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Key Considerations - Company Start-Up in Thailand
Key Considerations - Company Start-Up in Thailand
Key Considerations - Company Start-Up in Thailand

Companies must be started by at least three individual initial shareholders

  • Following incorporation, one or more shareholders may sell shares to a corporation
  • Original signatures and signed copies of identity documents are needed for the initial three shareholders - subsequent shareholders can be certified by a Director's signature
  • One of the original three shareholders (designated as "the company promoter") must sign the incorporation documents, as part of the incorporation process

Company must have at least one Director

  • No restrictions on location or nationality of Director(s)
  • It is not practical to operate a company without a readily-available signatory Director on the ground in Thailand.

Minimum lawful company capitalization level is 15 baht (USD $0.50)

  • To employ foreigners, minimum registered capitalization is 2,000,000 baht. An additional 2,000,000 baht in registered capitalization is required per each additional work permit that company seeks to sponsor.
  • To apply to legally operate as a company whose shares are majority-owned by non-Thais, minimum registered capitalization is 3,000,000 baht - except for companies who activities are limited to manufacturing or sourcing for export.
  • To apply for Thai-US Amity Treaty protection, minimum registered capitalization is 2,000,000 baht
  • To be taken seriously, company should initially be capitalized at no less than 100,000 baht (USD $3,150). Most banks will not open an account for a company capitalized at less than 100,000 baht.

Foreign share ownership rules exist

  • There are no restrictions preventing three foreigners from registering a company, and being the majority shareholders
  • There are severe restrictions on what business activities a majority foreign-owned company may pursue, without obtaining an Foreign Business License (FBL)
  • Obtaining an FBL is a laborious and expensive process.
  • It has been common to use Thai "nominee" (proxy) shareholders to hold majority of shares "on paper," to avoid requirement to obtain FBL. Recent new restrictions make the use of Thai nominee shareholders slightly more problematic (and expensive).

Other Considerations:

  • Thai banking law stipulates that in order to exercise signature control over a Thai corporate bank account, a foreigner must be a company director with a work permit. As of May 2006, virtually all Thai banks are complying with this rule.
  • Thai Revenue Department is very strict about requiring companies to maintain a legally-sufficient registered business address - business occupancy must be certified by building owner, and office must be occupied by at least one staff person during normal business hours.
  • Accounting submissions must be initiated in calendar month following incorporation - negative reports are required in three categories of tax records-keeping
  • "Shelf companies" typically do not exist, due to costs of maintaining legally sufficient address, and accomplishing monthly accounting submissions. A "shelf company made to order" can be supplied on a "turn-key" basis in 30 days, for an extra 16,000 baht (USD $510), over and above normal costs of incorporation.
  • In order to own land outright in Thailand, more than 50% of a company's shares must be held by Thai citizens - and these Thai individuals must be able to document significant personal wealth.
  • Minimum time to incorporate a company from a standing start is four days. 7-10 days is comfortable.

Taxation Issues

For companies with less than 5,000,000 baht registered capital, Thailand corporate tax rates are 0%, 15%, and 20% maximum rate.

  • 0% on the first 150,000 baht of annual profit
  • 15% tax on the next 850,000 baht of annual profit
  • 20% tax on all annual profit in excess of 1,000,000 baht

For companies with more than 5,000,000 baht registered capital, Thailand corporate tax rate is a flat 20% of profits.

Thai Revenue Department does not expect newly-formed companies to earn profit for first two years.

Beginning in third year, tax authorities expect taxes to be paid on a modest profit. Typical third-year target for corporate taxes paid is under 30,000 baht.

Thailand collects 7% VAT on most business transactions in Thailand

There is a mandatory Social Fund program in Thailand - 5% is withheld from salaries, and a matching 5% must be contributed by employer - with maximum combined monthly collection of 1,500 baht per employee.

Labor Issues

Authorized workweek is 48 hours - eight hours per day, six days per week.

Typical "white collar" work week is five days, eight hours per day - plus lunchtime.

Severance pay must be paid for summary termination, once employees have completed 120 days employment. Severance rates increase as employment tenure increases - ranging from one month's salary to ten month's salary.

Summary termination requires payment of current month, following month, and THEN severance pay, if due.

© 2017 by Indo-Siam Technical Services Co., Ltd.