How to create a startup in Thailand?

A startup is a young innovative company with a strong potential of development. These companies evolve in the sector of new technologies, often on the Internet.

Thanks to the web, startups have the possibility to reach large markets very quickly. A new innovative product or service can therefore quickly reach a large customer base, and thus generate strong growth.

The Board of Investment is a program that helps people open and operate businesses in Thailand. Digital business is one of the sectors that will easily receive help from BOI, so it is an advantage to create a startup. With a BOI company, the ownership does not have to be majority Thai, but can be 100% foreign owned. This type of company has many benefits, mainly tax benefits. The Board of Investment supports and promotes investment incentives for companies in the digital field.

In addition, as this field is very current, on September 28, 2021, the BOI issued a notification regarding the modification of business promotion related to the digital industry. Thus, the previous BOI promotion categories for the IT industry (5.7 Software development, 5.8 eCommerce and 5.9 Digital services) have been combined into the new promotion category 5.10 Software, development of platforms for the provision of digital services or digital content. There are several types of companies that are very attractive for a foreigner moving to Thailand to invest in.

The term eCommerce refers to a business model that allows companies to buy and sell goods and services through online services to consumers on the Internet. The Board of Investment No. 4/2564 measures exclude retail and wholesale activities. Since 2014, the total value of the eCommerce market in Thailand has grown by about 10% each year, and was valued in 2018 at USD 103.6 billion.

They also benefit from the non-tax incentives provided by the BOI which are:

ECommerce companies are not exempt from corporate income tax and import duty on machinery. ECommerce companies are also not eligible for merit-based incentives.

BOI promotion, “Software” is one of the most popular activities that is classified in Section 5: Electronic Industry and Electrical Devices. Software” means a computer program, application, system or set of instructions written in computer languages to instruct a computer or electronic device to operate as specified.

Thailand’s software industry has always been robust due to the country’s excellent infrastructure, which is able to provide quality services that are essential to software production. This infrastructure includes broadband internet, network security, low power outage rates, and robust production facilities.

The activities included in software development companies are divided into three activities:

Enterprise software and digital content activities:

• Benefit from a corporate tax exemption for 5 years with a cap of 100% of the invested capital, excluding the cost of land and working capital;
• Benefit from an exemption from import duties;
• Benefit from all the non-tax incentives that come with a BOI promotion.

Embedded and high value software business:

• Benefit from 8 years of uncapped corporate tax exemption;
• Benefit from an exemption from import duties;
• Benefit from all the non-tax incentives that come with a BOI promotion;
• Can benefit from merit-based incentives.

The general conditions for the issuance of a BOI license for a software development company are as follows:

In order to qualify for these incentives, the project must meet several conditions:

The BOI promotion for the digital industry is a beneficial scheme where the applicant can retain 100% ownership of the company and benefit from the incentives mentioned above. However, the applicant must pay attention to the many criteria and conditions. The Thai government has recently amended this scheme to simplify the application of the digital industry investment scheme.

To attract highly skilled labor and investors the Thai government has approved a new visa category called SMART visa, which came into effect since February 1, 2018. This type of visa encourages high-skilled foreigners to come and work or invest in Thailand. The digital industry is one of the 10 industrial activities targeted by this type of visa.

The 4 categories of foreigners eligible to apply for the SMART visa are: Investors, Startup entrepreneurs, Highly skilled experts (Talents) and Senior executives.

However, for startups to obtain this type of visa the following conditions must be met:

As a startup, the smart visa will bring the following benefits:

If you decide to start an online business in the gaming industry, there are a few rules regarding data protection that you need to follow. All of these issues are regulated in Thailand, by the Personal Data Protection Act of 2019 (“PDPA”). This law regulates all processing of personal data in commercial transactions, including eCommerce.

If you create a startup in Thailand that operates one or more websites for the sale of its products or services, you must apply for an eCommerce license within 30 days after the start of business operations. The license application must be submitted to the Department of Business Development once the website is operational as the website owner will have to provide the following information:

If it is impossible to apply for a BOI (if the conditions are not met, if the BOI refuses to issue the license …), the foreigner can apply for a Foreign Business License if he meets the conditions in order to open his startup. An application for FBL, will then allow him to own 100% of the shares of a company located in Thailand. A foreigner who meets the criteria listed in the FBA will have to apply for a license, except for some activities which are not listed by the FBA. In this case, the business may be wholly owned by foreigners and will not require an FBL.