Thailand is an attractive destination for Japanese investment, offering a strategic location and competitive advantages. However, navigating the legal and operational landscape as a foreign business owner requires careful planning. Here is a guide to the key things a Japanese business owner should know when opening a corporation in Thailand.

1. Choosing Your Business Structure and Ownership

The most common structure for foreign investors is the Private Limited Company. Crucially, you must understand the rules around foreign ownership.

• Standard Foreign Ownership Limit: Under the Foreign Business Act (FBA), foreign ownership in many sectors is restricted to 49%, with Thai nationals required to hold the majority 51% of shares.

• Foreign Business License (FBL): If you wish to own 50% or more of the company, especially in sectors restricted to Thai nationals, you will generally need to apply for a Foreign Business License (FBL) from the Department of Business Development (DBD). The FBL application is stringent and requires demonstrating that your business will benefit the Thai economy.

• Board of Investment (BOI) Promotion: This is a crucial alternative for Japanese businesses. BOI promotion, granted under the Investment Promotion Act, can offer significant benefits, including:

  • 100% Foreign Ownership: Exemption from the FBA, allowing a Japanese business to own 100% of the shares in promoted activities.

  • Tax Incentives: Corporate Income Tax (CIT) exemptions for up to 13 years, reduction of import duties, and more.

  • Non-Tax Incentives: Permission to own land for promoted activities and easier access to work permits for foreign experts.

2. Capital and Work Permit Requirements

The registered capital of your Thai company is a critical factor, especially if you plan to hire foreign staff.

• Minimum Registered Capital for Foreign Employees: If your company employs a foreign national and requires a work permit (excluding BOI-promoted companies), the standard requirement is a minimum of 2 million THB per foreign employee.

• Thai to Foreign Employee Ratio: Non-BOI promoted companies also typically need to hire at least four Thai employees for every one foreign employee to support a work permit application.

• Minimum Shareholder Requirement: A Thai Private Limited Company requires a minimum of two shareholders at all times.

3. Corporate Registration Process (Private Limited Company)

The incorporation process involves several steps with the Department of Business Development (DBD) under the Ministry of Commerce:

1. Name Reservation: Reserve the company name with the DBD. It must end with the word "Limited" (Thai: จำกัด - chamkat).

2. Filing of Memorandum of Association (MOA): Submit the MOA, detailing the company name, location, objectives, and registered capital.

3. Statutory Meeting: Hold a statutory meeting to approve the Articles of Association (AOA) and appoint the board of directors and auditor.

4. Company Registration: Lodge the final registration documents with the DBD within 90 days of the statutory meeting.

5. Tax Registration: Apply for a Tax ID Card and register for Value Added Tax (VAT) if your annual turnover is expected to exceed 1.8 million THB. This must be done within 60 days of commencing operations.

4. Key Legal and Compliance Considerations

• Accounting and Audit: All limited companies must maintain proper accounting records and submit audited financial statements annually to the DBD and the Revenue Department.

• Social Security Fund: Registration with the Social Security Fund (SSF) is mandatory for companies with at least one employee.

• Repatriation of Profits: Thailand generally permits the repatriation of profits and capital, but you should be aware of any local currency controls and double taxation treaties (Thailand and Japan have a Double Taxation Avoidance Agreement).

• Intellectual Property (IP) Protection: Thailand is committed to IP protection. Japanese business owners should proactively register their trademarks, patents, and copyrights in Thailand.

• Don't risk your investment by navigating the FBA and BOI landscape alone. Secure a proactive, compliant, and optimized entry into the Thai market.We specialize in cross-border investment, providing the seamless integration of Japanese business culture with local Thai legal expertise. Our firm is uniquely positioned to:

• 1. Determine Your Optimal Structure: Instantly assess whether a majority Thai-owned company, FBL application, or BOI promotion provides the greatest advantage for your specific business activity.

  2. Ensure Full Compliance: Handle all corporate, tax (VAT/CIT), and labor registrations to guarantee a smooth and compliant launch.

  3. Expedite Personnel Transfer: Manage the complex work permit and visa process for your essential Japanese executives and staff.

  Contact our dedicated Japan Desk at ilawjapan today for a confidential consultation. Protect your capital, maximize your incentives, and ensure your Thai corporation is established on the strongest legal foundation.