HOW CAN INDIANS START A BUSINESS IN THAILAND? WHAT ARE THE LEGAL REQUIREMENTS FOR THE SAME?

Before starting a business anywhere, it is important for a businessman to scrutinise the profits and losses along with the kind of laws and policies applicable in that country regarding taxation, ownership and other business activities. Thailand is a country that consistently ranks among the most attractive investment locations in the world in international surveys, and the World Bank’s Ease of Doing Business 2020 report places Thailand as the 21st easiest country in the world and second-ranked emerging economy in the whole of Southeast Asia to do business. On one hand, this country provides a wide range of business opportunities to foreigners, whereas on the other, its strict legal regimes and a seemingly impenetrable system of permits and paperwork makes it difficult  for  most foreigners.

The procedure of starting a business in Thailand can be a daunting prospect, but once a man gets it right it can be a lucrative one. But before beginning the startup the businessman has to arm himself with the basics of the legal requirements and business laws. They are as follows:

•  Learning about the opportunities available for foreigners: The foreign business in Thailand is governed by The Foreign Business Act, 1999. The act describes a range of business, commercial and industrial activities that cannot be carried out by foreigners. Any non-compliance could  result  in a three-year prison term or a fine of 100,000b. There is no general prohibition against foreigners to start a business, however, they cannot engage in the following activities:

1. Newspaper publishing, radio or TV broadcasting
2. Rearing livestock
3. Trading in land
4. Forestry and Fishery
5. Manufacture or casting of Buddha images and alms bowls

• Types of companies they can form: The foreigners can choose from three types of companies-  Limited Partnership, Limited Company or a Representative Office. It is to be noted that a foreign company must have at least one active branch in Asia. Regional offices are also restricted from earning income, purchasing, selling, and negotiating while based on Thai soil. The foreign nationals are not allowed to own 100% shares of any company in Thailand (except some), unless they are citizens of the USA. So, the best way to start a business in Thailand is to register it under a Thai person.

• Obtaining a business license: One of the ways of obtaining 100% ownership of a company in Thailand is to obtain a foreign business license which basically acts as a work permit. This way the Thai government can control  the inundation of foreign businesses and protect the interests of the Thai nationals. Before obtaining a work permit the foreigner must have a non-immigrant visa which may cost between 2000-5000 baht depending upon the entry particulars.

• Obtaining a business visa: Before a foreign national can start any kind of business in Thailand, he/she needs to have a non-immigrant B (business) visa.  This visa makes him/her legally eligible to conduct business activities including the prospect to set-up a company in the kingdom of Thailand. The application for the visa can be made at any Thai embassy or consulate in the home country.  Non-immigrant B visas cost 2,000 Baht for a single entry and 5,000 Baht for multiple entries with a validity of upto one year.

• Registering with the Thailand Board of Investment (BOI): The Thailand Board of Investment is a small division of the Thai government that offers frames in which new companies can be formed with slightly loosened regulations. It is free of charge and helps foreign investors in identifying business opportunities, tax incentives and provides support for expanding business. The registration with the Thai BOI has certain advantages like flexibility in capital investment, 100% ownership of the company and certain tax exemptions.

• Trademark Registration: A notarised Power of Attorney is required for a trademark application in Thailand by a foreign national. A single attorney is sufficient for multiple trademark registrations.  The applicant must provide his name, address, nationality, a sample of the trademark and the list of products to be used in relation to the mark. It is recommended that objections must be anticipated and an attorney who is familiar with Thai practice should be prepared for it. There are two types  of fees to be paid to the Department of Intellectual Property for  the registration of the trademark.  The first official fee is due for filing the application for registration and the second fee is  due on the acceptance of the same. The trademark once registered, is protected for a term  of 10 years from the date of filing and can be renewed for  another term of 10 years.  However, the application for renewal  must be filed 3 months prior to the expiration. There are many more rules and regulations related to Intellectual  Property in Thailand which must be looked into before starting a business.

• Recruitment of employees: Laws in Thailand state that for each expat employee hired, the company has to provide jobs for four Thai employees as well. In the first year of business after registration of the new company, the Labour Department may allow a ratio of only 1-2 Thai employees per expat employee. The employees must be registered at the Social Security Office  in Thailand, and a fee should be paid for the same. However, if the foreign company owner is married to a Thai spouse, he/she will have to employ only 2

Thai staff and the registered capital investment is also reduced by half. 

The start-up scene is exploding in Thailand. The number of co-working spaces, venture capitalists and tech-networking systems are popping up everyday. Since a number of expats want to  start a business in Thailand, a talent pool of employees, both local and foreigner, can be found with the required skills. To ensure  the Thailand economy continues to develop,  the government has adopted a new economic model called Thailand 4.0, which focuses on transforming Thailand into a value-based economy.

Thailand’s well-defined targets and investment policies focus on liberalisation and encourage free trade throughout the nation and with other countries.  Hence, a start-up in Thailand as per its global position is a wise choice. 

-RIDHIKA KAPOOR.