Foreign Business License

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The Foreign Business Act of 1999 governs the ownership of Thai businesses by foreign nationals. Different rules apply to foreign owned businesses and Thai owned businesses. A foreign owned business is defined as a business with over 49% foreign ownership. Under Thai law, a foreign national can only be majority owner of business operation that is not prohibited by the Foreign Business Act, authorized by the Board of Investments, or allowed by bilateral treaty agreements.

The Foreign Business Act restricts the activities which foreign owned business can conduct business. The FBA list three categories of controlled business activities. The first category are businesses which foreigners are barred from entering because of special reasons and they cannot get special permission from the government to enter into those businesses. These types of businesses are restricted only to Thai nationals. The businesses are as follows:

Prohibited Foreign-Owned Industries

  1. The Press, radio broadcasting station or radio and television station business
  2. Rice farming, plantation or crop growing
  3. Livestock farming
  4. Forestry and timber processing from a natural forest
  5. Fishery, only in respect of the catchment of aquatic animals in Thai waters and specific economic zones of Thailand
  6. Extraction of Thai medicinal herbs
  7. Trading and auction sale of antique objects of Thailand or objects of historical value of the country
  8. Making or casting Buddha Images and monk alms?bowls
  9. Land trading

The second category are industries which are vital national interests. They are generally related to national security, Thai arts, or national resources. Foreign owned businesses must get a license from the Minister of Commerce with approval from the Cabinet to operating in Thailand. The following businesses fall under the second category:

Businesses related to National Safety or Security

  1. Production, distribution and maintenance of:
    1. firearms, ammunition, gun powders and explosives;
    2. components of firearms, ammunition and explosives;
    3. armaments, ships, aircraft or vehicles for military use;
    4. equipment or components of all types of war materials
  2. Domestic transportation by land, water or air, including domestic aviation

Businesses Having Impacts on Arts, Culture, Traditions, Customs and Folklore Handicrafts

  1. Trading of antiques or artistic objects that are artistic works or handicrafts of Thailand
  2. Production of wood carvings
  3. Silkworm raising, production of Thai silk yarn, weaving of Thai silk or printing of Thai silk patterns
  4. Production of Thai musical instruments
  5. Production of gold ware, silver ware, niello ware, bronze ware or lacquer ware
  6. Production of crockery or porcelains representing Thai arts and culture

 

Businesses Having Impacts on Natural Resources or the Environment

  1. Production of sugar from sugar cane
  2. Salt farming, including non-sea salt farming
  3. Production of rock salt
  4. Mining, including rock blasting or rock crushing
  5. Timber processing for production of furniture and utensils

The third category of businesses have been designated as activities which Thai nationals are not ready to compete with foreigners. Foreign owned businesses can operate in these business categories with permission of the Ministry of Commerce and an application for a Foreign Business License. The following is a list of the businesses activities in category three with a catch-all in number 21 (Other service businesses):

Businesses Thai Nationals are Not Ready to Compete with Foreigners

  1. Rice milling and production of flour from rice and economic plants
  2. Fishery only in respect of the hatching and raising of aquatic animals
  3. Forestry from a grown forest
  4. Production of plywood, veneer wood, chipboards or hardboards
  5. Production of lime
  6. Provision of accounting services
  7. Provision of legal services
  8. Provision of architectural services
  9. Provision of engineering services
  10. Construction, with the exception of:
    1. Construction of structures for delivery of infrastructure public services in the sphere of public utilities or transportation requiring the use of special apparatuses, machines, technology or expertise, with the minimum capital of five hundred million Baht or upwards from foreigners;
    2. Construction of other types as prescribed in the Ministerial Regulation
  11. Brokerage or agency businesses, with the exception of:
    1. being a broker or an agent in the sale or purchase of securities or in services related to futures trading of agricultural commodities or financing instruments or securities;
    2. being a broker or an agent in the sale, purchase or procurement of goods or services necessary for the production or the provision of services amongst affiliated enterprises;
    3. being a broker or an agent in the sale or purchase, procurement, distribution or acquisition of domestic and foreign markets for the distribution of domestically manufactured or imported goods, which is in character the operation of international trade, with the minimum capital of one hundred million Baht or upwards from foreigners
    4. being a broker or an agent of other types as prescribed in the Ministerial Regulation
  12. Sale by auction, with the exception of:
    1. a sale by auction which, in character, involves international bidding of items other than antiques, objects of antiquity or artistic objects that are artistic works or handicrafts or objects of antiquity of Thailand or of historical value of the country;
    2. sales by auction of other types as prescribed in the Ministerial Regulation
  13. Internal trade related to traditional agricultural products or produce not yet prohibited by law
  14. Retail sale of goods of all types with the total minimum capital in the amount lower than one hundred million Baht or with the minimum capital of each store in the amount lower than twenty million Baht
  15. Wholesale of all types with the minimum capital of each store in the amount lower than one hundred million Baht
  16. Advertising business
  17. Hotel business, with the exception of the hotel management service
  18. Guided touring
  19. Sale of food and beverages
  20. Cultivation, propagation or development of plant varieties
  21. Other service businesses, with the exception of service businesses as prescribed in the Ministerial Regulation

There are exemptions available for foreign businesses. The Board of Investments will allow certain business to engage in category 2 and category 3 activities if they have been designated promoted activities. Nationals of certain treaties such as the United States, Japan, Australia, and ASEAN may be accorded the same status as Thais in a certain number of listed business activities. The Thai government may also provide a temporary permit for a foreign owned companies to operate in a restricted business activity.

The process of forming a company in Thailand is complex with many restrictions. It is important that you contact a knowledgeable Thai corporate attorney to assist you with the process.