Foreign Business License application information
A Foreign company or Foreign investors that wishes to operate a business which is normally restricted to Foreigners under Thai Law can be awarded a Foreign Business License. The company must check the “Foreign Business Act” to verify if the business category they wish to operate in is permitted for foreigners by Thai Law. Some business categories are wholly reserved for Thai Nationals.
Foreign investors and foreign owned businesses can apply for a Foreign Business License at the Foreign Licensing Department of the Ministry of Commerce in Thailand. The minimum capital requirement for the formation of such a company in Thailand is 2 million baht in general, and 3 million baht for those under List 2 or List 3.
The Foreign Business Act maintains 3 lists of business activities:
- List 1: Business Not Permitted to Foreigners under no circumstances.
- List 2: Business Permitted to Foreigners under Conditions.
- List 3: Business Not Yet Permitted to Foreigners.
Activities that fall under List 1 are strictly prohibited to aliens. List 2 are prohibited to aliens unless permission is granted by the Cabinet. Businesses that are covered by List 3 are prohibited to aliens unless permission is granted by the Director-General of the Commercial Registration Department (“CRD”).
List 1: Businesses strictly prohibited for Foreigners:
- Newspaper publishing and radio or television broadcasting stations.
- Rice farming, plantation, or crop growing.
- Livestock farming.
- Forestry and timber processing from a natural forest.
- Fishery, specific only to catching aquatic animals in Thai waters and specific economic zones of Thailand.
- Extraction of Thai medicinal herbs.
- Trading and auction sale of antique objects of Thailand or objects of historical value to Thailand.
- Making or casting Buddha images and monk alms bowls.
- Land trading.
Generally, a registered non-Thai entity cannot embark on any activities from List 1, but there are some exceptions, such as US Amity Treaty companies and foreign companies that meet certain investment and partnering conditions.
List 2: Businesses Permitted to Foreigners under Certain Conditions
The FBA lists activities under three different groups that foreign entities must receive government approval from or meet certain ownership conditions before commencing.
- Group 1 – Businesses related to Thai national safety or security: production, sales, or maintenance of firearms, ammunition, gun powder, or explosives; or the domestic transportation by land, water, or air of such products.
- Group 2 – Businesses affecting Thai arts, culture, traditions, folk handicrafts: trading in Thai art, art objects, or handicrafts; or production of carved wood, etc.
- Group 3: Business affecting Thai natural resources and environment: manufacturing sugar from sugar cane, salt farming, or rock salt mining, etc.
Foreign entities can operate businesses categorized under List 2 once they have received proper licensing and approval from the Ministry of Commerce, the Board of Investment, or the Industrial Estate Authority of Thailand. There is a list of other factors that will determine which regulatory body should be involved.
List 3: Businesses Permitted to Foreigners who Obtain a Foreign Business License
The FBA classifies these activities as businesses in which Thai nationals may not yet be ready to compete alongside foreigners.
- Rice milling and flour production from rice or farm plants.
- Fisheries, only in respect of the hatching and raising of aquatic animals.
- Forestry, from a replanted forest.
- Production of plywood, veneer boards, chipboards or hardboards.
- Production of (natural) lime.
- Provision of accounting, legal, architectural, and engineering services.
- Construction, with some exceptions.
- Brokerage or agency business, with some exceptions.
- Sales by Auction, with some exceptions.
- Domestic trade related to native agricultural products or produce not yet prohibited by law.
- Retail sales with an aggregated minimum capital of less than 100 million Baht, or with a minimum capital of each store of less than 20 million Baht.
- Wholesale trading with a minimum capital of each store less than 100 million Baht.
- Advertising business.
- Hotel business, except for hotel management services.
- Guided touring.
- Sale of food and beverages.
- Cultivation, propagation and development of plant varieties.
- Other service businesses, except those otherwise prescribed by Ministerial Regulations.
A foreign entity seeking to engage in any of these business activities must first obtain a Foreign Business License (FBL) from the Foreign Business Committee and the Director-General of the Department of Business Development (DBD). There are also cases for exemptions or special permissions from the Board of Investment or Industrial Estate Authority of Thailand, as well as through free-trade agreements and treaties between Thailand and certain nations.
An application should be filed with the Commercial Registration Department, which will be reviewed by the Cabinet or Foreign Business Committee, as the case may be. Various criteria are used to consider the impact of the proposed business operation, such as the advantages and disadvantages to the nation’s safety and security, economic and social development, size of enterprise, local employment, etc. Approval of business license application is more likely when the authorities view the business as providing significantly more benefits and protect and promote Thai interests.
If the majority of shares of a limited company are held by Thais, it is regarded as a Thai company and thus not subject to this Act. This means that aliens are generally allowed to participate up to 49% in a company engaged in restricted businesses. Beyond that, the approval requirement must be complied with. Strictly speaking, any company with majority of foreign shareholders is required to apply for the Foreign Business License if it engages in a restricted business.
There are some exemptions which allow the foreigner to set up business in Thailand where majority of the owners are foreigners. The Thailand-United States Treaty of Amity is one of such exemption.
Similar to the Thailand-United States Treaty of Amity, the Thailand Board of Investment (BOI) is another exemption which might allow foreigners to operate their businesses in Thailand by holding majority of shares. Foreign investors may hold a majority or all shares in promoted BOI projects. Such BOI certified companies will not be restricted under the FBA.
Generally, the application process for a Thai Foreign Business License is very lengthy and complex. It may take a minimum of 4 months to receive a decision on the application. For these reasons, we suggest you to consult us before starting the application process by clicking the free consult button below or fill in the form.