For many foreigners coming to do business in Thailand for the first time the rather complicated process to set up a new business can seem a bit overwhelming. Thailand has improved many procedures and has climbed up the Ease of Doing Business Index and remains in the top 30 out of 190 countries on the World Bank’s Ease of Doing Business rankings. The full report can be found
The government of Thailand made company formation less costly with a fixed registration fee, streamlined the procedures to obtain electricity and made electricity price changes more transparent, enhanced the online platform for calculating and filing corporate returns, and implemented an e-matching system for electronic cargo control, reducing time at borders.
However, despite this, to set up and register a Thai company as a foreigner has several hurdles. The first one being, of course, that every document must be submitted in Thai.
Registering a Thai Company
First Step – Picking a company name, necessary documents
The first steps of registering a Thai company are always the hardest – and the easiest. The first step you need to take is picking a name for your new business. Coming up with something creative and catchy can be tough. Make sure your company name represents you and what the company is all about. Sunbelt Asia legal advisors recommends that the name shouldn’t be too long, or too difficult for non-English speakers to pronounce.
You need to choose three names in case one is not available. You cannot use the word Investment but you can use the word Capital, you cannot use a name that is too similar to another business. Names of the royal family, ministries, bureaus, departments, government offices or organizations are prohibited as are the names of countries.
Your company name will be registered in Thai but it is not necessary to use Thai words in your business name, the name can be transliterated into Thai.
There are guidelines by the Department of Business Development (DBD) website as to what is allowed and what is not, Sunbelt Asia will check with the Department of Business Development to ensure the name falls within those regulations and has not already been used.
Then, in order to register your company we will need:
- The address of the company and the ID card, house registration and letter from the owner permitting use of the building for the business – Sunbelt Asia can assist you with an office if you don’t already have one.
- Name, address, phone number and copies of passport and/or ID card of the Managing Director.
- Company business objectives – Sunbelt Asia can assist you in wording this accurately.
- Name, address, and copies of ID card and/or passport of shareholders
- Company seal – we can assist you in designing a seal or you can use one of your own design.
- Map of the location of your business
It is important to note that the copies of the ID cards/passports must be signed in blue ink by that person.
Once Sunbelt Asia has all these documents it is time to move on to the next step, which is filing with the Department of Business Development (DBD). The incorporation process needs to move fairly quickly after that since once your name is approved it only has a validity of 30 days until registration.
Second Step – Filing a Memorandum of Association
The next step in starting your business begins with filing a Memorandum of Association with the Commercial Registration Department. This must include the name of the company that has been successfully reserved, its business objectives, the capital to be registered, the province where the company will be located, and the names of the three shareholders. Included as well are the number of shares and the value per share.
It is important to note that the use of nominee Thai shareholders – that is shareholders in name only who do not actually invest in the business – is illegal. The Department of Business Development now requires that all businesses with foreign shareholders must declare the source of the funds used by the Thai shareholders to invest in the business. The DBD is in an ongoing campaign to crack down on such companies and does instigate investigations from time to time.
All shares, even if only partially paid, must be issued at the time of formation. There is no requirement that the capital be fully paid up at the time of formation, in fact to form a company there are no minimum capital requirements but it should be enough for the business to function healthily.
However, if you wish to obtain a work permit and a non-B visa then you will need 2 million baht in registered capital – this number is 1 million baht for someone who married a Thai national in Thailand on a non-O visa based on marriage to a Thai national.
At the time of formation, the authorized capital, although partially paid, must all be issued. Although there are no minimum capital requirements, the amount of the capital should be a respectable amount and adequate for the business operation to function healthily. The Memorandum registration fee is 50 baht for every 100,000 baht of registered capital. The minimum fee is 500 baht, and the maximum is 25,000 baht.
Convene a Statutory Meeting & Approve the Articles of Association
After the structure of shares has been decided, a statutory meeting must be called to approve the bylaws and articles of incorporation, the Board of Directors are nominated, and an auditor selected. A minimum of 25% of the value of each subscribed share must be paid at this time. Shareholders should be issued share certificates in their names and the registration book should be kept at headquarters.
There are some restrictions on what the director can and cannot do when convening this statutory meeting, they can be found on the DBD website.
- A limited company may not prescribe in its articles of association for a director to grant a proxy to another person to attend a meeting or be included in the quorum, and also to cast a vote in a meeting of the company board of directors.
- A limited company may not prescribe company articles which allow the adoption of a board of directors resolution by circular resolution without convening a meeting of the company board of directors.
Two different share types can be issued; ordinary shares in which the holder gets one vote per share. The ordinary shareholder will get a share of any profits in the form of dividends, and their initial investment in the company will be returned if they sell their shares.
The second type are preferred shares where the holder has some special rights and their voting power will depend on company documents. Preferred shareholders may have one vote per share or may be given ten votes per share. This must be decided at the start as share types cannot be changed at a later date in Limited Companies.
The Articles of Association are the rules regulating the internal affairs of the company, such as restricting or limiting the signing power of all directors to that joint signatures and joint consent of the directors is required in all matters of the company except the regular day-to-day management.
Registration of the Thai Limited Company
The director or directors have three months after the date of the Statutory Meeting to submit their application to the Registry to establish the Thai Limited Company.
Accounting and Tax responsibilities
Companies liable for income tax have 60 days after incorporation, or after the start of business operations, to obtain a Tax ID Card and Tax ID Number for the Company from the Revenue Department. Businesses that earn more 2 million baht annually will need to register for Value Added Tax (VAT) within 30 days of the date they reach that amount in sales.
A newly established company must keep books and follow accounting procedures as laid out in the Civil and Commercial Code
, the Revenue Code
and the Accounting Act.
Documents may be prepared in any language, but a Thai translation must be attached. All accounting entries should be written in ink, typewritten, or printed.
A newly incorporated company may choose to use the period from its incorporation date to any one date as the first accounting period however, it should close its accounts within 12 months from the date of its registration.
Companies in Thailand are required to file their tax returns (Form CIT 50) within one hundred and fifty days from the closing date of their accounting periods. The tax payment must be submitted together with the tax returns. The company is also required to make a prepayment of tax on the estimated annual net profit and tax liability and pay half of the estimated tax amount within two months after the end of the first six months of the accounting period. This prepaid tax is credited towards the annual tax payment. Sunbelt Asia’s team of experienced accountants will ensure that you remain fully legal and compliant with all aspects of legal account requirements.
Management of a Thai Limited company
A Thai Limited Company
must have at least one director, and in the case of a company with a TAT license for instance, the board must be majority Thai directors and the signing director must be a Thai national.
The director or directors are responsible for keeping regular books and documents in compliance with the law, payment of shares to shareholders, distribution of dividends, enforcement of resolutions of the general meetings, and convening the annual general meeting. It is important to point out that directors of a Thai Limited company may be liable for any criminal actions taken by the company, such as issuing false statements in official documents and failure to file required balance sheets or reports.
A Thai Limited Company
, even one where the foreign director maintains control through a preferred share structure, may purchase land for the purposes of its business. The business must show regular business activity with annual shareholder meetings, file annual balance sheets and accounts. It is illegal to form a company for the sole reason to purchase land; the company must be an actively trading business.
The Signing Director, if a foreigner, must have a work permit
. It is possible to be a director of a Thai Limited Company
without holding a work permit
, but you cannot take part in any management of the company or hold signing powers. If you wish to take part in the day to day management, or hold the authority to manage the bank accounts, finances, make agreements on behalf of the company and other things, then you will need a work permit
Non -B visa and Work Permit applications
In order to apply for a visa and Work Permit
for your newly registered company you will need to have four Thai employees being paid into the social system, and 2 million baht in registered capital. If you are married to a Thai national holding a non-O visa based on marriage then these requirements are halved, to two Thai employees and 1 million baht in registered capital. The capital does not have to be fully paid up in cash but can be assets or a directors loan to the company.
In order to obtain the WP3 receipt or letter of approval from the Ministry of Labour, which is necessary to apply for the non-B visa (skip these steps if you hold a non-O based on marriage), you must leave the country, Sunbelt Asia then submits the application and sends you the WP3 receipt, which along with company documentation enables you to apply for and obtain a non-B visa in regional Thai embassies and consulates to apply for a non-B visa.
To obtain a WP3 Sunbelt Asia will need the employment certification form, proof of your education achievements a copy of your university diploma, any professional licenses you may hold, and a Power of Attorney for Sunbelt Asia to act on your behalf. Also needed are the company’s Business registration and business license, a list of shareholders, VAT registration if applicable, balance sheet, copy of one month’s payment into the social welfare fund, and any necessary licenses the business may need in Thailand. You can find a copy of the form on the Ministry of Labor site
Once you have the WP3 you will need to submit the following documents to the Thai Embassy for the non-B visa:
- Corporate documents of hiring company in Thailand such as:
- Business registration and business license
- List of shareholders
- Company profile
- Details of business operation
- List of foreign workers stating names, nationalities and positions
- Map indicating location of the company
- Balance sheet, statement of Income Tax and Business Tax (Por Ngor Dor 50 and Por Ngor Dor 30 of the latest year)
- Value-added tax registration (Por Por 20) (if applicable)
- Letter of employment stating position and salary of applicant
- Employment agreement or contract
It is possible to convert a Tourist Visa to a non-B without leaving the country but there must be a minimum of 15 days left on the visa and you will still need supporting documents (more than for the non-B applied for overseas) including the Work Permit receipt.
The list of Additional documents to convert from a Tourist Visa to a non-B in country can be found on the Immigration Bureau website and include.
- A letter from the company stating the reason for hiring you
- A copy of the latest financial statements. (certified by Ministry of Commerce or Revenue Department)
- A copy of the Company income tax returns (Form Paw Ngor Dor.50) (certified by the Ministry of Commerce or the Revenue Department, together with the receipt)
- A copy of the evidence of education and certificate of employment issued by the foreigner’s former employer (must be translated into Thai or English and certified by local or overseas Embassy or Consulate of the foreigner and by the Legalization Division, Ministry of Foreign Affairs of Thailand)
- A copy of the list of withholding income tax of Thai employees (Form Paw Ngor Dor.1) (for the past 3 months, together with the attached list of all Thai employees, showing the first to the last names, and the receipt)
- A cooperation letter from BOI (in the case of promotion by BOI), IEAT or PTT
- Approximately 6 or 7 color photographs of the Company’s building, Company’s sign name, environment of workplace where the employees are working, office desks or building or warehouse, which show the nature of work
- Water supply, electricity and telephone bills for the past 3 months if those amounts are not included in the revenue form in page 5, line 3 (Paw Ngor Dor.50)
- Lease Agreement
As you can see, the list is rather lengthy, which is why many prefer to apply outside the country. Sunbelt Asia can assist you in determining which option is best for you.
Once the non-B visa is obtained you can then apply for and receive your work permit, make sure you carry your work permit with you at all times when you are working.
The list of documents to get started and operational may seem daunting but experienced legal advisors have run this gauntlet many times and can make sure the entire process goes smoothly.
Once you are established, fully legal, and in compliance with Thai Revenue Department accounting requirements, you are ready to launch your newly registered Thai company and get down to the business of doing business in Thailand. Sunbelt Asia is here to guide you every step of the way and help keep you legal once you are in business.
For a free consultation on setting up your company in Thailand and applying for a work permits please call 0943387625
Key points to remember
- Choose a company name – English words can be phonetically transliterated into Thai
- Determine location of business- documents from the owner will be needed to register at this address
- Determine Managing Director, shareholders, Thai shareholders will need to show their investment source
- Create a company seal
- Map of business location
- Submit company name to Department of Business Development for approval
- File Memorandum of Association within 30 days
- Convene a Statutory Meeting and approve Articles of Association
- Determine share types
- Register the company within 90 days after the statutory meeting
- Follow required accounting regulations
- Hire a minimum of 4 Thai staff for each work permit and pay into the social account on those employees
- Apply for a work permit
- Use WP3 receipt to apply for a non-B visa outside the country
- Obtain work permit and get ready to start working!
Contact Us for a Free Consultation