Quick Answer
The Treaty of Amity allows eligible US companies and citizens to operate businesses in Thailand with majority or full foreign ownership, bypassing many restrictions under Thai foreign business law. It grants US investors national treatment, meaning they can operate similarly to Thai owned companies in most sectors. Herrera & Partners assists US businesses in structuring, certifying, and registering Treaty of Amity companies while ensuring full regulatory compliance.
What is the US–Thailand Treaty of Amity?
The Treaty of Amity and Economic Relations is a bilateral agreement between the United States and Thailand designed to promote cross border investment and trade.
Its core principle is national treatment, meaning US investors receive the same rights as Thai nationals in most business activities.
Key characteristics of the Treaty include:
- Applies only to US citizens and US majority owned companies
- Overrides certain restrictions under the Foreign Business Act
- Requires certification and ongoing compliance
Understanding the scope and limits of the Treaty is essential before choosing it as an entry structure.
Who qualifies under the Treaty of Amity?
Not all companies can benefit from the Treaty. Eligibility is strictly defined.
To qualify, a company must meet the following conditions:
- At least 51 percent owned by US citizens or US companies
- Majority of directors must be US or Thai nationals
- Business activities must fall within permitted sectors
- Company must obtain official Treaty certification
Early eligibility analysis helps avoid restructuring or rejection later in the process.
Business activities allowed and restricted
While the Treaty grants broad rights, it does not apply to all sectors.
Permitted activities typically include:
- Professional services
- Consulting and advisory services
- Trading and distribution
- Manufacturing
- Software and technology services
Restricted or excluded activities include:
- Communications
- Transportation
- Banking and insurance
- Exploitation of land
- Domestic agriculture
Careful activity classification is critical, as operating outside permitted sectors can invalidate Treaty protection.
How the Treaty of Amity works in practice
Operating under the Treaty involves a defined legal and administrative process.
A typical Treaty of Amity process includes:
- Structuring the shareholding and board composition
- Incorporating or amending the Thai company
- Applying for Treaty certification through US authorities
- Registering Treaty status with Thai government agencies
- Maintaining ongoing compliance with Treaty conditions
Errors at any stage can delay operations or invalidate Treaty benefits.
Treaty of Amity vs Foreign Business Act
The Treaty is often used as an alternative to Foreign Business Act licensing.
|
Aspect |
Treaty of Amity |
Foreign Business Act |
|
Ownership |
Majority or full US ownership |
Generally limited to 49 percent |
|
Scope |
US investors only |
All foreign investors |
|
Approval |
Certification and registration |
Licensing process |
|
Flexibility |
High for permitted sectors |
More restrictive |
The choice depends on nationality, sector, and long term business plans.
Treaty of Amity vs BOI promotion
The Treaty of Amity and BOI incentives serve different purposes and are sometimes confused.
Key distinctions include:
- Treaty focuses on ownership and market access
- BOI focuses on tax and investment incentives
- Treaty applies only to US investors
- BOI applies to multiple nationalities
In some cases, both frameworks can coexist, but this requires careful structuring to avoid regulatory conflicts.
Common mistakes with Treaty of Amity structures
Many investors misunderstand the Treaty’s limitations.
Common issues include:
- Assuming all sectors are eligible
- Incorrect shareholding structures
- Failure to maintain majority US ownership
- Changes in directors without notification
- Treating Treaty status as permanent without compliance
These mistakes often lead to loss of Treaty protections.
What happens after Treaty certification?
Treaty certification is only the start. To keep Treaty protection, companies must maintain their qualifying status over time.
After certification, US investors should plan for:
- Ongoing monitoring of shareholding to maintain US majority
- Board and signatory updates aligned with Treaty rules
- Clear separation of permitted and restricted activities
- Proper corporate records for audits and banking
- Visa and work permit structures aligned with registered activities
Failure to maintain compliance can result in revocation of Treaty benefits.
Herrera & Partners’ approach to Treaty of Amity structuring
Herrera & Partners supports US investors throughout the full lifecycle of Treaty of Amity companies.
Their approach typically includes:
- Eligibility and structuring analysis before incorporation
- Certification and registration management
- Coordination with US and Thai authorities
- Ongoing compliance and restructuring support
This ensures that Treaty protections remain effective as the business evolves.
Conclusion
The Treaty of Amity offers a powerful pathway for US investors to operate in Thailand with greater ownership rights and fewer regulatory barriers. However, it requires strict eligibility, proper certification, and continuous compliance.
Need help setting up or managing a Treaty of Amity company in Thailand? Contact Herrera & Partners for expert guidance tailored to US investors.
FAQ
Who can benefit from the Treaty of Amity in Thailand?
Only US citizens and US majority owned companies are eligible. Other nationalities cannot rely on the Treaty.
Does the Treaty allow 100 percent foreign ownership?
Yes. In many permitted sectors, US investors can own 100 percent of a Thai company under the Treaty.
Is the Treaty of Amity better than BOI promotion?
It depends on the project. The Treaty focuses on ownership rights, while BOI focuses on tax incentives and investment promotion.
How long does Treaty certification take?
The process typically takes several weeks, depending on document readiness and authority review timelines.
Does Herrera & Partners assist with Treaty compliance after registration?
Yes. Herrera & Partners supports clients with ongoing compliance, restructuring, and regulatory coordination to protect Treaty status.
