Coming to Thailand

[haveaniceday]

I believe that one can own 100% of a Thai company that only exports and does not engage in domestic trading within Thailand, is this true ?

Secondly, Americans, Japanese and Australians also have some (different) advantages within Thai companies, anyone know the details for a Australian ?

[samran]

You need to examine the Thailand Australia free trade agreement. There won't be 100% ownership but there will be majority ownership depending on sector.

If a company is BOI approved it can also be 100% foreign owned.

[haveaniceday]

Yeah, my understanding was it was for a manufacturing company in Thailand that only exports can be Foreign owned, (and not using loopholes as in most Farlang owned companies here). This company I believe does not have to be BOI approved.

Anyone know any more on this ?

[Arkady]

Any foreigner can own 100% of a manufacturing company that exports 100% of its produce but you have to ensure that the company is not doing any other business at all, e.g. selling food in its canteen to staff or charging for parking in its car park. There are inspectors who come around to check.

ASAIK Australians are entitled to own 70% of a service sector company under the FTA but you will need to check the wording of the FTA for details. ASEAN nationals should soon have the same right under the AEC.

[ATF]

BOI is the only method that allows 100% foreign ownership and then you will still need other directors/shareholders even though they are not Thai. There are also minimum capital investments involved and the 100% foreign ownership and tax holiday under BOI has a time limit or is reviewed periodically.

The easiest way for most foreigners is to make their Thai born children directors of a Thai company. They can be made directors as soon as they have a birth certificate.

Another method is to set up a pari passu agreement where you give the Thai directors the equivalent shares in a foreign company. In exchange for the foreign company having legal claim on their shares in the Thai company.

There are many trade advantages for Japanese, Asean, Australian and other Asian Pacific countries. You should consult a professional because these agreements are in a constant state of flux.

Edited May 29, 2014 by ATF

[Chao Lao Beach]

Any foreigner can own 100% of a manufacturing company that exports 100% of its produce but you have to ensure that the company is not doing any other business at all, e.g. selling food in its canteen to staff or charging for parking in its car park. There are inspectors who come around to check.

ASAIK Australians are entitled to own 70% of a service sector company under the FTA but you will need to check the wording of the FTA for details. ASEAN nationals should soon have the same right under the AEC.

Interesting subject, I am also interested in getting more info on this, where would I find details describing what a service sector company is for the 70% ownership?

Where would I find more info on me owning 100% export company, Doe sit have to manufacture as such or can the company just buy, package and export ? Are there hefty requirements on capital like on a BOI company ?

(I am not interested in a BOI company by the way)

[ATF]

Any foreigner can own 100% of a manufacturing company that exports 100% of its produce but you have to ensure that the company is not doing any other business at all, e.g. selling food in its canteen to staff or charging for parking in its car park. There are inspectors who come around to check.

ASAIK Australians are entitled to own 70% of a service sector company under the FTA but you will need to check the wording of the FTA for details. ASEAN nationals should soon have the same right under the AEC.

Interesting subject, I am also interested in getting more info on this, where would I find details describing what a service sector company is for the 70% ownership?

Where would I find more info on me owning 100% export company, Doe sit have to manufacture as such or can the company just buy, package and export ? Are there hefty requirements on capital like on a BOI company ?

(I am not interested in a BOI company by the way)

BOI is the only Authority that can permit more than 49% foreign ownership and it is done on a case by case basis. Usually for companies investing 100's of millions of baht in Thailand. BOI also allows the tax free import of all foreign equipment necessary for your company plus a generous tax holiday. A BOI company can be set up for an investment less than 10 million baht.

For export only there are several "Bonded" industrial areas where you can import tax-free and export tax-free and also use Thai made components. You don't even need a Thai company to do this, but you will be subject to foreign tax if you decide not to pay tax in Thailand but these regulations differ by country.

[Arkady]

The Business Development Dept of the Commerce Ministry has the authority to issue alien business licences. You don't need to be a BOI promoted company. Rep offices, US treaty companies, I assume Aus FTA cos, 100% export manufacturers etc all have to apply to BRD for their alien business licence. Retailers like Tesco, Big C got them under an amendment to the FBA for large retail operations.

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[Arkady]

Interesting subject, I am also interested in getting more info on this, where would I find details describing what a service sector company is for the 70% ownership?

Where would I find more info on me owning 100% export company, Doe sit have to manufacture as such or can the company just buy, package and export ? Are there hefty requirements on capital like on a BOI company ?

(I am not interested in a BOI company by the way)

Much of the information you are interested in can be found in the 1999 Foreign Business Act and the Australian-Thai FTA (both attached) Foreign Business Act 1999.pdfaus-hai FTA_text.pdf.

The restricted businesses are in the annexes and services businesses are in Annex 3 which contains a catch all covering all services businesses not mentioned.

Most types of manufacturing and exporting are not covered in the FBA, as they are not considered service businesses. Therefore, you don't need an alien business licence to engage in these businesses, even in fact manufacturing for domestic sale. However, you will need the help of a good lawyer to the get the company registrated with majority foreign ownership as the application will obviously be scrutinised in detail by the BDB to ensure the company is not going to engage in anything prohibited to foreigners by the FBA. It is possible, as I know someone who registered a 100% foreign owned furniture export manufacturing company without an alien business licence or BOI promotion.

Not from the FBA that large foreign owned retail and wholesale businesses are specifically excluded from the FBA in Annex 3. That was put there to enable the rescue of Lotus, Carrefour, Big C and Makro which might otherwise have shut down with the loss of thousands of Thai jobs as their Thai major shareholders had overextended themselves in the 1997 Thai economic crisis.

As mentioned already, any business that is included in the FBA annexes will need to obtain an alien business licence. This includes companies exempted by international treaties: the US treaty, Aus-Thai FTA and, soon enough, the AEC. For US treaty companies it is currently a formality, although it takes a few weeks. I haven't heard of anyone using the Aus-Thai FTA for this purpose yet. You need to set up a clean company to get an alien business licence and the alien business must be approved before you actually finalise the registration of the company. Thais can hold shares in US treaty companies without affecting the status and I expect that is the same for Aus-Thai companies, e.g. in the case that Australians were to hold 60%, rather than 70%, the FTA status should remain the same but not if there were other nationalities holding shares, i.e. neither Australian nor Thai.

Re AEC. It seems that the AEC intention is to allow any company that has been actively operating a business in an ASEAN country for two years to qualify as ASEAN. Thus a 100% farang owned company in Cambodia with documents to prove it was active there for two years, should technically be allowed to set up a 70% owned subsidiary in Thailand. However, I expect the Thais to make this difficult in practice.