The restaurant industry in Thailand
As a result of the COVID-19 health situation, many states have taken the decision to close their borders and, as a result, trade and tourism flows have been greatly reduced internationally. The closure of state borders has had disastrous consequences for many economies, especially for those states that receive revenue from the tourism industry. Indeed, these revenues represent a significant percentage of the economy.
Thailand, as a popular tourist destination, is one of those economies that relies on tourism and therefore suffered greatly during the covid-19 crisis. This loss of income resulted in the bankruptcy of a significant number of businesses in this sector. However, following the opening of the borders, the tourist economy seems to start again in Thailand and positive predictions have already been announced by the government.
This announcement marks the recovery of trade and tourism in Thailand. It is now interesting for investors to take into account this opportunity and invest in tourism sectors such as the restaurant industry. This describes a favorable situation to open a restaurant in Thailand.
Open a restaurant in Thailand
In order to open a restaurant in Thailand, it is necessary to create a company under Thai law. The creation of a company in Thailand is first of all governed by the Civil Code and is framed by the law on foreign investments called the Foreign Business Act (FBA). It is important to note that under the Foreign Business Act, a foreign investor must register his company and cannot own all the shares of a company in Thailand. You can open a restaurant in Thailand but not have 100% ownership.
The creation of a company in Thailand remains complex to say the least in the preparation of the documents relating to its constitution and involves several stages. Moreover, the language barrier remains an additional difficulty in all the administrative formalities.
In spite of the minority participation of the foreigners within a Thai company, several possibilities are offered to the foreigners in order to control a Thai company following the drafting of statue including preferential shares. Indeed, through these statutes, the foreign investor owning 49% of the shares can benefit from 90.57% of the voting rights, and about 99% of the dividends, as well as a right of pre-emption (or priority) on the purchase of shares. It is therefore advisable to have your articles of association drafted by a professional to protect you and your company.
When you open a restaurant in Thailand, the registration of the company must be done at the Ministry of Commerce and more precisely at the office of the Department of Business Development (DBD) of the place of residence of the company.
How to open a restaurant in Thailand?
1. VAT registration
The registration of the company to the VAT with the competent Thai authorities is to be considered. Indeed, any company having an annual turnover exceeding 1,800, 000 baths must proceed to the registration. In this case the registration is done with the Revenue Department within 30 days after the turnover exceeds 1,800,000 baht. VAT registered companies are obliged to pay 7% VAT and apply it on your invoices. We invite you to read our guide on how to register a company in Thailand in 7 easy steps.
2. Social security registration
Social security registration is mandatory as soon as the company hires its first employee. This registration must be done within 30 days from the date of the first employee’s employment. Following this registration, monthly contributions will be required under the Social Security Act. The social security contribution rate is 5% for employees and the rate is capped at 1500 baths. Registration must be done at the relevant Social Security Department.
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Legal regulations for restaurants in Thailand
Depending on the type of activity, the company may be subject to specific regulations which require additional licenses authorizing the company to operate in Thailand.
When you open a restaurant in Thailand the obtaining of certain licenses is necessary. These licenses are relatively simple to obtain, and involve the filing of an application and the control of the competent administration to issue the license.
1. Restaurant license
In Thailand serving food and operating a restaurant requires at least the acquisition of the restaurant license. This license will indicate that your establishment meets the required hygiene standards.
The application for a restaurant license in Thailand includes the following steps:
|➤ Provide the required documents to the district office where the restaurant is located|
|➤ Making an appointment to check the restaurant (employees must be present)|
|➤ Thai employees will have to pass a test at the district office on hygiene issues|
|➤ Government fees will have to be paid (according to the square meters of the establishment)|
|➤ The document proving the registration of the domain name or the certificate of the service provider (ISP or web host)|