Opening a company in Thailand: cost, risks, conditions

Foreign companies in Thailand are limited in their rights to carry out certain actions, to acquire or own property and land (Foreign Investment Law of 1999, Land Code)

In particular, companies with foreign capital are prohibited from operating in the following industries:

• banking and insurance;
• publishing activities;
• commercial fishing and forestry;
• aviation and tourist transportation;
• acquisition of land.

For a company to be legally considered Thai, a majority stake (51%) must be owned by Thai citizens. A foreign shareholder can own no more than 49% of the company's capital.

HOW MUCH DOES IT COST TO REGISTER A COMPANY IN THAILAND?

The size of the authorized capital for companies must be a multiple of 1 million baht: 1, 2, 3 and so on million. But if you plan to get a job in this company, then the minimum authorized capital is 2 million baht. For each additional foreigner employed in the company, another 2 million baht must be added to the authorized capital. Naturally, in fact, no one requires depositing this amount into the account; Thai lawyers provide this service for a certain fee (from 20,000 baht for every million baht of the authorized capital).

Additional costs of doing business include:

• payment of state duty;
• legal services when opening a company will cost on average $3000-3500;
• accountant services for preparation and submission of reports approximately $1000 per year;
• annual visa extension and work permit;
• corporate income tax (if the company's profit exceeds $5,000 per year) - from 15% to 23% depending on the size of the company's profit;
• VAT (if the company's annual income exceeds $53,000) – 7%.

The total cost of registering and maintaining a business depends on many nuances: the purpose of registering a company, types of activities, the number of officially registered employees, the need to obtain a work permit. For some types of business, Thai law provides for special tax conditions.

ORDER OF OPENING LTD

The most common organizational and legal form of doing business in Thailand is LLC (Thai Limited Company). It provides for a simplified procedure for registering a company and compliance with minimal formalities when doing business.

To open a Company limited you must:

1. Obtain a business visa (if the owner plans to work in the company himself).
2. Attract at least 3 shareholders to the company. Of these, at least two founders must have Thai citizenship and have a combined ownership of 51% of the shares.
3. Register the company name with the Business Development Department of the Ministry of Commerce. Registration of a company name takes 3 business days.
4. Prepare constituent documents and convene a meeting of founders. It is necessary to sign the Memorandum of Association, approve the name, charter, size of the authorized capital and legal address for the company.
5. Order a print with the company logo.
6. Pay a registration fee of 0.05% of the authorized capital (minimum fee 500 baht, maximum 25,000 baht).
7. Submit an application for establishing a company to the Business Development Department (at the place of intended registration). The application review period is 10 working days.
8. Register the company with the Department of State Revenues and Duties.
9. Obtain a taxpayer identification number and a director (foreigner) permit to work in Thailand.

All official documents must be completed in Thai, including the company name in Thai transliteration. With the help of an experienced lawyer, you can register a company within 10 days. If an investor decides to register a company on his own, he should be prepared for the fact that business registration will take 1-3 months.

The main disadvantage of this form of commercial partnership is the insecurity of investments, since foreigners cannot independently manage their business and are forced to take into account the opinions of shareholders. For every foreign employee you will have to hire 4 Thais (formally or actually, depending on the needs of the business).

HOW TO SECURE INVESTMENTS

To control his company, a foreign investor can include the following provisions in the company’s Charter:

• appoint yourself as the sole Managing Director;
• establish the procedure by which decisions must be signed by the Managing Director;
• indicate the quorum of shareholders of at least 65% of the votes;
• divide shares according to voting rights into ordinary and preferred ones, and give them different rights.