General overview on Thai company incorporation.
Setting up a company in Thailand is incredibly convenient as the company registration in Thailand requires only a few steps, and the laws are very encouraging to investors who want to start a company in Thailand. The setting up process is relatively smooth and painless, but requires some Thai knowledge.
TYPES OF ENTITIES IN THAILAND
A Limited Company in Thailand is established by at least three shareholders and at least 51% of total shares must be held by a Thai national. The management is assured by at least one director which can be either Thai or foreign, while the major decisions are made by a general meeting of the shareholders.
A Public Limited Company is subject to compliance with the prospectus, approval, and other requirements, public limited companies registered in Thailand may offer shares, debentures, and warrants to the public and may apply to have their securities listed on the Stock Exchange of Thailand (SET).
A minimum of 15 promoters is required for the formation and registration of a public limited company, and the promoters must hold their shares for a minimum of 2 years before they can be transferred, except with the approval of the shareholders at a meeting of shareholders. The board of directors must have a minimum of 5 members, at least half of whom must have a residence in Thailand. Each share of the company shall be equal in value and be fully paid.
Forms of business for foreign investors:
A Thai Branch office of a Foreign Company. It is not considered a separated entity and the capital is provided by the parent company.
The investors can also open a Representative office incorporated mostly in order to perform research activities on the Thai market.
A US-Thai company can be registered as an American company under the US - Thai treaty of Amity which allows Americans to be the majority of shareholders in a Thai company, however, the majority of company directors must be American or Thai.
Other forms of Thai legal entities.
• A sole proprietorship in Thailand is one person in charge of the business with unlimited liability. Legal action can be taken against both the person's business and his assets. Other than those who are permitted under the US-Thai Treaty of Amity and Economic Co-operation, foreigners may not run sole proprietorships. A sole proprietor pays income tax equal to tax rates that apply to individuals.
• Partnerships, of which there are three types in Thailand. The differences for each type vary in regard to the limitation of liability and the tax rate applied to the partners.
Partnerships generally are not eligible to apply for work permit for foreign partners/ employees so it is unusual for foreign investors to form this type of company.
The three types of partnerships are:
• Unregistered partnerships: all the partners are fully liable for all responsibilities of the partnership. Partners pay tax at a personal income tax rate.
• Registered partnerships: the partnership is a legal entity, and therefore, is separate and distinct from the partners. Corporate Tax rate is applied to this type of company.
• Limited partnerships: the amount of capital determines the liability of the partners. This type of business must be registered. Corporate Tax rate is applied to this type of company.
INCORPORATION PROCEDURE IN THAILAND
The registration of a new business in Thailand is simplified by checking with the Department of Business Development’s registry to check whether your planned business name is already taken. After the preferred business name is approved, the entity must submit an application form to the Department of Business Development, the Ministry of Commerce. The application must be accompanied by the articles of association, Memorandum of Association (also known as the Articles of Incorporation), and Articles of Association (By-laws), a declaration confirming that the company has been incorporated following the provisions of the Thai Civil and Commercial Code as well as other relevant documents asked by the registrar. All forms are in Thai and they must be filled only in Thai. While this process is relatively straightforward, it is best to make use of the assistance that our firm can provide.
The other important aspects of the registration process are tax and employment matters. The Ministry of Commerce and the Revenue Department have a joint information system. The company registration number is also Tax ID number.
Registering for VAT or Registering Employers can be done after company registration is completed. Enrolling in the VAT register can be done voluntarily, but it is mandatory if the accounting period sales exceed 1.8 million THB while registering of employers must be completed within 30 days if the company wants to begin employing staff.
Investing in Thailand
The Thailand Board of Investment (BOI) is a government agency which encourages investment, especially foreign investments in Thailand.
They have made Thailand a competitive country to invest in by facilitating investments in the following ways:
• Offering an attractive and competitive package of tax incentives
• Imposing no foreign equity restrictions on manufacturing activities or on certain services
• Providing assistance for the provision of visas and work permits to facilitate entry and subsequent operation for a foreign-owned business.
• Waiving restrictions on land ownership by foreign entities.
ECONOMY OVERVIEW IN THAILAND
Company formation in Thailand is attractive, because Thailand offers an industrialized economic environment, is extremely competitive in manufacturing, engineering, telecommunications, electronics industries, has high skilled labour and is a good environment for living.
VALENS provides a wide range of corporate services to start and operate businesses in Thailand including registration, licenses and permits, company secretarial services, tax matters, employment, immigration, regulatory affairs, and property. We have an experienced team who can provide the best and most helpful advice for your business operations.
We work to create value for our clients. Our client base includes multi-national corporations, mid-market companies, state-owned enterprises, and private equity firms.