Foreign Business License Service in Bangkok, ThailandBusiness law of Thailand has put some restrictions with regards to activities that is limited to Thai nationals only as a result foreign investors have to experience limitations when doing business in Thailand. Foreign Business Act B.E 2542 (1999) (FBA) advises wide ranges of business, commercial and industrial activities that may not be carried out by foreigners or remains controlled in certain way unless appropriate license has been obtained from competent government authority or an exemption is granted.
Definition of a Foreign company:According to Foreign Business Act 1999, the term foreigner means:
- Natural person not of Thai Nationality
- Juristic Person not registered in Thailand
- Juristic Person registered in Thailand having following characteristics:
- Having half or more of the juristic person’s capital shares held by persons under (1) or (2) or a juristic person having the persons under (1) or (2) investing a value of half or more of the total capital of the juristic person.
- Limited partner or registered ordinary partnership having person under (1) as managing partner or manager
- Juristic person registered in Thailand having half or more of its capital shares held by the person under (1), (2) or (3), or a juristic person having the persons under (1),(2) or (3) investing with the value of half or more of its capital.
Foreign business act has classified wide range of business, commercial and industrial activities that may not be carried out by foreigner or unless appropriate license has been obtained or limited exemption applies. Three lists of activities have been prescribed by foreign business act 1999.
- LIST 1:
Foreigner cannot engage in the business activities listed in LIST 1.
- LIST 2:
Foreigner can engage in the business activities list in LIST 2 subject to obtaining relevant license from Ministry of commerce and approval from the cabinet.
Foreign engage in activities mentioned in LIST 2, to obtain appropriate license maximum of 60% can be owned by foreigner and 40% owned by Thai. However, the maximum of 60% shareholding can be increased up to 75% upon specific approval of Minster and the cabinet.
- LIST 3:
Activities in designated in LIST 3 as “businesses related which Thai are not yet ready to compete with foreigners”. Foreigners can engage in such activities with an appropriate license approved from Ministry of commerce prior to commencing the activity.
LIST of Restricted Business Activities under Foreign Business Act of 1999
LIST 1 – Businesses that foreigners are not permitted to engage in for special reason
- Newspaper business, radio – broadcasting station or radio/television business.
- Farming, cultivation or horticulture
- Animal Husbandry
- Forestry and timer conversion from natural forests.
- Fisheries, especially fishing in Thai territorial waters and in specific economic areas of Thailand
- Extracting Thai Herbs.
- Trade and auction sale of Thai antiques or objects of historical value
- Making or casting Buddha images and alms bowls
- Trading of land.
LIST 2 – Business concerning national safety and security that might cause an adverse effect on art and culture, customs, or native manufacture/handicraft, or with an impact on natural resources and environment.
GROUP 1- Businesses concerning national security or safety
- Manufacturing, Distribution, repair or maintenance of:
- Firearms, ammunition, gunpowder and explosive materials.
- Components of firearms, ammunition and explosive materials.
- Armament, ships, aircraft or military vehicles.
- Equipment, or parts of any type of war equipment
- Domestic Land Transportation, water transportation, or air transportation, including domestic aviation
GROUP 2 – Businesses that could have impact of art, culture, customs and local manufacturing/handicraft
- Trading of antiques or artifacts that are Thai works of art or Thai Handicrafts
- Wood carving
- Silkworm rearing, manufacture of Thai silk, Thai silk weaving, or Thai silk printing.
- Manufacturing of Thai Musical instruments
- Manufacturing of gold-ware, silverware, nielloware, bronzeware or lacquerware.
- Making of bowls or earthenware which are of Thai art and culture
GROUP 3 – Business that could have adverse effect on natural resources or the environment
- Manufacturing of sugar from cane
- Salt farming, including rock salt farming
- Mining of rock salt
- Mining, including stone quarrying or crushing
- Timber processing for making furniture and utilities
LIST 3 - Businesses in which Thais are not ready to compete with foreigners
- Rice milling and flour production from rice and plants
- Fisheries, specially breeding of aquatic creatures.
- Forestry from re-planting
- Production of plywood, veneer, chipboard or hardboard
- Production of lime
- Legal services
- Construction, except
- Construction of infrastructure in public utilities or communications requiring tools, technology or special expertise in such construction, except where the minimum foreign capital is 500 million THB or more.
- Other types of construction as prescribed in Ministerial regulations.
- Agency or brokerage, except:
- Brokerage or agency of securities or service related to future of agricultural commodities futures or financial instruments or securities.
- Brokerage or agency for the purchase/sale or procurement of goods or services necessary to production or providing services to affiliated enterprises.
- Brokerage or agency for the purchase or sale, distribution or procurement of markets, both domestics and overseas for the distribution of products made in Thailand, or imported from overseas in the category of international business, with minimum foreign capital of not less than 100 million THB.
- Other brokerage or agency activities, as stipulated inn ministerial regulations.
- Auctioneering, except
- Auctioneering in the manner of international bidding, not being auctions of antiques, ancient objects or artifacts that are Thai works of art, Thai handicrafts or antique objects, or with Thai historical value.
- Other types of auctioneering, as stipulated in ministerial regulation.
- Domestic trade in local agricultural products not prohibited by law.
- Retailing all categories of goods having of less than 100-million-baht capital in total or having the minimum capital of each shop of less than 20 million baht.
- Wholesaling, all categories of goods having minimum capital of each shop less than 100 million baht
- Hotel operation, excluding hotel management
- Sale of food and beverages
- Planting and culture of plants.
- Other services, except those prescribed in the ministerial regulations.
The term “Other services” used in LIST 3 implies catch all phrase for service category. If the foreigner provides service not stated in LIST 3, the company must still apply for and obtain a foreign business license before commencing its operation.
Exceptions to foreign Business License
- If a foreigner is operating a business that is classifies in LIST 2 and 3 with the permission of the Board of Investment or the Industrial Estate authority of Thailand such foreigner shall notify the Director – General of Commercial Registration Department in order to obtain a certificate.
- If a foreigner is operating a business that is classified in the lists under a treaty to which Thailand is a party or is obligated to abide by, it shall comply with the provisions of the treaty. Example: Treaty of Amity between U.S. – Thailand.