Doing business in Thailand for foreigners: a guide on how to avoid legal pitfalls
Doing business in Thailand - is it even possible?
Thailand attracts foreign entrepreneurs, whether you dream of a café on the beach, an IT firm in Bangkok or a consulting company. The opportunity to do business as a foreigner in Thailand exists, but success depends on understanding the local laws and rules. The biggest mistake you can make is to try to circumvent the system. On the contrary, a proper and legal approach will protect you and secure your business. In this article, we'll go over the basic steps and key rules you need to know.
Ownership rules: Key Restrictions You Must Respect
Thai laws encourage foreign investment, but with clearly defined limits. In most cases, the rule is that a foreigner may own a maximum of 49 % shares in Thai society. The remaining 51 % must be held by Thai citizens.
However, there are exceptions that allow you to acquire a majority share. These include, for example:
Support from the Board of Investment of Thailand (BOI): Applies to selected sectors that Thailand actively supports (e.g. technology companies, innovation, tourism).
Foreign Business License: It allows a foreigner to own more than 50 % businesses, but it is quite difficult to obtain and only applies to certain types of business.
Business in sectors not covered by the Foreign Business Act.
The process of setting up a company: how to do it step by step
Properly setting up a business in Thailand requires meticulous preparation. These are the main stages you will need to go through:
Determination of ownership structure: Decide whether you will go into partnership or take advantage of one of the exceptions. This decision will affect the whole process.
Selection and registration of the company name: You must approve the name through the Department of Business Development (DBD) system. Prepare several alternatives.
Document collection: Details of shareholders, directors' passports, registered office of the company with a valid lease agreement and other registration forms are required.
Company registration: Once the documents are complete, you can apply online or directly at the DBD office.
Tax registration: You must apply for a tax identification number within 60 days of registering your business. If your annual income exceeds a certain threshold, VAT registration is also required.
Visa and work permit: If you plan to work in your company (not just invest), you will need a business visa (Non-B visa) and a work permit (Work Permit). These documents are linked to the existence of your business.
Common mistakes to avoid
Many foreign entrepreneurs make the same mistakes. If you avoid them, you can avoid penalties and inconvenience.
Use of "nominees" (fictitious associates): Fictitious Thai shareholders, who hold the majority of shares on paper only, are illegal in Thailand. The authorities actively monitor and punish these practices.
Incorrect registered office: Registering a business at a fictitious or temporary address is a fast track to rejection. The registered office must be real and supported by a lease agreement.
Ignoring specific licenses: Some industries require special permits or licences in addition to the normal registration. The absence of these can lead to the business being shut down.
Insufficient tax strategy: Tax planning is essential. Being unprepared can surprise you with unexpected payments or checks.
How to do business in Thailand without risk?
Doing business in Thailand is real and full of opportunities if you do it right. The key to success is thorough legal planning and compliance with all local regulations. Don't be tempted by shortcuts, which can get expensive in the long run.
Do you need advice on doing business in Thailand? Our team will help you through the entire process, from setting up the right structure to obtaining all the necessary permits.
Contact us today and start doing business in Thailand with confidence.
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