Streamline your company incorporation in Thailand
While Thailand has launched a number of initiatives to promote foreign investment, there are still certain industries where foreign investment is prohibited and 100% ownership is not common. Understanding the nuanced rules of establishing a business in Thailand is critical to successfully expanding a business to Thailand.
Our comprehensive end-to-end solution will help your company to establish a legal entity in Thailand. We deliver a strategic approach by enabling our clients the ability to retain the same quality of legal compliance as their own in-country subsidiaries.
Horizons is Thailand’s most trusted incorporation partner to foreign clients. This expertise allows businesses to establish local entities efficiently, reliably, and compliantly.
Streamline your entity setup
Our team of in-country experts work alongside local governments to handle the bulk of the incorporation process. This saves you valuable time and money.
Our highly-skilled advisors will manage all of your monthly corporate services. This includes your bookkeeping, financial planning, and accounting.
Local HR Department
You can rely on the support of our local Human Resources department for reliable and compliant guidance for your entire entity setup.
Our approach to company incorporation in Thailand
- Handling payroll setup and registration.
- Once incorporation is complete, we transition employees from their current employment status – under our PEO – into that of your company.
- Overseeing the same benefits your company has been providing to your foreign employees under the ownership of your new subsidiary.
- Gathering local employment contracts and legally mandated materials for the establishment of your new entity.
- Strategic guidance in matters concerning contract negotiations when hiring employees in Thailand.
Types of business entities in Thailand
There are a variety of legal entities that you can establish in Thailand as a foreign investor. As the second largest economy in Southeast Asia, Thailand offers tremendous opportunity. Other than the areas noted above, foreigners can generally invest in foreign businesses through one of the following types of entities:
Private limited company
A private limited company is the most common choice for the registration of a foreign business in Thailand. A private limited company is formed by registering the company’s memorandum of association and the articles of association. Shareholders are only permitted to own a limited number of unpaid shares. Capital funds must be divided to form shares.
There must be at least three shareholders. Each shareholder must be given at least one share and the first payment on these shares has to be at least 25% of their value. Foreigners can only own 49% of the company’s shares. There must also be a director, auditor and registrar. These individuals can be the shareholders. The directors of a private limited company can apply for work permits.
At least 25% of the company’s capital must be paid up. The minimum amount of share capital is USD $1. If you wish to hire expatriates, you will need to inject a minimum of USD $63,000 in unrestricted industries or USD $94,000 in restricted industries.
Public companies in Thailand can sell stock to the public if they have certain minimum registered capital. To establish a public company in Thailand, there must be at least 15 shareholders and a minimum of five directors. At least half of the directors must be Thai residents. The memorandum of association must be submitted to form this type of entity. Shareholders must keep their shares for at least two years before they can transfer or sell them.
To list on the Market for Alternative Investment, minimum paid-up capital is USD $622,000. To list on the Stock Exchange of Thailand, a minimum registered capital of USD $9.3 million is required.
Board of investment promoted company
Thailand generally prohibits 100% foreign-owned companies. However, the major exception to this is a Board of Investment (BOI) Promoted Company. The BOI is the government agency responsible for promoting foreign investment in Thailand.
Having a BOI Promoted Company provides significant advantages to foreign investors, including official tax residency, a 0% corporate tax rate, the ability to use Thai work permits on foreign workers, up to 50% reduction on personal taxes and the ability to own real estate in Thailand. Additionally, BOI Promoted Companies generally do not have to obtain a foreign business license or can go through an expedited process to obtain one.
While the official amount of paid-up capital to establish a BOI is USD $30,000, many businesses must invest a minimum of $500,000. Additionally, they may have to provide evidence of technology transfers or job creation in Thailand.
To obtain approval, you must submit an application about your business, including information about the number of employees you plan to hire and your financial projections.
You must also submit your memorandum of association, which must include the following information:
- Your company name
- The province where the company is located
- The scope of the business
- The amount of the capital to register
- Name of the shareholders and basic information about them
- The number of shares and the value of each share for each shareholder
Other steps of the registration process include:
- Apply for your business name, including two alternatives in case your name is already in use or does not meet requirements
- Issue capital
- Pay necessary government fees and part of the registered capital
- Complete an interview at the BOI headquarters
- Conduct a statutory meeting in front of directors and shareholders
- Obtain a foreign business license, if necessary
- Apply for and obtain a tax identification number and VAT certificate within two months of incorporating the business or beginning operations
The BOI has the authority to set a certain number of shares for a project that can be held by foreign investors. The BOI promotes different types of businesses, based on its own agenda.
After BOI promotion is obtained, the company will be required to report their financial status regularly to the organization.
Applying for BOI promotion can often be a long and complex process, so it is best to work with an experienced organization who can assist with this process
Amity treaty limited liability company
There are certain businesses that can be established by American citizens only in Thailand, pursuant to the Amity Treaty. To qualify, the business must have at least three shareholders, all of whom must be American citizens. This type of business must be majority owned by Americans. At the time of setting up a company, all shareholders must be natural persons, not companies. However, after the company is registered, shares can be transferred to an American limited liability company.
This type of company must provide paid up share capital of at least USD $67,000. If the business plans to engage in restricted activities, it must provide paid up share capital of at least USD $94,000.
There are a number of different types of partnership structures in Thailand, including the following:
Unregistered ordinary partnership
An unregistered ordinary partnership provides no legal protection to the business. It is not considered a separate legal entity. The partners are jointly and severally liable for the partnership’s debts.
Registered ordinary partnership
This type of partnership is registered with the appropriate government entities. The partnership has its own legal rights, obligations and debts that are distinct from its partners.
A limited partnership allows one partner to have limited liability equal to his or her investment while the other partner’s liability is not limited. A limited partnership must be registered. Limited partnerships in Thailand do not allow the owners to apply for work permits or open corporate bank accounts for the business.
While 100% foreign ownership is technically permitted in a limited partnership, most limited partnerships are not due to the limitations on foreign participation in certain business activities.
Sole proprietorships are owned by a single person who is the operator of the company. While this type of company is registered with the authorities, incorporating this type of entity may be difficult if the company does not quality for incorporation.
A representative office can be a useful setup if the business only needs to complete certain business activities that do not generate income. Representative offices in Thailand can conduct the following types of activity:
- Reporting on business movement in the country
- Providing advice related to products that are sold to distributors or customers in Thailand
- Sourcing goods and services in the country
- Conducting market research
- Promoting the business of the parent company
- Inspecting and maintaining quality control of products
A regional office conducts business in Thailand for the head office of the company that is located in another country. To establish a regional office, there must be at least one active branch office or affiliate located in Asia. These offices cannot earn income, make purchases, negotiate or sell while in Thailand.
A regional office is taxed at 10% on income it receives from its subsidiaries, including management fees, intellectual property payments, interest and royalties. Dividends that the headquarters receives from overseas are tax-exempt. Employees of regional offices are subject to 15% income tax.
Regional offices must obtain a foreign business license and investment promotion from the BOI. Minimum paid-up capital investment of $310,000 is required to set up a regional office. During the first three years of the regional office’s life, only one-third of its income can come from overseas subsidiaries while the rest must come from sales in Thailand. At its fourth year and subsequent years of operation, at least half of its income must come from service provisions to its overseas affiliates and subsidiaries.
The actions of regional offices are also limited like with representative offices. Specifically, regional offices can only engage in the following types of activity:
- Communicating, coordinating and directing on behalf of the head office
- Operating branches and affiliates located in the region
- Providing consulting and management services
- Providing training and personnel development
- Managing the financials of the business
- Marketing and planning sales promotion
- Product development
- Research and development services
Branch offices in Thailand can be set up to conduct work for a maximum of five years. A foreign business license renewable every five years must be obtained. Minimum investment of $156,000 is required to cover the office’s future activities.
Unlike representative or regional offices, branch offices are not restricted from earning income in Thailand. However, many branch offices require a foreign business license and the branch office’s liability extends to the head office located in another country.
Income earned from the activity of a branch office in Thailand is subject to the typical corporate tax rate, but money earned outside the country is not. A remittance tax of 10% is charged on payments made to overseas investors.
Pre & post-incorporation services
Horizons provides companies with both pre and post-incorporation services as part of our entity setup solution.
With pre-incorporation, you can use our PEO service to immediately establish a global workforce in Thailand while you await the completion of your company incorporation. Once the setup is complete, we will seamlessly transition your foreign employees from our international PEO directly to your company’s new subsidiary.
Our post-incorporation experts support ongoing monthly and annual compliance services in order for our clients to continue operating compliantly on-site, giving you the ability to primarily focus on local operations.
By partnering with Horizons for your company incorporation in Thailand, you can save time and money while ensuring that the entire process will be handled efficiently, reliably, and with full compliance to local laws.