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Company formation in Thailand

Тhailand might not be the first choice that springs to mind when you think about starting an oversea business. More established jurisdictions have already gained the trust of businesspeople and investors worldwide. This can lead to a lack of time and motivation for exploring less well-known countries. However, often it's precisely those less popular business destinations that might surprise you the most. Thailand falls into this category. Company formation in Thailand for foreigners often turns out becoming a splendid decision, as the jurisdiction offers numerous advantages.

Let's take a closer look at how to start a business in Thailand, at the process of registering a company, the applicable tax structure, and the deadlines for financial reporting.

Company formation in Thailand

Posted 30 August 2023

Summary

At least THB 15, with a recommended capital of around THB 200,000 (approximately USD 3,000)

Relative to other countries

Thinking about business in this country?

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Diane

Diane, partner of GFLO Consultancy

Advantages of starting a business in Thailand

  1. Strong infrastructure and a large domestic market.
    Thailand offers excellent conditions for the growth of your business. Due to its well-developed infrastructure and expansive domestic market, establishing and developing a business here is a relatively seamless and swift process.
  2. Booming Economy.
    It is crucial to consider various economic indicators while choosing a jurisdiction to start a business. Economy in Thailand is currently on the rise, positively impacting the reputation of this beautiful country. Thailand holds the second-largest economy in the Association of Southeast Asian Nations (ASEAN) and provides access to one of the world’s fastest-growing and promising markets.
  3. Simple company establishing process.
    Thailand company registration is genuinely straightforward. Only two documents are necessary, the minimum authorized capital requirements are modest, and the registration timeframe is standard.
  4. No residency requirements for participants.
    Company formation in Thailand is open to both residents and non-residents. Therefore it is possible to open a company with complete foreign ownership, making the process highly convenient.
Important:
Although company registration in Thailand permits full foreign ownership, there are various complexities to consider. Certain sectors impose limitations on the distribution of shares between residents and non-residents.

For accurate guidance on all aspects of starting a business in Thailand, it’s advisable to consult our specialists.

What should be taken into account before you open a company in Thailand?

Company registration in Thailand for foreign businesspeople might need the following to be considered:

  1. Number of shareholders in a private limited company.
    To register the most common organizational form, a private limited company, a minimum of 2 shareholders is required.
  2. Conducting business in Thailand.
    To operate a business in Thailand you must ensure that at least 51% of the shares is owned by local shareholders.
  3. Annual reporting requirements.
    Every company registered in Thailand is obligated to prepare and submit annual reports that detail all income and expenses.
  4. Worldwide taxation principle for resident companies.
    Resident companies in Thailand are subject to a worldwide taxation principle, which means they are taxed on profits earned worldwide.
  5. Mandatory registered office.
    Having a registered office within Thailand is a required for establishing a company.
  6. Minimum authorized capital.
    The minimum authorized capital for the most common company type in Thailand (Company Limited) is THB 15, although it is recommended to have at least THB 200,000.
  7. Foreign exchange controls.
    Thailand does have currency control regulations, but they are relatively tolerant.

Legal forms of business organization in Thailand

To register a company in Thailand, you first need to choose its organizational and legal form. Among the most popular types, the following can be highlighted:

  • Limited liability company (or Thai Company Limited).
    Members of such a company are not personally responsible for the company’s obligations in terms of property, and their liability is limited to the extent of their contributed capital. This organizational and legal form is ideal for small and medium-sized businesses in Thailand, making it the most popular choice. This type of company requires a minimum of 1 director and 3 shareholders in its structure.
Interesting:
As stated in section 1097 of the Civil and Commercial Code of Thailand, any three (or more) persons can establish a limited liability company.

For a Company Limited type, a minimum registered capital of THB 15 is required, but it is recommended to contribute THB 200,000.

  • Partnership (or Thai Partnership).
    Partnerships in Thailand can be general or limited. In a limited type, partners’ liability is limited to the amount of their contributed capital.
  • Public Company (or Thai Public Company).
    This is the equivalent of a public joint-stock company. For its registration, a minimum of 15 founders is required.

The process of company formation in Thailand for foreigners

Company registration in Thailand starts with collecting the required set of documents. To initiate the process, you will need to prepare identification documents for all participants of the company (for details please reach out to our specialists) and provide the following information:

  • 2-3 proposed company names in priority order;
  • the future company structure (the director, beneficiary, shareholders);
  • the intended business line.

Once all the required documents and information are provided, the registration procedure will be immediately initiated. The entire process, which begins with collecting the necessary documents and concludes with receiving the package of corporate documents for the established company, includes the following stages

  1. Checking and reserving the company’s name and selecting the one acceptable. The name verification process usually takes no more than 1 day. Once the name is approved, it can be reserved at the Business Development Office, an entity responsible for all matters related to business registration, under the supervision of the Ministry of Commerce of Thailand. The company’s name must be distinct from the names of existing companies in Thailand. The approved company name remains valid for a period of 30 days. Extension is not available.
  2. Preparation of forms and documents for submission to the Thailand Companies Registry.
    Among the essential documents required for company registration in Thailand is the Memorandum of Association. This document should also be submitted to the Business Development Office. The Memorandum must include the following information:

    • The reserved company name;
    • The province in which the company is planned to be established;
    • Registered capital;
    • Information about the founders;
    • The number of shares and their nominal value.

    In addition to the Memorandum of Association, it is necessary to prepare and submit the company registration form.

  3. Depositing the amount of registered capital (if required).
    The minimum registered capital depends on the chosen form of business organization. For instance, the most common form – a limited company – requires the minimum registered capital to be THB 15. To learn more about contributing the registered capital, please reach out to our specialists.
  4. The actual company registration procedure.
    The average registration period for a company in Thailand is around 7-14 business days from the moment when all required forms and documents are submitted to the Registry.
  5. Preparation of the constitutional documents for the registered company and ordering a corporate seal (if necessary).
  6. Notarization and legalization of the company documents (if required).
    The process of notarizing documents for the company in Thailand takes 5-7 days, while the legalization procedure takes about 2 weeks. Thailand is not a participant of the Hague Apostille Convention, so apostille certification in the country is not available .
Important:
Many companies operating within Thailand need to obtain a license for their specific line of business.

To find out whether your future company requires a license, please request a consultation with GFLO Consultancy specialists.

Taxation in Thailand

Companies in Thailand are subject to worldwide taxation principles.

This means that companies registered in Thailand are liable to pay taxes on profits earned worldwide. Foreign companies, on the other hand, are taxed on profits only if they are derived from Thailand’s territory or from conducting business within Thailand.

Corporate Income Tax in Thailand
The standard corporate income tax rate in Thailand is 20%.

As mentioned earlier, resident companies are taxed on profits earned from worldwide sources, while non-resident companies are taxed on profits derived from Thailand’s territory or sources within Thailand.

Withholding Tax
A foreign company that does not conduct business in Thailand is subject to withholding tax on specific types of income (such as interest, dividends, royalties, rent, etc.) paid from or within Thailand.

The withholding tax rate is typically 15%, but it’s 10% for dividends.

Important:

Considering the numerous double taxation avoidance agreements between Thailand and other countries, these agreements may establish different tax rates according to their provisions.

VAT taxation in Thailand
The standard value-added tax (VAT) rate in Thailand is 7%. VAT is applied to most goods and services sold within the territory of Thailand.

VAT is not required to be paid by individual entrepreneurs and small businesses with an annual income below THB 1.8M.

Preparation and submission of reports in Thailand

Every company registered in Thailand is required to prepare and submit annual financial statements. Each financial statement must also undergo an audit.

The reporting period is typically 12 months; however, a company can opt to change it if preferred. To effect such a change you need to submit a request to the Thai Revenue Department.

The submission of financial statements is allowed within a maximum period of 5 months after the end of the reporting period.

As for VAT reporting, it needs to be submitted on a monthly basis.

Important:

Accounting records can be kept in any language globally, but translating them into Thai is mandatory. As per Thai regulations, each company must store its accounting documentation for a minimum of 5 years at its registered address.

Conclusion

Thailand is frequently overlooked among the lists of jurisdictions popular for business registration, which is unfortunate. Many businesspeople are still unaware of the favorable conditions that Thailand offers for establishing a legal entity.

Company formation in Thailand can be a advantageous choice for starting and expanding your business. If this jurisdiction had caught your interest or if you would like to learn more about conducting business in Thailand, feel free to reach out to our experts. We’re here to provide you with valuable guidance.

Please hold in mind, that the first consultation with the specialists of the GFLO Consultancy is free.

How can our services assist you?

  • guide you towards the best company structure choice according to your preferences;
  • assist in collecting proper documents and provide advice on the business process, the company structure and other matters;
  • register your company in Thailand;
  • handle communication with the registering authority;
  • prepare a package of corporate documents for the registered company;
  • facilitate document notarization if required;
  • assist with bank account opening;
  • mail documents to your specified address;
  • provide answers to all your inquiries.

GFLO Consultancy experts are pleased to assist and help you with any inquiries, just get in touch or leave a request through the form right below.

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