How to Start a Business in Thailand

Table of Contents

How to Start a Business in Thailand – The Essentials

Thailand imposes significant restrictions on foreign businesses. Many businesses require a license under the Foreign Business Act (FBA), and obtaining this license can be a complicated process.

However, there are exceptions. Projects approved by the Board of Investment of Thailand (BOI), the Industrial Estate Authority of Thailand (IEAT), and those stipulated in international treaties or free trade agreements are exempt from these restrictions.

Having BOI benefits is particularly advantageous. BOI offers a range of tax and non-tax incentives to businesses.

In situations where foreign businesses want to avoid the constraints of the FBA, a common strategy is to participate in a company where Thai individuals or entities own at least 51 percent of the capital. Such companies are not considered foreign under the FBA.

Restrictions for Foreigners: The Foreign Business Act

To properly structure a business in Thailand, it’s necessary to take into account the existing restrictions for foreigners.

The main law regulating foreign investments in Thailand is the “Foreign Business Act,” year 2542 according to the Buddhist calendar (BE), which corresponds to 1999 in the Gregorian calendar. Abbreviated as “FBA,” this Act imposes limitations on foreigners engaging in certain types of business activities.

Definition of “Foreigner” under the Foreign Business Act

In accordance with Section 4 of the Foreign Business Act (FBA), the term “Foreigner” is defined as follows:

A natural person who is not of Thai nationality.
A juristic person not registered in Thailand.
A juristic person registered in Thailand with the following characteristics:
- Having half or more of the capital shares of the juristic person held by individuals under (1) or (2), or a juristic person in which individuals under (1) or (2) have invested with a value of half or more of the total capital of the juristic person.
- A limited partnership or registered ordinary partnership with the individual under (1) serving as the managing partner or manager.
A juristic person registered in Thailand with half or more of its capital shares held by individuals under (1), (2), or (3), or a juristic person in which individuals under (1), (2), or (3) have invested with a value of half or more of its total capital.

Prohibited or Restricted Activities

The types of activities prohibited (or restricted) for foreigners are divided into three categories and are listed in the schedules attached to the Foreign Business Act (FBA).

List 1: This list specifies types of activities strictly prohibited for foreigners for “special reasons.” It is impossible to obtain a license for these types of activities.

List 2: List 2 enumerates activities that may impact national security, arts, culture, traditions, folk crafts, natural resources, or the environment. Foreigners may engage in these activities after obtaining a Foreign Business License (“FBL”) issued by the Minister of Commerce based on a decision of the Cabinet (Council of Ministers) of Thailand. As a general rule, FBLs can be obtained by legal entities in which Thai citizens hold at least 40 percent of the capital, and among the directors of which Thai citizens make up at least two-fifths.

List 3: List 3 specifies types of activities in which Thai citizens are not prepared to compete with foreigners. Foreigners may engage in these activities after obtaining an FBL issued by the Director-General of the Department of Business Development, Ministry of Commerce (DBD), subject to approval by the Foreign Business Board. With an FBL, there are no requirements for Thai citizens’ participation in the capital and management bodies of legal entities. In 2019, some types of intra-group services provided by affiliated or subsidiary companies were excluded from the scope of List 3.

The table below provides a brief description of the lists:

Category	Restrictions	Description and Examples
List 1	Prohibited from foreign ownership, impossible to obtain a license.	Activities strictly prohibited for foreigners for “special reasons.” Examples: Media, agriculture, livestock farming, land trading.
List 2	Requires permission from the Ministry of Commerce and approval from the Cabinet of Ministers. At least 40% of shares must be owned by Thai individuals, and Thai citizens must constitute at least two-fifths of the directors.	Activities that may impact national security, arts, culture, traditions, folk crafts, natural resources, or the environment. Examples: Weapon production, domestic transportation, mineral mining, antique trading.
List 3	Requires permission from the Director-General of the Department of Business Development, Ministry of Commerce (DBD), and approval from the Foreign Business Board.	Activities in which Thai citizens are not yet ready to compete with foreigners. Examples: Various services, hotel business, construction, trading * There are some exceptions.

For a full list of the restricted business activities, please see below.

Restricted businesses: Lists Attached to the Foreign Business Act B.E. 2542 (1999)

List One: Businesses not permitted for foreigners to operate due to special reasons

Newspaper business, radio broadcasting or television station business.
Rice farming, farming or gardening.
Animal farming.
Forestry and wood fabrication from natural forest.
Fishery for marine animals in Thai waters and within Thailand specific economic zones.
Extraction of Thai herbs.
Trading and auctioning Thai antiques or national historical objects.
Making or casting Buddha images and monk alms bowls.
Land trading.

List Two: Businesses related to the national safety or security or affecting arts and culture, tradition, folk handicraft or natural resource and environment

Group 1: The businesses related to the national safety or security

Production, selling, repairing and maintenance of:

Firearms, ammunition, gun powder, explosives.
Accessories of firearms, ammunition, and explosives.
Armaments, ships, air-craft or military vehicles.
Equipment or components, all categories of war materials.

2. Domestic land, waterway or air transportation, including domestic airline business.

Group 2: The businesses affecting arts and culture traditional and folk handicraft:

Trading antiques or art objects being Thai arts and handicraft.
Production of carved wood.
Silkworm farming, production of Thai silk yarn, weaving Thai silk or Thai silk pattern printing.
Production of Thai musical instruments.
Production of goldware, silverware, nielloware, bronzeware or lacquerware.
Production of crockery of Thai arts and culture.

Group 3: The businesses affecting natural resources or environment:

Manufacturing sugar from sugarcane;
Salt farming, including underground salt;
Rock salt mining;
Mining, including rock blasting or crushing;
Wood fabrication for furniture and utensil production.

List Three: Businesses which Thai nationals are not yet ready to compete with foreigners

Rice milling and flour production from rice and farm produce.
Fishery, specifically marine animal cultures.
Forestry from forestation.
Production of plywood, veneer board, chipboard or hardboard.
Production of lime.
Accounting service business.
Legal service business.
Architecture service business.
Engineering service business.
Construction, except for:
- Construction rendering basic services to the public in public utilities or transport requiring special tools, machinery, technology, or construction expertise having the foreigners’ minimum capital of 500 million Baht or more.
- Other categories of construction as prescribed by the ministerial regulations.
Broker or agent business, except:
- Being a broker or agent for underwriting securities or services connected with future trading of commodities or financing instruments or securities.
- Being a broker or agent for trading or procuring goods or services necessary for production or rendering services amongst affiliated enterprises.
- Being a broker or agent for trading, purchasing, or distributing or seeking both domestic and foreign markets for selling domestically manufactured or imported goods in the manner of international business operations having the foreigners’ minimum capital of 100 million Baht or more.
- Being a broker or agent of other categories as prescribed by the ministerial regulations.
Auction, except:
- Auction in the manner of international bidding not being the auction of antiques, historical artifacts, or art objects which are Thai works of arts, handicraft, or antiques or having the historical value.
- Other categories of auction as prescribed by the ministerial regulations.
Internal trade connected with native products or produce not yet prohibited by law.
Retailing all categories of goods having the total minimum capital less than 100 million Baht or having the minimum capital of each shop less than 20 million Baht.
Wholesaling all categories of goods having a minimum capital of each shop less than 100 million Baht.
Advertising business.
Hotel business, except for hotel management service.
Guided tour.
Selling food or beverages.
Plant cultivation and propagation business.
Other categories of service business except that prescribed in the ministerial regulation.

Foreign Business License in Thailand

Foreigners seeking to conduct business in Thailand in areas restricted under Lists Two and Three of the FBA must apply for a Foreign Business License (FBL) at the Ministry of Commerce.

To successfully obtain an FBL, the project must meet the following criteria:

Job Creation for Thais: Demonstrating that the business contributes to job creation for the local population.
Transfer of Unique Technologies and Know-How: Implementing innovations and specialized knowledge beneficial for Thailand’s development.
Significant Investments in the Thai Economy: Ensuring substantial investments that contribute to economic growth.
No Negative Impact on Local Companies: Ensuring that the business activity does not deteriorate the competitive environment for Thai enterprises.

Typically, the process of obtaining the license takes 3-5 months.

When You Don’t Need a Foreign Business License

Thus, as a general rule, foreigners need to obtain a Foreign Business License (FBL) to conduct business in Thailand. The process of obtaining this license can be complex and prolonged, and its outcome is unpredictable.

However, there are several exceptions that allow foreigners to engage in certain restricted activities without obtaining an FBL. These exceptions are provided by:

The legislation of the Thailand Board of Investment;
The legislation of the Industrial Estate Authority of Thailand;
International treaties or free trade agreements.

Thailand Board of Investment

The Thailand Board of Investment (BOI) offers various tax and non-tax incentives and preferences to Thai and foreign companies in accordance with the Investment Promotion Act.

Foreign investors, whose projects have received BOI incentives, can obtain a certificate instead of an FBL, allowing them to engage in activities specified in Schedules 2 and 3 of the FBA (Foreign Business Act), known as a ‘foreign business certificate’ or ‘FBC’.

Additionally, BOI incentives may include full or partial exemption from corporate income tax for up to eight years, full or partial exemption from customs duties on the import of equipment or raw materials, and the opportunity to own land.

As a general rule, projects with an investment value of at least one million baht, excluding working capital and land cost, are eligible for BOI incentives.

Read details:



 How to Obtain Incentives from the Thailand Board of Investment (BOI)

Industrial Estate Authority of Thailand

The Industrial Estate Authority of Thailand (IEAT), established and operating in accordance with the Industrial Estate Authority of Thailand Act B.E. 2522 (1979), provides incentives to investment projects located in industrial estates. In addition to infrastructural advantages, investors can receive other benefits and privileges, including land ownership rights, ease in obtaining work permits for foreign experts, currency regulation benefits, as well as other tax and non-tax incentives.

Foreign investors who have received IEAT incentives can obtain an FBC (Foreign Business Certificate), which allows them to engage in activities specified in Schedules 2 and 3 of the FBA (Foreign Business Act).

International Treaties / Free Trade Agreements

Five treaties or free trade agreements that Thailand has concluded with the USA, Australia, Japan, and the countries of the Association of Southeast Asian Nations (ASEAN) allow, in some cases, citizens or legal entities of these countries to engage in activities restricted to foreigners without obtaining an FBL (typically, by holding a majority in Thai companies).

Here are these treaties and agreements:

Thai Company: The Mainstream Business Option

Foreigners whose projects do not meet the BOI or IEAT support criteria commonly opt to not be governed by the Foreign Business Act (FBA). This is typically achieved by investing in a company where at least 51% of the capital is owned by Thai individuals or legal entities. Such a company is not regarded as a foreign company under the terms of the FBA.

 Strategies for Minority Control in a Thai Company

 How to Register a Company in Thailand

If you need guidance on starting a business, investing, or navigating corporate law in Thailand, feel free to contact me or use the below form for your queries.