Foreign Business Laws in Thailand
What Expats Need to Know
Understanding Thai Business Laws as an Expat
Thailand is a popular destination for expatriates looking to start a business due to its strategic location, growing economy, and welcoming culture. However, foreign business laws in Thailand can be complex, and expats must navigate legal restrictions to ensure compliance.
This guide provides an overview of Thailand’s Foreign Business Act (FBA), business ownership rules, investment options, and legal requirements for expat entrepreneurs.
1. The Foreign Business Act (FBA) – What It Means for Expats
The Foreign Business Act (FBA) is the primary law regulating foreign ownership in Thailand. It classifies businesses into three categories:
List 1 (Prohibited for Foreigners) – Businesses in this category, such as agriculture, forestry, and traditional Thai industries, are completely restricted for foreign ownership.
List 2 (Restricted but Possible with Government Approval) – Includes businesses related to national security, arts, and culture. Foreigners can own up to 75% but require approval from the Ministry of Commerce.
List 3 (Restricted but Possible with Licensing) – Covers services, wholesale and retail businesses, and real estate development. Foreigners can operate these businesses but must obtain a Foreign Business License (FBL).
Key Takeaway: Most businesses that expats wish to open fall under List 3, requiring an FBL or a Thai business partner to comply with the law.
2. Business Structures Available to Expats
Expats have several options when setting up a business in Thailand:
A. Limited Company (Most Common Choice)
- Minimum 51% Thai ownership required to avoid licensing restrictions.
- Foreigners can own up to 49% unless they obtain a Foreign Business License.
- Requires at least 3 shareholders (can include Thai partners).
B. Thai-US Treaty of Amity (For U.S. Citizens)
- Allows U.S. nationals to own 100% of certain businesses.
- Must register under the treaty and comply with specific business regulations.
C. Board of Investment (BOI) Company
- BOI-promoted businesses receive tax incentives and 100% foreign ownership rights.
- Primarily for industries such as technology, manufacturing, and tourism.
- Requires investment and approval from the BOI Office.
D. Representative Office
- Suitable for foreign businesses that do not generate revenue in Thailand.
- Used for market research, product sourcing, and liaison services.
3. Foreign Business License (FBL) – Do You Need One?
If a foreigner wants to own more than 49% of a restricted business, they must apply for a Foreign Business License (FBL) from the Ministry of Commerce.
FBL Requirements:
- Business must benefit Thailand’s economy.
- Proof of financial capability.
- Compliance with Thai employment laws (hiring Thai employees).
4. Work Permits & Visas for Foreign Business Owners
Expats doing business in Thailand must have:
- Non-Immigrant "B" Visa – Required for business operations.
- Work Permit – Allows legal employment in your business.
- Annual Renewals – Both visa and work permit require renewal.
Employers must also hire at least 4 Thai employees per foreign work permit to comply with labor laws.
Key Takeaway: Business owners must maintain the correct visa and work permit to operate legally in Thailand.
5. Tax & Compliance Requirements for Foreign Businesses
All businesses in Thailand must comply with tax regulations:
- Corporate Tax – 20% standard rate.
- VAT (Value Added Tax) – 7% for applicable businesses.
- Withholding Tax – Varies based on business type.
- Annual Financial Reporting – Required for all businesses.
Key Takeaway: Proper tax registration and reporting are crucial to avoid penalties and ensure compliance.
Final Thoughts: Start Your Business Legally in Thailand
Understanding foreign business laws in Thailand is essential for expats to run a successful and legally compliant company. Choosing the right business structure, obtaining necessary licenses, securing a visa, and following tax laws will help you navigate Thailand’s legal landscape smoothly.
Need legal assistance for your business in Thailand? Contact our expert business law attorneys today!
