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Company Registration in Thailand

Company Registration in Thailand

The most preferred form of business entity in Thailand is the private limited company. Company registration in Thailand is a straightforward process. In order to register a company in Thailand, connect with Enterslice to know the entire procedure:

Package inclusions:
  • Company Registration with the Department of Business Development (DBD)
  • Documentation Support
  • Opening of a Corporate Bank Account
  • Business Plan
  • End to End support
  • Appointment of company secretary and registered business address
  • Advisory Services
Company Registration in Thailand

Company Registration in Thailand - An Overview

Thailand shares borders with Laos, Myanmar, Malaysia and Cambodia. Doing business in Thailand is quite straightforward. However, it is important to comply with the requirements of local law to carry out business in Thailand. Thailand is one of Asia’s largest tourism hubs. There are more than 20 million foreign tourists visiting Thailand every year. Tourism is thriving in Thailand in places such as Bangkok, Krabi and Phuket.

It is quite straightforward to go for company registration in Thailand, as the business can be incorporated without the investor’s presence. If a manufacturing company sets up a business in Thailand, there are multiple benefits which include VAT exemption on the export of all products, custom duty exemptions on products and low rental costs.

The government has liberalised foreign investments in areas such as paper, chemicals, electronics and other forms of products. This liberalised scheme of investment attracts more benefits, such as corporate tax holidays and permission to own land in Thailand. Manufacturing firms that export products have some form of import duty exemption on the products. All the above reasons make it beneficial for an investor to go for company registration in Thailand.

Regulatory Authority for Company Registration in Thailand

Registration of companies in Thailand is managed by the Department of Business Development under the Ministry of Commerce. Companies registration in Thailand is done according to the Civil and Commercial Code of Thailand.

Benefits of Company Registration in Thailand

The following are the benefits of company registration in Thailand:

  • Tourism Sector

Thailand is one of the largest tourism hubs of Asia. More than 20 million foreign tourists visit Thailand every year. Tourism is thriving in Thailand in places such as Bangkok, Krabi and Phuket. Thailand has different tourist destinations that attract a lot of investors.

  • Economy

The GDP of Thailand is thriving and constantly increasing. Thailand has the largest consumer market, with a population of more than 70 Million and a GDP of USD 525 billion in 2020. As per the world economic forum, this country is ranked at 40th position among the developed consumer markets.

  • Manufacturing Hub

Thailand is one of the largest manufacturing hubs in the world. Manufacturing companies get access to multiple benefits, such as import subsidies and export benefits. Apart from this, the government of Thailand offers benefits related to foreign investment. The government has liberal foreign investment policies for various sectors.

  • Cheap Labour

Labour is cheap in Thailand. The average cost of employing labour in Thailand is lower than in most of the South East Asian countries. The average wage for labourers has been revised by the government lately. Labourers have to be paid between THB 313 - 336.

Types of Companies for doing business in Ireland  

Both foreign investors and local persons are given equal opportunities to set up their firms in Thailand. Following are the different types of business vehicles that a person can adopt to set up their business entities in Thailand:

  • Thai Limited Company-

A Thai limited company is the most preferred form of business vehicle that is popular among foreigners doing or wanting to do business in Thailand due to its flexibility. A Thai Limited Company is similar to the structure of a Limited Liability Company in the USA and a Private Limited Company in Thailand.

A Thai Limited Company should have a minimum of three shareholders and at least one director. As per section 1097 of the Civil and Commercial Code of Thailand, a minimum of three persons have to subscribe their names to a memorandum of association. The directors of the company are responsible for the management of the company, and the shareholders have limited direct participation in the affairs of the company.

There are two subsets of company registration in Thailand:

  • Thai Limited Company (Thai Majority)

A Thai Majority owned limited company is one where Thai nationals own a minimum of 51% shareholding of the company. Since the majority shareholding in the company rests with Thai nationals, there is no requirement to have a Foreign Business License (FBL). These companies do not face many restrictions in their functioning as compared to Foreign-Owned Limited Companies.

  • Thai Limited Company (Foreign Owned)

A foreign majority-owned Thai Limited company is one where foreign nationals have ownership of more than 49% of the company. The business activities and operations involving foreign nationals are governed by the Foreign Business Act. Those foreign-owned limited companies are required to obtain a Foreign Business License before commencing their business operations in Thailand. 

  • Companies Registered in Thailand under the US-Thai Treaty of Amity -

A treaty was signed between the USA and Thailand called the US-Thai Treaty of Amity, where the US corporates and investors are given significant trade advantages to run their businesses in Thailand. This treaty provides US-based investors with the following two significant trade advantages:

  1. It permits US nationals to hold either majority or all the shares of a Thai limited company or establish a Representative office or a branch office in Thailand without the need to apply for a s. 17 Foreign Business License; and
  2. US nationals have the same privileges that are enjoyed by Thai nationals and they are exempt from most of the restrictions in relation to foreign investment imposed in the Foreign Business Act of 1999.
  • Board of Investment or BOI Thailand -

A Board of Investment or commonly called BOI Thailand, provides business incentives to both foreign and national entrepreneurs who want to invest in the promoted activities of the agency. The criteria have been set by BOI Thailand for the projects applying for incentives and privileges. In order to be eligible for BOI promotion, your business has to fall within one of the categories set by the Board. 

  • Branch Office -

The legal framework of a branch office in Thailand is similar to that of a company limited. Similar to a company limited, a branch office has been permitted to earn income in Thailand. Such offices are governed by the rules applicable to the foreign-held company limited. The place where these two structures differ is in terms of the extent of their liability. The liability arising from the actions of the head office located overseas is also the liability of the branch office since the branch office is merely an extension of the overseas head office. On the other hand, in the case of a foreign-owned limited company registered in Thailand, its extent of liability is limited to its actions.

  • Regional Office -

Similar to Representative Offices, regional offices in Thailand are not permitted to undertake any commercial activities in Thailand. They are not allowed to earn income. These business entities are strictly regulated to undertake only specific functions on behalf of the overseas head office that has been designated by the statute. Regional offices in Thailand have been permitted to perform only the following activities:

  1. Consultancy and Management services;
  2. Communication, coordination and directing, on behalf of the operations of the head office, the operation of branches and affiliated in the region;
  3. Financial management services;
  4. Training and personnel development;
  5. Services in research and development;
  6. Produce development; and
  7. Marketing controls and sales promotion and planning.
  • Representative Office -

A representative office in Thailand is an entity that has been established to provide only support to the head office and only engage in activities such as acquiring information about the source of raw material, doing market research and sending the information back to the head office, advising the head office of the about new products and services offered in the Thai market.

In order to open a representative office in Thailand, the entity needs to undertake any one of the following “non-trading” activities:

  1. Searching and procuring information for the overseas head office about the source of goods or services or raw materials in Thailand.
  2. Reporting on the economic movement in Thailand to the headquarters
  3. Checking and ensuring the quantity and quality of products ordered by the head office
  4. Relaying news and updates to the overseas head office and affiliated companies about the new products, improvements in formulas/versions and upgrades or services offered by its head office or its affiliated companies in Thailand.
  5. Offer advice to the head office or its affiliated companies regarding the goods offered by the head office to the local distributors and consumers whereby the product must have already been distributied in Thailand.
  • Thai Partnership -

According to the Civil and Commercial Code of Thailand, there are two types of partnerships that are, viz. ordinary partnerships and limited Thai partnerships.

Ordinary partnerships have been defined under section 1025 of the Code. It defines ordinary partnerships are the ones where all the partners are jointly and unlimitedly liable for all the obligations of the partnerships.

On the other hand, Limited Thai partnerships find mention in section 1077 of the Code. A limited partnership has been defined as a partnership where there is (1) one or more than one partner whose liability to the amount that they have undertaken to contribute to the partnership; and (2) one or more than one partner who are jointly and unlimitedly liable for all the obligations of the partnership.      

Eligibility Criteria for Company registration in Thailand   

Every Limited Company wanting to establish its business in Thailand is supposed to meet the following criteria to register itself with the Department of Business Development:

  • Minimum 1 director -

The Civil and Commercial Code prescribes that there should be at least 3 natural persons as the promoters (initial shareholders) at the time of incorporation and throughout the operation of the company. Not every person can become a promoter of Thai Limited Company. The promoter should be at least 21 years old who can act legally on behalf of the company. Generally, at the time of incorporation of the company, the promoters share an equal amount of shares and it is only after the registration of the company that the shares are transferred to others.

  • Head Office Requirements-

It is mandatory for a limited company to have its head office located in Thailand only. The company has to obtain a copy of the house registration number and a letter of consent form the landlord of the office.

  • Minimum registered capital -

In order to register a Limited Company in Thailand, it is necessary to have a minimum registered capitalization of THB 2 million in the case of foreign businesses operating in non-restricted sectors and TBH 3 million for operating in restricted businesses according to the provisions of the Foreign Business Act. There are no such requirements for Thai national or domestic companies. However, such companies need to meet certain financial requirements to support a work permit for a foreign worker. 

 

  • Memorandum of Association -

A memorandum of association has to be filled out and submitted along with the application for registration.

  • Statutory meeting -

It is mandatory to convene a statutory meeting before the registration of a company in Thailand.

  • Letter of Certification -

There is also a requirement of a Letter of Certification from the bank to signify that there are sufficient funds in the personal bank account of Thai shareholders where foreign shareholders are also among the shareholderse.

  • Signature by the Shareholders

Every shareholder/ initial promoter and director is required to sign a part of the application documents in Thailand.

Procedure for Company Registration in Thailand   

Incorporation of a company in Thailand can be done by adhering to the following procedure:

  • Reserving and registering the name of the Company -

First and foremost, the applicant must make an application with the Department of Business Development (DBD) to reserve the name of the company. The reservation of the name for the company takes a time period of 1-3 days. The applicant must satisfy the requirements of naming the company. For example, the name of the company must be unique, and it must include the word ‘limited’.

The applicant must choose at least three names to be considered by the department for the company name. The names of the company have to be ranked on a priority basis. The name of the company would be registered in Thai. However, it would be beneficial if the applicant chooses easy names for the purpose of pronunciation. The name which is reserved would be valid for a period of thirty days. Once the name of the company has been reserved, the name shall be used in all the company incorporation documents for registration purposes.   

  • Filing Charter Documents -

After completing the name reservation, the applicant for company registration in Thailand would have to file the charter documents. At this stage, all the shares of the company must be paid. One such document would be the memorandum of association (MOA). The following details have to be included while filing the MOA:

  1. Name and Objectives
  2. Registered Office address of the Business
  3. Declaration on the minimum capital and liability of the company
  4. Names and other information on the shareholders and directors of the company.

Once the above step is carried out by the applicant, the documents have to be filed with the DBD. The prescribed fee for company registration in Thailand for filing the memorandum also has to be paid by the applicant. The fees are as follows:

  • THB 50- if the registered authorised capital is THB 100,000. The fee paid by the applicant has to satisfy the requirements of the respective authority.

In order to engage in foreign businesses, the company has to obtain the cabinet’s approval first.

  • Have Statutory Meeting

In the next step, the statutory meeting has to be conducted. This meeting is conducted to submit the by-laws of the company, and articles of incorporation of the company are drafted during this meeting. Additionally, any form of contract which is entered into by the company is ratified, and the amount of capital for the company is fixed. During this meeting, the directors and auditors of the company are appointed. Usually, this form of meeting is carried out as a formality before going for company registration in Thailand.

  • Company Registration -  

Once the MOA is filed and the statutory meeting has convened, the application for company registration in Thailand can be lodged with the DBD. This application has to be filed with the DBD no later than 90 days after the statutory meeting. All information related to the company has to be provided in the application. The directors also have to mention and sign that the shareholders have paid their subscription money. The registration fee is THB 5,500 per THB 1 million minimum capital.

  • Register for Tax -

After the registration of the company, the applicant would have to register for corporate tax and VAT. This has to be carried out within a period of 60 days from the date of registering the company. The revenue department would issue a corporate tax ID. The same documents have to be submitted to the Central Filing office of the Revenue Department of Bangkok.

The business must register with VAT if the turnover is more than THB 1.8 Million and has Special Business Tax. Registering with VAT authorities must be carried out in 30 days if the turnover exceeds such requirements. 

  • Opening of a Corporate Bank Account -

On getting registered with the Department of Business Development and receiving the Business Registration Certificate and Company Affidavit, the company can proceed towards opening a corporate bank account at any one of the established commercial banks in Thailand.

  • Registering with Social Security -

If a company employs any individual, then it has to register itself at the Social Security Office. This registration should be carried out within a period of 30 days from the date of hiring the first employee.

Corporate Tax rate in Thailand  

All the corporations that have been incorporated in Thailand are subject to corporate income tax on worldwide income. A company that has been incorporated outside Thailand is subject to a corporate income tax on its profits that arise from or as a consequence of the business carried within the territory of Thailand. The Corporate Income Tax applicable in Thailand is 20%.

A company incorporated outside Thailand and not carrying on any business in Thailand is subject to final withholding tax on certain types of assessable incomes such as dividends, royalties, interests, rentals and service fees that have been paid from or in Thailand. The applicable rate of tax stands at 15% except for dividends which are 10%, and other provisions apply as per the provisions of a double tax treaty.

However, those companies and juristic partnerships that do not have a paid-up share capital exceeding THB 5 million at the end of the accounting year and the income earned from the provision of services or sale of goods does not exceed the sum of THB 30 million are subject to the following rates of corporate income tax in Thailand:

Net Profit (THB)

Tax Rate (%)

0 – 3,00,000

0

300,001 – 3 million

15

Over 3 million

20

Documents required for Company Registration in Thailand  

The following documents are required to be submitted for the incorporation of a Company Limited in Thailand, and the registration form accompanied by the given information has to be submitted to the Department of Business Development:

  • Company’s name (the name which has been reserved by one of the promoters/shareholders/director(s));
  • Location of the Head Office of the Company (other details such as the house number, company’s telephone number, company’s official email, company’s website (if any));
  • Registered capital should be divided into each share with the same value (the share value should be at least 5 Baht);
  • The objective of the company (type of business activity undertaken);
  • Name, address, occupation, age, ID card, telephone number and other personal documents (in case of a foreign investor) number and number of shares that persons who are starting up a company reserve to buy the shares;
  • Name, address, occupation, age, ID card, telephone number and other personal documents (in case of a foreign investor) number of the 2 witnesses;
  • The stamp duty to be paid on Company’s regulation (if any) of 100 Baht
  • The stamp duty to be paid on the Memorandum of Association (200 Baht)
  • Paid-up share capital (at least 25% of the share value)
  • Name, address, occupation, age, ID card, telephone number and other personal documents (in case of a foreign investor) number and signatures of Directors
  • Name and license number of the Company’s auditors
  • The names and numbers of the directors who are authorised to sign on behalf of the company
  • Name, address, occupation, age, ID card, telephone number and other personal documents (in case of a foreign investor) number and number of shareholding of the shareholders
  • Company’s seal

Frequently Asked Questions

If all the required documents have been attached and the Department of Business Development does not raise any objections, the process of company registration in Thailand can be concluded within one day.

A Thailand-registered limited company should have a minimum of 3 promoters and at least one director to incorporate a company.

The Corporate Income Tax applicable to companies in Thailand is 20%. However, for companies whose net profit is between 0-300,000 TBH, the applicable corporate income tax rate is 0%; between 301,000 – 3 million TBH, the rate is 15%, and where the net profit is more than 3 million TBH, the applicable rate is 20%.

The Department of Business Development under the Ministry of Commerce is the statutory body that is responsible for the registration of companies in Thailand. The regulation of the companies’ registration in Thailand is made according to the Civil and Commercial Code of Thailand.

There is a simple 3 step process of company registration in Thailand:

  1. Preparation of the Company incorporation application documents along with other supporting documents
  2. Promoters, directors and witnesses, by themselves, need to duly sign the company incorporation application
  3. Submission of the documents at the office of the Department of Business Development or the Office of Business Development (District 1-6), or the Office of Commercial Affairs within a period of 3 months from the date of the company’s statutory meeting. 

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