Foreign companies are prohibited from business activities specified in the list 1 of the FBA and must obtain a Foreign Business License in order to carry business activities of the list 2 or 3. Prohibited activities include agriculture, forestry, commodities related to the practice of Buddhism, newspaper and television businesses for instance while restricted activities include most service activities. The listing of activities is clearly outdated, and poorly regulates the real business environment of today. The obtention of a Foreign Business License is time-consuming and notably requires to demonstrate that a special know-how and new technologies would be brought to Thailand, which makes it unsuitable for numerous business activities. A few activities can be done freely by majority foreign-owned companies, this is the case for retail or wholesale for instance providing that a significant amount of capital is paid up.

American citizens still benefit from the US-Thai Treaty of Amity that exempts them from most of the business activity restrictions under the FBA. But both these exemptions are strictly limited to foreign shareholding, and do not include tax exemptions or derogations for foreign expatriate recruitment, which can only be given by the Board of Investment (BOI).Numerous companies operating in Thailand are 100% foreign-owned under a license from the Board of Investment coupled with a Foreign Business Certificate. The BOI grants such privileges to foreigners investing in certain activities that are deemed important for the development of Thailand. Eligible sectors are mostly related to industrial activities, but also include digital, software development, trade and investment support.

Aside from the BOI, there is also a set of special incentives for companies to develop activities in the Eastern Economic Corridor (EEC) and special derogations for companies choosing Thailand to set up their Regional Headquarter.

However, the difficulty or impossibility to obtain a Foreign Business License and/or a promotion from the BOI for certain business activities often pushed foreign investors to enter into a joint venture with a Thai partner. The Thai partner will then own more than 50% of the share capital to allow the company to carry out most business activities without any specific restrictions. Corporate and contractual arrangements permitting foreign control of a Thai company are possible, provided that the Thai partner is not a nominee.

Our market entry practice follows a pragmatic approach:

• Business Eligibility Check allowing you to quickly determine whether your business activity can be legally done in Thailand before engaging any substantive cost. When possible, it is recommended that a foreign entrepreneur owns the majority of the shares of his or her company, as it is the best form of investment protection.
• Market Research to analyze industries, distribution channels as well as the size of the market potential for your products and services, and find business partners or investors.
• Entry Strategy to assess a realistic cost and estimate the revenue that your business activity could generate, determine the most suitable structure (soft structure with a representative or legal entity with or without a local partner), and get familiar with the Thai business practices (HR, negotiation, behavior, etc.).
• Business structure to assist with the registration of a Thai limited company, BOI company, Representative Office, Amity Treaty etc. and assist you with ongoing corporate change, post registration duties, accountancy, work permit and visa etc.

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