Doing Business in Thailand

1.   Antitrust & Competition

2.  Banking & Finance

3.  Capital Markets

4.  Dispute Resolution

5.  Employment & Compensation

6.  International Commercial & Trade

7.  Investigation, Compliance & Ethics

8.    Investment Funds

9.    Mergers & Acquisition

10.  Private Equity

11.  Projects

12.  Real Estate

13.  Taxation

1. Private Limited Companies

According to Section 1012 of Thai Civil and Commercial Code ("TCCC"), specifies that two or more persons can set up the Thailand Company ("Limited Company").

However, planning to setting up the Limited Company is required 
due to many legal considerations and government process to legally register the Limited Company which should be carefully considered as follows:

1. Article of Association;

2. Memorandum of Association;

3. Shareholder Agreement;

4. Any meeting and report to be required by TCCC; and

5. Compliance to specific laws of specific type of business which must be required to comply along with setting up Limited Company.

2. Public Limited Companies

According to Section 16 of Public Limited Companies Act, B.E. 2535 (1992) ("PLCA"), The number of persons to Incorporate a Public Company must be 15 or more persons.  The Pros of the Public Company is to facilitate in capital raising, e.g., a public offering which must also comply to the Securities and Exchange Act, B.E. 2535 (1992) ("SEA"), governance, disclosure and shareholder protection requirement which is more rigorous and complex than the Limited Company.

Ordinary Partnership and Limited Partnership

Two or more persons may establish Ordinary Partnership and Limited Partnership.  The differences between Ordinary Partnership and Limited Partnership may be described as follows:

1. In case of Ordinary Partnership, all partners have joint and unlimited liability for the debts and obligations of the partnership;

2. The Ordinary Partnership may be registered or unregistered.  The registered Ordinary Partnership can be the proof or claim against third parties according to Section 1065 of TCCC; and

3. The Limited Partnership must be registered.   Some partners who register as a limited liability partner are without the obligations and debts of the partnership other than some partner who register as managing partner who are responsible to unlimited liability of the Limited Partnership, but a limited liability partner can only contribute money or other property to the Limited Partnership.

Please note that: In case of the Ordinary Partnerships and Limited Company that have registered capital of more than THB 5 million are subject to additional requirements to submit evidence which the details are according to Order of Office of the Company Limited and Partnership Registration, Department of Business Development ("DBD").

In Thailand, there are no laws or regulations that specifically address the establishment or registration of the presence in Thailand.  However, the Branch Office is considered the same legal entity as its head office overseas which carry on any or all the activities within the scope of the head office's business objectives.

The Branch Office will be subject to prohibitions and restriction under 
the FBA and may be required to obtain a Foreign Business License (“FBL”).

A Representative Office has a limited scope of activity which consists of the following support services to its head office located offshore:

1. To seek for the supply source of goods or services in Thailand for the head office or affiliated company or the group company;

2. To inspect and control the quality and quantity of the goods that the head office or affiliated company or the group company purchased or hired to manufacture in Thailand;

3. To give advice on various aspects pertaining to the goods distributed by the head office or affiliated company or the group company to the distributors or the users;

4. To disseminate the information in relation to the new goods or services of the head office or affiliated company or the group company; and

5. To report the business movements in Thailand to the head office or affiliated company or the group company.

The Representative Office is generally exempt from the requirement to obtain a Foreign Business License, provided it operates within permitted activities.

A Regional Office is permitted to only undertake the following activities:

1. To carry out duties in communicating, coordinating, and directing, on the behalf of the head office, the operation of the branches and affiliates located in the same region; and

2. To provide the following services on the head office as follows:

• Consulting and Management
• Financial Management
• Product Development
• Training and Personal Development
• Marketing Control and Sales Promotion Planning
• Research and Development

The Regional Office will not be subject to prohibitions and restriction under the FBA which is not required to obtain the FBL.

Joint Ventures are many different forms which mainly divided as follows:

• The parties preserve their own separate legal status; or
• The parties create a new legal entity

There is no specific law of this relationship.  The relationship of Distributorship is consisted of supplier and distributor which is governed by the Contract of provision of the TCCC which is no requirement to register to government authorities and Intellectual Property Laws, 
e.g., Copyright Act, Patent Act, Trademark Act and other relevant laws which optionally registered or request to be recorded by Department of Intellectual Property depending on the type of goods which 2 laws should collaboratively considered when drafting the Distributorship Agreement.

Moreover, The Distributor is not considered to be the agent, representative, or go-between of the supplying company.

Please note that: an offshore company using a distributor for the sale of its goods in Thailand is not subject to any Thai tax on the income from its sales to the distributor.

A Principal is bound by the acts of an agent acting within the scope 
of its actual or apparent authority.

The benefits and qualification from The Draft Startup Promotion Act (“DSPA”) are as follows:

1. The Legal Flexibilities other than Thailand Civil and Commercial Code

1. Offering shares to the public and issue debentures;
2. Holding up to 20% of the company's own shares;
3. Increasing capital and allocating newly issued shares to persons who are not existing shareholders such as:
   1. Directors and Employees under an approved equity plan; and
   2. Investors under a shareholder-approved investment agreement.
   3. Enabling to use ESOP plan to the investor or employee according to the equity plan in items 3;
   4. Enabling to use Debt-to-equity conversion plan; and
   5. Enabling to convert preferred shares to ordinary share.

1. Other incentives:

1. Streamlined entry and work authorization for foreign experts;
2. Eligibility for tax exemptions or reductions under the Revenue Code and other applicable tax laws;
3. Recognition as priority categories that the state aims to promote under public procurement rules;
4. Facilitated protection and commercialization of IP;
5. Access to schemes under the Investment Promotion Act, legislation promoting competitiveness in target industries, and Eastern Economic Corridor regulations;
6. Supported by the National Innovation Agency ("NIA")’s integrated mechanisms
   1. The Laws of Foreign Investment in Thailand

The main focus of law regarding the Foreign Business in Thailand is the Foreign Business Act, B.E. 2542 (1999) (the "FBA").  The Foreign Business is subject to have FBL according to FBA with the following conditions:

1. The Foreigner that is subject to the Definition of "Foreigner" of the FBA; and
2. The type of business which is classified as a restricted business which are listed in the FBA's annex.

The Exemptions of FBA are as follows:

1. Some types of foreign business may be exempted from applying for the FBL but shall inject or operate with a minimum capital of 
   THB 2 million and apply for Foreign Business Certificate (“FBC”) according to FBA and the Ministerial Regulation.
2. The exemption from special treaty.  The following are examples of such agreements:

1. The ASEAN Comprehensive Investment Agreement and The ASEAN Framework Agreement on Services;
2. The Treaty of Amity and Economic Relations between Thailand and the United States of America, B.E. 2512 (1969);
3. The Japan-Thailand Economic Partnership Agreement;
4. The Thailand-Australia Free Trade Agreement; and
5. Other relevant treaties and bilateral agreement.

1. The privileges from The Board of Investment (“BOI”) and the Industrial Estate Authority of Thailand which may apply solely for the FBC to certify the approval to operate the business from the Foreign Business Administration Division
2. The privilege of EEC Act
   1. Mergers and Acquisitions

According to Order of the Central Partnership and Company Registration Office No. 2/2568 (2025) Re: Criteria and Supporting Documents for the Registration of Partnerships and Limited Companies Involving Foreign.  In case of Participation or Authorized Foreign Directors, for juristic persons where foreign shareholding is less than 50% of the registered capital, or where there is no foreign shareholder but a foreign director with signing authority, each Thai partner or shareholder is required to submit bank statements of 3 months demonstrating withdrawals or transfers consistent with the amount of capital contribution or share subscription.

Mergers and Acquisitions (“M&A”) in Thailand can be taken in several forms which can be explained the following forms:

1. Amalgamation or a consolidation: This form type is consisted of at least 2 companies to form one company which those 2 companies are caused to be dissolved.

1. Merger: This form type is consisted of at least 2 companies to form one company but either 2 companies or entities shall be dissolved while other is surviving.

1. Acquisition of the shares in a target company: This form type is one person or company buys shares in another company in order to take control of it in lieu of buying company assets.  the buyer takes ownership of the whole business by purchasing its shares from the current owners

1. Acquisition of assets of the target company: an asset purchase allows the parties to selectively choose which assets and liabilities to include in the transaction.  This Method avoids certain liabilities or acquiring specific assets but it tends to be cumbersome.

The law keys of M&A are as follows:

There is Criteria of Development on land which can be the following purposes:

1. Commercial;
2. Residential; or
3. Industrial.

Moreover, Land development consists of 2 requirements:

1. General Restrictions -under laws on town planning, building control, or environmental conservation; and
2. Specific Regulations -factories, hotels, condominiums, housing estates and etc.

In case of Residential purpose, the Foreigners may acquire land ownership strictly not exceeding one Rai (or 1600 sq. m.) in area, according to specific statutory requirements.  The Law specifies that the individual must invest a minimum of THB 40 million in Thailand and obtain prior approval from the Ministry of Interior of Thailand.  Such acquisition is governed by the criteria, procedures, and conditions prescribed in Ministerial Regulations, for instance, the investment must be in businesses that are beneficial to the country’s economy and social welfare.

Government policy has generally not permitted foreigner to own land.

Except:

1. Thai-Structure Company; or
2. Other Laws: BOI promotion privileges, Oil Concession under Petroleum Act, Business located in industrial estate.  Upon the cessation of the promoted business, the foreign entity must dispose of the land within one year from the date of such cessation.

Foreigners may own up to 49 percent of the total area of all condominium units in a condominium project and the condition of qualification of ownership registration with the following conditions:

1. The purchase funds that must be transferred into Thailand in foreign currency from an overseas account. and
2. A Foreign Exchange Transaction Form (FET Form) issued by the recipient bank in Thailand is a mandatory document required by the Land Department for the transfer of ownership.

Foreigners may own buildings directly and freehold, provided that

they have the rights to locate the buildings on land and use the land.   However, the construction must be secured by a building permit, and ownership should be registered at the Land Office.

The TCCC allows forms of possessory rights such as a lease which the Foreigner and Thai nationals equally use this right unlike the Land Code.  The examples of TCCC's form of possessory rights are as follows:

1. A leasehold agreement: Lease terms for real estate are legally limited to a maximum of 30 years.  However, term of lease can up to 50 years for specific business purposes.

1. A Usufruct: It allows a foreigner to possess, use, and enjoy the benefits of a property owned by another person.

1. A Superficies: is a real right granted under the TCCC.  It grants a person the right to own buildings, structures, or plantations upon or under another person's land.

1. Sub-Ing-Sithi: According to the Sap-Ing-Sithi Act B.E. 2562 (2019), It provides more superior rights than a standard lease, acting as a hybrid between a leasehold and ownership.   Foreigners who register a Sap-Ing-Sithi are entitled to transfer or sell this right to third parties, and may utilize it as collateral for a mortgage under the law without owner consent.

Real Estate Investment Trust (“REIT”)

Investment Gateway: REITs serve as a vehicle for foreigners to invest in real estate via units listed on the Stock Exchange of Thailand (SET).

Scale Requirements: A REIT must maintain a minimum real estate investment value of at least 500 million Baht.

Asset Flexibility: They can invest in freehold or leasehold properties, both locally and internationally, specifically to generate rental income.

Tax Efficiency: The trust itself is exempt from income tax, and investors may see reduced withholding taxes through double tax treaties.

High Payouts: Regulation mandates the distribution of at least 90% of adjusted net profit to unitholders annually.

Ownership Caps: To maintain diversity, no single person or group is allowed to own more than 50% of a REIT’s total units.

The current personal income tax rates are shown below:

The standard rate of corporate income tax is 20%.  However, the corporate income tax rates for small and medium enterprises (SME) are as follows:

VAT is an indirect, multi-stage consumption tax imposed on the sale of goods, the rendering of services, and the importation of products. It is calculated based on the total value of the goods or services provided at each stage of the supply chain.

The standard rate of VAT is 10% but the government has the power to reduce the rate.   The reduced VAT rate of 7% has been extended (currently expected to remain in effect beyond 2025, subject to further extensions by Royal Decree).  However, some items may also 0% rate of VAT.

There is some business which shall be subject to SBT the following businesses:

- Commercial banking, financial and credit foncier business                                                                                       3.0 %

(The rate of SBT has been reduced from 3% to 0.01% in respect of certain items of banking income.)

- Life insurance                                                                                      2.5 %

- Pawnshop brokerage                                                                                      2.5 %

- Sale of immovable property, real estate                                                                                      3.0 %

- Sale of securities in the stock exchange                                                                                      0.1 %

(It currently is exempt from SBT.)

An additional 10% of the tax is levied as municipality tax.

The excise tax calculation is based on both ad valorem rates (or "SRP") and/or specific rates.  The excise tax formula varies depending on type of excise taxable products, for example:

(SRP x ET rate) is applicable for motor vehicles, motorcycles, and cosmetic products.

(Specific rate x quantity) is applicable for petroleum oil products.

(SRP x ET rate) + (specific rate x quantity) is applicable for non-alcoholic beverages and tobacco products.

(SRP x ET rate) + (specific rate x quantity x degree of pure alcohol) is applicable for alcoholic beverages.

Duties are levied on a specific or an ad valorem basis, whichever is higher, and the applied ad valorem duties range between 0% and 80%. 

Exemptions from import duties are available on particular items of goods as prescribed in the Customs Tariff Decree. Preferential duty rates are available on imported goods from countries that have a preferential free trade agreement (FTA) with Thailand.

Land and building tax

The tax base is the value of the land, building, or condominium unit as appraised for the collection of fees by the relevant government authority for registrations under the Land Code.

The tax is levied on an annual (calendar year) basis, and the local municipal authority will send a tax assessment letter to the taxpayer before the end of February each year. The taxpayer must pay the tax so assessed before the end of April each year.

The statutory maximum tax rates range from 0.15% to 3%, depending on the purpose of use. However, the actual rates to be applied each year are published in a royal decree.

Signboard tax

The inheritance tax rate is 10%, except in the case of heirs who are ascendants or descendants of the testator, where the rate is 5%.  
On the other hand, Legacies received by the spouse of De cujus (or the Deceased) are exempt from the tax.

Gifts in excess of the above thresholds will be subject to PIT at the rate of 5% and will not need to be included together with other income when computing the annual PIT liability.

The company which is subject to a definition of related parties is required to report transfer pricing information according to requirements of Section 71 Ter and 71 Bis of Thai Revenue Code (“TRC”) and relevant laws of Transfer Pricing.   Thus, Failure to comply must be liable on Fine penalty not exceeding THB 200,000 according to TRC.

Definition of related party which may be subject to Transfer pricing Rule is details as follows:

1. A company or juristic partnership falling under the following criteria would be considered as a related party:

1. One party that either directly or indirectly is a shareholder or partner holding at least 50% of the entire capital of another party;
2. Shareholders or partners who either directly or indirectly hold at least 50% of the entire capital of one party, are also shareholders or partners either directly or indirectly, and hold at least 50% of the entire capital of another party; or
3. One party that has a relationship with regard to the capital, management, or control with another party so that one cannot operate independently from the other, as prescribed in the Ministerial Regulations.

2. The companies with annual revenue exceeding THB 200 million are required to prepare transfer pricing documentation.

Labor laws are consisted of the following laws:

1. The Labor Protection Act, B.E.2541 (1998) (“LPA”);

2. Labor Relations Act, B.E. 2518 (1975);

3. Social Security Act (“SSA”);

4. Compensation Act;

5. Occupational Safety, Health and Environment Act B.E. 2554 (2011);

6. Home Workers Protection Act, B.E. 2553 (2010); and

7. Act for the Establishment of and Procedure for Labor Court, B.E. 2522 (1979).

The key points which the employee should be entitled to be under 

the LPA in the following key points:

1. A Standard of Work Hour: a standard of working hours must not exceed 8 hours per day and 48 hours per week.

1. Holiday and Public holiday: the employers are entitled to be rest at least one day per week ensuring that the interval week does not exceed six consecutive working days.  Furthermore, Public holiday, Thai government provides 13 traditional public holidays per year which the employer is obligated to announce not less than 13 traditional public holidays in advance for employees.

1. Annual Leaves: Upon completion of one consecutive year of service, employees are legally entitled to a minimum of 6 working days of paid annual leave.

1. Sick Leave: Employees are entitled to sick leave based on actual illness.  While there is no cap on the number of days one can be sick, the employer is only mandated to pay wages for up to 30 working days per year.

Please note that: If an employee takes sick leave for three or more consecutive working days, the employer may legally require a medical certificate from a certified physician.

1. Personal Affairs Leave: The law provides employees with at least 3 working days of paid personal leave per year.

1. Maternity Leave: Pregnant employees are entitled to a total of 98 days of maternity leave per pregnancy, which includes weekends and public holidays.  The employer must pay the employee’s regular wages for the first 45 days, while the remaining period is typically subsidized by the Social Security Fund.

1. Other Leaves: Such as Sterilization Leave, Military Service Leave and Training/Educational Leave.

1. Age restrictions: Prohibits employers from hiring any person under the age of 15 years.  However, children between 15 and 18 years of age (“Young Worker”) may be employed, but the employer is subject to strict reporting and administrative requirements.

1. Equal opportunity: Employers are mandated to treat male and female employees equally in employment. Nevertheless, the LPA imposes specific restrictions on the employment of women, particularly concerning prohibited from requiring female employees to perform hazardous tasks including mining or underground construction.

According to the LPA, the amount of severance pay is determined by the employee's length of service which the last rate of wages refers to the basic salary (excluding certain allowances unless they are classified as wages) at the time of termination, as shown table below:

However, the Employer is not required to pay severance including the following causes; 

• Dishonesty: Performing duties dishonestly or intentionally committing a criminal offense against the employer;
• Intentional Damage: Intentionally causing loss or damage to the employer;
• Negligence: Causing serious damage to the employer through negligence;
• Violation of Work Rules: Violating lawful and just work rules or orders, provided a written warning was previously issued (except in serious cases where a warning is not required);
• Abandonment of Duty: Deserting work for three consecutive working days without reasonable cause, regardless of whether there is a holiday in between; or
• Imprisonment: Being sentenced to imprisonment by a final court judgment (unless the offense was committed through negligence or is a petty offense).

BOI attract foreign investors, skilled professionals, retirees, and remote workers who live or settle in Thailand.  The Long-Term Resident (“LTR”) Visa is expected to attract new foreign residents, technologies and talents contributing to domestic spending and investment while supporting economic growth.

The Benefits of LTR Visa are with the following:

• 10-year renewable visa
• Multiple-entry privileges
• No re-entry permit requirement
• Annual reporting instead of every 90 days
• Fast-track service at international airports
• Digital work permit option
• Exemption from the 4:1 Thai-to-foreigner employment ratio
• 17% personal income tax rate for qualified highly skilled professionals
• Visa and work permit support at the One Stop Service Center
• Tax exemption on foreign-sourced income transferred into Thailand
• Eligibility to open a Thai bank account