SETTING UP A
Foreigners can form a Thai
Company with 7 principals ONLY if the company they wish to form is not
under Category A & B. This Company cannot own property but if they
decide they want top buy property then they must change the shareholding
to 39% foreign owned the rest Thai owned. A new Company rule came into being regarding share capital when
forming a new company that one must show 2m baht share capital in a bank
account. One can also be asked to show when raising their share registration capital. Therefore if
increasing from 1m baht to 2m baht you may have to show this extra 1m baht
in your company account.
In a company you need 7 partners &
foreigners can only hold 49% shares but you can according to the
investment control 100% via B.O.I. (Board of Investment) or if American
have an Amity company. If exporting solely you can own a
company 100% but you cannot sell internally on retail and
local sales-strictly export under license. Foreigners as
from 2001 can make up 6 out of 7 shareholders but
Thais still hold 51% of the shares. If you use friends
overseas then this is Ok as long as they sign the share
memorandum and furnish signed copies of their passport.
Ideally if wanting a company overseas then inform us before
you come here.
What one does
not know until they decide to form a company is that certain businesses are
closed to foreigners and many businesses you may need licenses.
Businesses are categorized into 2 different
areas with the 3rd open. So when you form a company make sure it doesn't come under the
following or write to us first.
The Alien Business Law (N.E.C. Announcement 281).
Business activities falling in categories A & B are generally closed to foreigners. Under
category C you must obtain a permit prior to commencing business. Businesses outside these categories are
exempt. The Ministry of Commerce will also help applications of non
Category A: 1.Agriculture: rice farming; salt farming. Commercial
Business: Internal trade in local agriculture products, Land trade.
Service business: Accounting, farming animals, architecture, advertising, brokerage,
auctioning, Barber, hair dressing & beautician. Building industry.
Category B. 1. Agriculture Business: orchids, cultivation, animal
husbandry including silk worm raising, timbering, fishing. 2. Industrial
& Handicraft: Rice milling, Flour making, sugar, alcohol & non
alcohol drinks, Ice cream, Pharmaceutical manufacturing, cold storage,
timber, gold, silver and inlaid stone, wood carving, lacquer-ware, match
making, cement etc, Dynamiting rocks, Manufacturing garments &
shoes, Printing, newspaper publishing, silk weaving or silk printing,
manufacture of finished products in silk.3. Commercial: all retailing
not in category C. Ore trading not in Category C, selling food an
drinks, trading of antiques & fine arts.4 Service Industry: Tour
agency, Hotels except Hotel management, photography, laundering, dress
making and service jobs.5. Land, water & ie. transport.
Category C. You are allowed to do the following. Exporting, all
wholesale trades not in A & B. retiling machinery, equipment &
tools, selling food, beverages that promote tourism. Industrial &
handicraft Business: manufacturing animal feeds, vegetable oil
extraction, textile manufacturing, dyeing, fabric printing, glass ware
manufacturing, making plates and bowls, stationary & printing paper,
rock salt mining, mining.
Service: anything not in A or B.
Foreigners setting up a
company need to set up a 2m baht Company for one work
permit. If you want 2 foreigners employed then you need a
3,000,001plus baht company. Cost for share registration is
5500 baht per 1m baht but this will vary so please ask us.
Costs 20,000 baht although Bangkok is usually more. Our
price do not include Govt fees & ID tax code for you or VAT reg. If you use our
services we outline in English each step you are paying for &
no hidden costs are included. We welcome any questions or queries you
COSTS OWNING A
|1/. Taxes: Withholding
tax, VAT and Social welfare taxes paid monthly
||2/. Monthly accountant
fees: range from 1000 baht - 3500 baht per month
|3/. Salaries for 4
employees in your company & tax for the same.
||4/. Yearly audit fee:
anywhere from 8-20,000 baht per year
|5/. Normally utility
||6/. Running costs
& legal fees: Ongoing visas & work permits costs
2009: Buying into a Business in Thailand: If you want to
work in Thailand then you need a work permit. This means you
need a Thai company. To set up you need to show 2m baht for
share capital and have enough money for your business setup
and 4 Thai employees ---- not nominees; wages, tax including
VAT, Office, social welfare and withholding tax etc and
aware this will costs around 2.5-3m baht the first year of
business so buying into a new or existent business expecting
a work permit take this into consideration on the asking
price. Being a partner in a business with work permit will
cost min 3m baht if there is goodwill in the business and
the books are sound. For each work permit you must have 4
Thai employees on your books! pay VAT and other taxes plus
accountant and visa fees etc.
When forming a company you needed ex
Thai shareholders (now changed to 6 foreigners & one Thai or
combination of either or ). Using nominees or Thais off the
streets: Once paid off then that's the end of those nominees, or you
thought. However one must remember that if you make a yearly profit you
must pay dividends to all the share holders and you must pay social
welfare tax so you need proper employees x4 per work permit.If your
shareholders file a complaint you will be fined
One can transform a Thai company into a foreign
firm. For some of these companies it is to risky to maintain the Thai status as the intention
violates the Alien Business Law. It is now difficult for
small and medium foreign companies with capital registration of less than Thai Baht 100 million to get
a wholesale license, service license and/or retail of machinery-equipment
license as the application has to be approved by a 21 persons
committee comprising of high-ranking authorities from various ministries etc. This committee
will protect small and medium Thai Business. To ask a lawyer
email us email@example.com
WHY HAVE A THAI
COMPANY; If you think you will
make a profit, have a good idea of what you want to do, and want security
and an umbrella then a Company is the way to go. To do business in Thailand without a Company if you get caught then you may be up for deportation and fined. Sort out what you want
to do and talk to our lawyers as better to do this then jump into a
company with little direction. You must file yearly returns, pay taxes,
have an accountant; proper office and Thai staff x4. It can be a big
move but it also can be rewarding and like anything you do here in
Thailand done correctly you win---listen to bar talk and your girlfriend
then you have little chance of success. Also remember having a company
you have books and balance sheet and this is legitimate when selling
your business. A business without is pure key money. The most important
aspect of doing business in Thailand is management. Without good
honest managers you will not survive. After one year in
business you can then apply for a one year visa so the benefits are
there but it is not easy and you must have money to finance your business.
NEW RULES STARTING A NEW COMPANY 2007 same in 2009
1/. Your Thai staff will be interviewed on their job roles.
2/. Company Bank account must also be accessed by Thai director not just the foreign director ( formerly or companies already in existence are exempt from this).
3/. All Thai employees must submit bank account details. If the Company makes a profit then the shareholders must have their holdings covered by the % of shares they own in profit in their bank after yearly audit.
4/. You will be inspected -Office and interviewed.
5/. Remember everything is now on Computer database so you cannot take shortcuts..
WHAT ABOUT BUYING AN EXISTING THAI
COMPANY; good idea ( Grandfather clauses come into effect ) as there are many new rules starting up a new company now SOME OF WHICH you will not like. We can assist you here . Companies for sale must be fully audited with no liens and will assist any foreigner wishing to do business in Thailand. The prices are reasonable and you have a nead start plus all changeover costs included in the cost. You also will receive excellent accountant who speaks English ( honest ) and your monthly fees will be only 2800baht per month depending on the size of the workload of your business. (an accountant you must have with any Thai Company and pay monthly). These companies are based in Chiangmai but can be moved anywhere in Thailand once the changeover is made. You must have physical office address as well you can retain the existing name or change to what you desire if open once the business reverts into your name. You are a director as well but you will need non immigrant B visa if you wish to start a business work and need work permit which we can assist you with. Please ask us more information. If you buy a Company with property title in the Company and asked to remove you paying ----don't it may cost you around 75,000 baht to accomplish. POA
limited partnership is Ok for say a husband and wife team or
when one has a small business like a Bookshop or restaurant.
For foreigners this may be ideal but the problem is, it does not cover
your liability as well as a company. A partnership can be one foreigner
& one or more Thai. Cost to form is 14,000 baht depending on
the partnership setup. Once formed
you still need a [ work permit.]
and the fees become similar to a Company including taxes, VAT etc. If you are
thinking long term and diversifying in your business it is best to have
a Company as you can then take the Company with you and use in your next
business. The problem you may have having a limited partnership is the
liability factor--- if your partner borrows you may have to settle the
debt so in fact there are limitations using a partnership as against a
Company. Thailand recognizes three types of business organizations:
Thai and western partnership are basically the same. Thailand provides for
3 types of partnerships:
1.) Unregistered ordinary partnerships, all partners are
jointly and wholly liable for all obligations of the partnership;
2.) Registered ordinary partnerships. The partnership
becomes a legal entity, separate and distinct from the individual
3.) Limited partnerships. Individual partner liability is restricted to
the amount of capital contributed to the partnership. Limited
partnerships must be registered.
or more people who form a partnership to operate a business. Both
partners have unlimited liability. An ordinary partnership may be
registered - in which case their business is considered a separate legal
entity - or unregistered. The advantages to registering an ordinary
partnership is that the assets must be examined before creditors can
claim debt payment from the partnership and the liability of any partner
is limited to two years from the date ceased being a partner.
Needless-to-say, all the terms of any partnership should be put in
writing prior to setting up the business.
or more partner's liability is limited to the amount of investment
in the company and the other partner's liability is unlimited. A limited
partnership is registered and becomes an independent legal entity. A limited
partnership can be managed by an unlimited liability partner. If a
limited liability partner manages the organization, liability becomes
unlimited. The prime advantage of a limited partnership is that
creditors cannot sue individual partners (although they can sue the
company as a whole) unless the partnership is dissolved. New partners may
only be entered into the partnership with consent of all partners. Downside:
a foreigner cannot hold the bank account in his /her name; cannot
register the building lease in ones name; cannot be the director; so
therefore will not know if his/her Thai partner has borrowed against the
partnership. We recommend these partnerships ONLY if both parties have
an excellent relationship.
Public Limited Companies
registered in Thailand may, subject to
compliance with the prospectus, approval, and other requirements, offer
shares, debentures and warrants to the public can apply to have their
securities listed on the Stock Exchange of Thailand (SET).
Must have a minimum of 15 promoters
for the formation and registration of the memorandum of association of a
public limited company, and the promoters must hold their shares for a
minimum of two years before they can transfer. The Board of Directors of
a public limited company must have a minimum of five members, at half
being Thai nationals. Shares must have a face value of at least five
baht each and be fully paid up. Restrictions on share transfers are
unlawful except those protecting the rights and benefits of the company
allowed by law, and those maintaining a Thai/foreigner shareholder
ratio. Debentures may only be issued with the approval of three quarters
of the voting shareholders.The registration fee is 2,000 baht per
million baht of capital for a public limited company.
COMPANY BRANCH OFFICE:
There is no special requirement for foreign
companies to register their branches in order to do business in
Thailand. But, most business business fall within the laws or
regulations which require special registration, either before or after
the commencement of business. Foreign businesses must follow generally
accepted procedures. It's 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.
As a condition for approval of an Alien
Business License to a branch of a foreign corporation, working capital
amounting to a total of 5 (five) million baht in foreign exchange must
be brought into Thailand within certain intervals over a four-year
period. A branch Office may be
allowed to operate for five years, unless a shorter period is indicated
in the application as a result of a contract in Thailand. Extension of
the original duration of the license to operate may be granted, provided
the working capital required to be brought into Thailand is met.
A representative office of foreign
corporations may also engage in limited “non-trading” activities,
such as sourcing of goods or services in Thailand for its head office or
inspecting and controlling quality of goods which its head office
purchases in Thailand. Other activities can cover disseminating
information about new products and services of its head office, and
reporting to its head office on local business development and
A regional office of a multinational
corporation is Ok to coordinate and direct the operation of the branches
and affiliates of the head office in the region on behalf of the head
A regional office can coordinate and
supervise the company's branches and its affiliated companies in the
region on behalf of the head office. The regional office may provide
these branches and affiliated companies with: