How to run a business in Thailand?
Thailand is not only a great place to live, it is also a nice place to do business. The country is geographically well located and has facilities and infrastructure that can help businesses to flourish. Here is a brief look at how to open a company in Thailand and some of the processes involved.
Is Thailand a good place to start a business?
Thailand is very well located in Asia-Pacific, to be a business hub of the region. Its seaboards allow for easy shipping to countries in the region and further afield. It is also well placed to do business with other large economies in the region, including China, India, Hong Kong, Indonesia, and Singapore.
Road and rail networks makes trading easy with Thailand’s immediate neighbours: Myanmar, Laos, Cambodia, and Malaysia. Thailand is also a member of ASEAN. This is a trading block that helps make it easier for member countries to do business with each other, including favourable tariffs.
Ease of doing Business
A key consideration when choosing a country to do business in is how easy it is to do business in that country and according to the World Bank, Thailand ranked 21st in the world. This ranking considers several factors, including:
- The ease of opening a business in Thailand.
- The easy of getting credit, and paying taxes.
- The easy to register a property and to get construction permits.
The economy
Thailand’s economy has seen strong growth over the last few years or so. With the region also seeing strong growth overall, Thailand is in an excellent position to take advantage. From 2014 to 2019, the Thai economy saw growth of an impressive 4.5%.
The Thai economy is expected to continue to grow. This is down largely to increased private investment and growing consumer spending. The country’s tourism industry also looks set to help keep the economy strong, stable, and growing.
The country is also in negotiations to join further trade partnerships in the future, further strengthening the possibilities regarding doing business in Thailand.
Infrastructure
Thailand’s future economy will be further helped by the country’s infrastructure.
In addition to a rail network, Thailand also has a network of motorways that connect the nation’s industrial, commercial, and residential hotspots. Deep seaports on the Eastern and Western seaboards also put the country in a good condition to do business.
Doing business in Thailand is also helped by Bangkok’s two international airports, with others located in Chiang Mai, Phuket, Koh Samui, Hat Yai, and Chiang Rai, and U-Tapao. In Bangkok, the city is served by two rail networks. These are the BTS (Sky-train), and the MRT (underground). Both networks also have interchanges with each other at certain stations.
The culture
One thing that brings visitors back to Thailand again and again is the warm Thai welcome.
The generally friendly and fun-loving nature of Thai people makes it a lot easier for foreigners to settle in the country. It also helps to make it easier to interact with other people, which is helpful when it comes to doing business in Thailand. The rich culture is something else that makes it a pleasure to stay and many choose Thailand to retire. Throughout the country you will find attractions that are a testament to the country’s rich heritage.
Plus, there is the incredible food that is among the most popular cuisines worldwide.
How much does it cost to start a business in Thailand?
The cost of starting a business in Thailand is very affordable when compared to many other countries.
When it comes to setting up a company in Thailand, the company registration will cost between 5,000 and 250,000 bath ($160 and $8150), a factory license will cost 100,000 baht (about $3,260), while a 1-year work permit will cost 6,000 baht ($190), and a one year visa will cost 5,000 ($160).
Office rent will range from around 730 to 1100 baht per square meter in Bangkok while electricity costs 5-6 kW/hour, and air-conditioning will cost around 50 baht ($1.6) per square meter/month.
Corporate tax rates in Thailand are 20% on income and 50% of the estimated value will need to be paid before the eighth month ends. This figure is 15% for businesses with a net profit below 3 million baht ($96,000). Withholding tax for companies is 1% and for individuals, it is 15%. VAT for income over 1,800,000 is 7%.
The personal income tax is Thailand is as follows:
- 1 – 150,000 ($1 – $4,800) = Exempted
- 150,001 – 300,000 ($4,800 – $9,600) = 5%
- 300,001 – 500,000 ($9,600 – $16,000) = 10%
- 500,001 – 750,000 ($16,000 – $24,000) = 15%
- 750,001 – 1,000,000 (24,000 – $32,000) = 20%
- 1,000,001 – 2,000,000 ($32,000 – $64,000) = 25%
- 2,000,001 – 5,000,000 ($64,000 – $160,000) = 30%
- More than 5,000,001 ($160,000) = 35%
How to open a limited Thai company
When setting up a company in Thailand, most foreigners will open a Thai limited company, which is relatively straight forward to do. Anybody wanting to do so, will need to demonstrate a noticeably clear understanding of the business. A Thai limited company is a quite secure option which cannot be dissolved easily.
The process
In order to open a company in Thailand, a name must first be reserved and there are restrictions and guidelines on what a Thai company can be named.
Then an MOA (Memorandum of Association) will need to be filed with the Department of Business Development. This must include details such as the reserved company name, the capital to be registered, names of the promoters, the businesses’ objectives, and the province where the business will be registered. It will then be necessary to appoint an auditor, elect a board of directors, define the share structure, and have the MOA approved. Once this has been done, a statutory meeting will need to be held to make all the appointments.
Once this stage is complete, the applications for registration must be submitted within 3 months of the statutory meeting. The company will then need to obtain a tax I.D. card and registration number. This will be obtained from the Thailand Revenue Department. The company will also need to open a corporate bank account and this will usually take at least 9 days before the process is completed.
One of the reasons foreigners open a company in Thailand is that it can act as a channel that allows them to own land of their own. If a foreigner owns a Thai company, they can then purchase a property under the company’s name, effectively giving them ownership of the property for as long as they own the company.
If you’re interested in investing in Thailand, visit our lands for sale in Koh Samui.
How to buy a business in Thailand as a foreigner
Not only can foreigners open a company in Thailand from scratch, but they are also permitted to buy an existing business. This is sometimes preferred because the process is a lot simpler, than starting a company from new.
Regardless, it is still best to hire the assistance of a lawyer to help ensure everything goes smoothly. There are some restrictions that any foreigner buying a business should be aware of. One such restriction is that foreigners are not permitted to own more than 49% of the shares in a Thai company. However, a foreigner is permitted to hold the highest number of shares.
It is also quite common for other shareholders to sign away their company rights. It is often the case that the other shareholders are registered to meet regulations rather than taking an interest in the business. Another stipulation is that there must be at least four Thai staff for every work permit.
In many cases, the company already have the four Thai staff. The immigration bureau will need to see evidence and the withholding tax and social security contributions have already been paid for the company’s employees.