Setting up a company in Thailand can be a complex process, especially when you’re new to this country, the culture, the language, the laws, and the proverbial: “Way things get done”. With Antares, establishing a company is a straightforward, simple and cost-effective process. We do the legwork and take the hassle out of navigating through the legal and procedural maze.
Our experienced lawyers and legal staff will help you plan your Thai enterprise, choosing together with you the structure that fits better your business needs, including shareholder agreements and the articles of association that will govern your company’s internal policies. Once we’ve completed your business, tax and VAT registration, we will assist you in organizing the company and starting operations, allowing you to concentrate on the development of your core business right from the start.
• Limited Company
• Branch Office
• Representative Office
• Regional Office
• Regional Trade & Investment Support Office
• Board of Investment (BOI) Company
• US Amity Treaty Company
• Sole Proprietorships
• Joint Ventures
At Antares, our experienced lawyers and legal staff can assist and advise you with any corporate structure requirements or needs. Contact us now for more information.
There are two types of limited companies:
1. Private Limited Companies
These types of companies are governed by the Civil and Commercial Code.
Under a private limited company, a Thai person or company will hold no less than 51% of the company’s shares (however, the foreign shareholder may maintain the control). The company must have at least three shareholders all the time and can engage in all kind of activities.
There is no current requirement to have a Thai director, except for some activities for which specific operating licenses are required. This allows the company to be run and maintained by one or more foreign directors holding valid Work Permits.
2. Public Limited Companies
These types of companies are governed by the Public Company Act and are established with the purpose of offering shares for sale to the public.
The company must be setup by minimum 15 promoters and half of the promoters must be permanent residents of Thailand. They have to subscribe at least 5% of the registered capital and the rest must be sold to the public or any interested person.
The public limited company must be managed by minimum 5 directors and at least one-third of those directors must not have any business or professional relationship with the head office, subsidiaries, associates, or jurist person in his own interest, whether directly or indirectly.
Thai Private Limited Company is the preferred form of a juristic entity for foreign individuals or companies interested in establishing a full juristic presence in Thailand.
The company registration process can be separated in three main steps, as following:
1. Reserve the Company Name
The first step is to reserve the desired company name with the Department of Business Development (DBD) at the Ministry of Commerce. The name must not be the same or similar to the one of other existing companies, and must not be contrary to the ministerial rules. The company name registration is valid for 30 days.
Our professional lawyers can assist you with the company name reservation. You only have to gave us three company name suggestions and we will apply on your behalf.
2. Prepare and File a Memorandum of Association
This document must contain the objectives of your company, the approved company name, the authorized capital, the desired location of the company, the extent of liability of the directors, as well as the names, nationalities, addresses, occupations, and ages of at least three promoters. These promoters should be natural persons, and will have to sign the original application form. Each promoter is required to subscribe to a minimum one share of the company.
3. Submit the Articles of Association
Finally, the Articles of Association have to be submitted defining the specifics of the company, i.e. share structure and distribution, types of shares, voting rights, quorum, directors, dividends, auditors, and any other essential regulations and characteristics of the company. In principle, the filing of these documents completes the registration process and the company’s Certificate of Registration with supporting documents will then be issued.
Contact us today and our experienced lawyers will review your requirements and give you a free estimation of the duration and cost involved.
A Branch Office is a 100% foreign-owned branch of an overseas Head Office. A Branch Office as such (unlike a registered limited company) is not an independent legal entity, and there are no shareholders or directors.
The advantage of this legal form is that there is no requirement to have a local shareholder. The disadvantage is the comparatively high establishment costs and time of incorporation. In addition, it is not an automatic process (unlike the registration of a limited company), but rather an application that will be considered by the committee based on its merits (we have to show that your company will bring a number of benefits to Thailand such as transfer of technology, will no compete with Thai operators).
There is no special requirement for foreign companies to register their branches in order to do business in Thailand. However, most business activities fall within the scope of one or more laws or regulations, which require special registration, either before or after the commencement of activities. Foreign business establishment must, therefore, follow generally acceptable procedures.
As a condition for approval of an Alien Business License to a branch of a foreign corporation, working capital amounting to a total of 3 million THB in foreign exchange must be brought into Thailand within certain intervals over a three-year period.
The branch may be allowed to operate for an indefinite period of time, unless a shorter period is indicated in the application as a result of a contract to be performed in Thailand.
It is important to clarify beforehand what constitutes income subject to Thai tax because the Revenue Department may consider revenues directly earned by the foreign head office from sources within Thailand as subject to Thai taxes.
We can also help you establish a Representative Office, a non-trading legal entity. A Representative Office is a 100% foreign-owned extension of an overseas Head Office. It is not an independent legal entity, and there are no shareholders or directors.
This entity is not permitted to sell or distribute any goods or services, or in any other way directly generate revenue in Thailand. All operating expenditure in a total of at least 2 million THB must be remitted entirely from aboard.
In order to operate such a business, a foreigner must obtain a Certification Letter from the Department of Business Development (DBD). The Representative Office do not generate income and therefore is not subject to Thai taxation.
We have successfully incorporated many Representative Offices in Thailand and we can advise and assist you in every step, making sure you fully comply with Thai Foreign Business Law.
In early 1996, the Board of Investment (BOI) announced the establishment of Trade and Investment Support Offices (TISO), becoming a new category of activities eligible for investment promotion. This measure was taken in support of the government’s policy to develop Thailand as a regional center for trade and investment.
Activities found in this realm go beyond regional offices. There are a broad range of business activities including:
• Controlling & advising affiliated companies
• All types of consulting services, except those engaged in buying and selling securities and foreign currency exchange. For accounting, advertising, legal affairs, architecture and civil engineering some exceptions will be made possible via permission of the Department of Commercial Registration or other government agencies.
• Information services related to sourcing and procurement, but not brokerages or agencies
• Engineering and technical services, except those related to architecture and civil engineering
• Testing and certifying standards of products, production and services standards
• Exporting of all types of products
• Wholesaling of all types of products within Thailand, excluding local agricultural products, arts and crafts, antiques, and natural resources
• Provision of training on the use of machinery, engines, tools and equipment
• Installation, maintenance, and repairing of machinery, engines, tools, and equipment
• Calibration of machinery, engines, tools, and equipment
• Software design and development
Any other activities will be considered by the office of the Board of Investment on a situational basis.
TISO successful projects will enjoy non-tax incentives, such as:
• 100% foreign ownership of the promoted company
• Permission to own land for offices
• Permission to bring in foreigners to conduct investment studies
• Permission to bring in foreign technicians and experts with no limit
• Permission to take or remit foreign currency abroad
Eligibility for Regional Trade and Investment Support Offices
• To be considered, applicants must either be companies fully established under Thai law or companies who plan to establish under Thai law
• Operating licenses must be acquired from all relevant government agencies
• Operating expenses must amount to no less than 10 million THB per year. This consists of sales and administrative expenses and is set forth by the Revenue Code.
• The Board of Investment must approve the business plan and scope of business
The approval process takes approximately 2 to 4 months.
The BOI provides investment matchmaking services to both Thai and foreign investors seeking co-operation in the areas of:
• Agriculture and agricultural products
• Mining, ceramics, and basic metals
• Light industry
• Metal products, machinery and transport equipment
• Electric industry and electric appliances
• Chemicals, paper, and plastics;
• Service and public utilities
• Technology and innovation development
In determining both the economic and technological suitability of a project for which investment is requested, the Board applies different criteria depending on the level of investment capital.
For a project with investment capital, excluding land and working capital, not greater than 1 million THB, the following criteria are used:
• Value added not less than 20% of sales revenue, except projects in electronic products and parts, agriculture and agricultural products and coil center, for which the value added is not less than 10% of sales revenue
• Registered capital is at least 25% of the total investment
• Modern machinery and production processes are used
• Adequate environmental protection systems are installed
For a project with investment capital, excluding land and working capital, greater than 10 million THB, the same criteria applies. In addition, the project must obtain ISO 9000, ISO 14000 or similar international standard certification within 2 years from the full operation start-up date.
For a project with investment capital, excluding land and working capital, of over 750 million THB, the same criteria applies. In addition, feasibility study must be submitted.
Projects which qualify for investment promotion will be granted tax and/or non- tax incentives, such as:
• Exemption or reduction of import duties on imported machinery
• Exemption or a reduction of import duties on imported materials and components
• Exemption of corporate income taxes for up to 15 years
• Double deduction from the cost of water supply, electricity, and transport
• Deduction of 25% of the project’s infrastructure installation or construction cost
• Visas and work permits for expatriate personnel without meeting the capital and Thai employees ratio requirement
• Permission to bring foreign skilled workers and experts
• Permission to own land
• Permission to remit money abroad in foreign currency
If the project has merits pertaining to enhanced competitiveness, industrial area development and decentralization, additional merit-based BOI incentives may be granted.
These BOI incentives are specified in the BOI certificate granted to successful projects. Failure to meet or remain in compliance with the conditions may lead to the revocation of the BOI certificate.
Under the U.S. Amity Treaty, American citizens are allowed to own the majority or all the shares of a company, branch office or representative office in Thailand.
The U.S. Amity Treaty basically gives U.S. citizens the same benefits Thai nationals enjoy, except for the following:
• Own land
• Engage in the business of inland communication
• Engage in the business of inland transportation
• Engage in fiduciary functions
• Engage in banking involving depository functions
• Exploit land or other natural resources
• Engage in domestic trade in indigenous agricultural products
According to the U.S. Amity Treaty, American shareholders (either individuals or entities) shall hold a majority of shares and comprise a majority of shareholders in the new company. American or Thai directors will be allowed to control the management of the company.
After incorporation, the new business should apply for a Certificate of Treaty Protection from the Department of Business Development. This is officially called: Alien Business Certificate. A minimum of 2 million THB in capital is required for Treaty protection. If the business is required to obtain a Foreign Business License, the minimum capital must be 3 million THB for each business activity
Takes approximatively 30 days from the date we have all required information, documents and required signatures on hand to acquire the certificate.
At Antares, our experienced lawyers can handle the complete application process for you. Our professional fees charged for drafting, preparation and filing of all documents necessary to obtain the Alien Business Certificate will be made available upon contact.
A sole proprietorship is an unincorporated commercial business which is owned and operated by a single natural person, the proprietor.
The proprietor has unlimited liability and all the proprietor’s business and personal assets are subject to attachment and other forms of legal action.
A sole proprietor’s income is taxed at the personal income tax rates (progressive rates of 5% to 35%) with exemptions and deductions applicable to all individuals. Furthermore, if the business’ annual income exceeds 1.8 million Baht, the proprietor is required to collect VAT on the sale of goods or provision of services.
Unless covered under the United States-Thailand Treaty on Amity and Economic Cooperation, foreigners are not allowed to operate sole proprietorships.
Any person or company supplying goods or providing services in Thailand with an annual turnover exceeding 1.8 million THB has to register for VAT in Thailand. Registration has to be undertaken before the registration of the business or within 30 days after the threshold has been reached.
The VAT registration application must be submitted to Area Revenue (Branch) Offices. In case the taxpayer has multiple branches, the registration must be filed at the company’s headquarters.
On a practical note: Thai embassies and consulates request a copy of a company’s VAT registration when applying for a Non-Immigrant Business Visa. If a company needs to support a foreigner’s Visa and Work Permit, a VAT registration is therefore needed from day one on.
The company is required to file monthly VAT reports from the day of registration, even if there are zero VAT invoices that month. Companies are required to keep books and follow accounting procedures as specified. Supporting documents may be prepared in any language (once that a Thai translation is attached).
The Labor Protection Acts apply to any business that maintains at least one employee. Domestic workers and other household staff are included in the definition of employee, therefore the Labor Protection Act applies to these workers as well. Any employee, whether full or part time, is covered.
According to the law, an employer shall not employ a child under 15 years of age. A worker below 18 years of age must not perform dangerous and hazardous jobs.
If the employer disregard the law, he is subject to fines ranging from 400,000 THB to 800,000 THB and imprisonment of up to 2 years, or both. If the offense causes the employee a physical or mental harm, or death, the maximum penalty is 4 years of imprisonment or a fine between 800,000 THB to 2 million THB.
The maximum number of work hours for non-hazardous work is 8 hours a day or 48 hours a week. In some cases, the employer and employee may arrange the period of hours upon arrangement as long as it still does not exceed 48 hours a week.
Hazardous work is not permitted to exceed 7 hours a day or 42 hours a week.
Employees are given no fewer than 13 national holidays per year and a minimum of 6 days of vacation annually after working consecutively for one year. Female employees are entitled to maternity leave for 90 days including holidays, however, the number of paid leave shall not exceed 45 days.
After working five consecutive hours, all employees are entitled to a daily rest period of at least 1 hour. It may be arranged that the daily rest period is to be shorter than 1 hour at each time, but it cannot be less than 1 hour a day total. A weekly holiday of at least 1 day per week at intervals of a six-day period have to be arranged by the employer.
Employees may have the option of whether they wish to work overtime or on holidays. For work performed in excess to the maximum number of working hours fixed by law or by agreement, employees are entitled to overtime compensation.
The rates for overtime vary and range from one and a half to three times the normal hourly wage rate for the time worked. The maximum number of overtime allowance is limited to 36 hours a week.
The regulation which stated different minimum wages depending on the workplace’s province has since been given by the Thai Cabinet in 1972.
In Phuket, Chonburi and Rayong a daily rate of 330 THB applies. In Bangkok and nearby provinces: Nonthaburi, Chachoengsao, Nakhon Pathom, Pathum Thani, Samut Prakan, Samut Sakhon the daily rate of 325 THB applies. For the rest of 67 provinces daily rates varying from 320 THB to 308 THB applies.
Skilled workers from 16 professional branches are entitled to higher minimum wages, ranging from 370 THB to 600 THB per day, depending on the worker’s skill level.
Failure to pay the minimum wage rates may result in penalties for the employer, such as imprisonment of up of 6 months, and/or a fine up to 100,000 THB.
The Labor Protection Act covers the conditions for termination of employment.
There is a code that governs and controls unfair practices and dismissals. These unfair practices are usually the result of failure to follow the correct legal functions.
Employee Associations and Labor Unions are required to be registered at the Labor Department and maintain a license for operations. Eventually, a Labor Court will settle employment disputes.
If a contract of employment has no specification to duration, either party is permitted to terminate the contract by simply giving notice at or before any time of payment, to have effect in the next pay period.
Employees who have worked for more than 120 days but less than one year are entitled to 30 days of severance pay. The severance pay is not less than 90 days pay for those employed between one and three years. Employees with three to six years of employment are entitled to six months salary. Those employees with more than six to 10 years of service will receive eight months salary. Employees with more than 10 years of employment will receive 10 months salary.
Employees who retire must also receive a severance pay. The severance pay is not less than six months pay for those employed between three and six years. Employees with six to ten years of employment are entitled to eight months salary. Those employees with more than 10 years of service will receive ten months salary.
The employer who fails to give severance pay to the employee who retire will be subject to a maximum of six-month imprisonment or a maximum fine of 100,000 THB, or both.
Other than those in transit and citizens of certain countries, all persons are required to obtain a visa in order to enter in Thailand whatever their purpose may be (traveling, working, studying or simple retire in Thailand).
The Immigration Act establishes the following visa categories:
• Transit Visa
• Tourist Visa
• Non-Immigrant Visa
• Diplomatic Visa
• Official Visa
• Courtesy Visa
Furthermore, a foreign must obtain a valid work permit and the correct type of visa if he wants to work or conduct business in Thailand. Failure to comply with these strict requirements may lead to severe sanctions such fines or even deportation.