Setting up a company in Thailand as a foreigner

A foreign national cannot simply register a company and start work. Three sets of rules have to line up: who may own the company, what the company may do, and who may work in it.

Taking them out of order is the most expensive mistake in this area, because putting it right usually means starting again, and the registered capital fixed at incorporation is difficult to change later.

When is a Thai company treated as foreign?

The test is the shareholding, not the nationality of the directors and not where the money came from. A company registered in Thailand with half or more of its shares held by foreign nationals is treated as foreign, and needs permission before carrying on certain kinds of business.

What business can a foreigner actually do here?

Restricted businesses fall into three groups.

• The first is closed to foreign nationals entirely; no permission is available.
• The second requires Cabinet-level approval: business affecting national security, arts and culture, and natural resources.
• The third requires a Foreign Business Licence from the Department of Business Development. This group covers most service businesses.

Manufacturing for export largely sits outside these groups. Services, retail and wholesale usually do not, which is why the same business plan can be straightforward or difficult depending only on how the activity is described.

Are nominee shareholders allowed?

Using Thai nominees to hold shares so the company appears Thai is an offence, for the foreign national who benefits and for the Thai shareholders who lend their names.

It is prosecuted, and the court can order the business to cease. If someone offers to arrange Thai shareholders who will not actually pay for their shares, that is the arrangement being described.

The better question is whether the business really falls into a restricted group at all, and whether a lawful route exists: a licence, investment promotion, or rights under an international treaty.

What are the steps, in order?

Each step depends on the one before it. None can be skipped.

• Decide what the business will actually do and check it against the restricted groups, before settling the shareholding.
• Register the company, setting the registered capital in line with the number of work permits that will be needed later.
• Register for VAT when turnover will reach the threshold, and register as an employer with the Social Security Office once there are staff.
• Apply for the Foreign Business Licence, or for investment promotion, if needed.
• The company applies to the Department of Employment for permission to hire the foreign employee.
• The employee applies for the business visa at a Thai embassy or consulate abroad.
• After arrival, apply for the work permit.

How many work permits a company may hold depends on its registered capital and the number of Thai employees. Those criteria are administrative and are revised from time to time, so confirm the current figures before fixing the capital.

What does the company have to file every year?

• Prepare audited financial statements and file them with the Department of Business Development.
• File the annual corporate income tax return within the deadline.
• File monthly VAT returns once registered.
• Keep accounting records for at least five years.
• Renew work permits and extensions of stay annually.

This article is general information. Whether a business falls into a restricted group depends on how it is actually carried on, not on the wording of the objectives clause. Tell us what the business will do and we will check which routes are open.