Foreign Business Law – Key Point Summary
Thailand foreign business law is summarized below. Please note that even if your company is considered “foreigner” per below definition, but your Thailand business will engage in only export (and nothing else), or manufacturing (and thus selling of your manufactured products) you don’t have to worry about obtaining a foreign business license/certificate. Here is the full version of Thailand Foreign Business Law.
Definition of “Foreigner”
Thailand foreign business law defines “Foreigner” as:
1. a non-Thai person;
2. a juristic person not incorporated in Thailand
3. a juristic person incorporated in Thailand and being one of the following natures:
(a) a juristic person of which one-half or more of the capital is held by
– non-Thai person(s) and/or
– juristic person(s) not incorporated in Thailand
(b) a limited partnership or a registered ordinary partnership whose managing partner or manager is a non-Thai person.
4. a juristic person incorporated in Thailand and having one-half or more of the capital held by;
– non-Thai person(s) and/or
– juristic person(s) not incorporated in Thailand and/or
– juristic person(s) incorporated in Thailand but being in category (3) above.
How does the Law work?
If your status is defined as a foreigner (so if you have a company which is not considered as a foreigner, Thailand Foreign Business Law does not apply to you), look at the three schedules of businesses annexed to the Law (or at the bottom of this page):
- If the business you would like to do is not one in those schedules, there is no need to get an approval from the Ministry of Commerce to operate it. You can do that business right away. Note that export and manufacturing businesses are not covered in those schedules.
- If your planned business is one in Schedule 1, you cannot do it according to Thailand Foreign Business Law.
- If your planned business is one in Schedule 2, you can do it only after you have been granted the license by the Minister with the approval of the Cabinet. Thailand Foreign Business Law requires that in this case there must be Thai nationals or juristic persons not considered foreigners by this Act, holding shares of at least 40 percent of the capital of that foreign juristic person, unless there are reasonable grounds, in which case the Minister may, with the approval of the Cabinet, reduce the percentage of shareholding, but it shall not be less than 25 percent. Moreover the Law requires that at least two-fifths of the total number of directors must be Thai nationals.
- If your planned business is one in Schedule 3, you can do it only after you have been granted the license by the Director-General with the consent from the Foreign Business Committee.
- At least Baht 3,000,000 for each of the businesses in the annexed schedules.
- At least Baht 2,000,000 for each kind of business not in the annexed schedules.
Schedules of Reserved Businesses per Thailand Foreign Business Law
Thailand Foreign Business Law has classified the reserved businesses into 3 schedules:
Schedule 1: The businesses prohibited to the foreigners because of special reasons.
1. Newspapers, radio and television broadcasting businesses.
2. Rice farming, field crops farming, or orchard farming
3. Animal farming
4. Forestry and timber from natural forests
5. Fishery, exclusively aquatic animals in Thai territorial waters and Thai specific economic zones.
6. Thai herbs extraction.
7. Trades and auctions in Thai antiques or objects of historical value to Thailand
8. Manufacturing or casting of Buddha images and alms bowls
9. Trade in land
Schedule 2: The businesses related to the national safety or security or affecting culture, arts, traditional customs and folk handicraft or natural resources and environment.
Group 1: The businesses related to the national safety or security.
(1) Production, selling, repairing and maintenance of:
a. Firearms, ammunition, gun powder and explosives.
b. Accessories of firearms, ammunition and explosives.
c. Armaments, ships, aircrafts or military vehicles.
d. War equipment or components of war equipment of all kinds.
(2) Domestic land, waterway or air transportation, including domestic airline business
Group 2: The businesses affecting culture, arts, traditional customs and folk handicraft.
(1) Trading antiques or art objects being of Thai arts and handicarft.
(2) Production of woodcarvings
(3) Silkworm farming, Thai silk yarn production, Thai silk weaving or Thai silk pattern printing
(4) Production of Thai musical instruments
(5) Production of goldware, silverware, nielloware, bronzeware or lacquerware.
(6) Production of crockery of Thai arts and culture.
Group 3: The businesses affecting natural resources or environment.
(1) Production of sugar from sugarcane.
(2) Salt farming, including subsurface salt production.
(3) Rock salt mining.
(4) Mining, including rock blasting and quarrying.
(5) Wood processing for furniture and utensil production.
Schedule 3: The businesses in which the Thai people are not yet ready to compete with foreigners.
1. Rice milling and production of flour from rice and field crops.
2. Fishery, exclusively aquatic animal cultivation
3. Forestry from forestation.
4. Production of plywood, veneer board, chip board or hard board
5. Production of lime
6. Accounting service
7. Legal service
8. Architectural service
9. Engineering service
10. Construction, except:
(a) Construction of things providing fundamental services to the general public in the field of public utilities or transport requiring special tools, machinery, technology or construction expertise, with a foreign minimum capital of Baht 500,000,000 or more.
(b) Other categories of construction prescribed in the Ministerial Regulations.
11. Broker or agent business, except:
(a) Being broker or agent for underwriting securities or services related to future trading of agricultural commodities, financial instruments or securities.
(b) Being broker or agent for trading or procuring of goods or services necessary for production or rendering services amongst affiliated enterprises.
(c) Being broker or agent for trading, purchasing, or distributing or seeking both domestic and foreign markets for selling domestically manufactured or import goods in the manner of international business operation with a foreign minimum capital of Baht 100,000,000 or more.
(d) Being broker or agent of other kinds as prescribed in the Ministerial Regulations.
12. Auction, except :
(a) Auction in the manner of international bidding not being the auction of antiques, historical artifacts or art objects which are Thai art works, handicrafts or antiques or of historical value to the country.
(b) Auction of other kinds as prescribed in the Ministerial Regulations.
13. Internal trade connected with native products or produce not yet prohibited by law except for agricultural futures trading at the Agricultural Futures Exchange of Thailand, which has no delivery or receiving of agricultural commodities in Thailand.
14. Retail of goods of all kinds having the total minimum capital less than Baht 100,000,000 or having the minimum capital of each shop less than Baht 20,000,000.
15. Wholesale of goods of all kinds having the minimum capital of each shop less than Baht 100,000,000.
16. Advertising business
17. Hotel business except for hotel management service.
18. Guided tour.
19. Selling food or beverages.
20. Plant cultivation and propagation business.
21. Other service businesses except the ones prescribed in the Ministerial Regulations.
Contact www.ThaiLawyers.com for questions about Thailand Foreign Business Law.