For American entrepreneurs and corporations eyeing Southeast Asia, Thailand offers a unique gateway that no other nation enjoys. Since 1833, the United States and Thailand have maintained a “Special Relationship,” codified most significantly in the 1966 Treaty of Amity and Economic Relations.
Here’s the thing. The US Thai Amity Treaty is often described as a shortcut for American businesses entering Thailand. In reality, it’s closer to a narrow legal doorway. Walk through it correctly, and it offers real advantages. Miss a requirement, and the same treaty becomes unusable.
This is where many investors run into trouble. They assume eligibility is automatic. It isn’t. Qualification depends on ownership, control, business activity, and how the company is structured from day one.
In practical terms, this treaty allows US-owned businesses to operate in Thailand with majority or 100% foreign ownership, effectively exempting them from the restrictive ownership caps of the Foreign Business Act (FBA). However, many investors enter the market under the false impression that “American-owned” is a simple, blanket definition.
In reality, the qualification process is a technical exercise in corporate law. At Herrera and Partners, we frequently consult with clients who have already committed capital, only to realize their corporate structure, or their own residency status, invalidates their Treaty eligibility.
Understanding who qualifies, and more importantly, who does not, is the first step in protecting your investment.
What the US-Thai Amity Treaty Actually Covers
To understand eligibility, one must understand what is being granted. Under the Foreign Business Act, most service and retail industries are “List 3” activities, meaning they are reserved for Thai nationals unless a special license is obtained. The Treaty of Amity bypasses this, granting “National Treatment” to Americans. This means a qualifying US company is treated, for the most part, as if it were a Thai company.
It is a powerful tool, but it is not a “get out of jail free” card for all regulations. It does not grant the right to own land, nor does it exempt a company from obtaining necessary VAT registrations, work permits, or industry-specific licenses (such as FDA or TCG). The US Thai Amity Treaty is an ownership solution, not a total regulatory exemption.
Who Qualifies Under the US-Thai Amity Treaty?
Eligibility is divided into two primary categories: individuals and legal entities. While the requirements seem straightforward on paper, the Department of Business Development (DBD) applies a high level of scrutiny to the evidence provided.
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US Individuals
A US citizen acting as a sole proprietor or as a shareholder in a Thai company must prove their nationality beyond a shadow of a doubt.
- Proof of Citizenship: This requires a certified copy of a US passport.
- The Residency Trap: A common point of confusion involves US Permanent Residents (Green Card holders) who are not citizens. The Treaty is based on nationality, not tax residency. If you hold a passport from a third country but live in the US, you do not qualify.
- Dual Nationality: If an individual holds both US and another nationality (e.g., US-French), they can generally qualify using their US status. However, if they hold US-Thai dual citizenship, they are already treated as Thai nationals, which simplifies ownership but changes the tax and reporting implications.
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US Companies
The majority of Amity applications involve a US parent company looking to establish a Thai subsidiary. To qualify as a “US Organization,” the following criteria must be met:
- Majority Ownership: At least 51% of the shares of the US parent company must be held by US citizens. If a US company is owned by a holding company in the Cayman Islands or Singapore, the DBD will “pierce the corporate veil” to find the ultimate beneficial owners. If those owners aren’t Americans, the company is disqualified.
- Management Control: The majority of the directors with authorized signatory power must be either US citizens or Thai citizens. A US company managed entirely by European or Japanese nationals may find its Amity application rejected, even if the shareholders are American.
- The “Ultimate Beneficial Owner” (UBO) Rule: Thai authorities are increasingly focused on where the money actually goes. At H&P, we advise our clients to prepare a clear “chain of command” document that shows the flow of ownership from the Thai subsidiary all the way up to the individual American shareholders.
Who Does Not Qualify: The Common Pitfalls
Understanding the “exclusions” is often more valuable than understanding the rules. Disqualification usually happens not because of a lack of intent, but because of a technicality in the corporate charter.
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Non-US Nationals and Third-Country Entities
This seems obvious, but it is the most common point of failure for international startups. If a US citizen partners with a British or Australian national on a 50/50 basis, the company does not qualify.
To be an Amity company, the American (or Thai) interest must be the clear majority (at least 51%).
Furthermore, “Nominee” structures (where a Thai national holds shares on behalf of a foreigner to circumvent the law) are strictly illegal and heavily prosecuted. The US Thai Amity Treaty is designed to replace the need for such risky structures by providing a legal path to majority ownership.
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Mixed Shareholding and “Control” Issues
Ownership is not just about the number of shares; it is about the rights attached to them. If a US citizen owns 51% of the shares, but a non-US minority shareholder holds 90% of the voting rights through “preferred shares,” the Thai authorities will likely disqualify the entity. The Treaty requires that the American interest is substantive, not just nominal.
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Restricted Business Activities
Even if your company is 100% American-owned and managed, certain sectors are strictly prohibited under the Treaty. These are known as the “Big Six” exceptions:
- Communications.
- Transportation.
- Fiduciary functions (Trusts/Banking).
- Land trade or ownership.
- Exploitation of natural resources.
- Domestic trade in indigenous agricultural products.
If your business involves any of the above, the US Thai Amity Treaty cannot help you. You would instead need to look toward the Thailand Board of Investment (BOI) promotion or other specific licenses.
Common Misconceptions About Eligibility
At Herrera and Partners, we often hear “myths” that can lead to expensive mistakes. Let’s clarify the legal reality:
- “Any US-incorporated company qualifies.”
- Reality: Incorporating a “shell” company in Delaware does not grant Amity rights. If the Delaware company is owned by a non-US person, it is ineligible.
- “Amity status applies automatically.”
- Reality: You must proactively apply for a Treaty of Amity Certificate. Until that certificate is issued by the DBD, you are operating under the Foreign Business Act and could be in violation of the law if you are majority foreign-owned.
- “Once approved, I never have to worry again.”
- Reality: Compliance is ongoing. If you bring in a new non-US investor later and your American ownership drops below 51%, your Amity Certificate becomes void.
How Authorities Assess Qualification in Practice
The application process is handled by the Department of Business Development (DBD) in Thailand, but it begins with the US Commercial Service at the US Embassy in Bangkok.
The Embassy issues a “Letter of Certification” after reviewing your corporate documents. They will look at your Bylaws, Articles of Incorporation, and Shareholder Lists. Following this, the DBD performs its own independent review. They are looking for inconsistencies.
If your US company’s bylaws allow for non-US citizens to take control of the board in certain circumstances, the DBD may ask for amendments before granting the certificate.
What Happens If You Do Not Qualify?
If you don’t meet the Amity criteria, it is not the end of your Thai business journey, but it does mean you need a different strategy.
- BOI Promotion: The Board of Investment offers incentives (including 100% ownership and tax breaks) for businesses that provide high-value technology, manufacturing, or services. This is often a better route for tech startups than the Amity Treaty.
- Foreign Business License (FBL): You can apply for a license to operate as a foreign-owned entity. This is a discretionary process and can be difficult to obtain without significant capital investment and a “unique” business proposition.
- Thai Majority Partnership: The traditional route of having 51% Thai ownership. This requires a high degree of trust and well-drafted shareholder agreements to protect the minority foreign investor’s interests.
Why Early Legal Structuring Matters
The biggest mistake we see is “incorporating first and asking questions later.” In Thailand, changing a company’s structure after it has been registered is significantly more expensive and time-consuming than setting it up correctly the first time.
When Herrera and Partners works with US investors, we perform a “Treaty Audit” before a single document is filed. We ensure that the US parent company’s documentation meets Thai standards and that the proposed board of directors satisfies the Treaty’s management requirements.
By the time we submit an application, we ensure there is zero ambiguity regarding eligibility. This proactive approach doesn’t just save time, it prevents the “compliance exposure” that can occur if a company is found to be operating illegally under the FBA while waiting for an approval that may never come.
To sum it up, the US-Thai Amity Treaty is a remarkable privilege, offering American investors a level of control in Thailand that is unavailable to the rest of the world. However, the Thai government treats this privilege with the gravity it deserves. Qualification is technical, evidence-based, and requires a deep understanding of both US corporate documentation and Thai administrative law.
Do not assume your American passport is a universal key. Before you sign a lease, hire staff, or transfer capital, ensure your structure is “Amity-ready.”
Ready to secure your Amity status? At Herrera and Partners, we specialize in navigating the technical intersection of US and Thai corporate law. We provide the precise legal structuring required to ensure your business qualifies for 100% ownership under the Treaty from day one.
Contact our legal team today for a confidential eligibility assessment and let us help you turn a complex treaty into a competitive advantage!
