Foreign Business License Thailand

Thailand is home to many national and multinational companies. Over the past five years, it has become a popular business hub due to its stable economic growth, modern infrastructure, popularity among tourists, and strict government policies.

One such policy is that foreign investors wishing to operate businesses in certain industries in Thailand must obtain a foreign business license. So, what exactly is a foreign business license, how can you get one, and do you even need one? To find answers to these crucial questions, read this article prepared by the experts at S & F Consulting Firm

What Is a Foreign Business License in Thailand?

In Thailand, if you are a foreign investor planning to set up a business, you need to understand the Foreign Business License. The FBL is a legal permit that allows foreign individuals or companies to engage in specific business activities within Thailand. The FBL is governed by the Foreign Business Act B.E. 2542.

The Foreign Business Act categorizes business activities into three lists:

1. List 1: It lists activities that foreigners are completely prohibited from doing. These activities are considered essential to Thai culture, traditions, or national security. For example, publishing newspapers and farming rice.

2. List 2: Foreigners can only take part in these businesses after getting special permission from the Minister of Commerce. An example of this is manufacturing firearms.

3. List 3: It focuses on activities where Thai nationals are not yet ready to compete with foreign businesses. Foreigners can participate in these areas if they get a Foreign Business License.

If your intended business falls under List 2 or List 3, obtaining an FBL is mandatory before commencing operations. You may be curious about why Thailand has these regulations. The Foreign Business Act is designed to protect Thai businesses from unfair competition by foreign entities.

Business Activities Restricted for Foreigners Under Foreign Business Act

List 1: Activities Absolutely Prohibited to Foreigners

Foreigners are completely banned from participating in these activities because they are important to Thai culture. Some examples include:

• Operating press or broadcasting stations

• Farming rice or growing crops

• Raising livestock

• Processing timber from natural forests

• Fishing in Thai waters and specific economic zones

• Collecting Thai medicinal herbs

• Trading or auctioning antiques and historical objects

• Creating Buddha images and monk alms-bowls

• Buying and selling land

List 2: Activities Related to National Safety or Culture

Foreigners can participate in these businesses only if they obtain special permission from the Minister of Commerce. Some examples include:

• Production, distribution, and maintenance of firearms, ammunition, gunpowder, and explosives

• Manufacturing components for firearms, ammunition, and explosives

• Producing military items such as armaments, ships, aircraft, or vehicles

• Creating any type of war materials or equipment

• Domestic transportation by land, water, or air, including domestic aviation

• Trading antiques or artistic objects that are unique to Thailand

• Producing wood carvings

• Raising silkworms and producing Thai silk yarn, weaving, or printing patterns

• Creating Thai musical instruments

• Manufacturing goldware, silverware, nielloware, bronzeware, or lacquerware

• Producing crockery or porcelain that represents Thai arts and culture

• Extracting sugar from sugar cane

• Farming salt, including non-sea salt

• Producing rock salt

• Engaging in mining activities such as rock blasting or crushing

• Processing timber for furniture and utensils

List 3: Activities Where Thai Nationals Are Not Yet Ready to Compete

This list includes activities where Thai nationals are not yet fully prepared to compete with foreign businesses. Foreigners can engage in these activities if they obtain a FBL. Some examples include:

• Hatching and raising aquatic animals

• Managing forestry from grown forests

• Producing plywood, veneer wood, chipboards, or hardboards

• Manufacturing lime

• Offering accounting services

• Providing legal services

• Offering architectural services

• Providing engineering services

• Engaging in internal trade of traditional agricultural products not prohibited by law

• Retailing goods of all types with a total minimum capital of less than one hundred million Baht or less than twenty million Baht per store

• Wholesaling goods with a minimum capital of less than one hundred million Baht per store

• Running advertising businesses

• Operating hotels, except for hotel management services

• Providing guided tours

• Selling food and beverages

• Cultivating, propagating, or developing plant varieties

Requirements for Obtaining a Foreign Business License in Thailand

To successfully acquire an FBL, you must meet these requirements:

1. Business Registration

Your business must be registered as a legal entity in Thailand. This can be a partnership, sole proprietorship, limited company, or public limited company.

2. Minimum Capital

You must show a minimum capital investment to start a business. Typically, this amount is at least 2 million baht. If your business falls under List 2 or List 3 of the Foreign Business Act, the required amount increases to 3 million baht. This capital must be brought into Thailand.

3. Applicant Qualifications

As an applicant, you must meet certain qualifications:

• You must be at least twenty years old.

• You need to have a residence in the Kingdom or be allowed temporary entry under immigration laws.

• You should not be considered incompetent or quasi-incompetent.

• You must not be declared bankrupt.

• You should not have been punished by a court judgment or fined for any offenses under this Act or under specific previous laws unless at least five years have passed since your discharge.

• You must not have been imprisoned for offenses like cheating, misappropriation, or trade-related crimes unless at least five years have passed since your discharge.

4. Business Plan

You must prepare a detailed business plan outlining your proposed activities. This plan should include:

• Nature and scope of the business.

• Investment value.

• Number of employees.

• Projected financial statements.

5. Maintain Thai Employment Ratio

Although the Foreign Business Act does not clearly define a specific ratio, it is advisable to maintain a reasonable balance between Thai and foreign employees. A common practice is to have four Thai employees for every foreign employee.

6. Shareholder Information

You must disclose information about your company's shareholders.  This includes their nationalities and their shareholdings.  This information helps the authorities assess the foreign ownership structure of your business.

7. Office Address

You need to have a registered office address in Thailand.  This address must be a physical location.  It cannot be a P.O. Box.  You will need to provide proof of your office address.  This could be a lease agreement or a property ownership document.

Step-by-Step Process to Obtain a Foreign Business License in Thailand

Here is a step-by-step guide to help you get a Foreign Business License in Thailand.

Step 1: Determine if an FBL is Required

The first step is to classify your business activity under the Foreign Business Act B.E. 2542. Specifically, you need to determine if your business falls under List Three. The Department of Business Development website is the best place to check categorized lists.

If your business falls under List Two or List Three, you need to obtain a Foreign Business License. If your business is not listed at all, you likely will not need an FBL. However, you will still need to obtain other permits and licenses.

Step 2: Prepare Required Documentation

Next, you need to gather all the necessary documents. It is important to ensure all documents are accurate and complete. Below is a list of the required documents:

Company Documents

• A certified copy of your company's Certificate of Incorporation.

• A certified copy of your company's Memorandum of Association or Articles of Incorporation.

• A list of shareholders that includes their nationalities and percentage of shareholding.

• A Power of Attorney authorizing a representative in Thailand to act on behalf of your company.

Business Plan

Your business plan is a critical document and should include the following sections:

• Executive summary

• Information about your company's background and mission.

• Research and insights about your target market in Thailand.

• Details about what your business will offer.

• Information about the people involved in the business.

Financial Documents

• Audited financial statements for the past three years, if available. If your company is new, provide a detailed financial forecast.

• Bank statements showing sufficient capital to operate the business in Thailand.

• Office Address Proof

• A copy of the lease agreement or property title deed for your registered office in Thailand.

• A map showing the location of your office.

Other Documents

• Copies of passports for directors and authorized signatories.

• Photographs of the office building.

All documents that are not in Thai must be officially translated by a certified translator and notarized.

Step 3: Complete the Application Form

The FBL application form requires detailed information about your company and your proposed business activities.  You will need to provide:

• Company name and registration details.

• Business address in Thailand.

• Details of directors and shareholders.

• Description of your business activities

Step 4: Submit the Application

Submit the completed application form and all supporting documents to the DBD.  You can usually do this in person at the DBD office.

Step 5: Wait for Application Review

The Department of Business Development carefully reviews your application. They check the provided information and evaluate your business plan and financial status. This review process can take around 60 days. The duration depends on the complexity of your business and the current workload at the DBD.

Step 6: Receive the FBL

If your application is approved, you will receive your Foreign Business License. This license will outline the business activities you are allowed to conduct in Thailand as well as any conditions or restrictions.

Step 7: Register the Business and Get Other Permits

Getting the FBL is just one step in the process. If you have not already done so, you will need to register your company with the DBD. Additionally, you must obtain a tax identification number from the Revenue Department.

Depending on your type of business, you may need other permits. For example, a restaurant will require food licenses while a factory will need permits related to manufacturing.

Step 8: Start Business Operations

You can only start operating your business once you have obtained all necessary licenses and permits.

Fee for Obtaining a Foreign Business License in Thailand

The cost of getting a Foreign Business License in Thailand varies based on the type of business and whether you apply as an individual or a company.

General License Fee

The basic fee for the license under Section 7 of the Foreign Business Act is 5,000 Baht.

License Fee for Businesses in List Two

• If you apply as an individual, the fee is 40,000 Baht.

• If you apply as a company, the fee depends on your registered capital. You will pay 10 Baht for every 1,000 Baht of registered capital. The minimum fee is 40,000 Baht and the maximum fee is 500,000 Baht.

License Fee for Businesses in List Three

• If you apply as an individual, the fee is 20,000 Baht.

• If you apply as a company, the fee is 5 Baht for every 1,000 Baht of registered capital. The minimum fee is 20,000 Baht and the maximum fee is 250,000 Baht.

Penalties for Operating Without a Foreign Business License in Thailand

Running a business in Thailand without the required Foreign Business License can result in serious legal penalties, such as:

1. Monetary Fines

Operating a business without an FBL can result in fines ranging from 100,000 to 1,000,000 Thai Baht. For instance, if a foreign-owned company conducts a restricted business without the proper license, it could face these significant penalties.

2. Imprisonment

Individuals responsible for unauthorized business operations may face imprisonment for up to three years. This applies to both foreign investors and Thai nationals who help in bypassing the FBA regulations.

3. Business Closure

Authorities have the right to stop unlicensed business activities. This means your business operations can be legally shut down until you comply with the law.

4. Daily Fines for Continued Violations

If you continue operating without an FBL after being ordered to stop, you could face additional daily fines. These fines range from 10,000 to 50,000 Thai Baht for each day the violation continues.

5. Take Away the Business Assets

If you repeatedly fail to comply with the law, authorities may take your business assets. This action prevents unlicensed businesses from making money illegally.

Frequently Asked Questions

Q: Can I operate my business while waiting for my Foreign Business License Thailand?

No.  You cannot legally operate your business until you have received your Foreign Business License Thailand.

Q: Can I renew my Foreign Business License in Thailand?

Yes.  Foreign Business Licenses in Thailand are typically renewable.  You will need to follow a renewal process.

Q: What is the validity period of a Foreign Business License in Thailand?

The validity period varies. It depends on the type of business and the conditions of the license.  Check your license for its specific validity period.

Q: What is the difference between a Foreign Business License and a company registration?

A Foreign Business License permits specific business activities. Company registration establishes your company as a legal entity in Thailand.  You usually need both.