Doing business in Thailand: structures, permits and the honest constraints.

What counts as doing business

Thai law draws a firm line between being in the country and working in it. Any work performed in Thailand, whether or not it is paid, whether or not the client is abroad, and whether or not it happens from a laptop on a terrace, generally requires the correct permission. That statement surprises people, and it is the point at which most avoidable trouble starts. Advising a friend's company for free, managing a rental property, appearing as a director at a meeting: each of these can constitute work, and the sanction for working without permission runs to fines, deportation and a bar on return.

So the first question is not which company to form but whether the activity needs a Thai structure at all. Some clients are genuinely employed abroad and remain so; the Destination Thailand Visa was introduced in part for that population, and its terms should be read carefully with a lawyer rather than summarised from a forum. Others are plainly trading in Thailand with Thai customers and Thai staff, and they need to be set up properly. Being honest with yourself about which you are is the cheapest piece of advice in this article.

The Thai limited company

The workhorse structure is the private limited company registered with the Department of Business Development. It needs a minimum of two shareholders under the current rules, a registered office in Thailand, at least one director, objects that cover what you intend to do, and articles. Registration itself is quick, often a matter of days once the name is reserved and the documents are in order. What takes time is everything that follows: the tax registration, the VAT registration where turnover requires it, the social security registration once you have employees, the corporate bank account and the bookkeeping.

The nuance that catches foreigners is shareholding. A company more than forty nine per cent foreign owned is treated as a foreign company under the Foreign Business Act and is restricted from a long list of activities unless it holds a licence or an exemption. The temptation is to place Thai shareholders on the register who hold shares in name only. Nominee shareholding of that kind is unlawful in Thailand, it is enforced, and it exposes both the foreign principal and the Thai nominees. Our office will not arrange it and no reputable Thai firm will either. If your intended activity requires majority foreign ownership, the answer is a Foreign Business Licence, a treaty route where one applies to you, or BOI promotion, not a paper Thai shareholder.

The Foreign Business Act, plainly

The Act sets out three lists of activities. The first is closed to foreigners entirely. The second covers activities affecting national security, arts, culture and natural resources, and requires cabinet level approval. The third, and the one most clients meet, covers a long schedule of service businesses that are reserved for Thai nationals unless a Foreign Business Licence is granted. Many ordinary businesses sit in the third list, including a great deal of what people mean by consulting, agency work and services.

There are lawful routes through. A Foreign Business Licence can be applied for and is granted in appropriate cases, with the application assessed on the benefit to Thailand. BOI promotion, described below, brings its own permissions. Some nationalities have treaty arrangements with Thailand that grant broader rights; whether any applies to you is a question for a lawyer looking at your citizenship and your documents, not a matter of general expectation. And a majority Thai owned company, with genuine Thai partners who genuinely own their shares and genuinely take the risk, is a real and common structure that many successful businesses use.

BOI promotion

The Board of Investment promotes activities Thailand wishes to attract, and promotion is the cleanest route to majority foreign ownership for those who qualify. Promoted categories change but have consistently included technology and software development, digital services, research and development, advanced manufacturing, certain tourism and health related activities, and international business centres. The benefits typically include permission for foreign majority ownership in the promoted activity, exemptions or reductions on corporate income tax and on import duty for machinery, the right to own land for the promoted business, and a considerably smoother work permit and visa process through the One Start One Stop Investment Center.

The trade is paperwork and substance. A BOI application requires a real business plan, real capital, real staffing commitments and reporting afterwards, and promotion is granted for the activity described rather than for the company generally. It suits founders building something genuine with a medium term horizon. It does not suit a family looking for a convenient wrapper, and applications of that kind are refused.

Work permits and the ratios

A work permit belongs to a person doing a specified job at a specified employer at a specified location, and it is granted on the basis of the company's standing rather than the individual's wishes. For an ordinary Thai company the familiar requirements are registered capital of two million baht per foreign employee, and four Thai employees registered for social security per foreign work permit holder. BOI promoted companies work to different and lighter criteria. The visa and the permit are separate instruments issued by different authorities, and both must be kept valid; the ninety day reporting and re-entry permit obligations continue regardless.

• The permit names the job. Doing materially different work, or working at an unlisted location, needs an amendment.
• Leaving the employer generally ends the permit, and the visa attached to it follows quickly. Plan transitions rather than discovering them.
• Directors' fees, salary and the personal tax filings that follow are not optional; Thai personal income tax is filed annually.
• Certain occupations remain reserved for Thai nationals. Check the current list before promising a role to anyone.
• Spouses and children are usually accommodated on dependent visas, but they do not inherit the right to work.

Banking and compliance, stated honestly

A new Thai company will need a corporate bank account, and this is the step our clients most often underestimate. Thai banks apply their own customer due diligence to corporate customers, and for companies with foreign shareholders that process is thorough: identification and address verification for every shareholder and director, evidence of the source of the capital, an explanation of the business that a compliance officer can follow, and often a site visit. Enhanced due diligence on certain shareholder profiles is a normal feature of the system, applied by the bank under its own policy, and neither an adviser nor a client can override it.

The workable approach is preparation rather than persuasion. Have the corporate documents, the shareholder identification, the business plan and the source of capital file complete and translated before the first appointment. Answer every question fully and accurately, including on tax residency. Accept that timelines are longer than they were and that a bank may decline without giving reasons. And take the same line here that we take on all money questions: everything must be done lawfully and be capable of being documented, professional advice from a qualified lawyer and from your own bank is the only proper route, and where a step cannot be taken lawfully it is not taken.

Where our business guides take over

This article is the map rather than the route. Asia Global Partners maintains detailed guides on company formation mechanics, on BOI categories and application practice, on work permits and the One Start One Stop process, on Thai employment law for employers, and on accounting, audit and the annual filing calendar, and the Russia desk hands clients across to them once the shape of the business is decided. What the desk does at this stage is narrower and more useful: establish honestly what the activity is, identify which lawful structures can carry it, introduce a Thai law firm and a Thai accountant who will still be there in year three, and set a timetable that assumes compliance will take the time it takes. We do not give investment advice and we do not opine on whether a venture will succeed.

Company law, the Foreign Business Act schedules, BOI categories, capital and employment ratios and bank policies all change. This is general information, not legal, tax or investment advice. Verify the current position with the Department of Business Development, the Board of Investment and the Ministry of Labour, and instruct a qualified Thai lawyer and accountant before forming anything.

This briefing is general information, not legal, tax or investment advice. Thai rules change frequently and individual cases differ. Verify current requirements with the relevant authorities, including the Immigration Bureau, the Board of Investment, the Land Department, the Department of Business Development and the Revenue Department, and take advice on your own facts before acting.