Increasing or not increasing the registered capital must be considered from the standpoint of the debt/equity ratio which must not exceed 3:1, and projects must have a minimum investment of at least 1 million baht.

The easiest way to conduct this business under Thai’s company is suggested. According to Thai’s law, a company will consider as Thai when equal to or more than 51% of the company’s shares held by Thai nationality (whether juristic person or natural person).

Accordingly, if more than 49% of the company’s shares help by foreigner will consider as foreign company. Please see the attached file of Foreign Business Act B.E. 2542 (1999) section 4 for more detail regarding on this part. Following tables are main step to set up a business in Thailand.

The advice from the officer of The Customs Department are as follows:

Bonded Warehouse of Duty Free Shop Type

1. Advantages of a Bonded Warehouse of Duty Free Shop Type

The bonded warehouse of duty free shop type was designed to promote tourism of Thailand by allowing tourists/travelers to buy merchandise displayed in duty free shops free of import/export taxes and duties. The goods imported from abroad or those entitled for tax and duty refund upon exportation can be stored in this type of bonded warehouse for two years. Local goods are also allowed to be removed to the bonded warehouse for display and sale.

2. Criteria and Conditions for Establishment of a Bonded Warehouse of Duty Free Shop Type

The bonded warehouse of duty free shop type is a public warehouse established at international airports or in towns to display and sell the goods for the purpose of exportation. Business operators interested in establishing the bonded warehouse of duty free shop type must be a legal person with a paid-up register capital of not less than 1 million baht. The applicant must be able to provide display and sale areas, management system, pick-up points as required by Customs, and a cash-register machine as required by the Revenue Department. It is required that 51% of the paid-up register capital belongs to the Thai national stockholder. In addition, such intending business operators must have no past record of offences against Customs or other related laws for a period of 3 years from the date of filing an application. Also they must be free from the financial obligation with Customs as well.

The licensee of the bonded warehouse shall give security by bond to the Customs Department and deposit a bank guarantee covering 50 percent of the applicable taxes and duties charged on the remaining inventory during each accounting period. It is also required that the licensee pay the annual license fee at the rate of 30,000 baht.

Source: The Customs Department, Title "BONDED WAREHOUSES” (Available in Thai only) via:http://www.customs.go.th/data_files/6e69a3efe9177be59c0a2613c0c08f17.pdf

3. More detail regarding setting up "Duty Free Shop”(คลังสินค้าทัณฑ์บนประเภทร้านค้าปลอดอากร) via:https://bit.ly/2QvvhLc.(available in Thai only). The instruction contains Rules & Regulations, Application form and Required Documents, etc.

4. Contact of The Customs Department

Tel. +66-2240-2513-6, FAX: +66-2672-8121

Source : The Customs Department:http://www.customs.go.th

Information as of June 2015

Q1:Is it possible to acquire the majority by foreign company in spite of business for land transportation. And is it possible to acquire the Foreign Business License?

Q2:In case land-transporting vehicles by car-carrier, is it certain that it falls under LIST 2?

A:Yes, this business activity is listed in List 2, Chapter 1 (2) of Foreign Business Act, B.E.2542 (1999).

Any foreign company (Foreign Shareholding ratio is greater than 49%) who is willing to start up the business in Thailand with those business activities listed in List 2 of Foreign Business Act, B.E.2542 (1999) is needed to obtain the permission from the cabinet minister together with the permission from the relevant agency.

The relevant agency is "Department of Land Transport”. Referring to Land Transport Act B.E. 2522(1979), this act was enacted to regulate and monitor on the subject of road transport such as transport operation, operational license and control particular commercial vehicles (bus and truck).

Unofficial Translation

"Land Transport Act, B.E.2522 (1979)

Chapter 3: Transport Operation

Section 24 (3) In case of Limited Company, ……..the investment capital of the company shall not be less than 51% of shareholders holding by natural persons with Thai nationality…….”

Thus, the company is needed to be Thai company to operate Land Transport business.

Land Transport Act, B.E.2522 (1979) only Thai version see via

http://web.krisdika.go.th/data/law/law2/%a111/%a111-20-9999-update.pdf

Source: Foreign Business Administration Bureau

https://www.dbd.go.th/dbdweb_en/more_news.php?cid=246

Department of Land Transport

http://www.dlt.go.th/th/

An investor has to apply for permission to conducting foreign business. The company can get the license to operate this business by 3 different ways;1.Apply for permission to operate foreign business under LIST 3 article (14) or (15) of the Foreign Business Act B.E. 2542 (1999).OR

2.If a company has minimum capital (paid-up capital) of 100 million baht for each of business, a company can operate a business without a license. However, company has to inform the Foreign Business Department before starting its business.OR

3.Thai company has to submit a principle approval letter to the committee of foreign business department. After that, the committee will consider whether your company will be allowed to be a foreign business. Once the company gets an approval, the company can transfer shares to a foreign shareholder. After the company becomes the foreign business, the company has to get a permission to operate the business as the company has explained in the principle approval letter. However, the officer of Foreign Business Dept. suggests an investor to visit the foreign Business Dept. head office (Sanam Bin Nam) to discuss on this issue.

For more information, please access:http://www.dbd.go.th/index.php

a) as foreign company

1. To do intermediate trade (import items from other countries and export them to other countries)

→register as international trade center

1. To do retailing (sales to distributor, not to end user)

→increase capital fund up to 10 million THB

A2:In case that you do intermediate trade (import items from other countries and export them to other countries) or do retailing (sales to distributor, not to end user), this business could possibly be categorized under 7.6 Inter National Trading Centers(ITC) (on the list of activities eligible for investment promotionhttp://www.boi.go.th/upload/content/newpolicy-announcement%20as%20of%2020_3_58_23499.pdf) but if customer are the end user BOI does not promote your business.

This category you shall receive the following incentives:

• Exemption of import duties on machinery.
• Exemption of import duty on raw or essential materials for use in production for export product for 1 year which can be extended as deemed it appropriate by the Board.
• Permit for foreign nationals to enter the Kingdom for the purpose of studying investment opportunities.
• Permit to bring into the Kingdom skilled workers and experts to work in investment promoted activities.
• Permit to own land.
• Permit to take out or remit money abroad in foreign currency.

Condition to apply for privileges offered by the BOI

• An ITC must have paid-up capital of at least THB 10 million.

** Please note that in the case where the business of a foreigner that is promoted under BOI investment promotion, the foreigner can apply for foreign business certificate. The foreigner shall notify the Director-General in order to obtain a Certificate. So in case of BOI promotion project, no need to apply for Foreign Business License.

Retail business (Selling products to end users)

• Any foreign company that would like to do retail business in Thailand is required to obtain Foreign Business License under section17.
• Retail business is in the Annexed list of Foreign Business Act, B.E.2542 (1999), list 3 (14).
• The minimum capital shall not be less than 3 million Baht (paid-up).

In addition, foreign company is allowed to do retail business without obtaining Foreign Business License if having minimum capital of 100 million baht (paid-up). With this amount of money, 5 retail stores are allowed. In case, the company would like to have the 6th store or more, the company is required to increase the capital every 20 million baht/store.

For more information regarding Foreign Business Act, B.E.2542 (1999) and the procedure to obtain Foreign Business License under section17, please see the attachments. If you have further information and would like to inquire directly to Foreign Business Administration Division, you are able to make a call at Tel. +66 2 547 4425-6 or send an email to foreign@dbd.go.th

Referred to e-mail, regarding apply for BOI promotion under activity of International Trading Center (ITC). Since we revised new investment promotion policy start from January 1st , 2015, activity of International Procurement Office (IPO) has been changed to International Trading Center (ITC). According to your existing promoted project is International Procurement Office (IPO) which receive the same incentive as ITC, so you can enjoy privilege under activity of International Procurement Office (IPO). However, if you would like to change type of promoted project from IPO to ITC, you have to fill revised form, and give us the reason of changing.

If customers are the dealer (Import for wholesale) this business could possibly be categorized under 7.6 Inter National Trading Centers (ITC) (on the list of activities eligible for investment promotion but if customer are the end user BOI does not promote a business.

International trading related services include:

1. Procurement of goods
2. Warehousing and inventory services prior to delivery
3. Packaging services
4. Transportation of goods
5. Insurance on goods
6. Advisory, technical and training services on goods
7. Any other services stipulated by the Director General of the Revenue Department.

This category you shall receive the following incentives:

• Exemption of import duties on machinery.
• Exemption of import duty on raw or essential materials for use in production for export product for 1 year which can be extended as deemed it appropriate by the Board.
• Permit for foreign nationals to enter the Kingdom for the purpose of studying investment opportunities.
• Permit to bring into the Kingdom skilled workers and experts to work in investment promoted activities.
• Permit to own land.
• Permit to take out or remit money abroad in foreign currency.

Criteria for Project Approval

1. The minimum of investment project is 1 million baht (excluding cost of land and working capital) for a new project.
2. Modern production processes must be used.
3. New machinery must be used.
4. The value-added of the project must not be less than 20% of revenue.
5. The debt to equity ratio of the project must not exceed 3 to 1.

For more information, please find fromhttp://www.boi.go.thandhttp://www.boi.go.th/index.php?page=criteria_for_project_approval

If your company decides to apply for the BOI promotion certificate, the foreign employee who will be working in Thailand can apply for an extension of his/her Non-B visa and a work permit through BOI in the Foreign Expert Services Division. I have attached the work permit form Application for WP,which is used to apply for a work permit through BOI. In order to apply for an extension of visa and a work permit for a foreign employee, the company needs to make requests for position approval and bringing in foreign experts. These requests can be submitted online through the e-Expert system but the company must submit the agreement to use the system at the Foreign Expert Services Division in Bangkok first.

For Non-BOI company

In case your company decides not to apply for the BOI promotion certificate, then the foreign employee will need to fill out the Form WP.1, please read a guide of WP.1form and can submit it directly at the Department of Employment in the province where your company located in, along with other required documents as follows:

1. Work Permit 1 (WP.1) form
2. Three (3x4 cm.) photos taken within the last 6 months
3. Employment certificate (last form in the pdf file)
4. List of aliens having received work permits
5. Organization chart detailing names, positions and numbers of Thai and alien workers
6. Original and copy of the passport and alien resident certificate
7. Copy of company’s affidavit (Certificate) and copy of list of shareholders (issued within the last 6 months)
8. Copy of VAT certificate (Por Por 01)
9. For legal entities having paid-up capital below 30 million baht, financial statements showing a total assets value of at least 30 million baht
10. Copy of transcript and/or employment reference letter issued by the previous employer
11. Map of office’s location
12. Medical certificate confirming that the applicant has no prohibited diseases as prescribed by Ministerial Regulations (issued within the last 6 months)

For the information about the Non-B visa application, please see the visa application attachment.

Information of The Customs Department

3. ELIGIBILITY FOR DUTY DRAWBACK

1) The drawback on such imports is not prohibited by the Ministerial Regulations.

2) The quantity of the imports used in producing, mixing, assembling, or packing exports is in accordance with the rules approved or specified by Customs.

3) The goods are exported through a port or place of exit designated for a drawback scheme.

4) The goods are exported within one (1) year from the date of importation of the goods used in producing, mixing, assembling or packing exported goods. In case where there is a force majeure event that causes the delay of such exportation, Customs may extend the aforementioned period by six (6) months.

5) A claim for drawback must be made within six (6) months from the date of exportation of the goods. However, Customs may extend this time limit on a case by case basis.

1) Raw materials which are obviously seen in the exports e.g. fabrics, buttons, zippers and thread in garments, plastic sheeting in plastic products, etc.

2) Raw materials used directly in the manufacturing process and contained in the exports but not obviously seen e.g. preservatives in canned food, stiffening agents in garments, solvents for glue in cellophane and anti-rust agents in electronic circuits, etc.

3) Raw materials required in the manufacturing process e.g. sizing materials and bleaching agents used in textile products, sand paper, scouring powder, varnish, velvet, scouring agents, chalk, carbon paper and pattern.

1) Machinery, tools, moulds and various appliances e.g. grinding ball for ores, tools and appliances made from tungsten carbide used in the manufacturing of watches, etc.

2) Fuels for manufacturing e.g. fuel oil, firewood, coal, etc.

1) Request for approval

2) Importation of raw materials

3) Submission of production formula

4) Submission of "right transferred table”

5) Exportation of Goods

6) Claiming for duty drawback

7) Duty payment on raw materials not exported

1) Form for approval of drawback (Form Kor Sor Kor 29)

2) Form for the approval of production formula (Form Kor Sor Kor 96)

3) Form for transferring the right of duty drawback (Form Kor Sor Kor 96/6)

4) Form for claiming duty drawback under Section 19 bis and bank guarantee (Form Kor Sor Kor 111)

5) Form for the summary of total amount of outstanding import duties and taxes (Form Kor Sor Kor 112)

6) Form for requesting duty concession (Form Kor Sor Kor 131)

7) Sample of report on duty refund on exportation

8) Sample of report on duty drawback classified by export declaration

9) Sample of report on raw material imported and used

10) Sample of report on duty drawback classified by import declaration

11) Sample of report on raw material drawback

Validity of the Approved Production FormulaThe approved production formula is valid for five (5) years from the date of approval. Upon the request by the importer, the validity of the approved production formula can be extended for another five (5) years at a time. The request for extension the validity of the production formula must be made before the expiry date of the production formula. Failure to do so is considered as an offence and the validity of the production formula will be extended after the case is settled.Raw Material AuditingThe auditing of raw material is conducted from the date when the Formula Number is issued. In case where the approved production formula is revised, the audit shall be conducted on the date indicated in the revised production formula, provided that such revision does not result in the approval of a new production formula.Documents1. Submission of Production Formula and Revision of the Approved Production Formula

1) Production Formula Declaration Form (Kor Sor Kor 96) with lists of products to be manufactured, lists of raw materials, code, unit and quantity of raw materials to be consumed including waste (if any) together with one (1) duplicate. The Unit of the raw materials shall be aligned with UN standards.

2) A copy of approved production formula(in case of revision of the approved production formula only)

3) Manufacturing Process(the submission of marker indicating the use of raw materials is also required for some products e.g. garments, shoes, etc.)

4) Samples of imported raw materials and finished products

5) Electronic media e.g. CD-ROM containing details of data in the format stipulated by Customs

6) Other related documents e.g. invoice of raw materials

2. Use of Other Person’s Approved Production Formula

1) A request stating the purpose of using other person’s approved production formula together with the written consent from the owner of the production formula

2) A copy of the approved production formula

3) Electronic media e.g. CD-ROM containing details of data in the format stipulated by Customs

3. Transferring or Selling of the Imported Goods to Other Person

1) Production Formula Declaration Form (Kor Sor Kor 96) with lists of products to be manufactured, lists of raw materials, code, unit and quantity of raw materials to be consumed including waste (if any) together with one (1) duplicate. The Unit of the raw materials shall be aligned with UN standards.

2) A letter certifying the production information of the manufacturer. The importer is waived from submission of production formula in the case where the exported product is manufactured using the production formula for drawback under Section 19 bis

3) Manufacturing Process(the submission of marker indicating the use of raw materials is also required for some products e.g. garments, shoes, etc.)

4) Samples of imported raw materials and finished products

5) Electronic media e.g. CD-ROM containing details of data with the format stipulated by Customs

6) Other related documents e.g. invoice of raw materials

4. Extension of the Validity of the Approved Production Formula

1) A request stating the purpose of the extension

2) A copy of the approved production formula to be extended

3) Electronic media e.g. CD-ROM containing details of data in the format stipulated by Customs

Submission of Right Transferred TableRight Transferred Table is the table containing information of the importer who is granted by the exporter to use his/her exported information for the purpose of auditing imported raw material in order to claim duty drawback under Section 19 bis. The table is submitted to Customs by the exporter.