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Foreign business license

Foreign companies wishing to engage in business activities controlled by the Foreign Business Act must apply for a foreign business license before commencing their operations in Thailand. In addition, the Thai government has issued the Thai Foreign Business Act of 1999, which restricts the scope of activities of foreign companies.

Company registration

Foreign Business License Thailand

The Foreign Business Act BE 2542 (FBA) defines the term 'foreign' about:

  1. Individuals who do not have Thai citizenship;
  2. Legal entities not registered in Thailand;
  3. Legal entities registered in Thailand but having the following characteristics:
  • 50% or more of the investment made or 50% or more of the shares held by persons covered by (1) or (2);
  • partnerships have persons covered by (1) as a managing partner or manager;
  • A legal entity registered in Thailand, 50% or more of whose capital investment is made by persons falling under (1), (2), or (3);
  • A legal entity incorporated in Thailand, 50% or more of whose shares are held by persons falling under (1), (2), or (3).

Restricting activities

The Foreign Business Law clearly defines which activities of foreigners are restricted and which are regulated. Some activities are prohibited, some may be carried out with the prior permission of the authorized state body, and some do not require special approval. Three lists are attached to the Foreign Business Law for the following areas of activity:

№1 Prohibited for foreigners for particular reasons:

  • The newspaper business, broadcasting station, or radio/television business;
  • Farming, cultivation, or horticulture;
  • Livestock;
  • Forestry and wood processing from natural forests;
  • Fishing, especially fishing in the territorial waters of Thailand and the particular economic regions of Thailand;
  • Thai herb extraction;
  • Trade and auction of Thai antiques or objects of historical value;
  • Making or casting Buddha images and begging bowls;
  • Domestic trade.

№2 Special permission of the Cabinet of Ministers required

The list includes types of business related to national security or protection or affecting arts and culture, traditional and folk crafts.

Business activities include three groups:

Group 1 - Entrepreneurial activities related to national security or environmental protection.
Production, distribution, repair, or maintenance:

  • firearms, ammunition, gunpowder, and explosives;
  • components of firearms, ammunition, and explosives;
  • weapons, ships, aircraft, or military vehicles;
  • equipment or parts of any military equipment;
  • internal land transport, water transport, or air transport, including domestic aviation.

Group 2 - Businesses that may damage arts, culture, customs, and local production/crafts.

  • trade in antiques or artifacts that are Thai works of art or Thai handicrafts;
  • woodcarving;
  • silkworm breeding, Thai silk production, Thai silk weaving, or Thai silk screen printing;
  • Manufacture of Thai musical instruments;
  • manufacture of articles of gold, silver, niello, bronze, or alcohol;
  • making bowls or pottery representing Thai art and culture.

Group 3 - Businesses that can damage natural resources or the environment.

  • sugar production from cane;
  • salt cultivation, including rock salt cultivation;
  • rock salt mining;
  • mining, including stone quarrying or crushing;
  • Wood processing for furniture and utilities

№3 - The license is issued at the discretion of the responsible authorities of the Ministry of Commerce of Thailand

Includes types of businesses in which Thai citizens are not yet ready to compete with foreigners. Activities include:

  • Rice milling and flour production from rice and plants;
  • Fishing, in particular, the breeding of aquatic life;
  • Replant forestry;
  • Manufacture of plywood, veneer, chipboard, or hardboard;
  • Lime production;
  • Accounting services;
  • Legal services;
  • Architecture;
  • Engineering;
  • Construction, except:
  • The structure of utility or communications infrastructure requires tools, technology, or unique knowledge in the field of such building, except when the minimum foreign capital is 500 million THB or more;
  • Other facilities as prescribed by regulations.
  • Agency or brokerage, except:
    - Brokerage or agency activities in securities or services related to future futures for agricultural commodities or financial instruments or securities;
    - Brokerage or agency activities for the purchase/sale or purchase of goods or services necessary for the production or provision of services to affiliated enterprises;
    - Brokerage or agency activity in buying or selling, distributing or purchasing markets, both domestic and foreign, for the distribution of products manufactured in Thailand or imported from abroad, in the category of international business, with a minimum foreign capital of at least 100 million THB or more;
    - Other brokerage or agency activities provided for by ministerial regulations.
  • Auction activity, except:
  • Auctions in the form of international bidding are not auctions of antiques, ancient objects, or artifacts that are Thai works of art, Thai handicrafts, or antiques or have Thai historical value.
  • Ministerial regulations provide for other types of auctions.
  • The Law does not prohibit domestic trade in local agricultural products;
  • Retail all product categories with a total capital of less than THB 100 million or a minimum capital of each store of less than THB 20 million.
  • Wholesale trade in all categories of goods with a minimum capital of each store of less than 100 million THB;
  • Advertising;
  • Operation of hotels, excluding hotel management;
  • Tourism;
  • Sale of food and beverages;
  • Planting and growing plants;
  • Other services, except those prescribed by ministerial regulations.

Based on the above definition, if Thais own most of the shares of a limited liability company, it is considered a Thai company and, therefore, not subject to this Law. This means foreigners are generally allowed to participate in a company up to 49% of the limited liability company. Otherwise, the licensing requirement must be met. Strictly speaking, any company with a majority of foreign shareholders must apply for a Foreign Business License (FBL) if it is doing business.

Companies that can apply for a business license

Representation

A foreign company that wishes to have a representative office in Thailand to explore the local market, promote its company or products, and introduce new products offered by the head office without earning income and paying taxes in Thailand.

Branch

A foreign head office intends to register a branch office by applying for a license and transferring technology to Thailand. Foreign Business Law does not prohibit the activity. The nature of the business must allow the foreign entity to register a branch office in Thailand by the regulations of the Thai Ministry of Commerce.

New company with a majority or full foreign participation

A company registered in Thailand with predominantly or wholly foreign participation, and the company's activities are not prohibited for foreigners by the Foreign Business Law. The company's activities include technology transfer and assistance in the development of Thailand.

Two exceptions that require majority foreign ownership and make it easier to obtain a foreign business license.

  • BOI promoted the company.
    A Thai-registered company eligible to receive investment support from the Thai Board of Investment based on the nature of its business may also obtain a license as a non-tax privilege granted by the Thai Board of Investment (BOI) office.
  • American-owned company
    A company registered in Thailand or the United States of America with most US shareholders and directors can apply for a foreign business license and a certificate to do business in Thailand under the Thailand-US Friendship Treaty.

Applying for a Foreign Business License (FBL) in Thailand

Foreigners who wish to engage in business under Schedule 2 or Schedule 3 of the Foreign Business Law in Thailand must obtain a license for foreign trade from the relevant authorities before starting their commercial activities.

The application must be submitted to the Commercial Registration Division, which will be reviewed by the Cabinet of Ministers or the Foreign Affairs Committee, as the case may be. Various criteria are used to evaluate the impact of a proposed business operation, such as advantages and disadvantages for the security and defense of the nation, economic and social development, enterprise size, local employment, etc. e. Approval of a business license application is more likely when the authorities believe that the business provides significantly more benefits and also protects and promotes the interests of Thailand.

The application process can sometimes be very time-consuming, with unpredictable results. Applying for a foreign business license is a complex, lengthy process; most foreign investors rarely go through it, even if they have a serious chance of getting it. On the other hand, they will not hesitate to apply to the BOI, even if there are only a few chances of promotion.

Capital requirements

Foreign companies under Schedule 2 and Schedule 3 of the Foreign Business Law and licensed must have a registered capital of at least THB 3 million.

In addition, they must comply with other requirements, such as requirements regarding the schedule of receipt of the minimum capital that must be imported or transferred to Thailand, the ratio of capital and loans, the number of foreign directors or representatives who can be domiciled in the Kingdom, as prescribed by the Ministerial Regulations.

Application process

Step 1

Apply to the Department of Commerce.

The completed license application form and all supporting documents must be submitted for review by the Registrar. The Registrar may request additional documentation or information supporting the business license application.

Step 2

Consideration of the application by the Foreign Business Committee.

The Registrar to the Foreign Business Committee reviews it within sixty days, during which the advantages and disadvantages of the business for the security of the country will be considered; economic and social development; public order, morality, art, culture, and traditions of the country; natural resources, nature conservation, energy and environment protection, consumer protection, enterprise size, environment; technology transfer and research and development.

If the application for a license is rejected, the applicant will be informed in writing of the decision within 15 days, clearly stating the reason for the rejection.

Applicants may appeal the decision within 30 days from the date the applicant receives notice of the refusal to issue a business license. The minister's decision is final.

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Update: 16-03-2024
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