Setting Up a Company in Thailand as a Non-Resident
The influx of foreign nationals to Thailand, more specifically the foreign capital they have brought with them over the years, has seen a corresponding increase in Thailand’s prosperity.
It should come as no surprise then that new businesses, especially those bringing a bonanza of Foreign Direct Investment (FDI), are always welcome.
These capital inflows are, after all, part of the reason for Thailand’s current economic party atmosphere. It is also why Thailand’s Ministry for Foreign Affairs continues to streamline the application process for the necessary visas and work permits.
Thailand is an “expat-friendly” country. The Thai authorities are extremely accommodating towards anyone who wishes to do business in The Kingdom and/or make Thailand their new home.
How to start a business in Thailand
Starting a business is one of the easiest ways to obtain a visa and work permit to allow you to stay in Thailand.
Make sure you have a Viable Business Idea
If you have a good idea for a business, and you think Thailand offers the conditions to help that business prosper, the first step is to set up a company.
Apply for a Visa
Once you’ve done that you must apply for the necessary visa. Armed with your visa, you can go and get your Thai Work Permit.
Although it may sound a little complicated, with the right guidance you will find the process to be relatively easy. That guidance should come from an expert, such as a lawyer who specializes in immigration issues for expatriates.
Legal Business Structure
By all means, do your own homework on the procedures and requirements for starting a business in Thailand. It pays to track down the best legal representation or a qualified accountant to assist you throughout the process.
There are a number of different company structures available. Your lawyer will advise you on the best one for a foreigner who also wishes to obtain a visa and work permit.
Foreign Ownership Limit
No matter which structure is selected, foreign ownership of a Thai company is limited to only 49% of the shares. The remaining 51% must be owned by Thai nationals.
Your Thai shareholders should be people you know. In fact, it is actually illegal to have nominee shareholders whom you have never met, and with whom you have never had any contact.
It should not be too hard to find a genuine shareholder or two to help with the business. Ideally, you can look to Thai individuals who are already a key part of the business, and who understand what you are trying to build. Not only do the shares incentivize your staff, but they can then deal with the local authorities on all administration issues.
This also extends beyond issues related to admin. Having good Thai staff in key positions often means that you pay the Thai price for everything you need to do business. This is preferable than paying the farang price (the one which is charged to foreigners).
On top of that, by spreading the local shareholding between two or more individuals, you reduce your own investment risk. Your 49% minority stake becomes easily the largest single shareholding.
Once your application to form a company has been submitted and approved, the next step is to obtain your visa and work permit.
Most of the time that will mean leaving Thailand and obtaining a “Non-Immigrant B” visa from an overseas Thai consulate or Embassy. You can’t get your work permit until you have obtained the Non-B Visa.
For a company to issue one single work permit to a foreigner, the company must also employ four Thai staff. This is the case for every work permit. You are also required to pay the social security for each of your employees every month.
Taxes and Accounting
When your business is fully operational and starts to make some money, be prepared to pay corporate tax. The corporate tax rate for a small business is currently 25%. This needs to be filed and paid twice per year.
Your accountant will normally take care of this for you, together the Value Added Tax (VAT is only 7%). Depending on the type of business, you may also have to pay withholding taxes.
And let’s not forget that you’ll also be required to pay personal income tax (it’s a progressive system, with the top rate currently at 35%).
Anyone who lives in Thailand, or is deemed tax resident in Thailand, is subject to tax on all income derived from any sources within the country or outside the country. Your accountant should also be able to assist with this.