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 largest tourism hub. There are more than 20 million foreign tourists that visit Thailand every year. Tourism is thriving in Thailand in places such as Bangkok, Crabby and Phuket. Thailand has the world tallest hotel and different forms of tourist destinations that attract lot of investors.
It is quite straightforward to go for company registration in Thailand, as the business can be incorporated without the investor’s presence. In Asia, Thailand has the largest consumer market with more than 70 Million Population and GDP of 525 USD billion in 2020. As per the world economic forum, this country is ranked 40th position for developed consumer markets.
There is availability of cheap labour in Thailand. In fact Thailand is one of the countries that have the cheapest labour force in Asia. If a manufacturing company sets up a business in Thailand, there are different benefits which include VAT exemption on export of all products, custom duty exemption on products and low rental cost.
The government has liberalised foreign investments in areas such as paper, chemicals, electronics and other forms of products. This liberalised scheme of investment would attract more benefits such as corporate tax holiday 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.
Benefits of Company Registration in Thailand
The following are the benefits of company registration in Thailand:
- Tourism Sector
Thailand is one of Asia largest tourism hub. There are more than 20 million foreign tourists that visit Thailand every year. Tourism is thriving in Thailand in places such as Bangkok, Crabby and Phuket. Thailand has the world tallest hotel and different forms of tourist destinations that attract lot of investors.
The GDP of Thailand is thriving and constantly increasing. Thailand has the largest consumer market with more than 70 Million Population and GDP of 525 USD billion in 2020. As per the world economic forum, this country is ranked 40th position for developed consumer markets.
- Manufacturing Hub
Thailand is one of the largest manufacturing hubs in the world. Manufacturing companies get access to different benefits such as import subsidies and export benefits. Apart from this, the government of Thailand offers benefits related to foreign investment in the country. The government has liberalised foreign investment policies for different sectors.
- Cheap Labour
Labour is cheap in Thailand. The average cost of employing labour in Thailand cheaper than most South East Asian countries. The average wage for labourers has been revised by the government. Labourers have to get paid between THB 313 and 336.
Eligible Business Structures for Company Registration in Thailand
The following business structures can be utilised for company registration in Thailand:
- Private Limited Company
A private limited company in Thailand has the principle of separate legal entity. The shareholders and directors of the company have separate legal status. To form this form of entity, at least three shareholders are required. This type of entity is charged some form of corporate tax.
- Public Limited Company
A public limited company is allowed to list its shares in a public stock exchange. For a public limited company, at least 15 shareholders are required for forming the company. The liability of the shareholders and directors of a public limited company is limited to a particular extent. Stock offerings can be carried out either through the initial public offering or through the mode of private placement. The board of directors have the sole responsibility of managing the company.
A partnership is an agreement between two or more individuals to share the profits of the entity. There are two types of partnerships which can be utilised and this would include unregistered partnerships and registered partnerships. In the registered partnership, the liability of the partners would be limited to a particular extent.
- 51% LLC
This is also known as a locally owned Thailand company. This type of company is usually utilised in Thailand, if majority of the shareholders and directors are Thailand residents. This form of entity enjoys the principle of limited liability. Corporate tax at the rate of 20% has to be paid by the company. This type of company can be utilised by an applicant for all purposes.
- 100% LLC
LLC is also known as a Limited Liability Corporation or a Limited Liability Company. The liability of this form of entity is limited to the number of shares which are subscribed. A 100% LLC is usually foreign owned. The minimum paid up capital for forming this type of entity is USD 60,000. All the partners and directors would enjoy the principle of limited liability of the company.
- Branch Office
A branch office is usually an extension of a foreign parent company. The liability of this type of entity would come under the foreign parent company. Corporate taxes have to be paid by this form of entity, as local profits are generated by the company. All types of operations can be carried out by this form of entity.
- Representative Office
A representative office is also an extension of the foreign parent company. Only liaison and representative activities can be carried out in this office. Market research and promotional activities would come under the scope of the types of activities which can be carried out by a representative office. Corporate tax would not be paid by the representative office, as no profit making activities are carried out by this office.
Minimum Eligibility Criteria for Company Registration in Thailand
The following eligibility criterion has to be sufficed for company registration in Thailand:
- Minimum Capital
For starting a private limited company in Thailand, minimum capital requirement has to be sufficed. Usually USD 60,000 would be required to set up a company in Thailand.
However, the requirements would vary based on the type of business structure utilised. There is always minimum capital more than THB 15 (Thailand Baht).
- Minimum Shareholders and Directors
An applicant going for company registration in Thailand has to appoint minimum number of shareholders and directors. For a private limited company, the minimum number of shareholders that have to be appointed is three. A public limited company has to appoint minimum of 15 shareholders. A partnership firm should have minimum of two partners to carry out the requirements of the business. Other forms of entities have to satisfy the requirements as per the Charter Document of the Company. The minimum number of directors for company registration in Thailand is minimum 1 for a private limited company and 5 for a public limited company. Foreign directors also can be appointed to manage the company.
- Residency Requirements
Usually, there is no form of residency requirements for shareholders and directors. An applicant going for company registration in Thailand can appoint foreign directors. However, there is an exemption for a public company. At least half of the directors of the public limited company have to be a resident of Thailand.
- Registering the Name of the Company
The applicant must apply to the respective authority to reserve the name of the company. The name must be unique and not identical to any name chosen by a partnership or a company. There are specific terminologies which cannot be used in the name of the company. For example the term ‘investment’ or ‘investments’ cannot be used in the name. The name of the company must have the suffix ‘Limited’. The applicant would have to apply for reserving the name of the company with the Department of Business Development (DBD), Ministry of Commerce.
Procedure for Company Registration in Thailand
The following procedure has to be considered for company registration in Thailand:
- Reserving and registering the name of the Company
First and foremost, the applicant must make an application with the Department of Business Development (DBD) for reserving the name of the company. The applicant must satisfy the requirements with 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 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.
- Filing Charter Documents
After completing the name reservation, the applicant for company registration in Thailand would have to file the charter documents. One such document would be the memorandum of association (MOA). The following details have to be included while filing the MOA:
• Name and Objectives
• Registered Office of the Business
• Declaration on the minimum capital and liability of the company
• Names and other information on the shareholders and directors of the company.
Once the above, is carried out by the applicant then it has 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.
- Have Statutory Meeting
In the next step, the statutory meeting has to be conducted. This would be to draft the articles of association of the company, ratify any form of contracts which are entered into by the company and fix the amount of capital for the company. 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 is 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 three months of 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
In the next step, 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 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.
- Registering with Social Security
If the company employs any individual then they would have to register with the Social Security Office. This must be carried out within 30 days of hiring the first employee.
Compliances for Company Registration in Thailand
The following compliances have to be carried out for company registration in Thailand:
- Corporate Tax
Corporate tax levied in Thailand is 20%. All companies have to pay corporate tax. The company would have to register with VAT if its turnover exceeds THB 1.8 million.
- Annual General Meetings
Annual General meetings have to be held at least once a year for private and public limited companies.
- Board Meetings
Private limited companies do not require board meetings. However, board of directors must call at least once a year an AGM. Public limited companies must conduct board meetings. This must be carried out once every three months.
- Financial Statements
All financial statements of a company have to be filed annually with the BDB.
The following documents are required for company registration in Thailand
- Certificate of incorporation of the company
- Memorandum of association
- Articles of association
- Company's affidavit
- List of shareholders
- Share register book.
- Share Certificates
- Registered Office Address of the Business
- Information on the Directors of the Business
- Passport Copies (If there are foreign directors are appointed).