Setup New Business Advice Please

[nhague]

gday all! So I'm looking to setup a company here in Thailand - it's a training company that will provide an internationally-recognised qualification in fitness. I have a few questions ta...

1. The basic setup of the company - I want to have the equivalent of a private company with the company being it's own entity, with me as the Director. What is the Thai equivalent of this called thanks?

2. Someone point me to a good accountant and solictor thanks - someone that's been battletested by you if you're started a company and used their services.

3. What are the basic steps and costs involved in step (1)

4. What are the ongoing costs associated with a company where I am the sole Director

5. What are my tax liabilities and the Thai-equivalent of British NI or Australian Super each month (if applicable)

6. What level of corruption and utter shiite can I realistically expect on a monthly/yearly basis, and what can I do to alleviate it in your battletested experience?

7. Is it worth setting up in Thailand if point (6) is too much a pain in the arse, or would I be better to look at Bali (my target market is global, but starting predominantly with Aussies) - has anyone in THAT case, got any experience with Indo and Bali business establishment?

Lots of questions but I hope between all your grizzled commercial ninjas out there, you can give me the answers?!

Cheers all,

Nathan

[tombkk]

Lots of questions, and you would need to read many books to find all the answers. Some will recommend lawyers, some will point to lawyers who are sponsors here. "Co., Ltd" might be the form of company you are looking for, but I would ask the lawyer, as he or she knows best.

Corruption is not an issue any more in Thailand if you just want to set up a small company.

But you won't be able to be the sole director, as 51% of the company must be owned by Thais. Also, if you want to work in the company, you will need a work permit and at least four Thai employees per work permit (i.e. per foreigner working there). You will also need to have a minimum of THB 2 million paid-up capital per work permit.

It is worth setting up a company in Thailand if you want to live here and love the Thai people. For expats, it's like this: If you survive the first year, you are fine. I have seen many people who left before the first year was over, they simply didn't understand the culture or could otherwise not cope with it. After the first year, you'll learn. And if you've been here for five years, you can't leave any more.

Thailand is not a country to make money. Thailand is a country to love, with their people, their culture, their food, and their Thai-ness. Yes, some people make money here, but the basic requirement is to be able to live here.

How long have you lived here?

Edited July 4, 2011 by tombkk

[nhague]

Gday mate - thanks for the intial info Much appreciated! I've been living here on and off for the last 6 years and now it's time to put roots down in Thailand because I love the place, the people and frankly, the weather My business is pretty good as people can train in their own countries to do my course, or come to the tropical paradise that is THAILAND and do it all here, or just come here to be assessed and pass with industry-recognised credentials. The Co. Ltd. is the one I think I'll go for - but I do NOT want a business partner - I don't believe in them at all. How would the multinationals do it or larger foreign companies I wonder? I don't want a foreigner business partner, so I'm definately not wanting a Thai business partner - no offence, but like I say, I do not dig a business partner. Any ideas guys? Nathan

[Tatsujin]

You have no choice other than to have a Thai business partner with you holding no more than 49%. No other way of doing it (unless anyone knows something I don't).

If you want to get in touch and discuss things, feel free to PM me. I can also put you in touch with a Thai lady who can do all the paperwork for you. She handles all my Visa, Work Permit and other company paperwork.

Edited July 5, 2011 by Tatsujin

[tombkk]

You have no choice other than to have a Thai business partner with you holding no more than 49%. No other way of doing it (unless anyone knows something I don't).

I believe that if the investment is higher than a certain threshold (THB 50 million?) the company can be foreign-owned. But this might be restricted to the retail industry (hypermarkets), I'm not sure.

[Sunbelt Asia]

You can be the sole director of a Limited Company but regardless of which route you take, 3 shareholders is required. However, the number of shares each shareholder holds can be as low as one.

The following can be used if you wish to be the majority shareholder however.

1. You could apply under the Board of Investment (BOI) but your business must match with those eligible BOI Business Activities:

http://www.boi.go.th/english/about/eligible_activities.asp

2. You could apply for an Alien Business License, but the official must be able to see that your business is a great benefit for Thai market/labor force and approval by the Director General is required.

3. If you were an American citizen you could be the majority shareholder under the Amity Treaty.

The easiest alternative is to open a Limited Company of which, Thai partners must own more then 51%. You can be the sole Director of this company but, if you will be conducting business in Thailand and signing documents related to the company in Thailand you will need to obtain a work permit. You can establish the business as such that even as a minority shareholder, you are allowed more voting rights than other shareholders.

To open a Thai Limited Company you must have three Promoters (which will also become shareholders once the company is established). The Ltd Company must file a memorandum of association, convene a statutory meeting, register the company with the government, and obtain a company income tax identity number/card. They are also required to follow accounting procedures as laid out in the Revenue Department and Department of Business Development (Ministry of Commerce). Companies are required to withhold income tax from all regular employees as well as to withhold income tax from services consumed.

A physical address is needed, generally a house or condo is not allowed. Capitalization fees are 500 baht per 100,000 baht of capital. If your wife is Thai the registered capital needs to be at least one million, otherwise 2 million Baht. You will need to pay in at least 25% of your registered capital within 90 days of registering your company either by cash, assets inventory or equipment. To pay up your registered capital by assets you would be required to transfer the designated assets into the company’s name (once the company is registered). You will need a company seal.

In order to obtain a work permit you will need at least two Thai employees the first year (the 4 Thai employee rule per work permit is often relaxed, but its best to check first) and four Thai employees in the second year. The usual required paid-up registered capital must be 2 Million Baht for 1 work permit. Marriage to a Thai spouse can be advantageous in reducing the required paid-up registered capital from 2 Million to 1 Million baht for 1 work permit as well as reducing the number of Thai employees to two in the first year.

You should consider talking to a lawyer before starting this procedure, Sunbelt Asia has extensive experience setting up Limited Companies.

[tombkk]

3. If you were an American citizen you could be the majority shareholder under the Amity Treaty.

Is this still being applied? Since this violates the WTO regulations, I have heard that the Amity Treaty will not be applied any more, as otherwise citizens of all other nationalities can claim the same right.

[Tatsujin]

3. If you were an American citizen you could be the majority shareholder under the Amity Treaty.

Is this still being applied? Since this violates the WTO regulations, I have heard that the Amity Treaty will not be applied any more, as otherwise citizens of all other nationalities can claim the same right.

Since when has Thailand followed or even cared about the rest of the world lol . . . you know and i know they do whatever they want, whenever they want to and without even a cursory justification to anything or anyone else.

[Sunbelt Asia]

Sunbelt Asia does Amity treaty companies on a regular basis. As you can see by the links below, information is on the US government export information site as well as on the BOI site.

http://www.export.gov/thailand/treatyofamity/index.asp

http://www.boi.go.th/thai/how/legal_issues_for_roreign_investors.asp

Americans are still able to open businesses under the Amity Treaty.

[sunbelt][/sunbelt]

[CWMcMurray]

3. If you were an American citizen you could be the majority shareholder under the Amity Treaty.

Is this still being applied? Since this violates the WTO regulations, I have heard that the Amity Treaty will not be applied any more, as otherwise citizens of all other nationalities can claim the same right.

Even though it does appear to violate terms of WTO agreement, it is not such a simple matter...

The Treaty of Amity is is effect unless either Thailand or USA choose to officially cancel it...

As tot he WTO issue, it would need to be handled just like any other "WTO Violation"... (anti-dumping claims , unfair tariffs, gov subsidies etc..)

ie. the agrevied state ort party would have to file a complaint with WTO and then go through the entire WTO adjudication process. (which could take years and lots of money).

Then if a finding by WTO is that it is in fact a violation of WTO agreement, then and only then they would advise possible solutions, a timeline to follow and possible penalties if WTO ruling is not followed.

In all honesty, I doubt this will ever be challenged in WTO due to the fact that it is not worth the time and money for many gov. or companies to bother with...

My guess is the reason why MNC of other nationalities don't seem to be making that big a deal about it, is because they form BOI companies or have other ways of getting around this issue, so it is not worth it to them to make a big stink and foot the bill to try and fight it in WTO.

[tombkk]

3. If you were an American citizen you could be the majority shareholder under the Amity Treaty.

Is this still being applied? Since this violates the WTO regulations, I have heard that the Amity Treaty will not be applied any more, as otherwise citizens of all other nationalities can claim the same right.

Even though it does appear to violate terms of WTO agreement, it is not such a simple matter...

(...)

My guess is the reason why MNC of other nationalities don't seem to be making that big a deal about it, is because they form BOI companies or have other ways of getting around this issue, so it is not worth it to them to make a big stink and foot the bill to try and fight it in WTO.

Are you aware of any company that has been set up as 100% (or at least majority) US-owned in the last three years?

I am not saying that the Amity Treaty has been cancelled, I am saying that it is not applied any more. This is what I heard, so I depend on your knowledgable input to find out whether this is true or just a rumour.

[CWMcMurray]

Yes, I know of two friends of mine who have opened Amity companies, one about 1 yr ago and the other about 1 1/2 yrs ago...

One through a Lawyer in Chaing Mai and another through a lawyer in Bangkok

On another note.... I have heard many Thai Lawyers do not like and do not want to help set up Amity companies... not sure if it is because they don't know about it or if they just don't like the idea of it...

My friend in Chaing Mai advised that he had to talk to a few lawyers before he found one one willing (or able?) to set it up for him.

Edited July 8, 2011 by CWMcMurray

[tombkk]

Yes, I know of two friends of mine who have opened Amity companies, one about 1 yr ago and the other about 1 1/2 yrs ago...

Thanks, that answers my question. I will check back with the guy who told me that rumour.

[SolarOhm]

You have already condemned yourself to search in the wilderness for the imaginary unicorn.

Get real and recognise the facts - you are in a Foreign land and they have their own set of laws. You are obligated to conform, and you can not just do what you want!

There are many different structures you could use to establish the activity you are keen on.

If you use a Company then you will be a Minority Shareholder - and MUST have Thai Directors employed - (not nominally either or you will fall foul of regulations)

Other structures you could use require Partners too - either Thai or Farang, or both. Choose your own poison.

Starting from the Emma Chizit position means you will go cheap and suffer the death of a thousand daggers. 90% of all small businesses fail because of lack of capital and poor management skills. (get a business education or pay for a professional who has the knowledge and experience you lack)

If you do not have the freight to pay for professional advice in the set-up you will pay a lot more later on - and suffer endlessly, until you wimp away.

Do you want to do it right from the start or try the cheapies and end up in a real mess?

PM me if you are a serious business person.

[simon43]

I would suggest that Cambodia could provide you with a better and more secure business environment, (based on my understanding of your needs and what is legally available and realistically possible after I visited Cambodia last year):

- You can register your company without any other parters

- No Cambodian shareholders are required

- Your work permit is available aginst a small 'payment'

- If your business is primarily/solely targeting overseas customers, then no locals will bother you

I have a business(s) in Thailand, but I would relocate to Cambodia in an instant if this were feasible for me, (which it is not since my business is a hotel in a specific Thai location)

Simon

[tombkk]

I would suggest that Cambodia could provide you with a better and more secure business environment, (...) I have a business(s) in Thailand, but I would relocate to Cambodia in an instant if this were feasible for me, (which it is not since my business is a hotel in a specific Thai location)

Simon

I have a company in Cambodia, too. 100% foreign-owned, very easy to get a one-year multiple entry business visa without need for border-runs every 30 days, work permit available for US$ 100/year without much hassle.

However, I want to live in Thailand, and you say you have to live in Thailand due to your specific business.

That is the reason why it is easier to open a company in Cambodia: They want to attract people. Thailand does not need that.

[SolarOhm]

Can't help but smile about that. You could even go to Hong Kong or register a BVI company - but if you venture in to Thailand and establish a business there you will need to deal with the same rigamarole regarding taxes and authorizations . Much easier to just bite thebullet and set up one simple structure in Thailand!