Things You Need to Know Before Investing in Thailand
[Investment Advantages]
Thailand is a tropical country located on the Southeast Asian peninsula, with a coastline stretching 2,000 miles, bordering Myanmar, Cambodia, Laos, and Malaysia. Thailand has a well-developed tourism industry, known for its white sandy beaches, crystal-clear turquoise waters, rich ancient ruins, Buddhist temples, and local specialty cuisine.
According to the World Bank Group's 2020 "Doing Business Report," Thailand ranks 21st out of 190 countries/regions in terms of business ease, improving by 6 positions compared to the previous year. The report also highlighted significant improvements in Thailand's business environment, including a reduction in the steps and time required to obtain building permits and enhanced shareholder litigation procedures. Thailand has convenient infrastructure and is culturally very welcoming to overseas investors.
In 2019, Thailand's GDP exceeded 543 trillion USD, and its population reached 69.62 million. The educational level of the Thai population has steadily improved year by year, with most Thai people being fluent in English. Businesses can easily recruit cost-effective, well-educated employees with skilled expertise, which is highly beneficial for business growth.
World Bank: Thailand’s GDP from 2001 to 2019 (USD trillions)
Registering a company in Thailand generally allows for a broad business scope, which helps enterprises save on the costs of applying for additional licenses and ensures compliance in the long run. This also grants companies greater operational flexibility. However, if a company's production and operations involve national security and stability or impact arts and culture, customs, handicrafts, natural resources, or the ecological environment, approval is required before commencing operations.
Furthermore, Thailand places great emphasis on diplomacy and regional cooperation. Over the years, it has signed free trade agreements (FTAs) such as the ASEAN-China, ASEAN-Japan, ASEAN-Korea, ASEAN-India, and ASEAN-Australia-New Zealand FTAs. Additionally, Thailand has established bilateral FTAs or economic partnership agreements with countries like India, Australia, New Zealand, and Japan. Thai companies exporting products to other ASEAN countries can benefit from a "zero-tariff" policy.
The Board of Investment (BOI) is Thailand's main authority responsible for investment promotion. BOI categorizes encouraged industries into six groups: A1, A2, A3, A4, B1, and B2. Projects approved by the BOI can receive tax incentives of up to "8 years of tax exemption plus a 50% reduction for 5 years" and enjoy other non-tax privileges. Investors interested in Thailand can contact us for further details. If the application criteria are met, Jilian can assist with the application process.
[Registering a Company in Thailand]
In Thailand, companies generally receive broad business scope approvals, which help enterprises save on the cost of applying for additional permits and ensure regulatory compliance. This also grants companies greater operational flexibility. However, if a company's production or operations involve national security and stability or impact arts and culture, customs, handicrafts, natural resources, or the ecological environment, special approval is required before commencing operations.
[Thailand’s Trade Agreements & Free Trade Benefits]
Thailand values diplomacy and regional cooperation. Over the years, it has signed several ASEAN free trade agreements (FTAs), including those with China, Japan, Korea, India, and Australia-New Zealand. Additionally, Thailand has bilateral FTAs or economic partnership agreements with India, Australia, New Zealand, and Japan. Thai companies exporting products to other ASEAN countries can benefit from a zero-tariff policy.
[Thailand Board of Investment (BOI) Incentives]
The Board of Investment (BOI) is Thailand’s primary authority responsible for investment promotion. The BOI categorizes investment-promoted industries into six groups: A1, A2, A3, A4, B1, and B2.
Projects approved by the BOI can receive tax incentives of up to "8 years of tax exemption + 50% tax reduction for 5 years", along with other non-tax incentives.
If you are considering investing in Thailand, feel free to contact us for further details. If you meet the eligibility criteria, Jilian can assist you in the application process.
[Types of Companies in Thailand]
Business entities in Thailand include:
✔ Joint ventures/partnerships
✔ Private limited companies
✔ Public limited companies
✔ Foreign branch offices
✔ Foreign representative offices
✔ Regional offices of multinational corporations
Among these, private limited companies are the most common and are the preferred choice for most Chinese investors. Establishing a private limited company allows shareholders to bear limited liability only up to their shareholding, and the company can apply for work visas.
[Requirements for Establishing a Limited Company in Thailand]
✔ Foreign ownership restrictions:
A foreign-owned company must have at least 51% Thai ownership.
Thai shareholders cannot be replaced by Chinese nationals later.
Foreign shareholders can hold up to 49% of the shares.
✔ Minimum of three promoters (regardless of nationality):
A fully foreign-owned company cannot directly operate in Thailand.
It is recommended to first register with three non-Thai individuals, obtain the Certificate of Incorporation (COI), and then adjust the shareholding structure to a joint venture.
✔ Minimum registered capital:
At least 1 million THB (no capital verification required).
To apply for work permits and visas for foreign directors/employees, the registered capital must be at least 2 million THB per work permit.
For every additional work permit, the capital must be increased by 2 million THB accordingly.
✔ At least one director (no nationality restrictions).
✔ Work visa requirements:
To apply for work visas, the company must hire Thai employees at a ratio of 1 Thai per 4 foreign employees.
However, if the company is approved by the BOI, it is exempt from this requirement.
[Taxation in Thailand]
✔ Corporate Income Tax (CIT):
Companies are taxed on income earned within Thailand at a progressive rate:
Profit > 3 million THB → 20% tax
Profit 300,000 - 3 million THB → 15% tax
Profit 0 - 300,000 THB → 0% tax
✔ Personal Income Tax (PIT):
Any individual who resides in Thailand for 180 days or more per year is subject to income tax on any foreign income remitted to Thailand during the tax year.
The tax follows a progressive system (5% to 37%) and must be declared before the 7th of each month.
✔ Value-Added Tax (VAT):
Businesses with annual revenue exceeding 1.8 million THB must register for VAT.
The VAT rate is 7%.
✔ Specific Business Tax (SBT):
Certain businesses that cannot be taxed under VAT regulations are subject to Specific Business Tax (SBT), which is based on total revenue:
Financial credit services → 3%
Life insurance businesses → 2.5%
Pawnshop businesses → 2.5%
Real estate sales → 3%
Securities trading → 0.1%
✔ Withholding Tax (WHT):
A source-based tax deduction applicable to specific types of income.