Obtaining Foreign Business License/Certificate
Thai law regulates the activities in which the companies designated as "foreigner" may engage in. While some activities are completely prohibited, some may be engaged in with prior approval from a designated government agency, and some do not require any special approval at all.
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Definition of a Foreign Company -
Restricted Business Activities under the Foreign Business Act of 1999
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Definition of a Foreign Company
According to the Foreign Business Act of 1999 (FBA), the term foreigner means:
(1) Natural person not of Thai nationality.
(2) Juristic person not registered in Thailand.
(3) Juristic person registered in Thailand having the following characteristics:
- (a) Having half or more of the juristic person’s capital shares held by persons under (1) or (2) or a juristic person having the persons under (1) or (2) investing with a value of half or more of the total capital of the juristic person.
- (b) Limited partnership or registered ordinary partnership having the person under (1) as the managing partner or manager.
(4) Juristic person registered in Thailand having half or more of its capital shares held by the person under (1), (2) or (3), or a juristic person having the persons under (1), (2) or (3) investing with the value of half or more of its total capital.
The Foreign Business Act of 1999 has identified three lists of activities in which foreign participation may be prohibited or restricted, as follows:
Activities stated in List 1 are designated as "businesses not permitted for foreigners to operate due to special reasons.” Foreign companies are completely restricted from engaging in the activities contained in List 1.
Activities stated in List 2 are designated as "businesses related to national safety or security, or affecting arts and culture, traditional and folk handicraft, or natural resources and environment.” Foreign companies can operate business in the activities stated in List 2 only where not less than 40% of its shares are held by Thai nationals or juristic persons which are not foreigners under this Act, otherwise, they are approved with prior Cabinet approval.
Activities stated in List 3 are designated as "businesses which Thai nationals are not yet ready to compete with foreigners.” To engage in activities stated in List 3, the foreign company must apply for and obtain a Foreign Business License prior to commencing the activity.
There are two common exceptions to the above stated rules:
- If a foreigner is operating a business that is classified in List 2 or List 3 with the permission of the Government of the Kingdom of Thailand i.e. the Board of Investment or the Industrial Estates Authority of Thailand, such foreigners shall notify the Director-General of Commercial Registration Department in order to obtain a certificate.
- If a foreigner is operating a business that is classified in the lists under a treaty to which Thailand is a party or is obligated to abide by, it shall comply with the provisions of the treaty which may in return include the entitlement of Thai nationals and Thai enterprises to operate the businesses in the country of the foreigners, i.e. Treaty of Amity Between U.S.–Thailand.
Source :
| DBD: Establish rules and procedures for applying for a business license under Section 17 2003 | link |
| DBD: Requesting alien business license | link |
| SEC: Application for a license | link |
| DBD: Download form Foreign business | link |
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FBL
List 1 – Businesses that foreigners are not permitted to engage in for special reasons:
- Newspaper business, radio-broadcasting station or radio/television business.
- Farming, cultivation or horticulture.
- Animal husbandry.
- Forestry and timber conversion from natural forests.
- Fisheries, especially fishing in Thai territorial waters and in specific economic areas of Thailand.
- Extracting Thai herbs.
- Trade and auction sale of Thai antiques or objects of historical value.
- Making or casting Buddha images and alms bowls.
- Trading in land.
List 2 – Businesses concerning national security or safety that could have an adverse effect on art and culture, customs, or native manufacture/handicrafts, or with an impact on natural resources and the environment:
Group 1 – Businesses concerning national security or safety
- Manufacturing, distribution, repair or maintenance of:
- Firearms, ammunition, gunpowder, and explosive materials.
- Components of firearms, ammunition, and explosive materials.
- Armaments, ships, aircraft, or military vehicles.
- Equipment, or parts of any type of war equipment.
- Domestic land transportation, water transportation, or air transportation, including domestic aviation.
Group 2 – Businesses that could have an impact on arts and culture, customs, and native manufacturing/handicrafts
- Trading of antiques or artifacts that are Thai works of art or Thai handicrafts.
- Wood carving.
- Silkworm rearing, manufacture of Thai silk, Thai silk weaving, or Thai silk printing.
- Manufacturing of Thai musical instruments.
- Manufacturing of goldware, silverware, nielloware, bronzeware, or lacquerware.
- Making bowls or earthenware which are of Thai art and culture.
Group 3 – Businesses that could have an impact on natural resources or the environment
- Manufacturing of sugar from cane.
- Salt farming, including rock salt farming.
- Production of rock salt.
- Mining, including stone quarrying or crushing.
- Timber processing for making furniture and utilities.
List 3 – Businesses in which Thais are not ready to compete in undertakings with foreigners:
- Rice milling and flour production from rice and plants.
- Fisheries, specifically breeding of aquatic creatures.
- Forestry from a grown forest
- Production of plywood, veneer, chipboard or hardboard.
- Production of lime.
- Accountancy
- Legal services
- Architecture
- Engineering
- Construction, except:
- Construction of infrastructure in public utilities or communications requiring tools, technology or special expertise in such construction, except where the minimum foreign capital 500 million Baht or more.
- Other construction, as prescribed in regulations.
- Agency or brokerage, except:
- Brokerage or agency of securities or service related to future agricultural commodities futures or financial instruments or securities.
- Brokerage or agency for the purchase/sale or procurement of goods or services necessary to production or providing services to affiliated enterprises.
- Brokerage or agency for the purchase or sale, distribution or procurement of markets, both domestic and overseas for the distribution of products made in Thailand, or imported from overseas in the category of international business, with minimum foreign capital of not less than 100 million Baht or more.
- Other brokerage or agency activities, as stipulated in Ministerial Regulations.
- Auctioneering, except:
- Auctioneering in the manner of international bidding, not being auctions of antiques, ancient objects or artifacts that are Thai works of art, Thai handicrafts or antique objects, or with Thai historical value.
- Other types of auctioneering, as stipulated in Ministerial Regulations.
- Domestic trade in local agricultural products not prohibited by law, except agricultural futures trading in the Agricultural Futures Exchange of Thailand without delivery or taking delivery of agricultural commodities within the country.
- Retailing all categories of goods having of less than 100 million Baht capital in total or having the minimum capital of each shop of less than 20 million Baht.
- Wholesaling, all categories of goods having minimum capital of each shop less than 100 million Baht.
- Advertising
- Hotel operation, excluding hotel management.
- Tourism
- Sale of food and beverages.
- Planting and culture of plants.
- Other services, except those prescribed in the Ministerial Regulations.
Source: Department of Business Development, Ministry of Commerce, as of November 2018.
"Other service businesses” stated in List 3 effectively serves as a "catch-all” service category. If the foreigners provide a service, not otherwise contained in List 3, the company must still apply for and obtain a Foreign Business License prior to commencing operation. This category includes the business activity of leasing both fixed and non-fixed assets. Additionally, the activities in which representative offices and regional offices are allowed to engage in are all services that fall under this category.
However, in 2013, the Ministry of Commerce issued a Ministerial Regulation removing certain categories of business from the controlled business activities in Schedule Three of the FBA. This Ministerial Regulation effectively lifts restrictions on foreign companies in conducting certain service businesses in Thailand that were under the scope of the FBA, including securities and related businesses according to the Securities and Exchange Act, derivatives services according to the Derivatives Act, and trustee businesses according to the Trust for Transactions in Capital Market Act. Consequently, foreign companies are allowed to engage in these service businesses as prescribed by the Ministerial Regulation without being required to obtain a Foreign Business License under the FBA. , but will still be subject to notification, licensing and foreign shareholding limit requirements under specific regulations.
Source: Doing Business in Thailand 2015 - 2017, Baker & McKenzie
Also, note that special rules apply if the foreigners plan to engage in the activities of "retail sale of goods” or "wholesale sale of goods”. Both of these activities are contained in List 3; therefore, in order for a foreigner to engage in either of these activities the company must first apply for and obtain a Foreign Business License.
Thai law, however, grants narrow exceptions to the Foreign Business License requirement for those foreign companies seeking to engage in retail selling and/or wholesale selling.
For foreigners to engage in the activity of retail selling, the exception is that if the company has a registered capital of 100 million Baht (fully paid up) or more, and capital for each additional retail store of 20 million Baht or more, the foreigner is not subjected to the Foreign Business License.
For a foreign company to engage in wholesale selling, the exception is that if the company has 100 million Baht capital or more for each of its wholesale stores, the foreigner is not subjected to the Foreign Business License.
There is a catch-all promotional category named "Trade and Investment Support Office” (TISO) which permits a variety of services, including monitoring/servicing affiliates; consultancy services; advisory services on business operations; information services on goods sourcing; engineering and technical services; wholesaling products manufactured in Thailand; international business process outsourcing, and business activities related to machinery, engines, tools and equipment such as training, installation, maintenance and repairs, and calibration. There is a condition of sales and administration expenses of at least 10 million Baht per year. TISO is not qualified for tax benefits.
Last updated 17 May 2015
Source :
| DBD : Applying for a permission to operate a business under the Foreign Business Act BE. 2542(1999) | link |
| BOI : Foreign Business Act of 1999 and Activities Restricted to Thai Nationals | link |
FBC
As stated above, foreigners seeking to engage in List 3 activities are required to apply for and obtain a Foreign Business License prior to commencing operations.
The Foreign Business Act sets forth the process by which the Foreign Business Committee ("Committee”) reviews the application. It states that the Committee is required to rule on the application within 60 days of submission. However, practically speaking, the application process has two distinct steps. The first is the process by which the presiding official at the Ministry of Commerce (MOC) accepts the application for review by the Committee, and the second is the Committee’s actual review of the application.
Acceptance by the MOC Official
An application for a Foreign Business License is submitted to the MOC together with all required documents and information. The presiding MOC official, who is in charged with accepting the application normally, will not do so until he is satisfied that all documents are in order. The official will perform the preliminary inspection upon presentation, but usually he will require the person submitting the application to leave it for later inspection. The time frame for the official’s review of the application is not specified by statute.
In order to avoid these delays, make sure that the person designated to submit the application is familiar with the intended operations of the company to respond on the spot to the official’s questions regarding the application. In the case that the official requests additional documents and/or information, make sure the designated person supplies those documents in a timely fashion.
Review by the Board
Once the official accepts the application and issues a receipt, the 60-day consideration period begins. The factors considered by the Committee when reviewing applications are:
- The advantages and disadvantages to the nation’s safety and security;
- Economic and social development;
- Public order, good morals, art, culture and traditions of the country;
- Natural resources, conservation, energy and environment, consumer protection, size of the enterprises, employment;
- Technology transfer and research and development.
Technology transfer and research and development (R&D) are probably the most important. In 2004, the Ministry issued a document advising foreign investors on how they should describe technology transfer in the license application. Technology here is not just limited to R&D and use of sophisticated equipment, but also specifically includes "administration, management and marketing”. In addition, any planned programs the company has with Thai universities are taken under consideration by the committee.
In the event that the Foreign Business License application is rejected, the law requires that the MOC inform the applicant within 15 days of the decision. The notification of rejection must be in writing and expressly state the reasons why the application was rejected.
If the application is rejected, the applicant has the right to appeal the decision. The appeal must be submitted within 30 days of the date on which the applicant received the rejection notice. The Minister of Commerce is required to rule on the appeal within 30 days of receipt. The decision of the Minister shall be final.
Last updated 17 May 2015
Source :
| DBD : A foreigner permitted to operate business under the Foreign Business Act B.E.2542 | link |