirements. We provide transparent and detailed cost breakdowns tailored to your unique needs, ensuring clarity and facilitating effective financial planning.

• Registration fees: Mandatory fees paid to the Department of Business Development (DBD). For a private limited company, these include the Memorandum of Association and final incorporation.

• Licensing fees: Anyone operating in a restricted business, like most service or retail businesses, needs a Foreign Business Licence (FBL). Specific industry permits (for example, for food production or other factories) carry additional fees.

• Visa and work permit costs: Every foreign staff member will need a a work permit. Thailand's Long-Term Resident visa costs more but offers a ten-year stay and streamlined work permit rules. Labor quotas of foreigners to Thai nationals can apply.

• Office space rental: A physical registered address is legally mandatory for the DBD and VAT systems. Costs can vary significantly depending on the location, size and quality of the premises.

• Government fees: Various fees payable to government entities for approvals, permits and other administrative processes. These include stamp duty and minor fees for a company seal and social security registration.

• Professional fees: Costs for engaging professional services, such as legal counsel, business setup consultants and accounting services.

• Other potential costs: These may include translation costs, bank charges, KYC checks and other miscellaneous expenses.

At Hawksford, we follow a rigorous, step-by-step framework to ensure your Thai business venture is compliant, efficient and perfectly aligned with your goals. Our specialists manage every detail to avoid delays and help you get set up smoothly.

We begin with a consultation to understand your commercial objectives and operational needs for Thailand. Based on this, we can propose a legal structure that is aligned with the nature and scope of your business.

Following this, we can prepare a bespoke roadmap for your market entry. This phase covers the strategic design of your business entity, registration planning and navigating any industry-specific legal requirements in Thailand.

Our team can assist you with drafting and preparing the required documents for submission to the relevant authorities. By managing applications and securing government approvals on your behalf, we maintain strict adherence to local regulations.

We oversee the registration of your company name and manage the application process for business certificates as well as factory and trade licenses. Our team acts as your liaison with Thai authorities to facilitate the approvals needed for your business to commence operation.

We can streamline the visa process for you and your staff, from preparing employment visa applications to coordinating with the relevant immigration departments.

Setting up finances in a new country can be complex. We can assist you with opening your corporate bank account, guiding you through the documentation and bank appointments.

Our commitment extends beyond Thailand company formation and registration. We can provide continued logistical support to get your business running, including assistance with finding and setting up an office.

We can also support you with ongoing accounting and tax compliance, including corporate tax, value added tax (VAT) registration and filing, financial statement preparation and bookkeeping.

The overall timeline for starting your company in Thailand can vary. Factors include the chosen legal structure; complexity of your intended business activity and the specific licensing requirements associated with it; the requirements of your chosen location; and the level of efficiency of the relevant authorities.

Our team has the experience and expertise to manage the incorporation process, providing realistic and well-defined timelines for each stage so you can plan effectively.

• Chosen legal structure: Different legal structures come with varying degrees of red tape.

• Complexity of business activity: Business activities that require special approvals from specific government entities may inherently take longer to process.

• Efficiency of document processing: The efficiency with which documents are submitted and processed by the relevant authorities can also play a role.

With our deep industry knowledge and dynamic approach, we can help you get set up per your intended timeline. We offer straightforward, precise advice on every necessary phase, while highlighting the potential hurdles. We will also collaborate closely to ensure your paperwork is accurate and submitted on time, reducing setbacks that can result from mistakes or missing information. This can give you the certainty needed to plan your expansion and the confidence to proceed.

• Initial planning and document preparation: 2 weeks.

• Company registration and licensing: Generally 2 to 4 weeks.

• BOI business license approval: Minimum of 4 months.

• Visa processing: For B Visas, typically 3-10 working days. For LTRs, 20 days.

• Bank account opening: 1 month.
  Most Thai banks require at least one director to be there in person and often require them to also be authorized to reside and work before accepting their appointment as authorized bank signatory.

While providing these estimated timelines, we place a strong emphasis on consistent communication and proactive management throughout the incorporation process. Our experts can provide support and address the legal and regulatory requirements relevant to your entity formation.