Starting a business in Thailand
Which business structure can I use?
To do business in Thailand, one of the first things to consider is your business structure. Different regulations may apply depending on your business structure and activities.
Foreign companies doing business in Thailand use three main types of business entities:
Private Limited CompanyA private limited company may be wholly owned by foreigners, except those in businesses reserved for Thai nationals under the Foreign Business Act (“FBA”) where foreigners can own up to 49% of the company. A private limited company is managed by a board of directors, guided by the Civil and Commercial code and its articles of association. The company is controlled by shareholders.
Branch OfficeA branch office is the same entity as its head office overseas. To set up your branch office in Thailand, you will normally need the support of a Government Ministry or Agency, or a major organisation engaged in a particular activity. You can apply to the Foreign Business Committee to set up a branch office. It usually takes three to four months to process the application after you have submitted all the documents needed.
Representative OfficeYou may also set up a representative office in Thailand to engage in non-revenue generating activities for your company. The office needs to appoint one resident representative who can be of any nationality. A representative office is restricted to:
- Searching for local sources of goods or services for its head office.
- Inspecting and controlling the quality and quantity of goods purchased by its head office.
- Providing advice in various fields relating to products directly sold by its head office to local distributors or consumers.
- Disseminating information about new products and services of its head office.
- Reporting to the head office on local business developments and activities.
Other entities include: Partnership, Regional Office for an International Trade Business (ROIT) and Regional Operating Headquarters (ROH).
Directors and shareholders
How many directors do I need?
You need at least one director. There is no limit to the number of directors.
Do I need a minimum number of resident directors?
Yes, if you set up a representative office or branch office.
Any restrictions on who I can appoint as a director?
A director in your company must be at least 20 years old.
Can I appoint only foreigners as directors to my board?
Yes, the entire board can consist of foreigners.
Can a company in Thailand be wholly-owned by foreigners? Do I need a minimum percentage of local shareholders?
It depends on the nature of your business. If the business is a restricted business for foreigners under the Foreign Business Act, you need to get a Foreign Business Licence, or the majority of shares in the company must be owned by a Thai shareholder.
How many shareholders do I need to set up a company?
At least three shareholders.
Do I need approval from the local authorities before my company operates?
Depending on the nature of your business, you may need permission from the local authorities before starting. Some examples include:
- Entertainment place
- Power plant
- Production of energy/ power
- Financial advisor
What are some of the common business activities that need prior government approval?
Business activities such as operating a factory, selling insurance, import and export, running a restaurant, operating a hospital, banking, securities, forex trading etc. need prior government approval.
Are there business activities which foreign companies cannot do?
Foreigners cannot do business in these areas:
- Mass media
- Rice farming, plantation or crop growing
- Livestock farming
- Forestry and timber processing
- Extract of Thai medicinal herbs
- Trading and sale of Thai antiques
- Making or casting of Buddha images and monk alms-bowls
- Land trading
What are some business activities that need a licence?
They include activities such as operating a factory, import and export, running a restaurant, banking, etc.
Typically, do I apply for licences before or after setting up my company?
Apply for licences after setting up your company.
Do I renew my licences each year?
It depends on the type of licence you hold. Most licences can be renewed after they expire.
Should I display the business licence prominently at my business location?
Yes, you need to display your business licence.
Share capital and capital contribution
What is the minimum share capital or investment capital I need to set up a company?
Under Thai law, the minimum is THB 15 (S$0.61). In practice, it should not be lower than THB 100,000 (S$409).
Do I need approval from the local authorities to increase my share capital or investment capital? How long does approval take?
You do not need approval from the local authorities to increase your share capital, only approval from your shareholders.
What is the typical share capital requirement for an investment holding and trading company?
At least THB 1 million (S$40,900).
What is the common unit issue price per share?
The common unit prices are THB 100, THB 10 or THB 1,000.
Can I issue shares in a currency other than Thai Baht?
You can only issue shares in Thai Baht.
Any restrictions on bringing capital out of Thailand?
Yes, there are regulations from the Bank of Thailand for various types of remittances.
Do I need a separate bank account to receive capital?
It is not necessary. You can use only one bank account.
How long does it take to set up a corporate bank account?
It takes one day to open a bank account at local Thai banks. For international banks, this can take up to months.
Do I need to keep a minimum amount as capital in my bank account at all times? Or can my company use the entire amount for business activities?
No, you don’t need to keep a minimum capital amount in your bank account. You can use the capital for day-to-day business operations.
What is the current corporate tax rate?
The corporate income tax rate in Thailand is up to 20% of net profit. Rates may vary according to the type of taxpayer.
Are there any tax incentives for my company in Thailand?
Depending on your revenue, you will enjoy a lower tax rate will if you are an SME with capital under THB 5 million (S$204,500).
Any special grants for foreign companies or for specific industries which the local government encourages?
Yes, the Board of Investment of Thailand promotes foreign investments in the country. Incentives vary according to the type of business activity.
The business activities eligible for investment promotion:
- Agriculture and agricultural products
- Mining, ceramics and basic metals
- Light industry
- Metal products, machinery and transport industry
- Electronic and electric appliances industry
- Chemicals, paper and plastics
- Services and public utilities
- Technology and innovation development
When and how do I pay corporate tax?
The tax system operates on a self-assessment basis.
Corporate income tax returns must be filed within 150 days after the end of the relevant accounting period. Tax prepayments are required on a half yearly basis.
Do I need to pay tax when I send dividends back to Singapore?
Yes, the tax rate is 10% for repatriation of dividends.
What are the withholding tax rates on interest, dividends and royalties?
They are 1% on interest, 10% on dividends and 3% on royalties.
Any value-added tax or goods & services tax in Thailand?
Yes. The tax rate is 7%.
What basic employment benefits must I give to my employees?
You must contribute to your employees’ social security fund. Other benefits such as bonuses, provident fund, medical insurance etc. are optional.
Do I need to pay taxes or social security contributions for employees?
Yes, you will deduct withholding tax based on personal income tax rates. Social security contribution is 5% of the employee’s salary but capped at THB 750 (S$30.1) per month.
If I send a Singaporean employee to work in Thailand for less than a year, does the employee need a work pass?
Yes, all foreigners working in Thailand are required to obtain a work permit prior to starting work in Thailand, with the exemption of certain occupations such as members of diplomatic corps, consular missions, etc. Applications for a work permit take between 3 to 7 working days to be processed.
Must I have a physical office in Thailand? Can I use another business’ address or a virtual office address?
You need to have a physical office address.