Starting a business in Thailand

One of the most frequent enquiries I receive is: “How can I set up a business, get a visa, and obtain a work permit in Thailand?

Unfortunately it is nowhere near as simple as it might be for someone starting out compared to for instance the UK.

Firstly, under Thai law, a foreigner cannot, in most cases, obtain 100% ownership of a Thai company or limited partnership. That may not be a problem for the investor who already has a Thai business partner with whom he or she proposes to work. But what about the person who knows no Thai people who can become shareholders in the business, or the foreigner who wishes to have control over the business?

Secondly, how can a foreigner obtain a visa to remain in the country?

And thirdly, how does the foreigner go about obtaining a work permit?

There are of course exceptions to the 100% foreign ownership rule. The two most obvious being a company set up under the provisions of the Treaty of Amity and a BOI (Board of Investment) approved company. The Treaty of Amity which was reiterated in 1966 during the height of the Vietnam war, allows for American citizens and businesses incorporated in the US, or in Thailand to maintain a majority shareholding or to wholly own a company in Thailand, and thereby engage in business on the same basis as would a Thai national. These companies are also exempt from most of the restrictions on foreign investment imposed by the Thai Foreign Business Act of 1999. The treaty in effect allowsfor an equality of benefits between the countries. American companies that wish to be covered by the treaty should have a minimum of 50% American directors and a minimum of 51% of shares must be held by American citizens.

The Board of Investment was established in 1997 to attract investment from both foreign and local entrepreneurs within industries that the BOI promotes. The main advantages for eligible companies are either tax or non-tax incentives. The fact that BOI companies can be 100% foreign owned, flexibility on the number of work permits allowed for foreigners working for the company without the usual ratio of 4 Thai employees for each foreign work permit and the ability for the company to own land even if the company is majority controlled by non-Thais. Another important factor for a foreigner employed by a BOI approved company is that the visa extension and work permit will all be dealt with at a one stop centre without the need to attend separately at the Immigration Office and the Department of Labour.

With a Thai company however there will always be the problem of share ownership and control. In the past foreigners have often used Thai nationals as proxy shareholders. This is illegal and carries strict penalties and the practice is now routinely being rooted out by the authorities. Notwithstanding the obvious drawbacks, there are share structures that can be utilised with the allocation of both ordinary and preference shares that can allow the foreigner to retain overall control of the company without falling foul of the Foreign Business Act.

Either as an employee or shareholder in a company a foreigner can apply for a business visa. The visa will be obtained outside of Thailand and will usually last for a period of 3 months, at which stage an application to extend will be made within Thailand for a period of one year. A work permit can then be applied for. There are a whole host of documents required by the authorities to fulfil the criteria for both visa and work permit applications. The company must employ 4 Thai nationals for each work permit for a foreigner. The paid up share capital of the company must be at least two million Baht for each foreigner who is employed by the company. Thus a company with three foreign employees must have a paid up share capital of six million Baht. Also there are minimum wages that foreigners must earn. This depends upon nationality but at the moment is sixty thousand Baht per month for US and Australian nationals, fifty thousand Baht per month for most European nationals and lower amounts for other foreign nationals. Teachers have different rules applicable to them pertaining to monthly earnings.

Bearing in mind the language differences that will be encountered at Immigration, Labour and other government  offices, it is usually a wise choice to employ the services of a Thai speaking lawyer to assist with regard to all these applications.

The work permit will also usually last for one year. It is important to note that if the visa has been extended (i.e it is
not the original 3 or 12 month visa granted in a Thai embassy or consulate) then any loss of employment and cancellation
of the work permit by the employer, means that the extended visa will also expire giving the holder the option of immediately leaving the country or applying for an extension of 7 days stay at the Immigration Office.

Another visa that allows the holder to apply for a work permit is a Non Immigrant O visa based upon marriage to a
Thai national. An advantage in holding such a visa for those who are so eligible is the fact that if his or her employment is
terminated and the work permit cancelled, their visa status and right to remain in Thailand is not affected.
This article contains general background information without setting out specific details or requirements.

The author is an English qualified Solicitor who works with Thai licensed Lawyers providing a comprehensive legal service to all expatriates within Thailand.

Philip Sweeney is a qualified Solicitor of the Supreme Court of England and Wales with over 30 years experience. He is the Director of Opus Law International and can be contacted by email at [email protected], www.opus-law.com please quote Expat Life