Thailand has an open market-oriented economy and encourages foreign direct investment. As a result, thousands of people are motivated to move to Thailand every year to set up their small businesses.
To encourage foreigners to do business in Thailand, the Thai government enacted the Foreign Business Act of 1999 to oversee investment activities by foreign nationals and to open business sectors where the percentage of foreign ownership has been increased.
The Foreign Working Act of 2008 administers the work permit that foreign nationals need before beginning work in Thailand. Also, numerous programs are available to foreigners to help them develop their businesses, from the early stages of getting the business set up and registered in the ongoing process of operating it.
Setting Up a Business
The very first thing to do when starting any business is to have a unique business name registered and approved. Afterwards, a Memorandum of Association must be filed that includes the name, address, and objective of the company, as well as personal details about the owner or owners.
These documents need to be filed with the Thai Commercial Registrar at the headquarters of the Department of Business Development in Bangkok or a branch in one of the provinces. The Thai website gives the locations of offices through the country.
The company will also need a tax ID card within 60 days after registration of the business and a VAT certificate before the company can operate. Both of these can be obtained at the Thai Revenue Department in Bangkok.
Accounting procedures for the new business are laid out in the Civil and Commercial Code, the Revenue Code, and the Accounts Act. A local accountant is best suited to file the annual balance sheet with the Department of Revenue and Commercial Registration. Errors can be costly.
Different types of organizational structures for companies in Thailand are briefly discussed below. The following explanation is for informational purposes only and should be researched further before embarking on starting a business in Thailand.
A sole proprietorship has one individual as the sole owner who is accountable for all debts, activities, and business dealings. This model is the easiest business to set up and requires less paperwork and/or monetary investment than other types of business. Regulations and requirements vary by industry or business type.
The business and the owner are considered one and the same. For example, if the business owner files bankruptcy in his personal finances, that bankruptcy will include the business. Tax preparation is usually easier and less expensive for the sole proprietor than for other types of businesses.
Both types of partnership are separate from the individual owners and will be taxed as a corporation.
The Factory Act of 1992
Administered by the Department of Industrial Works of the Ministry of Industry, this legislation regulates the establishment and operation of factories, as well as safety requirements, such as industrial pollution control.
Whether or not a company needs to be registered is determined by officials. It is wise to consult with local officials before a company opens its doors.
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