This page describes the steps involved in establishing a business in Thailand. We believe that if you do it right from the start, it will save you a lot time and money.
1. Considering BOI promotion.
You want to know if your intended business can get the promotional privileges from BOI (Thailand Board of Investment). The BOI offers two kinds of incentives to promoted projects/activities, regardless of location: tax incentives (including exemption or reduction of import duties on machinery and raw materials, and corporate income tax exemptions) and non-tax incentives (including permission to bring in foreign workers, own land and take or remit foreign currency abroad.) Moreover, it offers tax and duty privileges based on the location of the business in the three Investment Promotion Zones throughout Thailand. Check if your business activities are on the list of promoted activities and if your business should be established in the investment promotion zones on our Thailand BOI page.
Some businesses want a BOI promotion even though they will not get the tax privileges at all. This is because some promoted activities can get the nontax privilege of being able to bring foreign employees into Thailand, thus allowing their company to sponsor more work permits than without BOI. Usually, for most businesses, the number of work permits a company can sponsor is limited by the number of its Thai employees (4 Thai employees for each work permit) and the amount of registered capital (THB 2 million or in some cases THB 3 million for each work permit.)
2. Choosing the form of business set-up
Whether you know your new business in Thailand will get a BOI promotion or not, you need to consider the form of your business set-up in Thailand. Do you want to set up a brand new company in Thailand? And will the new Thai company be foreign majority owned or Thai majority owned? If you already have a company in another country, do you want it to be able to operate in Thailand as a branch office or as a representative office so you will not have to set up another company in Thailand? Please check out different forms of business set-up to help make your decision.
3. Getting business licenses
If you want to operate your existing overseas company in Thailand, or after you have set up your new Thai company with majority foreign ownership, you need to apply for a license to operate business or in case of American, Australian and Japanese companies, you need to notify the Department of Business Development to get the Certificate of Business Operation because of the treaties that Thailand has with USA, Australia and Japan. Read more on this page.
In case you are going to have a factory, you will need a factory license whose process should start before you build the factory because you need to have some guidelines to build it. The Factory Act of Thailand stipulates regulations for factory construction and operation, factory expansion, safety requirements and controls on industrial pollution. Contact the Department of Industrial Works, Ministry of Industry for more information.
Please note that you may need other licenses depending on what business you will be engaged in.
4. Leasing of office space
When you are setting up a new business, most of the times you need to have the company’s registration papers (which you will have after you have registered the company) before you can enter into a lease agreement to lease the office or factory space. This can be frustrated because when you are registering a company or a branch office or a representative office for your foreign firm, you need to provide the company’s address in Thailand. In this case, the people who help set up the company for you usually can let you use their address (for a fee) until you have registered your new company. Then you can sign a lease agreement with a landlord and change the registered address later.
5. Tax registration
Your business will need to get a Tax ID card and get registered in the VAT (Value Added Tax) system with the Revenue Department. Note that not all types of business need to register in the VAT system.
6. Opening a bank account
All banks in Thailand need copies of the company’s registration papers, tax ID card, VAT registration papers in order to open an account for your business. Most Thai banks will ask for a copy of the work permit of the authorized signatories saying that it is the regulation of the Bank of Thailand. However, from our recent experiences, we have been able to help our clients open accounts with some banks without the work permit of the authorized signatories. Our advice is you need to contact the bank you want to have your accounts with for the list of papers they need to open the accounts for you.
7. Getting work permits for foreign employees
If the authorized signatories on the company’s papers are all foreigners, you need to get a work permit for at least one of them who can sign to bind the company since this person is going to sign the application for more work permits if you are going to hire foreign employees. Please check out our summary of Thailand work permit rules.
8. Hiring Thai employees and social security registration
When you start to hire an employee, Thai or foreign, the company needs to register into the social security system, just once and for all. If the employee is not one of the shareholders, you need to register him into the social security system. Then every month, you need to deduct 3-5% (depending on whether the rate has been reduced by the Government) from the employee’s salary (maximum salary to calculate the deduction is THB 15,000) to submit to the social security office together with the same amount paid by the employer.
MSNA is a great partner to help you through the process of establishing a business in Thailand from start to finish.
One Response to Process in Establishing a Business in Thailand