The registration fee for the MOA and the establishment of the company is 5,500 baht per million baht of registered capital.
The company can obtain a tax ID card and register the employer’s account under the Social Security Act with the MOC on the same day as the company’s registration.
However, if the company wishes to defer the application for the tax ID card or register the employer’s account for social security contribution obligations, it is possible to make the applications later.
For a limited liability company, all documents related to the registration of the company must be submitted to the Department Business Development (DBD) registration office of the MOC; or, if the company’s headquarters will be located outside of Bangkok, to the DBD office of the province in which the company’s business will be located.
For tax purposes, a company subject to corporate income tax must obtain an identity card and a tax identification number from the Revenue Department within 60 days from the date of incorporation or, in the case of a foreign company, from the date it starts operating in Thailand. Companies with a turnover exceeding 1.8 million baht must also register for VAT with the Revenue Department within 30 days from the date the annual turnover exceeds this threshold.
In terms of social security, if the company has at least one employee, it is required to register the employer’s account with the social security office within 30 days from the date of the employment contract. The procedure for registering the employer’s account can normally be completed in one day, provided that all the required information and documents are fully submitted to the Social Security Office.
Shareholders have limited liability, i.e. limited to the amount, if any, of the nominal value of their shares outstanding. However, the liability of directors may be unlimited if the articles of association so provide. Limited liability companies are managed by a board of directors in accordance with company law and its articles of association.
Thus, the creation of a company in Thailand to carry out a project is completely possible as soon as there are three shareholders including at least a Thai shareholder holding 51% of the registered capital. The creation of a company allows then to make other investments such as the purchase of real estate or the purchase of securities.
The Stock Exchange of Thailand (SET) is the stock exchange of Thailand. It was founded in 1975 and is based in Bangkok. The Stock Exchange of Thailand (SET) lists more than 600 companies with a market capitalization of approximately 13 billion baht.
Today, the SET has become a single market for financial products offering different products such as:
|➤ Equities including common shares, preferred shares, non-voting depositary receipts (NVDRs), mutual funds, warrants, derivative warrants, depositary receipts and exchange traded funds (ETFs)
|➤ Fixed income products, including corporate and government bonds, and Asian bond funds traded on the Bond Electronic Exchange (BEX)
|➤ Traded derivatives
The Stock Exchange of Thailand (SET) offers different types of stocks for local and foreign investors which are summarized as follows:
Local shares: Both local and foreign investors can trade in local shares, but it should be noted that foreign investors are not entitled to dividends or voting rights.
Foreign shares: The SET has established a foreign chamber of commerce where foreign investors can register their Thailand investments and enjoy the same benefits as local investors. Most Thai companies listed on the SET are subject to foreign ownership restrictions.
Non-Voting Depository Receipt (NVDR): The SET created these non-voting shares to stimulate business activity and to help remove barriers related to foreign ownership limits. These shares automatically have the same price and financial benefits as their underlying securities. The only difference is that the holders of this stock do not have voting rights.
|Types of action
To be able to buy or resell securities on the stock exchange, it is necessary to have a trading account. The account holder must be at least 20 years old. To have a trading account, you have to choose a brokerage company in Thailand and choose the type of account:
Cash account: An account in which the investor must pay in full, on the settlement date, the amount due for any transaction. Cash accounts require a 20% guarantee on the account before the first trade.
Cash Balance (Prepaid/Cash Deposit): With a cash account, the investor is required to have the full amount of a transaction on deposit before making the transaction. The investor receives interest on deposits to the account.
Credit Balance (Margin Account): In a credit balance account, the broker lends the investor cash to purchase securities. The brokerage firm charges interest on the borrowed cash while the loan is outstanding. The investor must post collateral in the minimum amount required.
The documents differ depending on the nationality of the applicant.
If the applicant is Thai, the following documents are required:
|➤ Certified copy of identity card
|➤ Certified copy of housing registration
|➤ Certified copy of the bankbook showing the account number and the name of the automated transfer system (ATS)
|➤ Certified copy of 6 months bank statement
|➤ THB 30 for the stamp duty
If the applicant is a foreigner, he/she must provide the following documents:
|➤ Certified copy of passport
|➤ Certified copy of work permit, if you work in Thailand
|➤ Certified copy of bank booklet showing the account number and the name of the automated transfer system (ATS)
|➤ Certified copy of 6 months bank statement
|➤ THB 30 for the stamp duty
It is quite possible for any person to invest in the stock market as long as he/she has a trading account to be opened with the brokerage companies. Other alternative means exist. The regulation of the stock market is always very complex and requires a thorough analysis before any investment.
The Board of Investment, also known as BOI, is a Thai government agency that aims to encourage foreign investment in Thailand. It was established in 1997 to attract investment from foreign and local entrepreneurs in the industries that the BOI promotes. A Thai company can enjoy many benefits by being certified by the BOI. The main benefits of establishing a BOI company in Thailand include: significant tax exemptions, multiple work permits without the requirement of four Thai employees per permit, a four-hour processing time for work permits at the one-stop service center, and even the ability to own property, even if the company is majority controlled by non-Thai nationals.
The Board of Investment has put in place incentives to attract more investment, decentralize Thailand’s industrial base and promote the development of local skills in attractive industries. Eligible companies can benefit from tax or non-tax incentives, or both.
Investors applying for BOI promotion must be engaged in activities eligible for promotion and in particular the specific requirements for each activity.
The following is a list of activities eligible for BOI promotion:
|➤ Agriculture and agricultural products
|➤ Mining, ceramics and base metals
|➤ Light industry
|➤ Metal products, machinery and transport equipment
|➤ Electronic industry and electronic devices
|➤ Chemicals, Paper and Plastics
|➤ Services and utilities
|➤ Technology and Innovation Development
It is necessary to apply to the BOI and provide all the required documents as well as a business plan in English. Several interviews will be undertaken to assess the investment capacity and to discuss the project.
The process including the submission and application of the project can take up to 3 months, and the Thai government will be the sole judge in approving or rejecting the investment project.
The Board of Investment provides various criteria for investment project approval, including the development of competitiveness in the industrial and agricultural services sectors, environmental protection, minimum capital and project feasibility.
Regarding the development of competitiveness in the industrial and agricultural sectors, the added value of the projects should not be less than 20% of the income except in some areas, modern production processes and new machinery should be used.
Regarding environmental protection, adequate measures and guidelines to protect the quality of the environment must be taken into account when submitting the project. The BOI will pay special attention to the environment and the treatment of pollution of an investment project with a potential environmental impact.
Regarding the minimum capital, each investment project must be in principle of a minimum amount of one million baht excluding the cost of land.
As soon as a company falls within the scope of activities eligible for BOI approval, it benefits from various tax advantages depending on the classification.
The company benefits from the following advantages:
|➤ Exemption or reduction of import duties
|➤ Exemption from income tax and dividends of a legal entity
|➤ Double deduction of transportation, electricity and water supply costs
|➤ Exemption from corporate income tax for eight years limited to the following activities:
- Any activity based on knowledge and R&D to enhance Thailand's competitiveness;
- Activity in the field of infrastructure for the development of Thailand;
- Activities using advanced technologies to create added value.
|➤ Corporate tax exemption for five years for High-tech activities that are important for Thailand's development, with little existing investment
|➤ Three-year corporate tax exemption for activities that are low-tech but add value to domestic resources and the supply chain
Tax benefits are numerous and vary by category. Please refer to the “Board of Investment” to see the benefits depending on the activity.
In the fields of activities provided for by the BOI and not reserved to Thai nationals only, it is possible for the foreign national to own a company at 100%. This is the only exception to the rule of majority ownership by Thai nationals. The license allows to withdraw or remit money abroad in foreign currency
It is also possible to bring in skilled workers and experts to work in investment promotion activities. Another advantage is the possibility for the company wholly owned by foreign nationals to own land or property in Thailand.
Thailand is an economic hub of Asia due to its strategic location in the heart of the ASEN Economic Community (AEC), which benefits production, trade, exports and logistics. The country borders Cambodia, Laos, Myanmar, and is a short distance from Vietnam. This makes Thailand one of the most suitable investment destinations – connecting Asia to the world. Currently, Asia contributes 32% of the world’s GDP with a total population of 3.5 billion.
One of the government’s strategies is to transform Thailand towards stability, prosperity and sustainability under the concept of Thailand 4.0. This strategy is implemented by investing in human capital and technology, as well as developing critical infrastructure, and reforming rules and regulations that hinder development, and building industrial centers for the future, which will increase Thailand’s competitiveness.
Thailand 4.0’s “new engines of growth” consist of two parts: upgrading five existing industries (agriculture and food, tourism, automotive, electrical and electronics, and petrochemicals) as well as developing five new industries (automation and robotics, aerospace, digital, bioenergy and biochemicals, and medicine and healthcare).
To achieve this, Thailand’s comparative advantage, including the country’s rich biodiversity and cultural diversity, will be transformed into a competitive advantage based on “science, technology, innovation and creativity. The government is therefore focusing on developing technologies that will provide an important foundation for the development of industries that will lead Thailand into a more prosperous future. Core technologies include biotechnology, biomedicine, mechatronics, embedded technology, service design and technology.
Thailand’s investment promotion laws are a particularly important part of its overall plan for future economic growth, especially with respect to its competitiveness with other ASEAN Economic Community (AEC) nations. The Investment Promotion Act of B.E. 2520 (1977), recently amended in 2001, authorizes the Board of Investment of Thailand to grant tax and non-tax incentives to foreign and Thai investors who engage in any type of promoted business activities, as stated in the Board of Investment announcements. Among the incentives offered by the BOI, in addition to tax incentives, are privileges such as majority foreign ownership, foreign ownership of land and special visas for foreign technicians and experts.
New investment promotion tools have been developed, including the establishment of a 10 billion baht competitiveness enhancement fund for targeted industries and additional tax incentives. The Investment Promotion Law has been amended to add new or enhanced incentives to attract high-value investments to enhance the country’s competitiveness, especially through investments in targeted industries that use advanced technologies and demonstrate strength in innovation and R&D.
With reference to the government’s policy to develop border areas, which are connected to neighboring ASEAN countries, to improve the quality of life, promote trade and investment, and especially to prepare for the ASEAN Economic Community (AEC), 10 special economic development zones are being established in Tak, Sa Kaeo, Trat, Mukdahan, Songkhla, Chiang Rai, Nhong Khai, Nakhon Phanom, Kanchanaburi and Narathiwat. The government provides support measures and other promotions for infrastructure development, including tax and non-tax incentives, the establishment of a one-stop service center, and other facilitation measures.
Investors in SEZs will not only benefit from greater tax incentives if they operate or invest in other areas, but will also be encouraged by the ability to easily employ foreign labor in their investments.
Activities or industries that lend themselves to investment in the SEZs include labor-intensive industries, industries that rely on raw materials from neighboring countries, border trade requiring bonded warehouse and distribution centers to neighboring countries, tourism supporting businesses, and various service activities to support the expansion of communities around the SEZs