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Company Formation in Thailand

Overview :

With a well-developed infrastructure, a free-enterprise economy, generally pro-investment policies, and strong export industries, Thailand enjoyed solid growth in past few years. It is a heavily export-dependent economy, with exports accounting for more than two thirds of its gross domestic product (GDP). The industrial and the service sectors serve as the two main sectors in the Thai gross domestic product, with the former accounting for 39 percent thereof. Thailand is the second largest economy in Southeast Asia.

Advantages of Incorporating Business in Thailand
  • With regard to the volume of the external trade, Thailand ranks 2nd in Southeast Asia.
  • Thai society, and in particular the business community, is very welcoming to foreign investment and companies wishing to establish operations in the country.
  • Organisations doing business in Thailand will find the infrastructure and systems ready for them to begin operating successfully.
  • Thailand has a large and very active manufacturing sector producing a diverse array of goods including toys, fish products, rubber, furniture and jewellery. These strengths in manufacturing and FMCGs have led Thailand to become a regional leader in trade and commerce.
  • The Thai government is a forward-thinking and innovative body which actively encourages development and socioeconomic advancement.
  • Foreign investment, both financial and in the local workforce, is strongly encouraged by the Thai authorities and the government’s policies over the last decade have made for a more inviting environment for foreign businesses and organisations.
  • Thailand has a large and adaptable workforce. Foreign investors will find an intelligent workforce with the potential for further development. In addition to being flexible and educated, the Thai workforce is also among the most cost-efficient in the region in terms of payment.
  • Thailand is a hospitable, friendly and rapidly developing nation in which there is the opportunity to establish long lasting and strong commercial and financial bonds.
Tax Regime

In Thailand, the tax on income of juristic entities is called corporate income tax. All juristic Companies and partnerships established under Thai or foreign law which carry on business in Thailand are subject to corporate income tax. Tax is generally levied at the rate of 30% of net profits. Reduced rates of 15% to 25% are granted to small and medium-sized enterprises (SMEs), and reduced rates of 20% to 25% are granted to companies listed on the Stock Exchange of Thailand, and companies listed on the Market for Alternative Investment (MAI).

Types of entities

Sole Proprietorship :

A sole proprietorship is an enterprise owned by a single natural person. This type of structure has unlimited liability for the proprietor. Generally, a sole proprietorship can engage in any business not prohibited by law.There are some tax advantages to Thai sole proprietorship because the proprietor can choose to either be taxed as a natural person based upon the gross receipts of the business.

General Partnership :

A partnership comes into legal existence upon two or more people agreeing to combine for a shared endeavour with the aim of dividing the profits. All parties must submit something to the enterprise. Basically, those involved must contribute either: 

Unregistered Ordinary Partnerships :

The partners of a Thai Unregistered Ordinary Partnership have joint liability, meaning that if one partner is liable, then all are liable for their respective portion of the obligations, but not for the full amount. A new partner in this type of entity is automatically legally responsible for all debts and obligations acquired by the partnership

Registered Ordinary Partnerships :

Those engaging in a Thai Ordinary Partnership are liable jointly and severally for all the commitments of the partnership. This liability has no limit. A Thai Ordinary Partnership is considered a legal entity and therefore must pay Thai corporate tax upon its income. 

Private Limited Company :

What we call corporations in other countries Thai Thais call a Limited Company. Two major necessities when forming a Thai Company include the Articles of Association and the Memorandum of Association, both of these documents must be registered with the Thai Ministry of Commerce. Articles of Association can be custom tailored to the specific needs of the Thai company so long as the original shareholders and promoters (if different) agree to the terms of the Articles of Association in writing.

Public Limited Company :

The necessary formalities for incorporating, setting up, and registering a Thai Private Limited Company are comparable to those for a Thai Public Limited Company. The relevant sections in Thailand’s Public Limited Companies Act of 1992 permit a Thai private limited company to be transformed into a Thai public limited company. Public Limited Companies in Thailand are allowed to offer up their shares for sale to the public at-large whereas the Thai Private Limited Companies are forbidden by Thai law from engaging in such an activity.

Representative Office :

A foreign company (i.e. a company not formed under the laws of the Kingdom of Thailand and/or not more than 50% owned by a Thai National) may setup a Representative Office in the Kingdom of Thailand provided its activities remain limited to non-income producing activities.

Joint Venture :

The term “Joint Venture” is a bit ambiguous in Thailand. Under the law Joint Venture is not clearly defined except under the Thai tax code. The law treats most joint ventures as a contract matter and with the exception of filing for licenses and/or tax certificates; the parties in the joint venture remain separate entities in the eyes of the law.

Time Period

It usually takes 29 days to form a company in Thailand.