Foreign Business in Thailand – Services to an Affiliated or Group Company

Foreign businesses can be permitted to operate in Thailand provided that proper licenses are obtained before the start of operation. Today, we discuss the guidelines of consideration on the permission for Foreign Business Operation in the category of services to affiliated or group company.

In general, providing services to the affiliated or group company which is located in Thailand or other countries is the operation of business under the business listed in Annex 3 attached to the Foreign Business Act B.E.2542, such as accounting service, legal service, loan service, lease of land and office space including public utilities, consultancy service, advisory service, or management service in various aspects. If the foreigner wishes to operate such business, permission by the Director-General, Business Development Department, with the approval of the Foreign Business Committee is required.

In consideration on approval, the Foreign Business Operation Committee has determined the guidelines as follows:-

1. Characteristic of Business

The foreign juristic person who operates a service business to the affiliated company or group company must have all 3 characteristics as follows:-

(1) Being a juristic person established under the foreign law and entering the Kingdom in order to operate the business in Thailand or, being a juristic person established under the Thai law and has a foreign status;

(2) The applicant is already operating other core business in Thailand, such as manufacturing, wholesaling or retailing and wishes to apply for the permission for other business operations which is not its core business;

(3) Being a business operation having a relationship with the service recipient as the affiliated or group company only and at all times during the business operation.

2. Scope of Business

The majority of previous operations of service business for the affiliated or group company are as follows:-

  1. Accounting service business – Annex 3(6);
  2. Legal service business Annex – 3(7);
  3. Lending service business Annex – 3 (21);
  4. Leasing business of land, office space including public utilities – Annex 3(21);
  5. Consultancy and advisory service business or management of various matters – Annex 3(21);

3. The Conditions to be Complied by the Foreign Juristic Person who services for the affiliated company or the group company after the Approval

The foreign juristic person who is approved to operate the service business for the affiliated company or the group company must comply with the following conditions:-

3.1   There must be the minimum capital to be remitted to Thailand for the commencement of business operation as stipulated by law, which shall not be less than Baht 3 million;

3.2   The total loan utilized in the permitted business operation must not exceed seven times of the inward remitted fund for the permitted business operation;

(Loan means the total liabilities of the business, notwithstanding the liabilities incurred by any form of transaction but excluding trade liabilities occurred from the ordinary course of business such as trade creditors, accrued expenses.)

3.3   At least one person of the responsible persons for operating the business in Thailand must have a domicile in Thailand;

(Domicile means the contactable residence in Thailand which can be the place of business, excluding temporary residence such as hotels)

3.4   The documents or evidence relating to the permitted business operation must be submitted when the official sent the summon or inquiry;

3.5   There must be the preparation of account and financial statements to be submitted to the Business Development Department.

4. Representation of the Applicant

In submission of the Application for the service business to the affiliated company or the group company permission, the responsible person for the business operation in Thailand on behalf of the juristic person in foreign country must sign to certify the accuracy of information specified in the Application and the supplementary documents and evidence.

The guidelines on the information and supplementary documents for the consideration of each scope of business will be discussed in the next article. Contact ThaiLawyers for Thai company registration, visa & work permit for expats, foreign business registration and Foreign Business License application for your foreign business or branch office in Thailand.