Doing business in Thailand—whether as a local SME, a large industrial factory, a foreign-invested enterprise, a real estate developer, or a hotel and tourism operator—requires a sound understanding of the legal landscape. Key economic regions like Bangkok, Pattaya, Chonburi, and Rayong host a multitude of businesses, both Thai and foreign-owned, all of which must comply with Thai business laws and regulations. Familiarity with these laws will help entrepreneurs operate smoothly, avoid legal pitfalls, and ensure long-term success.
This article serves as a basic guide to business law in Thailand for entrepreneurs. It covers essential topics such as setting up a company, obtaining necessary business licenses, compliance with corporate law, and sector-specific regulations for different industries. Whether you are a Thai business owner or a foreign investor, this guide will provide you with a solid overview of the key legal requirements and considerations when doing business in Thailand. Our aim is to present the information in a clear, approachable manner—combining a friendly tone with the professionalism you would expect from an international law firm
Establishing a Company in Thailand
Business Entity Types: The most common vehicle for doing business in Thailand is the private limited company. A limited company in Thailand is a legal entity separate from its shareholders, with liability limited to the amount of share capital. To incorporate a Thai limited company, you must register with the Department of Business Development (DBD) under the Ministry of Commerce. Traditionally, Thai law required at least 3 shareholders (promoters) to form a company, but a recent legal amendment has reduced the minimum requirement to just 2 promoters/shareholders, making it easier for small teams or single entrepreneurs (with a nominee shareholder) to set up a business. This company structure is suitable for most SMEs and larger enterprises, providing a clear governance framework and credibility with clients and partners.
Registered Capital: Thailand does not impose an excessively high minimum capital requirement for most businesses. You can register a company with a modest capital (even as low as a few thousand baht), although certain businesses or visa/work permit requirements may effectively necessitate higher capital. In practice, many companies choose a registered capital of 1 million baht or more to demonstrate financial substance. Note that at least 25% of each share’s value must be paid up by shareholders at the time of incorporation, as per the Civil and Commercial Code. Some specific sectors (e.g. certain financial services or foreign-owned businesses under the Foreign Business Act) may require higher minimum capital. For example, a standard foreign-owned company needs a minimum capital of 2 million baht under the law, and a hotel business requires at least 3 million baht registered capital. It’s wise to set a capital amount that reflects the scale of your operations—sufficient to cover initial expenses and instill confidence in counterparties.
Company Registration Process: The incorporation process in Thailand involves several key steps: (1) Reserve a company name with the DBD (the name must be unique and not similar to existing companies); (2) File a Memorandum of Association (MOA) outlining the company name, its business objectives, registered address, proposed capital, and the initial shareholders (promoters); (3) Convene a statutory meeting of the promoters/shareholders to adopt the company’s Articles of Association (bylaws), elect the Board of Directors, and approve the number of shares to be issued; (4) Register the company with the DBD by submitting all required documents, such as the list of shareholders, directors’ details, and the minutes of the statutory meeting. Once the DBD reviews and approves the application, the company is formally incorporated and you will receive a company registration certificate and taxpayer identification number. Thanks to improvements in the DBD’s procedures, incorporation can be completed in as little as 3–5 business days if all documents are in order. The government has also introduced online registration systems (DBD e-Registration) to streamline the process.
Post-Incorporation Requirements: After setting up the company, certain ongoing compliance steps are mandatory. The company must register for Value Added Tax (VAT) if it expects annual sales exceeding 1.8 million baht (approximately USD 50,000). If you plan to hire employees, you need to register the company with the Social Security Office and the Revenue Department as an employer. All companies are required to maintain proper bookkeeping and accounting records, and to prepare financial statements for annual submission to the DBD and Revenue Department. Additionally, within 60 days of incorporation, the company should obtain a corporate seal (if it has one) and have statutory books like the share register and minute books ready and up-to-date. While these are procedural, they are important for legal compliance and for any future due diligence if you seek loans or investors.
Representative Office (Rep Office): Foreign companies that wish to have a presence in Thailand without incorporating a local subsidiary may consider establishing a Representative Office. A rep office is a non-revenue-generating office that engages in limited “non-trading” activities on behalf of its overseas head office—such as market research, product sourcing, quality control, or after-sales support. A rep office cannot earn income or sign sales contracts in Thailand; all expenses must be funded by the head office. To set up a representative office, one must register with the DBD and comply with capital requirements (typically, bringing in at least 2 million baht in capital to cover expenses). The good news is that since June 2017, establishing a rep office no longer requires obtaining a Foreign Business License (FBL); the foreign company only needs to notify the Ministry of Commerce of its intent to open a rep office. The process involves submitting an application with details of the head office, the intended rep office activities (which must fall under permitted categories), and appointing a representative (who can be a foreigner with a proper visa/work permit or a Thai national) to liaise with Thai authorities. Once approved, the DBD will issue a certificate for the rep office. Keep in mind that rep offices must still obtain a tax ID and file tax returns, even if they don’t generate income (usually filing nil returns or reporting head office remittances used for expenses).
Sole Proprietorships and Partnerships: Apart from corporations, Thailand also allows businesses to operate as sole proprietorships or partnerships. A sole proprietorship is a business owned by one individual, and a partnership can be registered (ordinary or limited partnership) with two or more owners. These forms are generally simpler but do not provide limited liability protection to the owners. If you start as a sole proprietor or a small partnership (often typical for very small local businesses), you should still obtain a Commercial Registration Certificate (sometimes called a business registration) from the local district office or municipality. This “ทะเบียนพาณิชย์” registration is required for any person or partnership conducting commercial activities, and it serves as an official license to operate a business at the stated address. However, many entrepreneurs with growth ambitions prefer the limited company structure for its liability protection and easier access to credit and investment.
Corporate and Commercial Law Essentials
After incorporation, a company in Thailand must adhere to the provisions of the Thai Civil and Commercial Code (CCC) governing companies, as well as other relevant laws like the Revenue Code (taxation) and Labor Protection Act (employment). Being aware of these legal obligations will help you maintain your company’s good standing and avoid penalties. Here are some key points:
Articles of Association and Internal Governance: Upon incorporation, the company’s Articles of Association (AOA) — essentially the company’s bylaws — will govern the internal management alongside the default rules in the CCC. Common provisions include the procedures for issuing new shares, transferring shares, director appointments, and shareholder meeting protocols. Under recent legal changes, companies are now required to include a mechanism for resolving deadlocks among directors or shareholders in the AOA, ensuring there’s a pre-agreed method to break impasses in decision-making. It’s important to draft the AOA to fit the specific needs of your business and shareholders’ arrangement. If any changes are needed (e.g. increasing capital, changing the company name or business objectives), these must be approved by a shareholders’ resolution and filed with the DBD as official amendments.
Director Duties and Liabilities: The Board of Directors is responsible for managing the company’s affairs. Thai law imposes fiduciary duties on directors, requiring them to act in good faith and in the best interest of the company, with a reasonable standard of care. They must avoid conflicts of interest and cannot use company assets for personal gain. Failure to uphold these duties can result in directors being held personally liable to the company for any damages caused. In severe cases involving fraud or illegal activities, directors may face criminal charges as well. Directors are also tasked with statutory duties such as convening the Annual General Meeting (AGM) of shareholders within four months of the fiscal year-end to approve the audited financial statements, and filing an annual list of shareholders (Form Bor.Or.Jor.5) with the DBD. Non-compliance with these requirements can lead to fines. It’s also worth noting that under the updated laws, board meetings can legally be held via electronic means, i.e. teleconferencing or video conferencing, without requiring any directors to be physically present in Thailand, as long as certain technical safeguards are met (per the Emergency Decree on Electronic Meetings, B.E. 2563). This modernization is particularly useful for companies with foreign directors or during situations like travel restrictions.
Accounting and Tax Compliance: All companies in Thailand are required to maintain accurate accounts and financial statements. You must engage a certified accountant to record the company’s transactions and a licensed auditor to audit the financial statements at year-end. The audited financial statements must be submitted to the DBD and the Revenue Department on an annual basis. Key tax obligations include corporate income tax (standard rate 20% of net profits, with lower progressive rates for SMEs under certain income thresholds), withholding taxes on certain payments (e.g. service fees, rent, dividends), and VAT (7% on sales of goods or services, if applicable). Companies must file monthly VAT returns, monthly withholding tax returns, and annual tax returns. Failure to file or pay taxes on time can result in significant penalties and surcharges. Therefore, it’s crucial to set up a good accounting system or hire a professional accountant to ensure full compliance.
Labor Law and Social Security: If you hire employees, Thai labor laws will come into play. Key statutes include the Labor Protection Act, which covers minimum wage (determined by region), maximum working hours (generally 8 hours per day or 48 hours per week for most industries), overtime pay requirements, annual leave, sick leave, maternity leave, and severance pay rules. You will also need to register your company and employees with the Social Security Fund and make contributions (currently, both employer and employee contribute 5% of wages, capped at 750 baht per month each, to the fund). Additionally, employers must contribute to the Workmen’s Compensation Fund, which provides insurance for employees in case of work-related injury or illness. It is important to issue proper employment contracts (in Thai or dual language) that comply with local law, and to implement workplace rules consistent with legal standards. Thai labor law is generally employee-friendly, and unfair dismissal or failure to provide mandatory benefits can result in labor disputes or orders for compensation by the Labor Court. Ensuring compliance not only avoids legal trouble but also promotes better employer-employee relationships.
Permits for Specific Activities: Depending on the nature of your business, there may be additional permits or licenses required. For example, if you operate a restaurant or bar, you will need food and alcohol sale licenses; if you are in manufacturing, you might need a factory license or industrial permits (discussed further below). Always verify whether your line of business has any special regulatory body or licensing requirement. Consulting with a legal advisor or the One Start One Stop Investment Center (OSOS) in Thailand can clarify what permits apply to your specific business.
Foreign Investment and Restrictions
Thailand welcomes foreign investment, but also maintains regulations to protect certain local industries and control foreign dominance in key sectors. The principal law governing foreign business activities is the Foreign Business Act B.E. 2542 (1999), often referred to as the FBA. This law defines what constitutes a “foreign” company and lists the types of businesses in which foreign participation is restricted or prohibited. Under the FBA, a company is considered “foreign” if it is **registered overseas, or if it is registered in Thailand but 50% or more of its shares are owned by foreigners (note: foreign ownership is calculated by equity, not by nationality of directors or control). If your company falls into the “foreign” category, you need to be mindful of the FBA’s three Annex lists of controlled businesses:
- List 1 (Completely Prohibited): These are sectors totally closed to foreign participation for special reasons (e.g. national security or cultural heritage). Foreigners cannot engage in these businesses at all. Examples include newspaper publishing, farming, land trading, and fishing in Thai waters. No matter what, a foreigner or foreign company cannot legally operate in these areas (aside from rare exceptions via special laws).
- List 2 (Requires Cabinet Approval): These are sectors important to national security or domestic interests (such as transportation, communications, extraction of Thai herbs, etc.). Foreign businesses may only operate in these fields if a Foreign Business License is approved by the Ministry of Commerce with Cabinet approval, or if special laws allow it. In practice, List 2 licenses are rarely granted except for large projects with government backing, so most foreign investors avoid List 2 sectors unless they partner with the government or Thai entities.
- List 3 (Requires Departmental Approval): These are industries where Thailand deems Thai companies are not yet ready to compete fully with foreigners. It’s a broad category that includes most service businesses, as well as retail/wholesale above certain capital limits, hotels, tourism, advertising, construction (with some exceptions), brokerage or agency services, etc. A foreigner can engage in a List 3 business only if they obtain a Foreign Business License (FBL) from the Director-General of the DBD with recommendation from the Foreign Business Committee. The FBL application is a detailed process requiring the foreign company to explain its business plan, why its presence will benefit Thailand (technology transfer, employment, etc.), and sometimes to meet certain capital and Thai staffing requirements. If granted, the FBL will typically come with conditions (for instance, requiring a certain minimum capital, or limiting scope of business to what was applied for). Alternatively, if the business is promoted by the Board of Investment (BOI) or under certain treaties (like the U.S.–Thailand Treaty of Amity for American companies), the foreign company can receive a certificate that allows it to operate without a separate FBL. BOI-promoted companies are often granted broad privileges, including exemption from List 2 and 3 restrictions, as a way to attract foreign investment in encouraged sectors.
Minimum Capital for Foreign Companies: The FBA mandates that any foreign business (a business meeting the “foreign” definition above) must bring in a minimum investment capital of 2 million baht (approx. USD 57,000) if it’s not in a restricted sector, and at least 3 million baht for each List 2 or 3 business activity that it engages in, unless a higher figure is specified by other laws. This is separate from any capital required for obtaining work permits or visas (which often require 2 million baht capital per work permit for a Thai company, unless BOI promoted). Essentially, if you set up a wholly foreign-owned company in Thailand, you should be prepared to capitalize it with at least 2 million baht (and actually remit that money into Thailand) to comply with this requirement, even if your business does not need an FBL. Companies under FBL approval often have to maintain even higher capital as a licensing condition.
Foreign Business License (FBL): If your desired business is in List 2 or 3 and you need a license, be aware that the application can be complex. It may take 2–4 months or longer to obtain approval, and the authorities will consider whether the foreign business competes against Thai SMEs, whether it will transfer skills to Thai people, and its economic contributions. In many cases, foreign investors choose to avoid the FBL route by structuring their investment with Thai partners holding majority shares (51% or more) so that the company is not considered “foreign” under the FBA. This is common in sectors like restaurants, retail, certain services, and hospitality. However, such structures must be genuine—using a Thai partner as a mere nominee shareholder without real investment or decision-making power is illegal (more on this below). On the other hand, some sectors like engineering, architecture, or tourist guides are completely closed to foreigners (often by separate professional laws), so even local partnership might not circumvent restrictions unless the Thai partner truly controls the business. Always consult a legal advisor to choose the right strategy for compliance.
Use of Nominee Shareholders: A critical point for foreign investors is that Thai law expressly prohibits the use of Thai nominees to circumvent foreign ownership restrictionsA nominee shareholder is a Thai citizen who holds shares on behalf of a foreigner (typically in name only, without actually investing their own funds or having real control), with the intent of evading the FBA limits. Engaging in such arrangements can lead to severe penalties if discovered: not only fines but also possible prison terms for those involved, and the business can be ordered to shut down. Thailand’s courts and regulators have increasingly cracked down on nominee schemes. For instance, in 2023, a high-profile case in Phuket involved 23 Thai individuals who were acting as nominees for a foreign-run real estate company; they were each fined 200,000 baht and given suspended jail sentences, and the court ordered the company to be dissolved as it violated the law. The bottom line: do not attempt to use “figurehead” Thai shareholders just to meet the 51% Thai ownership requirement. If you cannot find a legitimate Thai partner, it’s safer to either obtain an FBL for majority foreign ownership or structure the business in a way that doesn’t violate regulations (e.g. minority foreign ownership with protective provisions, or using preferential shares in compliance with the law).
Treaty of Amity (U.S. Investors): It’s worth mentioning that U.S. citizens (and U.S.-majority companies) have a unique option via the U.S.–Thailand Treaty of Amity and Economic Relations. Under this treaty, American businesses can own a majority or even 100% of a company in Thailand engaging in many types of businesses, without needing an FBL, and be treated as Thai companies in those sectors. There are still restricted fields even for U.S. companies (notably, they cannot engage in the List 1 prohibited activities, and certain industries like communications, transport, banking, and land trading are excluded), but it’s a significant privilege in sectors like services or manufacturing. To use the treaty, an American investor must obtain a certification from the U.S. Embassy and then a certificate from the Thai Ministry of Commerce. If you are a U.S. entrepreneur, this is an avenue to explore to bypass some FBA limitations.
Penalties for Non-Compliance: Violating the FBA is a criminal offense. Operating a restricted business without a license (or beyond the scope allowed) can result in up to 3 years imprisonment, a fine from 100,000 up to 1,000,000 baht, or both, and the authorities may order the cessation of the business operations. If a Thai national or entity is found aiding and abetting a foreigner in violating the FBA (for example, by acting as a front shareholder or allowing their business license to be misused), they too face penalties: typically fines of 100,000–1,000,000 baht and/or up to 3 years imprisonment. The government has set up joint task forces (including the DBD and Department of Special Investigation) to monitor and investigate suspected nominee arrangements especially in sectors like real estate and tourism. Always err on the side of transparency and legality. It’s far better to adjust your investment structure or obtain proper licenses than to risk these consequences.
Industry-Specific Regulations
Beyond the general company and foreign investment laws, many industries in Thailand are governed by specialized regulations. Below we highlight some key sector-specific legal requirements for a few common business types: industrial factories, real estate development, and hotel & tourism businesses. Entrepreneurs operating in these sectors should be aware of the additional laws and compliance steps involved.
Industrial and Factory Businesses
If your business involves manufacturing or any kind of industrial operation, you will likely fall under the Factory Act B.E. 2535 (1992) and its subsequent amendments (notably the 2019 amendments). The Factory Act is enforced by the Department of Industrial Works (DIW) and local industry offices, and it classifies factories into different categories with corresponding licensing requirements:
- Definition of “Factory”: The 2019 amendment to the Factory Act significantly changed the definition of what constitutes a factory. Previously, any facility with 5 or more horsepower of machinery or 7 or more workers was considered a factory requiring oversight. Now, a facility is only deemed a “factory” if it uses machinery of 50 horsepower or above, or employs more than 50 workers. In other words, smaller workshops or production sites below these thresholds are no longer regulated as “factories” under this law and generally do not need a factory license (though they must still follow local health and safety regulations). This change was intended to ease the burden on SMEs. If your operation is small-scale, it’s possible you fall outside the Factory Act’s scope altogether. However, if you expand beyond the threshold, you would need to then comply with the Act.
- Factory Categories and License (Ror.Ngor.4): Factories are divided into 3 categories. Category 1 are very small factories below certain thresholds (now essentially those under 50 HP/50 workers) – they do not require any license or prior notification (but must comply with general standards). Category 2 are mid-sized factories that still fall below Category 3 criteria – these do not require a license, but the operator must notify authorities before commencing operations, and certain safety/environment standards apply. Category 3 are larger factories meeting the “factory” definition – these require a Factory Operation License, commonly known as a “Ror.Ngor.4” license (named after the form), before starting operations. If your business meets Category 3 criteria, you must apply for this license from the DIW or local industrial office. The application will require details about your machinery, manufacturing processes, layout plans, environmental control measures, and so forth. Authorities will often inspect the site as part of the consideration. Only once the Ror.Ngor.4 license is granted can you legally operate the factory. Operating without a required license can result in orders to shut down and criminal penalties. Also, important to note: previously, a factory license had to be renewed every 5 years, but the law was changed so that factory licenses are now granted without an expiration term (no renewal needed), unless specified otherwise or if the factory undergoes major changes that require an updated license. This improvement saves time and cost for business operators.
- Environmental Regulations: Industrial businesses must adhere to strict environmental laws. Depending on your industry, you might be subject to the Enhancement and Conservation of National Environmental Quality Act B.E. 2535 (1992), which requires certain projects to conduct an Environmental Impact Assessment (EIA) before proceeding. For instance, if you plan to build a large manufacturing plant that exceeds specific capacities (such as certain chemical plants, petrochemical factories, or projects located in environmentally sensitive areas), an EIA approval will be mandatory. Ongoing compliance with environmental standards is crucial: you must manage wastewater, air emissions, and hazardous waste according to the standards set by law. Regular reports and inspections are part of operating a factory. Non-compliance can result in heavy fines, temporary suspension, or even permanent shutdown of the factory. In severe cases of pollution or negligence (for example, causing a community-wide environmental harm), company executives could face imprisonment under environmental laws. Therefore, budgeting for and implementing proper pollution control equipment and environmental management systems is not only legally required but also wise business practice.
- Construction Permits for Factories: Building a factory facility involves compliance with the Building Control Act B.E. 2522 (1979). You must obtain a construction permit from the local municipal or district office before constructing or modifying any building, including factory buildings. The Factory Act amendments in 2019 clarified that the act of constructing the factory building is no longer considered part of the “setting up of a factory” that requires licensing. This means you can start building your facility once you have a building permit, even as you simultaneously work on obtaining the factory operating license for installing and running machinery. However, your building must still meet all technical codes (e.g. factory buildings may require specific fire safety systems, ventilation, and possibly a minimum distance from residential zones depending on local zoning). After construction, a certificate of building completion/use (often referred to as a house number registration or Por.6 certificate) should be obtained. Neglecting the building permit can lead to orders to demolish non-compliant structures, so it’s essential to handle both industrial and building regulations properly.
- Factory Safety and Inspections: Thai law emphasizes workplace safety. The Factory Act and related ministerial regulations may require you to implement certain safety measures, such as having qualified safety officers on staff (depending on the number of employees and industry risk level), regular equipment inspections (boilers, cranes, etc.), and emergency response plans. The 2019 amendments introduced the concept of private factory inspectors – this allows accredited experts to inspect factories and certify compliance in lieu of government officers in some cases, which can expedite inspections. Always ensure that your machinery is compliant and that you obtain necessary certificates (for example, pressure vessels must be inspected periodically). Non-compliance can result in orders to improve within a time frame or, if ignored, fines and possible suspension of operation.
In summary, if you’re in the industrial sector, invest time in understanding the Factory Act requirements for your specific business size and type. Many foreign manufacturing investors choose to set up in designated industrial estates or zones where authorities and estate management can assist with compliance, and sometimes enhanced incentives and one-stop services are available.
Real Estate and Property Businesses
The real estate sector in Thailand covers activities such as property development (housing projects, condominiums, commercial buildings), real estate brokerage, rental property businesses, and property investment. This sector has a mix of general laws and some very specific regulations. Key legal considerations include:
- Land Ownership Restrictions for Foreigners: One of the most important points is that foreign individuals and foreign companies are generally prohibited from owning land in Thailand. The Land Code of Thailand stipulates this restriction, with only a few exceptions (for instance, a foreigner who invests at least 40 million baht in specified Thai assets may apply for permission to buy up to 1 rai of land for residential use, but approvals are rare). Moreover, “land trading” (buying and selling land for profit) is on List 1 of the FBA’s prohibited businesses. Therefore, a foreign investor cannot simply set up a 100% foreign company to buy and sell land or to develop a housing project — that would violate both the Land Code and the FBA. Common structures to get around this include forming a Thai majority-owned company (with at least 51% Thai shareholding) to hold the land. However, as emphasized earlier, using nominees just to satisfy this structure is illegal. The Thai shareholders must be legitimate. Some foreign developers partner with Thai individuals or firms, while others focus on condominiums, where direct foreign ownership is allowed up to a limit, or long-term leases. A foreigner can lease land for up to 30 years (with an option to renew for another 30 years, though the enforceability of renewal can be tricky), and that lease can be registered on the land title. For property development, one model is for the foreign investor to lease a large parcel of land and then either sub-lease or build structures to sell under 30-year lease arrangements (commonly seen in villa projects in tourist areas). It’s crucial to consult legal counsel to design a structure that does not breach land ownership laws.
- Condominium Ownership: Thailand’s Condominium Act allows foreigners to own condominium units in freehold, provided that foreign ownership in a condominium project does not exceed 49% of the total sellable unit area of that condominium building. This means if you are a developer building a condo, you can sell units to foreign buyers, but once the 49% threshold is reached, the remaining units must be sold to Thai nationals or Thai companies. From a business perspective, developers often keep an eye on that ratio because a project that cannot sell more units to foreigners might need different marketing strategies (foreign quota vs Thai quota). For foreign investors, buying condos is the simplest way to own real estate in Thailand legally (besides long-term leasing of houses or land). If your business is a real estate investment firm targeting rental properties, you might focus on condos for this reason.
- Property Development Laws: If you plan to develop a housing estate or subdivision (for example, turning a plot of land into a gated community of houses for sale), the Land Development Act (often called the Housing Estate Act, updated in 2000) will apply. This law requires developers to obtain a land subdivision license before selling land in a project with certain infrastructure (roads, utilities) to the public. The application is submitted to the Land Department and local authorities and includes the layout plan, provisions for roads, parks, utility systems, and a management scheme for common areas. You also typically need to put up a financial guarantee or escrow to ensure completion of the infrastructure. Selling subdivided land without this license is illegal and can result in stiff penalties. Similarly, developing a condominium entails compliance with the Condominium Act, which requires obtaining a condominium license, setting up a juristic person (condo association), and other consumer protection measures (like plainly stating the property features in a prospectus). Real estate is a heavily regulated industry to protect buyers, so engage a qualified lawyer to handle permits and contract drafting (e.g., the Sale and Purchase Agreement with buyers should comply with ministry regulations).
- Construction Permits and Building Codes: Any construction, whether it’s a single house, a cluster of villas, or a high-rise condominium, must comply with the Building Control Act and local building codes. Before construction, you must secure a building permit from the city municipality or local authority. The application will include architectural and engineering plans, which must adhere to regulations like height limits, floor-area ratios, fire safety standards, parking requirements, and so on. For example, in Bangkok and many cities, there are zoning laws that might limit how high or dense a building can be in a particular area. Certain types of buildings (like hotels, condominiums, or factories) may have additional specific regulations (for instance, a hotel is considered a “special building” requiring extra safety features and an environmental checklist). After completing construction, a building inspection will be done, and a certificate of utilization (Por.6) should be obtained, similar to the requirement for factories. Not obtaining proper permits can lead to fines or an order to cease construction/demolish the building, which would be catastrophic for a development project. So this is a non-negotiable step.
- Environmental Impact Assessment (EIA): Large real estate projects often trigger the need for an EIA under Thai law. For instance, a condominium or hotel project with 80 units/rooms or more, or with an area of 4,000 square meters or more, must conduct an EIA and obtain approval before construction. The EIA process involves hiring licensed environmental consultants to study the potential impact on traffic, environment, public utilities, and the local community. The report is reviewed by an expert committee, which can take 6-12 months (or more) to approve. Only after EIA approval can the building permit for those projects be issued. This is often a challenging aspect of timeline planning for big developments. Thailand has tightened environmental scrutiny, so developers should anticipate this process for larger projects, such as shopping malls, resorts, industrial estates, and sizable housing projects.
- Real Estate Brokerage: If your business is a real estate agency or brokerage, the good news is that Thailand does not have a strict licensing regime for real estate agents like some countries do. There is no state examination or license needed to be a property broker. However, general business laws apply and if your brokerage is foreign-owned, you need to be cautious of the FBA (since “brokerage or agency in real estate” might be interpreted as a service under List 3, unless it falls under exempt categories). Typically, many real estate agencies are majority Thai-owned or operate in partnership with Thai firms to avoid regulatory issues. If you are a foreign individual wanting to work as a real estate agent, note that you would need the proper work permit and visa (and you’d likely have to be hired by a Thai agency as work permits are generally not granted to self-employed foreigners in brokerage). Contract-wise, ensure all brokerage agreements and commissions are clearly agreed in writing, as the legal system will enforce those like any other contract.
- Foreigner Mortgage and Title Transfer: It’s worth noting some practical legal points: Foreigners can get mortgages from some Thai banks for condo purchases (under certain conditions), but it’s not as easy as for Thai citizens. Also, when transferring property (land, house, condo), taxes and fees apply: a transfer fee (2% of assessed value), stamp duty or specific business tax (depending on holding period), and withholding tax. These aren’t “business law” per se, but if your business involves frequent property transactions, you need to budget for these costs.
In essence, the real estate business in Thailand requires navigating ownership restrictions and a host of development regulations. Many foreign investors succeed by focusing on condominiums, leveraging joint ventures with Thai partners for larger developments, or using leasehold structures. Always perform due diligence on land title (via a title search at the Land Department) and ensure contracts are reviewed for compliance with Thai law. Real estate is a major investment—legal missteps can be extremely costly.
Hotel and Tourism Businesses
The hospitality and tourism sector is a cornerstone of Thailand’s economy, especially in tourist-heavy areas like Bangkok, Pattaya, Phuket, and Chiang Mai. If you’re looking to operate a hotel, resort, guesthouse, or a travel/tourism business, there are specific laws and licensing requirements to be aware of:
- Hotel Business License: Operating a hotel or any lodging service (defined as providing accommodation for less than 30-day periods to guests for a fee) requires a Hotel License under the Hotel Act B.E. 2547 (2004). This applies to hotels, resorts, serviced apartments, guesthouses, and even Airbnb-style short-term rental properties. To obtain a hotel license, you must apply to the local licensing authority (typically the province or district where the hotel is located). Key conditions include: the building used must meet the structural and safety standards set out in ministerial regulations (for example, having proper fire escapes, firefighting equipment, emergency lighting, room size standards, and in many cases, parking space requirements depending on number of rooms); the location must not violate local zoning (some areas might be restricted for hotel use); and you need to appoint a qualified hotel manager who has passed certain training or holds a manager’s license (for hotels above a certain size). The process involves inspections by officials from various departments (public works for building safety, health department, fire department, etc.) to ensure compliance. Only after all requirements are satisfied will the hotel license be issued. Operating an accommodation business without a hotel license is illegal and can result in an order to close the property and significant fines. Recently, Thai authorities have been enforcing these rules strictly, especially on unlicensed hotels and short-term rental operators.
- Small Lodging Exemptions: Recognizing that many small guesthouses and homestays were operating without licenses, the government provided an exemption for certain small properties. Under a 2016 ministerial regulation, properties that have 4 or fewer rooms and can accommodate no more than 20 guests at a time, and which are in a owner-occupied residence, may not be considered a “hotel” and can operate by simply registering as a “small lodging establishment” with local authorities. This was meant to legalize small B&Bs and guesthouses. However, if you expand beyond those limits or operate a dedicated hostel/guesthouse building, you would need the full hotel license. The exemption also doesn’t apply if you’re essentially running a commercial operation in multiple buildings. As of now, Airbnb and similar short-term rentals in condominiums are technically illegal if they offer stays under 30 days, since they circumvent the Hotel Act (unless the condo is in a zone or building licensed for hospitality). Some local governments have cracked down on this. If your business model involves short-term rentals or a hostel, it’s strongly advised to seek the proper licensing or adjust the model (for example, only accepting monthly rentals in condos, which is legal).
- Environmental and Zoning Concerns: For large hotels or resort projects, an Environmental Impact Assessment (EIA) might be required prior to construction approval, as noted earlier. The rule of thumb is ≥80 rooms or ≥4,000 m² triggers an EIA. Also, hotels often fall under specific city planning/zoning rules; for example, some cities might restrict hotel construction in purely residential zones or require a certain amount of green space in resort areas. Before building or converting a building into a hotel, it’s important to verify that the location is properly zoned for a hotel under the City Planning Act regulations of that locale. Many beach towns have height limits to preserve scenery; violating those can halt a project or force redesign.
- Tourism Business License (Travel Agency): If you wish to operate a tour company, travel agency, or any business offering tour services, you must obtain a Tourism Business License under the Tourism Business and Guide Act B.E. 2551 (2008). This license is issued by the Department of Tourism (under the Ministry of Tourism and Sports). To qualify, the law imposes some strict requirements: the company must be a Thai entity, with at least 51% of shares held by Thai nationals and at least half of the directors being Thai. In other words, foreigners cannot own a majority of a tour operator company (this is separate from the FBA, it’s a sector-specific rule). Additionally, the managing director must be a person of good character (no recent bankruptcy, no criminal record related to tourism crimes) and at least 20 years old. The company also has to place a guarantee deposit with the Tourism Department, an amount which varies based on the scope of business (for domestic tours vs. outbound international tours, etc.), typically ranging from 50,000 to 200,000 baht. This deposit can be used to compensate travelers if the company defaults on its obligations. If you intend to run, say, a diving tour business, or a travel agency catering to foreign tourists, you will need this tourism license. Operating without it can result in fines and license bans. Tour operators are also required to provide insurance coverage for tourists and tour guides as per regulations, ensuring that clients are protected during tours. Keep in mind, any foreign tour guide work is strictly prohibited; only Thai nationals can be licensed tour guides in Thailand.
- Foreign Investment in Hotels/Tourism: As mentioned, hotels are listed in List 3 of the Foreign Business Act as a sector not fully open to foreigners. This means a foreigner can invest in a hotel in Thailand in a few ways: partner with Thai majority shareholders (many international hotel owners hold only 49% or less of the owning company, with Thai investors owning the majority), or obtain an FBL to own more than 49%. Alternatively, some hotel projects receive BOI promotion, especially if they are in underserved areas or involve large investments meeting certain criteria, which then allows 100% foreign ownership. But note, even with an FBL or BOI, land ownership for the hotel is a separate issue—foreign companies generally still cannot own land, so typically the land is leased or owned by a Thai entity. One common structure for international hotel chains is to separate the property ownership and the hotel management: a Thai-majority company owns the land and building, while a foreign or foreign-majority company is appointed to manage the hotel operations (via a hotel management agreement). This way, the foreign investor can effectively run the hotel and earn management fees, while staying within legal bounds on land ownership. This arrangement has been used by many well-known hotel brands. However, if you’re a small entrepreneur opening a boutique hotel, such complex structuring might not be necessary—you could simply have a Thai partner or spouse hold majority ownership of the landholding company, for instance. For travel agencies, as noted, foreigners cannot own a majority stake due to the Tourism Business Act requirements, so you’d need a trustworthy Thai partner or to play a minority role if you want to enter that market. U.S. investors cannot override this via the Treaty of Amity either, because the tourism business is specifically excluded from the treaty benefits (it’s considered a restricted profession).
- Minimum Capital and Other Requirements: Running a hospitality business often involves additional compliance. For example, there is a guideline that hotel businesses maintain a minimum registered capital of 3 million baht (this is partly to ensure ability to handle operations and liabilities, and is also tied to the requirement for each hotel to have sufficient financial resources). If you serve food or alcohol at your hotel or restaurant, you’ll need a food license and liquor license from the local authority. If you operate vehicles (like shuttle services or tour vans), those vehicles must be properly registered as commercial passenger vehicles and drivers properly licensed. And for any promotional materials or contracts, consumer protection laws require transparency (hotel rates, service charges, tour itineraries, etc. should be clearly communicated to avoid deceptive practices).
- Legal Liabilities in Hospitality: It’s prudent to know that hotels have certain legal liabilities, such as the Hotel Keepers Act (an older law) that makes innkeepers liable for loss or damage to guests’ property under specific conditions (with some limitations). Also, if your facility has a swimming pool or other amenities, you must adhere to safety regulations to prevent accidents (for instance, having lifeguards or warning signs as needed). Cases of guest injuries can lead to negligence lawsuits, so compliance with health and safety standards isn’t just about avoiding fines, but also about preventing civil liability.
In summary, the tourism and hospitality business in Thailand can be very rewarding, given the country’s popularity, but it is accompanied by a web of regulations to ensure safety, quality, and some degree of local participation. Many successful foreign entrants in this market do so by franchising with Thai partners, managing hotels rather than owning the underlying assets, or investing through joint ventures. Always ensure you have the proper licenses before operation—Thai authorities do conduct raids and checks on unlicensed hotels and tour operators, especially if there are complaints.
Frequently Asked Questions (FAQ)
A: It depends on the type of business. Thailand allows 100% foreign ownership in many sectors, especially if the business is not on the restricted lists of the Foreign Business Act. For example, manufacturers exporting products, certain consulting services catering overseas, or software development for export can often be wholly foreign-owned. If your business is not restricted, you can incorporate a Thai company with 100% foreign shareholders. However, if the business falls under sectors restricted by law (e.g. retail, local trading, most service businesses, restaurants, tourism, etc.), you generally have two options: bring in a Thai partner (or multiple Thai shareholders) who will hold at least 51% of the shares, making the company Thai for legal purposes; or apply for a Foreign Business License (FBL) or BOI promotion to operate with majority foreign ownership. The first option (Thai majority structure) is more common due to simpler setup, but you must ensure that any Thai partners are genuine stakeholders (not nominee placeholders) to avoid legal issues. In some specific industries like media, land trading, and tour agencies, Thai majority ownership is explicitly required by law with no exceptions. In summary, while 100% foreign ownership is possible, it’s not universal—check the Foreign Business Act lists and any industry-specific laws to determine the best approach for your situation. For many new foreign SMEs in Thailand, engaging a reputable local partner or adviser can smooth the entry by navigating these rules
A: Company registration in Thailand is relatively fast. Once you have all the required documents ready, incorporation can be completed in about 3 to 7 business days. This includes reserving the company name (usually approved within 1–2 days), preparing and signing all documents, and then submitting to the DBD (which can sometimes approve registration on the same day of submission, or within a couple of days). If you’re overseas, factor in extra time for notarizing and couriering any documents for which your physical signature is required. In terms of costs, the government fees for registering a limited company are based on the registered capital: a rough estimate is 5,500 baht per million baht of capital for registration fees (with a minimum fee of 5,500 baht and capped at 250,000 baht). So, for a company with 1 million baht capital, the official fee is about 5,500 baht. There’s also a stamp duty of 200 baht for the MOA and 200 baht for the registration application. If you hire a law firm or service provider to assist, their professional fees will be additional (varies widely, perhaps 10,000–20,000 baht for a basic setup service, more if complex). If your company needs special licensing (like an FBL or specific business permits), those come with separate application fees and processing times. Overall, Thailand’s incorporation process is considered cost-effective and quick compared to many countries. Just ensure names and documents are prepared accurately to avoid rejection or delays.
- A: Operating without required licenses can lead to serious consequences. The exact penalties depend on the law in question:
- If you run a business that requires a specific license (e.g. a hotel, factory, restaurant, school, medical clinic, etc.) without obtaining it, you can be fined and ordered to cease operations. For example, running an unlicensed hotel can incur a fine of up to 20,000 baht plus daily fines, and authorities can shut down the establishment until you secure a license. Operating an unlicensed factory could result in fines and orders to stop using the machinery.
- If you violate the Foreign Business Act by operating a restricted business without an FBL or using nominees, penalties can include up to 3 years in prison and fines from 100,000 to 1,000,000 baht for foreign operators. Thai collaborators (nominees) face similar penalties. Additionally, the government will likely order the business to close or the foreigner to divest from the company.
- For labor law violations (like not paying proper overtime or illegally dismissing an employee), employers can face orders to pay compensation, fines, and in some cases, criminal charges (for serious violations like employing underage workers in hazardous work).
- Tax evasion or failure to file taxes can result in hefty fines, back taxes with interest, and possible criminal charges (including imprisonment for willful evasion).
- If you ignore building regulations or environmental laws—say you build without a permit or pollute without control—authorities can issue stop-work orders, demolition orders for illegal structures, or environmental fines. In extreme environmental cases, company executives have faced imprisonment for pollution (though such cases usually involve significant, willful damage).
Essentially, Thailand has a robust legal framework, and while enforcement can sometimes be uneven, when you’re caught in violation, the penalties can be damaging both financially and reputationally. It’s not uncommon to see news of crackdowns on illegal businesses (e.g. nightlife venues without licenses, foreigner-run businesses under nominee arrangements, etc.). As an entrepreneur, it’s far better to invest time in compliance and licensing upfront than to deal with the fallout of being shut down or prosecuted later. Engaging local legal counsel to audit your compliance can be a prudent step if you’re unsure about any aspect.
A: Foreigners face significant restrictions on property ownership in Thailand, but there are avenues to consider:
- Land: Foreign individuals and foreign companies (those with majority foreign ownership) are generally not allowed to own land in Thailand. This is a firm rule in Thai law. A common workaround for business is to lease land long-term (30 years, renewable) for commercial or residential use. Another method is to set up a Thai majority company to hold the land, but as discussed, this must be done carefully to avoid it being deemed an illegal nominee structure. For residential purposes, a foreigner cannot own a landed house outright, but can lease the land under the house and own the house as a separate structure (houses can be owned by foreigners if the land is leased, through a registration of the building as a separate property). Also, a recent (though rarely used) law allows a foreigner who invests 40 million baht in approved Thai assets to buy up to 1 rai (~1600 m²) of land for residential use with government approval. Very few people go this route due to the high threshold and conditions.
- Condominiums: Foreigners can own condominium units in Thailand in freehold, up to the 49% foreign quota of the building. This is the most straightforward way for a foreigner to own real estate. If you buy a condo, you get a title deed (chanote) to your unit and can sell or bequeath it freely. Many foreigners buy condos either for personal residence or to rent out (note: if you rent out, it becomes a business activity and tax considerations apply). Condos in cities like Bangkok, Pattaya, or Phuket often have a high foreign ownership ratio precisely because of this law.
- Commercial Property: If a foreign business wants to own an office, shop, or factory building, they typically either lease the land long-term and maybe own the building (if structured correctly), or rely on investing via Thai entities/partners. Another option is to invest through a Thai-domiciled company that might not be considered “foreign” if structured with Thai majority (again, must be genuine to be legal). Thailand also has an Industrial Estate Authority which sometimes allows long-term land leases to foreign companies (or even freehold in certain industrial zones for BOI-promoted projects, especially for manufacturing, under the Industrial Estate Authority of Thailand Act). So manufacturing FDI has some special arrangements where 100% foreign companies can effectively control land usage for factories (lease up to 99 years in some zones, or freehold for certain promoted projects). For most standard commercial real estate, leasing is the go-to method.
- Other rights: There are property rights such as usufruct (right to use land), superficies (right to own structures on someone else’s land), and long-term leases that foreigners often use. For example, a 30-year lease on land is quite secure if properly registered; a usufruct can grant a foreigner use of land for their lifetime (commonly used for a foreigner married to a Thai, where the Thai owns the land and grants the foreign spouse a usufruct to live there for life). These don’t equate to ownership but can be practical solutions.
For a business, if owning property is critical (like you want to develop and sell houses), partnering with Thai investors or setting up a Thai majority company will be necessary. If you just want a premises for your business (like an office or shop), renting is straightforward and common—most foreigners rent their business premises. In conclusion, foreigners can own condos but not land; all other property interests involve either renting or creative legal structures. Always engage a property lawyer to do due diligence and structuring when acquiring real estate in Thailand to ensure you stay within the law.
A: Yes, Thailand offers various incentives to attract investment and to support new businesses, both local and foreign. The primary agency for investment incentives is the Board of Investment (BOI). If your business falls into one of the BOI’s promoted categories (such as tech, manufacturing of certain products, renewable energy, healthcare, tourism development, etc.), you can apply for BOI promotion. BOI incentives can include: corporate income tax holidays (exemptions) for 5-8 years, import duty exemptions on machinery and raw materials, permission for 100% foreign ownership in what might otherwise be restricted sectors, and eased processes for work permits and visas for foreign staff (the BOI one-stop center makes it simpler to bring in skilled expats). Being BOI-promoted can also allow foreign businesses to buy land for their operations (an exception to the land rules, but only for use in the promoted project). For tech startups or investors, Thailand has initiatives like the Thailand 4.0 policy and the Eastern Economic Corridor (EEC) project, which offer special zones and incentives for high-tech industries and innovation-driven enterprises. For example, companies in the EEC areas might get additional tax breaks or grants.
Promotion (OSMEP) provides training, easier access to finance (soft loans), and occasionally tax breaks (like reduced corporate tax rates for small companies under certain income thresholds). Recently, Thailand has also introduced a Smart Visa program to attract startup founders, investors, and highly skilled professionals in certain sectors, allowing them to stay in Thailand with a more flexible visa (not requiring a work permit in the conventional sense). Moreover, in response to economic changes, Thailand has considered easing some foreign business restrictions (e.g., raising foreign ownership limits in certain service businesses), although changes are gradual.
It’s also worthwhile to mention that free trade agreements (FTAs) and regional frameworks can make Thailand an attractive base. For instance, Thailand is part of ASEAN, and under the ASEAN Economic Community (AEC), there is some liberalization of services and movement of certain professionals among ASEAN nationals. While this doesn’t directly give rights to non-ASEAN foreigners, an investor could use Thailand as a hub to reach ASEAN markets tariff-free for goods.
In summary, if you’re a foreign investor or entrepreneur, look into BOI promotion and special economic zones if applicable to your business. They can significantly boost your benefits and make regulatory compliance easier (especially in terms of foreign ownership and visas). For startups, programs are developing in Thailand’s ecosystem — incubators, government grants, and networking events (e.g., through the National Innovation Agency) can be valuable. Always weigh the criteria though: obtaining incentives often comes with conditions like minimum investment amounts, job creation targets, or technological transfer commitments.
Entering the Thai market can seem daunting with the array of laws to navigate, but with the right guidance and preparation, it’s absolutely manageable. Countless businesses—big and small, Thai and foreign—thrive here by following the regulations and respecting the local business culture. It’s highly recommended to seek professional legal advice when setting up and during operations to stay updated on regulatory changes. Our law office is experienced in assisting both local entrepreneurs and international investors in complying with Thai laws and achieving business success in Thailand. Feel free to reach out for personalized guidance or clarification on any of the topics above. Free initial consultation, call 093-251-4500.