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What You Should Know Before Starting a Business in Thailand

October 3, 2014 | Sharon Cheong

Thailand is one of the most dynamic and opportunity-laden Southeast Asian countries. It has faced major challenges in the recent years such as the economic crisis of 2008, and the great floods in 2011 to 2012. These demonstrate that Thailand's economy is resilient and dependable, which makes it appealing to foreign investors and business owners.

Things to Remember

Foreigners can invest in an existing business or open a new business themselves. The most lucrative industries for foreign-owned SMBs (small-to-medium businesses) in Thailand are Private Limited Company (PLC) types.

The business must have THB30,000 as a minimum capital. Once the business starts employing workers, each foreign work permit should have a minimum capital of THB2,000,000.

Business owners don't have to be Thai when setting up a business in Thailand. However, at least 51% of the company's shares should be owned by Thai citizens. This will exempt the business from the restrictions of the Foreign Business Act. Thai small businesses should also have at least seven "promoters" or shareholders in Thailand. As long as it has mostly Thai shareholders, a PLC can buy and sell properties even if a foreigner owns part of the shares.

Meanwhile, antiquities trading is out of bounds for foreigners. Non-citizens also need a license from the Ministry of Commerce before entering industries such as architecture, law, and accountancy.

Take note that business owners cannot set up "shell companies" just to get long-term visas or to circumvent restrictions in buying local properties. This is as illegal as foreigners seeking jobs without work permits.

Legalities In Opening A Business in Thailand

To apply for a tax number, businesses should be registered within 30 days of establishment. Once registered, there is a THB 5,000 registration fee for every THB 1,000,000 of initial capital that the company has invested.

Thai law requires that companies undergo proper accounting in terms of fiscal laws, code of commerce, and the civil code while withholding income tax from their employees' salaries. The law also states that companies must have proper bookkeeping to be compliant with tax, accounting, and other governing laws. It is highly recommended for businesses to seek the services of a local tax adviser and/or lawyer. They should be trustworthy, knowledgeable, and skilled individuals who can give well-informed advice about Thai regulations.

Businesses can refer to Bangkok's Chamber of Commerce for foreign trade data, Thai market information, and recommendations for experienced attorneys in Thailand. For more guidance in setting up and managing a business in Thailand, seek the help of experts.

If you want to start a business in Thailand, get in touch with Servcorp. Servcorp provides corporate registration services and virtual office solutions.