Company Registration in Thailand
The private limited company is the type of business entity that Thai people choose the most. In Thailand, forming a corporation is a simple procedure. Connect with Enterslice to learn the whole process for registering a company in Thailand:
- Company Registration with the Department of Business Development (DBD)
- Documentation Support
- Opening of a Corporate Bank Account
- Business Plan
- End to End support
- Appointment of company secretary and registered business address
- Advisory Services
Company Registration in Thailand - An Overview
Thailand borders Malaysia, Cambodia, Laos, Burma, and Malaysia. It’s easy to conduct business in Thailand. To conduct business in Thailand, it is necessary to adhere to local legal restrictions. One of Asia’s major tourism centres is Thailand. Each year, Thailand welcomes more than 20 million foreign visitors. Thailand’s major tourist hubs include Bangkok, Krabi, and Phuket.
It is relatively uncomplicated to go for company registration in Thailand, as the business can be created without the investor’s presence. There are many advantages to establishing a manufacturing company in Thailand, including no VAT on exports of any goods, no product-related duties, and affordable rent.
Foreign investment has been made more open by the government in industries like paper, chemicals, electronics, and other goods. More advantages, including exemptions from corporation taxes and the ability to own land in Thailand, are attracted by this investment strategy that has been liberalised. Products produced by manufacturing companies that export them are often exempt from import duties. For the reasons listed above, registering a business in Thailand is advantageous for investors.
Regulatory Authority for Company Registration in Thailand
The Department of Business Development, which is part of the Ministry of Commerce, is responsible for managing company registration in Thailand. The Civil and Commercial Code of Thailand is followed while registering a company in Thailand.
Benefits of Company Registration in Thailand
The advantages of registering a company in Thailand are as follows:
- Tourism Industry
Thailand is one of Asia’s major tourist destinations. Thailand welcomes more than 20 million foreign visitors each year. Thailand’s major tourist hubs include Bangkok, Krabi, and Phuket. Several investors are drawn to Thailand’s various tourism spots.
Thailand’s Economy is flourishing and rising steadily. With a population of more than 70 million and a projected GDP of USD 525 billion in 2020, Thailand has the largest consumer market. As to the world economic forum, this country is positioned at 40th position among the developed consumer markets
- Hub for Manufacturing
One of the world’s biggest centres for manufacturing is Thailand. A variety of advantages are available to manufacturers, including export incentives and import subsidies. In addition, the Thai government provides incentives for international investment. The government has flexible foreign investment policies for many areas.
- Low-cost labour
Labour is cheap in Thailand. Thailand has cheaper labour costs on average than the majority of South East Asian nations. The government recently reduced the average wage for labourers. Pay for labourers must range from THB 313 to 336.
Types of Companies for doing business in Ireland
Equal possibilities are provided for both local residents and foreign investors to establish their businesses in Thailand. The many business vehicles that one can use to establish their business companies in Thailand are as follows:
- Thailand Limited Co.
Due to its flexibility, a Thai limited company is the most popular type of business entity used by foreigners conducting or wishing to conduct business in Thailand. The structure of a Thai Limited Company is comparable to that of an American Limited Liability Company and a Thai Private Limited Company.
Three shareholders and one director are required for a Thai limited company. A minimum of three individuals must sign a memorandum of association in accordance with section 1097 of the Thai Civil and Commercial Code. The management of the corporation is the responsibility of the board of directors, and the shareholders have only a small amount of direct influence over its operations.
In Thailand, there are two divisions of business registration:
- Bangkok Limited Company (Thai Majority)
Thai citizens must possess a minimum of 51% of the business’s shares to be considered a Thai Majority held limited company. There is no necessity to get a foreign business licence because Thai nationals own the majority of the company’s shares (FBL). In comparison to Foreign-Owned Limited Companies, these businesses do not encounter as many constraints when operating.
- Bangkok Limited Company (Foreign Owned)
A Thai Limited Company with foreign majority ownership is one in which foreigners possess more than 49% of the business. The Foreign Business Act governs all commercial ventures and operations involving foreign nationals. Before starting their company operations in Thailand, those limited firms with foreign ownership are required to get a Foreign Business License.
- companies registered in Thailand in accordance with the US-Thai Treaty of Amity
The US-Thai Treaty of Amity, a pact that was struck between the two countries, grants US investors and corporations important economic benefits so they can conduct business in Thailand. The two key trade benefits listed below are offered to investors based in the US by this agreement:
- Thailand’s Board of Investment (BOI) –
A Board of Investment, often known as BOI Thailand, offers financial incentives to both foreign and domestic businesspeople who wish to invest in the industries that the agency promotes. The requirements for projects requesting for incentives and privileges have been established by BOI Thailand. Your company needs to fit into one of the categories the Board has established in order to be eligible for BOI promotion.
- Division Office
A corporation limited in Thailand has a similar legal structure to a branch office. In Thailand, a branch office has been given permission to generate income similarly to a business limited. The regulations that apply to the foreign-held business limited also apply to these offices. The difference between these two structures is in how much liability they carry. Since the branch office is essentially an extension of the foreign head office, any liability resulting from that office’s activities likewise applies to that office. On the other hand, the scope of liability for a foreign-owned limited company registered in Thailand is restricted to its deeds.
- District Office
Regional offices in Thailand are similarly prohibited from carrying out any commercial activity there as Representative Offices are. They are not permitted to work for pay. These business entities must rigorously adhere to regulations that limit what they can do on behalf of the statute-designated overseas head office. Just the following tasks have been delegated to regional offices in Thailand:
- services in management and consulting; coordination, communication, and direction of branch and affiliate operations on behalf of the head office in the region;
- services for financial management;
- education and development of the workforce;
Product development, marketing controls, and sales promotion and planning are three examples of services in research and development.
- Reprographic Office
A representative office in Thailand is a business that has been set up with the sole purpose of supporting the head office. Its activities are limited to gathering data on raw material suppliers, conducting market research and reporting findings to the head office, and informing the head office of new goods and services available on the Thai market.
Any one of the following “non-trading” activities must be done by the entity in order to operate a representative office in Thailand:
searching for and obtaining information on the source of goods, services, or raw materials in Thailand for the overseas head office.
reporting to the headquarters on Thailand’s economic development
examining and confirming the quantity and calibre of the products the head office requested
relaying information and updates regarding new products, formula/version improvements, upgrades, and services offered by its head office or its affiliated companies in Thailand to the foreign head office and affiliated companies.
Provide guidance to the head office or its connected businesses regarding the products that the head office offers to the local distributors and customers, under the condition that the product has already been distributed in Thailand.
- Thai Cooperation –
Ordinary partnerships and limited Thai partnerships are the two forms of partnerships recognised by the Thai Civil and Commercial Code.
Section 1025 of the Code contains a definition of ordinary partnerships. It states that partnerships classified as “ordinary” are those in which all partners are jointly and severally liable for all partnership debts.
On the other hand, Limited Thai partnerships find mention in section 1077 of the Code. A limited partnership has been defined as a partnership where there is (1) one or more than one partner whose liability to the amount that they have undertaken to contribute to the partnership; and (2) one or more than one partner who are jointly and unlimitedly liable for all the obligations of the partnership.
Eligibility Criteria for Company registration in Thailand
The following requirements must be met by any Limited Corporation that want to register with the Department of Business Development in Thailand:
- At least one director
According to the Civil and Commercial Code, the promoters (original shareholders) of a company must consist of a minimum of three natural individuals both at the moment of incorporation and during its existence. Promoters of Thai Limited Corporation are not all eligible to apply. The promoter must be at least 21 years old and be able to legally represent the business. Typically, the promoters split an equal number of shares at the time of the company’s establishment, and the shares are only handed to others after the firm has been registered.
- requirements for the head office
A limited firm is required to have its head office only in Thailand. The business must acquire a copy of the house registration number and a letter of approval from the office’s landlord.
- Registered capital requirement:
According to the provisions of the Foreign Business Act, foreign companies operating in non-restricted sectors must have a minimum registered capitalization of THB 2 million and those operating in restricted sectors must have a minimum registered capitalization of TBH 3 million in order to register a limited company in Thailand. There are no such rules for Thai national or local enterprises. Yet, in order to support a work visa for a foreign worker, such businesses must fulfil specific financial conditions.
Memorandum of Association – A completed memorandum of association must be enclosed with the registration application.
Statutory meeting: In Thailand, a statutory meeting must be called in advance of a company’s registration.
Letter of Certification – If there are foreign shareholders among the Thai shareholders, it is also necessary to get a Letter of Certification from the bank certifying that there are sufficient cash in their personal bank accounts.
- By the shareholders’ signatures
In Thailand, it is a requirement that each shareholder, initial promoter, and director sign a portion of the application documents.
It is possible to incorporate a business in Thailand by completing the steps below:
- reserving and registering the company’s name
To reserve the name of the company, the applicant must first submit an application to the Department of Business Development (DBD). It typically takes 1-3 days to reserve a name for a business. The applicant must meet the criteria for naming the business. For instance, the company name, which must be original and contain the phrase “limited,” must be thus.
For the department to consider for the company name, the applicant must select at least three choices. Priorities must be assigned to each of the company names. The firm name would be registered in Thai. For pronunciation purposes, it would be advantageous if the applicant chose names that are simple. For a period of thirty days, the reserved name would be in effect. The company name must be used in all company incorporation paperwork for registration purposes once it has been reserved.
The applicant for Thai company registration must submit the charter documents after completing the name reservation. All of the company’s shares must be paid for at this point. A prime example of such a document is the memorandum of association (MOA). While submitting the MOA, the aforementioned information must be included:
- Name and Purpose
Address of the Company’s Registered Office; Statement of Minimum Capital and Liability of the Company
- information on the company’s directors and stockholders, including their names.
The applicant must complete the aforementioned procedure before filing the documentation with the DBD. The prescribed amount for company registration. for filing the memorandum also has to be paid by the applicant. The following are the fee
If the registered authorised capital is THB 100,000, the price is THB 50. The applicant’s fee must meet the standards of the relevant body.
The company needs the cabinet’s clearance before it may conduct business abroad.
- Organize a statutory meeting.
The statutory meeting has to be held as the next action. This meeting is held to submit the company’s bylaws, and it is also when the company’s articles of incorporation are drafted. The quantity of money for the company is also defined, and any deal that the company enters into is approved. The company’s directors and auditors are chosen during this meeting. This type of meeting is typically held as a formality prior to registering a corporation in Thailand.
- Registration of Companies –
The application for Thai company registration may be submitted to the DBD when the MOA has been submitted and the statutory meeting has been held. The DBD must receive this application no later than 90 days following the statutory meeting. The application must include all relevant firm information. The fact that the shareholders have paid their subscription money must likewise be mentioned and acknowledged by the directors. The registration price is THB 5,500 per THB 1 million required capital.
- Register for Tax –
The applicant would need to register for corporation tax and VAT after the company was registered. Following the date the firm was registered, this must be done within 60 days. A corporation tax ID would be issued by the revenue department. The identical documents must be presented to Bangkok’s Revenue Department’s Central Filing Office
If the company’s annual revenue exceeds THB 1.8 Million and it is subject to special business tax, it must register for VAT. If the turnover surpasses certain thresholds, registration with the VAT authorities must be done within 30 days.
Corporate Tax rate in Thailand
Corporate income tax is imposed on all businesses that have been incorporated in Thailand on their international profits. A firm that was formed outside of Thailand is subject to corporate income tax on any profits that result from or are a result of the operations conducted there. Thailand has a 20% corporate income tax rate.
A company incorporated outside Thailand and not carrying on any business in Thailand is subject to final withholding tax on certain types of assessable incomes such as dividends, royalties, interests, rentals and service fees that have been paid from or in Thailand. The applicable rate of tax stands at 15% except for dividends which are 10%, and other provisions apply as per the provisions of a double tax treaty.
However, those companies and juristic partnerships that do not have a paid-up share capital exceeding THB 5 million at the end of the accounting year and the income earned from the provision of services or sale of goods does not exceed the sum of THB 30 million are subject to the following rates of corporate income tax in Thailand: