Foreign Business License

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Do you want to get the Foreign Business License? Do you know what Foreign Business License is? We are here to help you provide the license. Business laws of Thailand maintain some regulations only for Thai nationals. The foreign investors have to experience many limitations when doing business in Thailand. For protecting the rights of foreign investors, Foreign Business Act of 1999 was introduced. Most of the people think Foreign Business Acts refers to business activities that are carried out by the foreigners. But the truth is that the Foreign Business Act of 1999 highlights the activities that are restricted for the foreigners.

A foreign company in Thailand is a firm that has the majority of non-Thai nationals as shareholders. There is some business that is not allowed to be owned by foreigners. These businesses are listed in the Foreign Business Act. In order to operate a business from the restricted category, you must obtain a Foreign Business License.

The Foreign Business License is often confused with Foreign Business Certificate. Though both of these are a form of approval to conduct restricted activities. The only difference is that they are applicable to different situations. In simple words, Foreign Business License is a permit. It lets foreign nationals to manage and do business in Thailand that is normally restricted to the foreign nationals.
Under the Foreign Business License, permission is granted to the foreigner to run a restricted business. On the condition that the business is beneficial for the economy and society of Thailand.

Who is Considered as Foreigner?

According to the Foreign Business Act, a foreigner is:

• A natural person that does not have a Thai nationality
• A juristic person who is not registered in Thailand.

These foreigners cannot operate a business in Thailand without permission from the Thai Government. The foreigners who can do business in Thailand with the approval of Director General are:

• Those who are born in Thailand but are not granted nationality.
• A person whose nationality has been canceled because of law governing nationality law or any other law.

However, if any foreigner deported or is staying in Thailand without permission is not allowed to operate any business. There are no exceptions, in this case, they cannot do business with permission as well.

Foreign Business Act

Activities that are prohibited under the Foreign Business Act are divided into 3 categories. These are as follows:

Category 1

Foreigners are restricted from operating following business in Thailand as these reflects the economic culture:

• Publication of newspaper, television broadcasting or radio station business
• Gardening, rice farming, and farming
• Dealing in real estate
• Livestock farming
• Selling and buying Thai antiques
• Forestry and wood production from forests
• Creating Buddha pictures and alms bowls
• Removal of Thai herbs for medicinal purpose
• Fishing related to marine animals, only in Thai waters and certain economic zones.

Businesses Require Permission

Categories 2 and 3 are shed a light onto the business that can be operated by foreigners. But permission is required in order to conduct these businesses. The reason is that they are related to national security or security that affects culture, arts, natural resources or local handicrafts.
In order to conduct business from the list, you must get permission from the Ministry of Commerce.

Category 2

The list includes:

Security Related to Business

• Creation, trade, and repairs of:
• Guns, ammo, explosives, gunpowder
• Accessories of weapons, explosives, and bullets
• Weapons, aircraft, military automobiles
• Accessories all kinds of weapons
• Local transportation of land, air or water. This also includes the local airline businesses.

Business that Affects Arts, Culture, Local Handicrafts

• Dealing in antiques or artifacts that are Thai arts or handicraft
• Creating wood cravings
• Making Thai silk thread or silk printing and weaving
• Production of Thai musical instruments
• Manufacture of goods from silver, bronze or gold
• Creation of crockery associated with Thai art.

Business Impacting the Natural Resources

• Production of sugar
• Farming of salt
• Manufacturing of rock salt
• Mining and stone crushing
• Processing wood for furniture and utensils.

If a foreigner wants to operate a business from the category 2 then 40% of the capital must be invested by Thai national. The Foreign Business Act indicates that if there is a cause then the Minister can reduce the requirement. But this cannot be lower than 25%.

Category 3

This category is the list of businesses that Thai’s are not yet ready to compete in with foreigners. They include:

• Grinding of rice, manufacture of flour from rice and field crops
• Fishing only of marine life
• Forestry
• Lime manufacturing
• Production of wood veneer, hardboard, chipboard and plywood
• Accounting services
• Engineering services
• Architectural services
• Legal services
• Local trade in agricultural products or those products that are not banned by the law
• Tourism
• Selling of beverages and food
• Hotels excluding hotel management
• Advertising
• Improvement, cultivation, and reproduction of plant types
• Other services excluding those are mentioned by Ministerial Guidelines
• Merchandising all kinds of items that have total minimum capital less than 100,000,000 Baht or minimum capital of every shop less than Baht 20,000,000.
• Selling business that trade in all types of products with a minimum capital of Baht 100,000,000 for every shop.
• Construction, exception includes:
• The construction of things that offer basic services to the public like public transportation, where special machinery or expertise is needed. The minimum capital of the foreigners must be 500,000,000 Baht or more than this.
• Other types of construction stated by Ministerial rules.
• Public Auctions, exceptions are:
• Auctions including international bidding and that do not contain the bidding of artifacts, antiques. These are related to the Thai art or handicrafts and they have historical value for the nation.
• Other auctions that are mentioned in the Ministerial rules
• Agent Business, except:
• Agents trading services linked with the trading of agricultural supplies or financial mechanisms
• Agencies offering products and services that are mandatory for production of services to associated businesses.
• Agencies that are dealing in trade, buying and supplying obtaining both local and foreign markets. They sell locally produced goods or import products from foreign markets, where the minimum capital is Baht 1,000,000 or more than this.
• Being agent that is suggested in Ministerial rules.

Requirements for Foreign Business License

When starting a business the initial capital for the business operation must not be less than agreed by the Ministerial rules. It should not be less than 2 million Baht in any case. The guidelines also mention the time period in which the capital must be brought and send into Thailand.

Moreover, these requirements must not be fulfilled if the money is obtained from the business that has been running in Thailand. The Minster with the recommendations from the committee is authorized to provide ministerial rules. These rules must suggest other conditions for the foreign licenses to follow.For instance, these requirements can mention the proportion of the capital and loans can be used in business.

According to Foreign Business Act, the Foreign Business License can be canceled or delayed by the conditions are not met or fulfilled. Following are the requirements for Foreign Business License that must be met:

• You must be at least of 20 years old.
• You must have a residency in Thailand or you must be allowed to enter Thailand in accordance with Immigration law.
• You must not be deemed as useless.
• You should not be bankrupt.
• One of the requirement is that you should have never been punished by the court or committed any offense.
• You should have never gone to prison for any fraud, crime or offense related to trade under the criminal code.
• Your license must have never been canceled under this Act.

Some Other Limitations on Foreigners

For the industry of banking, finance, and insurance, 75% of the shareholders must be Thai. A business that is involved in local shipping, they must have 70% of Thai shareholders.

What we can do for you

First, of an application should be filed with the Commercial Registration Department. This application will be then viewed by Foreign Business Committee. When they review the application, different criteria is used like whether it will be beneficial for the country or not. When these authorities view the business as beneficial for Thailand, the application has more chances of approval.

The process of getting approval from the Ministry of Commerce or director General is a complex process. Along with this, it is one of the most administrative procedure that must be carefully followed. The application procedure sometimes can be time-consuming and have unpredictable outcomes that increase the chance of rejection. In case any foreigner is caught committing any crime, the penalties are very high. It even includes imprisonment. In order to avoid this, you need the expertise of the best legal counsel. Our legal team has been working in this field for a very long time and is the right option for you.
Therefore, running a business in Thailand is complex and involves numerous rules. Before, investing in Thailand it is better to consult with our legal experts.

Contact Us for a Free Consultation

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