5 Things To Know Before Registering A Company in Thailand
Thailand is a promising market for entrepreneurs looking to start a new business abroad. It is ranked as the 21st easiest nation to do business in the entire world according to World Bank’s 2020 Doing Business report.
While the conditions for establishing a business may require dealing with a certain level of bureaucracy and paperwork, the processes are clearly outlined for business owners wanting to register a private limited company in Thailand. You may be expecting a smooth flow but should we alert you. There may be a few back and forth in the process — from getting the desired name to finalizing the last steps for the establishment..
We know timeframe is key for any business owner, so it would be best to entrust this to a professional who can get it done. A corporate law firm like us is here to advise and instruct you on what options are best suited to the kind of business you want to engage in. In summary, for company registration, Thailand business owners will go through basic steps to setting up a company:
- Reserving a company name
- Filing a memorandum of association
- Convening a statutory meeting
- Registering the company
- Registering with the revenue department
Here are some critical issues that you may however want to carefully consider as you embark on this journey to becoming a Thai business owner.
1. Choosing A Name
As indicated above, this is the first step taken to set up a business in Thailand. You need to submit three possible names for your business to the Department of Business Development (DBD). They should be organised in order of priority.
The name you choose needs to be unique and not resemble an already existing registered company. The name must also be written in Thai. You may use an English equivalent but still need to encrypt it in Thai, keeping in mind accents, pronunciation, and translation.
Know that the use of certain terms is prohibited when choosing a company name. Also, all limited liability companies must end with the word ‘Limited’. However, the business name you use may be different from the company name. Once the company name is approved, the next step is filing a memorandum of association within an allotted time.
2. Limited Foreign Ownership
The 51%-49% ratio may not be what you had in mind and is always in constant debate but be rest assured: we know how to get you covered. This is despite owning 49% of shares while investing 100% in your company and the 51% shareholder is liable to have limited control in your operations. Companies are also expected to have a minimum of 3 shareholders. That means at least 51% of shareholding will need to be in the hands of a Thai national.
There is, however, an exception to this if the business qualifies for an FBL (Foreign Business License) or the Board of Investment (BOI) program. Under these arrangements, the company can be 100% foreign owned. Also, these companies get to enjoy several tax and non-tax incentives but must meet certain requirements and are restricted to certain business activities.
3. Visas and Work Permits
For companies that want to bring in foreign talent to work for them, know that there is quite the process to facilitating their visas and work permits. Foreigners are required to have work permits to work in Thailand. It is advisable to work with a law firm or agent when it comes to this.
Certain documents will need to be obtained from the employer including company registration, an offer of employment from the Thai company partner, and a letter from the local labour industry. The work permit will need to be applied for while in Thailand. For each foreign employee, the business is also required to have four Thai workers and two million baht in capital investment.
Again, BOI licensed companies do qualify for exemptions on this issue. They are granted more leeway to bring in foreign expertise and faster processing of their visas and work permits through the BOI offices.
4. Keeping Accounts
All Thai businesses are required to pay taxes unless they are BOI licensed and qualify for corporate income tax exemptions. Within 60 days of incorporation, companies are required to obtain a corporate tax ID and if the business has a turnover exceeding 1.8 million baht, should register for VAT. Those exempted from VAT will fall under the specific business tax listing.
Ensure that there are good accounting and auditing procedures in place as besides paying corporate taxes, you will be required to submit an annual balance sheet, undertake annual audits, account for employee social security contributions and withhold income tax from employee salaries.
5. Finding Office Space
Thai businesses are required to have a physical address. If the space you occupy is rented, you will need to get permission from the property owner to use their address for your company registration. In the event you relocate the business, you will need to update this information with the Ministry of Commerce. The address you provide will establish your business in the local jurisdiction and with the government offices you will need to interact with.
Renting is popular as foreigners are not allowed to own land in Thailand. BOI licensed businesses may own land for business purposes, but need to sell it off within a year of a business closure. Serviced offices are typical for smaller businesses due to their convenience while larger setups may call for traditional office space.