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Initial steps for starting a business in Thailand
Setting up a business in Thailand could be an intimidating prospect, but if you get it right, it could be an enjoyable and lucrative one. There’s a wealth of opportunity in the service and industrial sectors and in import and export sector in general.
Thailand is the 2nd largest economy in Southeast Asia after Indonesia andacknowledged by the World Bank as one of the great development success stories in development and social indicators.
Here in this post, we have tried to break down the initial steps for starting a business in Thailand
Get your coffee; you will need it!
How to kick start a business in Thailand is a topic which is usually brought up by most of the travelers who have become enamored with the lifestyle they have experienced in Thailand. But they’re unaware that most of the foreigners wishing to open a business in Thailand aren’t permitted to fully own any company; except for a US citizen under theUS Treaty of Amity. There are legal boundaries and cultural differences that one needs to consider before planning to start a business in Thailand.
Having your business in Thailand is not that hard as one might think as the country is extremely receptive to the foreign businesses with an exploding middle class with loads of cash to spend.
Thailand offers great potential for a prosperous business if you:
- Have a robust idea and realistic business plan
- Have sufficient supply of funds for starting your business
- Inclination to understand the Thai culture, mentality and open-mindedness
One should assess their goals and think through their plan. If one wishes and desires to open a business in Thailand with a limited supply of capital,then one must accept the fact that it may not make him/her a millionaire back home. Though, if the business is successful, one could look forward to having a comfortable living while relishing the beautiful life in Thailand.
How Much Money is Required to start a Business in Thailand
There isn’t any magic figure. However, it is safe to say that cost of starting a business in Thailand from start to finish would be cheaper than it would be in your home country. One needs to keep in mind that the setting up a business in Bangkok would cost slightly more, particularly the cost with respect to rent in prime localities which in the city is comparatively higher as compared to rest of the country. However, it is also where you could find most of the client else as the bulk of the wealth lies in Bangkok.
Construction and manual labor are quite affordable. Once the business has started, depending on the business type electricity, inventory, staff salaries and water are much more affordable as compared to the UK or the United States.
What are the law governing setting up abusiness?
Foreign business in the country is administrated by the Foreign Business Act, 1999. It is very important to understand the penalties for not adhering to the restrictions levied. Non-compliance can result in a three-year prison term together with a fine of between THB 100,000 – THB 1,000,000.
The Foreign Business Act,1999 recommends a range of business, industrial and commercial activities which may not be performed by the foreigners unless an exemption applies or a relevant licence has been obtained.
It includesThai registered companies where the half or more of the capital is held by the non-Thai individuals, foreign companies or Thai registered companies which are majority foreign-owned.
There isn’t any general prohibition for foreigners running business in the country.However, foreigners are not permitted to engage in the followings:
- Newspaper publishing, radio or television broadcasting
- Rice farming, arable farming or orchard farming
- Rearing livestock
- Forestry and the processing of wood from forests (naturally grown)
- Fishery, only in relation to marine life in Thai waters and the specific economic zone
- Extraction of Thai medicinal herbs
- Trading and auctioning of Thai antiques or antiques which are of historical value to the country
- Manufacture or casting of Buddha images and alms bowls
- Trade in real property
What are the forms of the company one can choose?
Foreigners could choose fromthe followingtypes of company:
- Registered Ordinary or Limited Partnership.
- Limited Company.
- Representative Office, Branch Office or a Regional Office.
Can oneown100% of aThai company?
There is a long-standing rumorthat a foreigner cannot own 100 percent of a Thai company. With the help of some of the methods which are time-consuming and where the outcomes are un-predictable, one could achieve 100 percent ownership.
There are 3ways of achieving 100 percent ownership:
1. Obtain a Foreign Business License
A Foreign Business License(FBL) could be roughly understood as the Work Permit for the companies. Since foreigners in the country could only involve in specific occupations and need to have a Work Permit to be able to work, foreign companies could also operate only in the designated categories and require an FBL.
This way, the government controls the influx of foreign businesses into Thailand and protect the local business and the interests of Thai nationals.
2. Board of Investment Promotion
The Board of Investment or BOIis the division of the government of Thailand which promotes business projects and start-ups in areas which are deemed desirable for the economic stance of Thailand.
3. Treaty of Amity
US-Thailand Treaty of Amity and Economic Relationsis an agreement between Thailand and the USA which permits American entrepreneurs or companies for having a full ownership or maintaining a majority of share holding in a company in Thailand.
What type of visas are required for starting a Thai company?
For entering Thailand with the objective of starting a business in Thailand, one requires a non-immigrant ‘B’ (business visa). It would make the holder of such visa legally eligible for conducting business activities in the country, and which includes the prospects of setting up a company in Thailand.
One could apply for this particular business visa for Thailand at the consulate in the home country or at the Royal Thai Embassy. The fee for a visa is THB 2,000 for single-entry with a validity of 3 months and THB 5,000 for multiple entries with a validity of one year.
Can you hire foreigners for your business?
2 million Thai Baht would allow you to hire a foreign national,and an additional 2 million Baht would be required to employ another foreigner up to a maximum of 10 people.
It is also important to note that a company could employ 1 foreigner for every 5 million Thai Baht paid in tax.
Can you open a Thai bank account?
If one’s company is relatively small, then the bank might not offer a checking account when one first opens his/her company account. One might get only a savings account, where you could withdraw cash alone.
It is important to keep in mind that the loansfrom local banks aren’t easily available. Getting loans from one’s overseas bank might be easier, even though one would be transferring money to Thailand.
What tax one needs to pay?
Corporate income tax is a direct tax imposed on the juristic company or partnership carrying out business in the country, or not carrying out business in the country,however, deriving specific types of income from the country.
- The tax would be withheld on interest paid to foundations or associations at the rate of 10 percent.
- Government agencies would withhold tax at the rate of 1 percent on income paid to the companies.
- Royalties paid to the foundations or associations are subject to 10 percent withholding tax.
Having an up-and-running business in the country as a foreigner is one of the best ways of enjoying Thailand and live abroad. The prospects for profits is high with several Thai youths and a rising middle class ready to spend money.
If one is fully prepared, completed his/her market research and understands his/her business plan with sufficient supply of funds for starting up the business then the rewards are high for a successful business in the country.
Thailand also has a lot of startup consulting firms to assist you in setting up your own business in Thailand.One could be certain for a good response from the clients and customers with the help of these consulting firms. StartupinThailand, a part of Aditya Group is such a startup and business consulting company, well established over 15+ years to serve you with the best. Contact them for a FREE Consulting.