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FOREIGN BUSINESS LICENSE IN THAILAND

The Foreign Business License (FBL) is a type of license necessary for foreign companies doing business in Thailand. The Foreign Business Act (FBA) regulates foreign business activities in Thailand. According to the Foreign Business Act B.E. 2542 (1999), foreigners are prohibited from operating some categories of businesses, and some categories of businesses can be operated by obtaining a license or a certificate according to the Business Lists, as the case may be. This law categorizes business activities into three types:

3 TYPES OF BUSINESS ACTIVITIES

TYPE 1 Businesses Not Permitted to Foreigners

These are Thai-only activities that foreigners are not permitted to engage in. This includes the following activities:

Journalistic enterprise, broadcast radio station enterprise, television station enterprise
Farming and gardening
Animal husbandry
Forestry and transforming of natural wood
Fishery especially in Thai territorial waters and in specific economic zones of Thailand
Thai herb extraction
Trade and sale by auction of Thai antiques or Thai historically worthy items
Founding Buddha images and Buddhist monk’s alms-bowls
Land trade

TYPE 2 Businesses Permitted to Foreigners under Certain Conditions

Group 1: Business involving the safety and security of the nation:

Production, distribution and repair of

weapon, weapon accessories, cartridge set, gunpowder, explosive
war materials, ships, aircraft, military vehicles
equipment or accessories of all kinds of war materials

2. Transportation by land, by water and by air in the country, including domestic aviation

Group 2: Businesses affecting arts and culture, custom and tradition, and local crafts

Trade of antiques, art materials that are art objects and crafts of Thailand
Production of wood carvings
Silk worm husbandry, production of Thai silk thread, weaving of Thai silk cloth and printing design on Thai silk cloth
Production of Thai musical instruments
Manufacturing of goldware, silverware, nielloware, polished stone, goldware or lacquerware
Production of Thai art crockery, pottery

Group 3: Businesses affecting natural resources and the environment

Granulation of sugar from sugar canes
Salt Farming including salt farming from salty soil
Rock salt farming
Mining including blasting and crushing rock
Transformation of furniture and utensils

TYPE 3 Businesses Permitted to Foreigners

With the permission of the Director-General of the Department of Business Development and the approval of the Committee, these are the businesses that foreigners can engage in without restrictions:

Rice milling and production of flour from rice and farm crop

2. Fishery especially of aquatic animal

3. Forestry from planted forest

4. Production of plywood, veneer, chipboard and hardboard

5. Lime production

6. Service-based businesses such as accounting services, law service business, architecture business, engineering service business, and advertising business.

7. Construction services except

the construction of public fundamental services for public utilities or communication that requires special equipment, machines, technology and skill and that has the capital from Aliens at a minimum of 500 million baht
other constructions stipulated in the ministerial orders

8. Broker or agent enterprise except for

stock trade or service relating to a forward trade of agricultural goods or financial printed documents or stocks
providing necessary goods or services for the production and services in the enterprise’s group
trading, purchasing or distributing or providing materials both in the country and in foreign countries for selling domestic products or importing products as an international trade with an alien’s capital at a minimum of 100 million baht
being other kinds of brokers or agents as stipulated in the ministerial orders

9. Sale at auction except

the international auction that is not an auction of ancient objects, antiques, or art materials that are artworks, crafts or relics of Thai or historically worthy relics of the country
other kinds of auction stipulated in the ministerial order

Domestic trade relating to local agricultural products or products that have not been forbidden by other laws
Retailing trade of all goods that has the entire capital at the maximum of 100 million baht or has the least capital of each store at the maximum of 20 million baht
All kinds of wholesaling trade that has the least capital of each store at the maximum of 100 million baht
Restaurants and Hospitality (except hotel managing services)
Tourism and Travel Services
Cultivation, propagating and improving plants
Other service businesses unless otherwise stipulated in the ministerial order

The most common type of license for international enterprises in Thailand is the Foreign Business License TYPE 3. It encompasses a wide variety of commercial operations that are neither expressly limited under Type 1 nor subject to constraints under Type 2. To conduct foreign business in Thailand, an investor must apply for permission under LIST 3 article 14 or 15 of the Foreign Business Act.

A Thai company must submit a principal approval letter to the foreign business department’s committee to decide if the firm can operate as a foreign business. Once approved, the corporation can transfer shares to a foreign shareholder. A license is necessary after a foreign company is established. However, a company with a minimum capital of 100 million baht can operate without a license, but must inform the Foreign Business Department before starting.

QUALIFICATIONS For Foreign Business License Application

A foreigner intending to apply for a foreign business license must have the qualifications and not be under the following prohibitions:

being of not less than twenty years of age;
having a residence in the Kingdom or having been permitted to enter the Kingdom temporarily under the law on immigration;
not being an incompetent or quasi-incompetent person;
no bankruptcy declaration;
not having been punished by a court judgment or ordered to pay a fine in settlement of any offense under this Act or under the Notification of the National Executive Council No. 281, dated November 24, B.E. 2515 (1972), unless having been discharged for a period of not less than five years prior to the date of the application for the license;
have not been imprisoned by a court judgment for offenses of cheating, cheating creditors, misappropriation, or offenses related to trade under the Penal Code, or the offenses related to loans fraudulent to the public, or the offenses under the law on immigration, unless having been discharged for a period of not less than five years prior to the date of the application for the license; and
not having had a license issued under this Act or under the Notification of the National Executive Council No. 281, dated November 24, B.E. 2515 (1972) was revoked within a period of five years before the date of the license application.

REQUIREMENTS For Foreign Business License Application

When applying for a Foreign Business License in Thailand, you typically need to meet certain requirements and provide specific documentation. Here are some common requirements:

Eligible Business Activities

The business activity you intend to engage in should fall under the category of activities that foreigners are allowed to operate, either with or without conditions.

Company Registration

You must have a registered Thai company that is properly established according to Thai laws. This involves registering the company with the Department of Business Development at the Ministry of Commerce.

Minimum Capital Requirement

Depending on the type of business activity, there might be a minimum capital requirement that you need to meet. The amount of capital required can vary based on the nature of the business.

Either licensees or certificate grantees under the Treaty must have the minimum capital specified in the ministerial rules, which is not less than 25% of the average three-year expected expenditure.
There is no minimum capital requirement for certificate grantees under the Investment Promotion Certificate

Furthermore, the minimum capital must be maintained until you cease operating a business in Thailand, and it can be held in numerous forms, such as fixed assets or current assets.

Shareholding Ratio

In some cases, there may be some restrictions on the foreigner’s percentage of shares that they can hold. The specific ownership proportion may vary depending on the company’s operations.

Capital and Loans Ratio

The permitted business must utilize a capital-to-loan ratio of 1:3. In other words, if the capital is 100 Baht, the company loan cannot exceed 300 Baht.

Documents from Shareholders and Directors

It is a requirement to produce documentation pertaining to the company’s shareholders and directors. Therefore, make passport copies, work permits (if applicable), and other appropriate identifications available.

Additional Requirements

Depending on the nature of your business activity, additional requirements might be specific to that activity.

In conclusion, the eligibility conditions for a Foreign Business License can be complicated and vary depending on the type of firm and any changes in Thai legislation. As a result, we strongly advise that you get legal assistance or speak with our professionals who are well-versed in Thai company rules and regulations in order to appropriately analyze your eligibility and handle the application procedure. Book an appointment now!