Since 2003, Healy Consultants Group has assisted our Clients with business registration in Thailand. Our services include i) Thailand company registration ii) foreign business licensing approval iii) corporate bank account opening services iv) employee recruitment v) employee visa strategies and vi) office rental solutions.

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Thailand business setup summary

• Benefits and problems of registering a company in Thailand

  Benefits of registering a company in Thailand

  

  1. It is possible to register a wholly foreign owned Thai limited liability company (LLC) with only i) three shareholders ii) one director and iii) a minimum capital of US$60,000 (THB2 million). The company formation procedures (click link for more details) can be completed without travel requirement for our Clients;
  2. Thailand is a large consumer market, thanks to i) a population of 69 million and ii) a GDP per capita of US$7,274. The country is ranked as the 40^th most attractive consumer market in the world by the World Economic Forum;
  3. Thailand is a good location for starting a manufacturing business because:
     • Salaries in the manufacturing industry are low, averaging only US$650 per month. Click on the weblink for further information on salary levels in Thailand;
     • Our Clients are able to sell their manufactured goods abroad with a good markup thanks to i) Thailand VAT exemption on all exports; ii) custom duties exemption on all exports; iii) low rental cost for industrial space at an average of US$12 per square meter per month;
     • Foreign investments in many sectors including i) electronic ii) chemical iii) paper iv) plastics and v) metal products will benefit from i) a corporation tax holiday of up to 8 years ii) exemption from import duties on machinery and raw materials iii) simplified customs procedures and iv) permission to own land;
     • Our Clients will find it easy to transport their goods because Thailand’s transportation network is considered the 4^th best in South East Asia including rail, sea, road and air;
     • Our Clients who incorporate in Thailand’s 12 Free Trade Zones enjoy advantages including i) VAT exemption ii) no import/export duties iii) up to 8 years of tax holiday for promoted activities and iv) permission to own land;
     • The Customs Department can refund import duties on materials imported for the production of goods which are then exported. In addition, if a manufacturing firm exports its products, it is possible, with certain guarantees and fees, to procure import duty exemption on materials to be incorporated in products manufactured under bonded warehouse status;
     • Exporters may obtain financial assistance from commercial banks in the form of packing credits, by means of promissory notes discounted at the rate prescribed by the commercial bank;
     • For all the reasons above, Thailand is Southeast Asia’s largest manufacturer of i) automobiles ii) hard disk drives and iii) rubber products.
  4. Our Clients like to set up their regional headquarters in Thailand because:
     • A Thailand regional headquarters office enjoys a mere 10% corporation tax on income received from subsidiaries including royalties, interest, and intellectual property and management fees. Dividends received from international subsidiaries are free from Thailand corporate income tax;
     • An ROH (regional operating headquarters) i) is permitted to own land in the country ii) is free of any currency controls and overseas remittance restrictions and iii) is free to employ unlimited expatriate talent;
     • To change a corporate structure and appoint a new director, personal travel is not required;
     • Thai office rental costs and local staff salaries are low.
  5. The Thailand authorities want to attract foreign investors by providing attractive tax incentives, including:
     • Corporate tax holidays can be granted by the Thailand Board of Investment (BOI) to companies investing in designated industries including i) agro-industry ii) alternative energy iii) automotive and iv) electronics and ICT v) fashion vi) entertainment vii) healthcare and viii) tourism services;
     • A company may also claim a 200% rebate on R&D costs, and a 200% deduction for job training expenses and for expenditure on salary paid to disabled employees;
     • Import duty imposed on materials imported for the production of goods that are then exported can be refunded by the Customs Department. Furthermore, exemption from customs duties on imported goods is granted when the goods are taken through a Thailand special economic zone;
     • All Thailand businesses can carry forward their losses for up to 5 years.
  6. Through the implementation of the Eastern Economic Corridor (EEC), Thailand is rapidly developing into an investor-friendly jurisdiction through the development of i) transportation; ii) logistics; as well as iii) infrastructural services in the EEC. The government is also digitally transforming all the business setup procedures to provide a one-stop shop service to all the foreign investors. Further, all the priority sectors within the EEC are also entitled to all standard Thailand BOI incentives.
  7. it is easy for USA multinationals to register a wholly foreign owned subsidiary in Thailand, thanks to the USA-Thai Amity Treaty. Since 2021, the USA and Thailand Governments also allow our USA Clients to complete the same without having to travel to Bangkok.

  Problems with Thailand company registration

  1. Registering a wholly-foreign owned business in Thailand is challenging because:
     • Businesses with foreign shareholding exceeding 49% are required to secure a foreign business licence (FBL) before trading in most industries;
     • Securing a foreign business license takes an average of four months, due to challenging and cumbersome procedures requiring the approval of the Thailand Ministry of Commerce;
     • To secure the above foreign business license, foreign companies are required to have a minimum share capital equivalent to i) 9 months of planned expenditures or ii) US$60,000 whichever is higher. The actual amount required can be higher, depending on the exact business nature of our Clients’ businesses;
     • While a resident director is not required by law, administrative interactions with the Thai Government still require a director to visit and sign documentation in person, for instance to register a telephone line, activate water and electricity for office premises. If required, Healy Consultants Group will provide a professional passive nominee resident director until our Client appoints its own local director;
     • Approximately 45 days following incorporation, officials from the Revenue Department will do a one-time inspection of the company premises;
     • Despite the fact that many of our Clients will need a local national director or shareholder to be appointed, article 36 of the Thailand Foreign Business Act, prohibits the use of Thai nominee shareholders and directors.
  2. Companies registered in Thailand suffer significant and increasing taxes because:
     • In Thailand, corporate income tax amounts to 20%, while capital gains can be taxed up to 35%. Consequently, the effective total tax rate for companies approximates 30%, including corporation tax and VAT;
     • A 10% branch remittance tax is imposed on after-tax profits repatriated to the overseas parent company;
     • Withholding taxes on payments to overseas parent companies suffer i) 10% on dividends ii) up to 15% on royalties and iii) up to 15% on interest even after the benefits of Thailand’s 61 double taxation treaties.
  3. Our Clients find Thailand a corrupt place to conduct business because:
     • It is common for employees and competitors to counterfeit foreign company products. Thailand is indeed ranked as the 99^th country in the world for intellectual property protection;
     • When running into contractual problems with i) suppliers ii) customers and iii) business partners, multinationals cannot rely on Thai courts. Like most emerging markets, the local judicial system favors its citizens;
     • To get business done, multinationals may unfortunately frequently have to bribe corrupt Government officials. Businesses consider corruption and Government inefficiencies as the most problematic factors.
  4. HR management of a Thailand business can be challenging because:
     • The paid up share capital must be increased by U$56,500 for every foreign employee hired. The ratio is 2 Thai employees for every USA citizen employee and 4 Thai employees for every other nationality employee hired;
     • Our Clients can face labour shortages in Thailand, as the current unemployment rate is low (around 1%);
     • Foreign entrepreneurs may furthermore have trouble communicating with their employees, as only 30% of the population speaks English;
  5. Companies in Thailand suffer administrative Government red tape, including:
     • All outward fund remittances in foreign currencies must secure preliminary-approval from the bank after submission of an approval form and supporting information;
     • Multinationals can only import goods in Thailand for resale either retail or wholesale after i) the Thai subsidiary is granted permission by the Ministry of Commerce and ii) paid up share capital of at least US$3.3 million. There are no restrictions on the import of raw materials for manufacturing;
     • Thai translations must be provided when filing i) tax returns and ii) audited financial statements.
  6. Thai is the official language in the country. As a result, foreign investors who are investing in areas other than Bangkok are most likely to face communication barriers. Moreover, all official business documents are required to be maintained in Thai language. Therefore, most of the foreign investors are required to hire local suppliers to overcome these communication barriers.

• Best uses for a Thailand company

  • Thailand is a great place to register a manufacturing company, especially in the automobile sector thanks to a skilled yet affordable workforce, generous tax incentives, ASEAN membership and a vast network of suppliers and corporate customers;
  • Foreign multinationals trading customer products usually also register a local subsidiary in order to better target Thailand customers increase their share of this emerging market.