Knowing the many kinds of businesses that are available is crucial if you’re thinking about setting up a company in Thailand. Choosing the appropriate business model will determine the legal frameworks and needs; long-term success depends on getting these aspects right from the start. Thailand has a variety of corporate structures to suit various purposes, and at Herrera & Partners, we assist our clients in establishing their companies while making sure they abide by local laws and regulations.

Types of Companies in Thailand

Thailand offers several distinct business structures for entrepreneurs and investors looking to establish their presence in the Kingdom. Below are some of the common types of business in Thailand:

1. Limited Company

The Limited Company is the most popular type of business in Thailand for foreigners wishing to launch an enterprise in the country. It resembles a private limited corporation, which is prevalent in several other legal systems.

A Limited Company necessitates a minimum of one director and two shareholders. Foreign ownership, however, may come with certain restrictions. For example, unless they request special licenses under the Foreign Business Act (FBA), the majority of enterprises must have at least 51% Thai ownership. Make sure the industry you choose allows your company to function within the restrictions; certain sectors are off limits to foreign ownership because they are vital to the nation’s economy or culture.

A versatile form that works well for a range of company sizes, from small business to huge corporations, is the limited company. A corporation must create articles of association, submit the relevant paperwork to the Ministry of Commerce, and pay registration costs in addition to meeting ownership criteria.

2. Branch Office

Establishing a Branch Office is an additional option for international businesses wishing to do business in Thailand. As a result, a foreign business may become established in the country without forming a new, distinct legal organization.

Revenue-generating activities may be carried out by Branch Offices, but they have to use the parent company’s name. All responsibilities will be borne by the parent company. Although the branch office does not require local shareholders, it is nevertheless required to adhere to Thai tax and accounting regulations. In addition, branch offices must apply for permits under the FBA in order to conduct certain kinds of activity. For foreign businesses looking to grow in Thailand but maybe not requiring a fully-fledged local corporation, this arrangement is the ideal choice.

3. Representative Office

For international businesses that want to represent their head office in a foreign country but do not need to generate income there, a representative office in Thailand may be used to carry out certain authorized tasks. Conducting market research, procuring goods, or facilitating communication between the parent firm and local agents are all made possible by this kind of framework.

Representative Offices are not allowed to generate revenue in Thailand, hence, they are unable to conduct direct sales of goods or services. Rather, they are restricted to tasks like liaison work, market research, product procurement, and quality control. Even if the application procedure is simple, it’s important to keep in mind that before a Representative Office can start operations, certain sectors could need special licenses and authorization.

4. Thailand BOI Promoted Company and Foreign Business Licensing

A business that is sponsored by the Board of Investment (BOI) can stand to gain substantial advantages, including reduced limitations on foreign ownership, assistance in obtaining visas and work permits, and exemptions from taxes, provided that they satisfy certain requirements. The goal of these incentives is to draw in foreign investment, especially in sectors like manufacturing, technology, and R&D that the Thai government considers important.

For foreign majority-owned companies seeking to operate in Thailand, a Foreign Business License (FBL) is required for restricted business activities under the Foreign Business Act. These activities are categorized into three lists:

• List 1: Businesses strictly prohibited to foreigners (except through special trade agreements)
• List 2: Businesses requiring Cabinet approval and a minimum of 40% Thai shareholding
• List 3: Businesses requiring permission from the Department of Business Development

However, BOI-promoted companies can receive special privileges to operate in restricted businesses by applying for a Foreign Business Certificate instead of an FBL, streamlining the process for foreign investors in promoted sectors. A minimum capital of THB 3 million is typically required for operating restricted businesses under Lists 2 and 3.

A thorough business plan must be submitted as part of the application process for BOI promotion, along with meeting certain industry standards. Benefits awarded to successful applicants draw investors to Thailand, particularly those aiming to create ambitious or ground-breaking enterprises.

Key Considerations When Setting Up a Business in Thailand

There is more to starting a business in Thailand than merely picking the appropriate company structure. Ensuring adherence to local rules and regulations, such as employment legislation, tax obligations, and the Foreign Business Act, is crucial to a successful Thailand company formation. Several crucial actions consist of:

• Requirements for Shareholders

Foreign ownership may be prohibited according to the nature of the firm, particularly in sectors where the FBA has restrictions. It’s critical to know whether your company needs a Thai partner.

• Corporate Tax Obligations

Companies operating in Thailand are required to pay corporate income tax, and if their yearly turnover is above a certain level, they also need to register for value-added tax (VAT). Early awareness of your tax responsibilities might help you prevent unforeseen expenses.

• Licenses and Permits

Certain sectors of the Thai economy, like construction, food services, and tourism, call for specific permits. It is important to ensure that your business is functioning lawfully by obtaining the necessary permissions.

At Herrera & Partners, we have assisted several clients in navigating the difficulties of launching and expanding a company in Thailand. We provide an extensive array of services that streamline and expedite the company formation process, from assisting you in selecting the most suitable business structure to guaranteeing adherence to regional regulations. 

We are here to assist you at any stage of your business journey, whether you’re thinking about establishing a Limited Company, Branch Office, or investigating BOI-promoted incentives.

How Herrera & Partners Can Assist You

At Herrera & Partners—your trusted law firm in Thailand, we are aware of the complexities involved in forming a business in Thailand and the need to get everything right from the beginning.

In addition to assisting with company registration, we provide comprehensive legal counsel about the various types of Thai businesses, help with compliance concerns, and make sure your company adheres to all applicable laws in Thailand. If you want to establish a company in Thailand, get in touch with us to find out how we can support you through the process and assist your company in reaching its objectives.

Contact us for further information and tailored legal support.

Email: info@herrera-partners.com

Telephone: +66 22545600Office in Bangkok: Herrera and Partners Co., Ltd. 142 Two Pacific Place, 17th Floor, Sukhumvit Road, Klongtoey, Klongtoey, Bangkok 10110

Frequently Asked Questions (FAQs) 

1. What are the main types of companies in Thailand?

The main business structures in Thailand include a Limited Company, Branch Office, Representative Office, BOI-promoted company, and companies operating under a Foreign Business License (FBL).

2. What is the most common business structure for foreigners in Thailand?

The Thai Limited Company is the most popular structure for foreign investors. It requires at least one director and two shareholders and offers limited liability protection.

3. Can foreigners own 100% of a company in Thailand?

In many industries, foreign ownership is restricted under the Foreign Business Act (FBA), typically requiring at least 51% Thai ownership. However, 100% foreign ownership may be possible through BOI promotion, special licenses, or in non-restricted sectors.

4. What is the difference between a Branch Office and a Limited Company in Thailand?

A Branch Office is not a separate legal entity and operates under the parent company’s name, with the parent company bearing full liability. A Limited Company is a separate legal entity with limited liability for shareholders.

5. Can a Branch Office generate revenue in Thailand?

Yes. A Branch Office may conduct revenue-generating activities but must comply with Thai tax laws and may require a Foreign Business License depending on the business activity.

6. What is a Representative Office in Thailand?

A Representative Office is a non-revenue-generating entity that can conduct limited activities such as market research, sourcing goods, quality control, and liaison work on behalf of its head office.

7. Can a Representative Office sell goods or services in Thailand?

No. Representative Offices are strictly prohibited from generating income or conducting direct sales in Thailand.

8. What is BOI promotion in Thailand?

BOI (Board of Investment) promotion provides incentives such as tax exemptions, relaxed foreign ownership restrictions, and visa/work permit support to businesses operating in targeted industries like technology, manufacturing, and R&D.

9. What is a Foreign Business License (FBL)?

A Foreign Business License (FBL) is required for foreign-majority-owned companies operating in restricted business categories under the Foreign Business Act. Approval depends on the category of restricted activity.

10. What are the three lists under the Foreign Business Act?

The FBA divides restricted activities into:

• List 1: Strictly prohibited to foreigners

• List 2: Requires Cabinet approval and minimum Thai shareholding

• List 3: Requires permission from the Department of Business Development

11. What is the minimum capital requirement for foreign businesses in Thailand?

For restricted businesses under Lists 2 and 3 of the FBA, a minimum capital of THB 3 million is typically required.

12. Do all companies in Thailand need to pay corporate income tax?

Yes. Companies operating in Thailand are subject to corporate income tax. VAT registration is also required if annual turnover exceeds the statutory threshold.

13. What licenses are required to operate a business in Thailand?

Certain industries such as construction, tourism, food services, and regulated professions require specific licenses and permits in addition to company registration.

14. How long does it take to register a company in Thailand?

A Limited Company can typically be registered within a few business days once documentation is complete. However, obtaining licenses, BOI promotion, or an FBL may take significantly longer.

15. Is BOI promotion better than applying for a Foreign Business License?

It depends on the business activity. BOI promotion can offer greater incentives and streamlined approval, but it is only available to qualifying industries and projects.

16. What should foreign investors consider before setting up a business in Thailand?

Foreign investors should carefully review ownership restrictions, licensing requirements, tax obligations, capital requirements, and compliance under the Foreign Business Act before choosing a business structure.