Company Formation in Thailand
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Thailand Company Formation
Company registration in Thailand has 8 stages. These are:
- Obtain permission to use the company name. This takes 2 days.
- Receive approval from the Department of Business Development of the Ministry of Commerce for the memorandum of association. This takes 1 day and has an approximate maximum cost of 25,000 THB.
- Deposit the registered capital into a bank account. This takes one day.
- Create a corporate seal. This takes 4 days and costs 300 to 500 THB.
- Application for the registration of the company as a legal entity. This takes 1 day and costs approximately 5,200 to 250,000 THB.
- Register to obtain a taxpayer card from the Revenue Department. This takes 2 days.
- Register at the social Security Office, which takes 1 day.
- Submit to the Office of Labour Protection and Welfare details of the company work regulations. This takes around 21 days.
In Thailand there are three types of businesses:
- Sole Proprietorships
- Limited Companies (public and private)
The majority of foreign investors form a private limited company.
In Thailand, two types of limited companies are recognised: public companies and private companies. Public companies are regulated by the Public Company Act and certain other Acts. Private limited companies are regulated mainly by the Civil and Commercial Code.
Private Limited Companies
Commonly in Thailand, companies are set up through private limited companies. In this kind of organisation there is unlimited capital investment. Foreigners may fully own a private limited company. Conversely, there are certain types of company that foreigners cannot own on a majority basis, under the Foreign Business Act and other particular legislation.
Apart from instigating accounting customs, private limited companies should have at least three promoters to act as shareholders.
How do I set up a limited company?
To set up a limited company in Thailand, the following should be done:
Corporate name reservation - Some names disallowed and others may be decidedly similar to existing names. There are reservation guidelines issued by the Commercial Registration Department at the Ministry of Commerce. Approval or disapproval of the proposed name can be obtained within a couple of days. The validity of the approved corporate name reservation is limited to thirty days, but it can be reserved for an additional thirty days on expiration.
File a memorandum of association - A memorandum of association should be sketched and submitted with the Commercial Registration Department of the Ministry of Commerce and must have:
- Reserved name of the company
- Company's office location
- Company's business objectives
- Amount of share capital and its division
- Show the names of the three signatories
Generally, the amount of capital registered need only be sufficient for its business operations. However, in some circumstances, a minimum amount of capital is required to be deposited, depending on the nature of the business, or whether the company employs foreigners. You might be liable to pay government fees when the memorandum of association is registered: a fee of 0.05% of the registered capital, up to a maximum of THB 25,000.
Hold the statutory meeting of all shareholders - After the share structure has been drafted, call a meeting. At least 25% equivalent to the value of each subscribed share must be paid up. Depending on the nature of your business, a specified minimum amount of capital must be fully paid, and a minimum of capital must be fully paid if the company intends to employ foreigners.
Registration - Company registration applications must be submitted within ninety days of aforementioned meeting. Upon application, a government fee of 0.5% of the registered capital will be required (up to a maximum of THB 250,000).
Corporate Income Tax registration - Within two months of the start of business activity, the company must register for corporate income tax, and obtain a tax identification card and number from the Department of Revenue. Generally, corporate tax is all the income of the company within that tax year (minus allowable expenditure and depreciation). Presently, the general corporate tax rate is 30% of net income, as mentioned earlier.
You will have to submit two corporate income tax returns each year. The first return is expected at the end of the first six months of the company's tax year. Half (1/2) of the approximate annual tax will have to be paid. The final return must be submitted at the end of the company's tax year (where the total tax remaining must also be paid).
How do I set up a public limited company?
These companies are liable for certain financial requirements and may have their declarations listed on the Stock Exchange of Thailand (SET). There are many legal requirements for a public limited company. For example, half of the promoters must be resident in Thailand and there must be fifteen promoters for the Memorandum of Association.
What about partnerships?
In Thailand, three types of partnerships are recognised. The tax treatment and degree of liability of the partners are the only differences between the partnerships. The BOI does not commonly encourage partnerships. Therefore, it's not ordinary for alien investors to form this type of organisation.
The three types of partnerships are:
- Unregistered partnerships - Partners are fully liable for all responsibilities of the partnership.
- Registered partnerships - The partnership is a legal entity, and, therefore, is disparate and distinct from the partners.
- Limited partnerships - Capital investment determines the liability of the partners. This type of business must be registered.
Are there government incentives?
The Board of Investment (BOI) is the government agency responsible for administering incentives to encourage private sector investment in priority areas.
The BOI has a policy of preferential treatment to investment projects which:
- Locate operations in provincial areas
- Establish or develop industries that form the base for further stages of industrial development
- Develop and further public utilities and basic infrastructure
- Conserve natural resources and reduce environmental hazard
- Conserve energy or replace imported energy supplies
- Contribute to technological development
- Significantly strengthen the balance of payments
Application for promotion should be submitted in accordance with the rules, procedures, and forms of the BOI prior to the formation of your company.
Are there any incentives offered?
The following non-tax incentives may be granted to eligible businesses:
- Against nationalisation
- Against competition of new state enterprises
- Against state monopolies
- Against price controls
- Against tax
- To own land
- To bring in foreign nationals
- To bring in foreign technicians and experts to work on the promoted venture
- A surcharge on competing imported products
- Import ban on competing products
- Implementation of other tax relief measures
Investment Promotion Zones - In accordance with the national aims of decentralisation and the spread of development to provincial areas, the BOI has divided all provinces of Thailand into three investment zones. Businesses that establish their activity in provinces outside the central region of Thailand are eligible to a bigger range of taxation incentives.
Organisations that can assist with Company Formation
Need to register a company or setting up a company?