Foreign Business License
Foreign ownership of businesses in Thailand is feasible but involves a nuanced process. A foreign-owned business is defined as one where more than 49% of shares are held by foreign nationals. Governed by the Foreign Business Act, such enterprises must secure a Foreign Business License before commencing operations. This license is crucial for ensuring compliance with local laws and regulations, which are designed to protect Thai economic interests. Additionally, understanding the specific categories of business activities restricted for foreign investors is essential for navigating the legal landscape effectively. By carefully adhering to these regulations, foreign entrepreneurs can successfully establish and operate their businesses in Thailand.
Foreign Business License Regulations
The Foreign Business Act (FBA) imposes restrictions on foreigners from engaging in approximately 50 types of business activities, categorized into three lists.
LIST ONE
Comprises activities such as newspaper businesses, animal farming, and land trading, among others. Foreigners are completely barred from operating businesses listed here due to “special reasons,” with no avenue for obtaining approval.
LIST TWO
Encompasses businesses related to national security and domestic transportation via land, waterway, or air, including domestic airline operations. While foreigners or foreign entities can engage in list two activities, approval from the Minister of Commerce and the Cabinet is required. However, securing such approval is notably challenging.
LIST THREE
Includes activities where foreigners and foreign entities are restricted from participation due to the perceived unpreparedness of Thai nationals to compete. Approval for list three activities is attainable through the Director-General of the Commercial Registration of the Department of Business Development and the Foreign Business Committee. List three comprises various service businesses not otherwise specified by ministerial regulations.
To engage in activities from LIST 2 and LIST 3 a foreign entity would need to obtain a Foreign Business License, filing an application with the Business Department to be reviewed by the Cabinet or Foreign Business Committee.
Approval of a FBL will be reviewed based on how it benefits Thai society and national safety, how it would impact and benefit the development of the nation and how it would create local employment opportunities. The business must not be seen to be in direct competition with Thai owned businesses.
Once documents are submitted to the Director General a decision will be made within 60 days and a license issued with 15 days thereafter. Due to the protective nature of Thailand in regards to foreign businesses the process can take longer, and without having a qualified lawyer present the application will more than likely fail.
Requirements of Foreign Business License
Personal Requirements:
Passport or travel document with validity of not less than 6 months.
Not being declared incompetent or quasi-incompetent
Not being bankrupt
Not having been convicted by a court judgment or fined under the Foreign Business Act (FBA) or related regulations, unless discharged for at least five years prior to the application date
Not having been imprisoned for certain specified offenses under the Penal Code or immigration laws, unless discharged for at least five years prior to the application date
Not having had a previous FBA license revoked within the past five years
Documentation Requirements:
Copy of the juristic person certificate
Copy of passport or identification document
Certification by the applicant confirming qualifications and absence of prohibitions
Map of business location.
Declaration of business type and license required
Financial statements of the last three years with Thai translation
Power of attorney if represented by another person
Copy of house registration, residence certificate in Thailand, or evidence of temporary stay permission.
100% Foreign Owned
One Thai for one work permit
Progressive Tax rate with 20% CIT
Minimum 3 million baht registered capital
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Frequently Asked Questions (FAQs)
What is the Foreign Business License (FBL) in Thailand?
The Foreign Business License is required for businesses where foreign nationals hold more than 49% of the shares. It ensures compliance with the Foreign Business Act and is needed to legally operate in certain industries.
What types of businesses are restricted for foreign investors?
Certain industries are restricted for foreign investors, including those listed under the Foreign Business Act. Businesses in these sectors may require approval or are completely off-limits for foreign ownership.
Can foreign entrepreneurs own a business outright in Thailand?
Yes, some businesses with BOI certification or in specific industries can allow foreign entrepreneurs to have 100% ownership. However, other industries still require compliance with ownership restrictions.
How long does it take to get a Foreign Business License?
The process typically takes 60 days, but due to the protective nature of Thai regulations, it may take longer depending on the complexity of your business and industry.
What are the key requirements to apply for a Foreign Business License?
Applicants must meet personal and documentation requirements, including valid passports, proof of financial stability, and the business’s legal structure. Specific documents like financial statements and business location maps are also necessary.