Overview of Business Structures in Thailand
Thailand offers a variety of business structures for both local and foreign entrepreneurs. Choosing the right structure is crucial as it impacts your legal obligations, tax responsibilities, and operational flexibility. Below are the primary business structures available in Thailand:
- Sole Proprietorship
- Partnership
- Limited Company
- Branch Office
- Representative Office
- Regional Office
- Joint Venture
- Public Limited Company
- BOI Promoted Company
- 10.Foreign Business License (FBL) Company
1. Sole Proprietorship
A Sole Proprietorship is the simplest form of business structure, owned and operated by one individual. This structure is straightforward to establish but comes with unlimited personal liability.
Key Features:
- Ownership: Single individual.
- Liability: Owner bears unlimited liability for debts and obligations.
- Control: Full control by the proprietor.
- Taxation: Business income is taxed as personal income.
How Victory InterLaw Can Help:
- Business Registration: Assistance with the registration process at the Department of Business Development (DBD).
- Tax Advisory: Guidance on personal and business tax obligations.
- Compliance Support: Ensuring adherence to local regulations and filing requirements.
2. Partnership
Partnerships in Thailand can be formed by two or more individuals or entities. There are three types of partnerships:
- Ordinary Partnership: Partners share unlimited liability.
- Registered Ordinary Partnership: The partnership is registered and the business entity is distinct from the partners.
- Limited Partnership: Comprises general partners (with unlimited liability) and limited partners (liable only up to their contribution).
Key Features:
- Ownership: Shared among partners.
- Liability: Varies depending on partnership type.
- Control: Jointly managed by partners.
- Taxation: Profits are divided and taxed as personal income of partners.
How Victory InterLaw Can Help:
- Partnership Agreement: Drafting and reviewing partnership agreements to ensure clear roles and responsibilities.
- Registration: Facilitating the registration of partnerships.
- Legal Compliance: Ongoing support for regulatory compliance and partner disputes.
3. Limited Company
A Limited Company (most commonly a Thai Private Limited Company) is the most popular structure for foreign and local investors due to its separate legal entity status and limited liability.
Key Features:
- Ownership: Requires at least three shareholders; can be 100% foreign-owned in certain cases.
- Liability: Shareholders’ liability is limited to their shares.
- Control: Managed by a board of directors.
- Taxation: Subject to corporate income tax.
How Victory InterLaw Can Help:
- Company Formation: End-to-end assistance in company registration, including drafting the Memorandum of Association and Articles of Association.
- Shareholder Agreements: Structuring and preparing shareholder agreements to protect your interests.
- Corporate Governance: Advising on best practices for governance and compliance.
4. Branch Office
A Branch Office is an extension of a foreign company and not a separate legal entity. It can engage in revenue-generating activities in Thailand.
Key Features:
- Ownership: Owned by the parent foreign company.
- Liability: Parent company is liable for the branch’s operations.
- Control: Managed as per parent company’s directives.
- Taxation: Profits are subject to Thai corporate income tax.
How Victory InterLaw Can Help:
- Establishment Process: Assistance with the registration and licensing requirements for setting up a branch office.
- Regulatory Compliance: Ensuring adherence to Thai regulations and reporting obligations.
- Taxation Support: Guidance on tax planning and compliance for branch operations.
5. Representative Office
A Representative Office in Thailand is set up to engage in non-revenue-generating activities on behalf of a foreign company, such as market research or product sourcing.
Key Features:
- Ownership: Owned by the foreign parent company.
- Liability: Activities are limited to non-commercial functions.
- Control: Operates under the directives of the parent company.
- Taxation: Exempt from corporate income tax as it does not generate revenue.
How Victory InterLaw Can Help:
- Licensing and Registration: Navigating the application process for establishing a representative office.
- Compliance: Ensuring that the office’s activities remain within permissible limits.
- Operational Support: Ongoing support for administrative and compliance functions.
6. Regional Office
A Regional Office acts as a regional headquarters for a foreign company, coordinating operations within Southeast Asia but without directly generating income.
Key Features:
- Ownership: Owned by the parent company.
- Liability: Parent company is responsible for its operations.
- Control: Manages and supports regional branches or affiliates.
- Taxation: Generally, exempt from Thai corporate tax as it does not engage in commercial activities directly.
How Victory InterLaw Can Help:
- Setup Assistance: Guidance through the registration and setup process.
- Operational Compliance: Ensuring ongoing adherence to Thai laws.
- Management Support: Assistance with internal policies and regional coordination.
7. Joint Venture
A Joint Venture in Thailand typically involves a partnership between a foreign and a Thai entity, combining resources and expertise to pursue specific business objectives.
Key Features:
- Ownership: Shared between the parties involved.
- Liability: Varies depending on the agreement terms.
- Control: Managed jointly as per the joint venture agreement.
- Taxation: Tax obligations depend on the structure and revenue generation.
How Victory InterLaw Can Help:
- Structuring Advice: Advising on the best structure for the joint venture to maximize benefits.
- Agreement Drafting: Drafting comprehensive joint venture agreements.
- Dispute Resolution: Support in resolving any disputes between parties.
8. Public Limited Company
A Public Limited Company (PLC) is a corporate structure suitable for larger enterprises planning to raise capital through the stock market or large-scale investment.
Key Features:
- Ownership: Shares can be publicly traded and held by a large number of shareholders.
- Liability: Shareholders’ liability is limited to their investment.
- Control: Managed by a board of directors; subject to strict governance and disclosure requirements.
- Taxation: Subject to corporate income tax.
How Victory InterLaw Can Help:
- IPO and Capital Raising: Assistance with the process of going public and raising capital.
- Governance and Compliance: Advising on corporate governance practices and regulatory compliance.
- Shareholder Relations: Managing shareholder communications and obligations.
9. BOI Promoted Company
A BOI (Board of Investment) Promoted Company benefits from various incentives offered by the Thai government to encourage investment in specific sectors.
Key Features:
- Ownership: May allow for 100% foreign ownership depending on the activity.
- Liability: Limited to the amount invested by shareholders.
- Control: Operated as per normal corporate governance but benefits from BOI incentives.
- Taxation: Enjoys various tax incentives and exemptions.
How Victory InterLaw Can Help:
- BOI Application: Guidance through the application process to obtain BOI promotion.
- Incentive Management: Assistance with managing and leveraging BOI incentives.
- Sector-Specific Advice: Tailored advice based on the specific sector and investment.
10. Foreign Business License (FBL) Company
A Foreign Business License (FBL) Company is required for foreign entities engaging in business activities restricted by the Foreign Business Act.
Key Features:
- Ownership: Foreign entities must obtain a license for certain restricted activities.
- Liability: Subject to the same rules as other limited companies.
- Control: Foreign shareholders must comply with Thai ownership regulations.
- Taxation: Standard corporate tax obligations apply.
How Victory InterLaw Can Help:
- FBL Application: Expert guidance on obtaining the necessary licenses to operate restricted businesses.
- Regulatory Compliance: Ensuring ongoing compliance with the Foreign Business Act.
- Operational Support: Assistance with the operational setup and management of the business.
Victory InterLaw’s Comprehensive Support
Victory InterLaw provides a full spectrum of services to support the establishment and operation of all business structures in Thailand. With over 20 years of experience, our team offers:
- Strategic Consultation: Helping you choose the right business structure to align with your goals and legal requirements.
- Legal and Regulatory Expertise: Providing expert advice and support to navigate the complexities of Thai business laws.
- Documentation and Compliance: Assisting with the preparation and submission of all necessary documentation and ensuring ongoing compliance.
- Operational Setup and Management: Offering comprehensive support to set up and manage your business efficiently.
Why Choose Victory InterLaw?
- In-Depth Local Knowledge: Our deep understanding of Thai business regulations ensures smooth and compliant operations.
- Tailored Solutions: We provide customized advice and services tailored to your specific business needs.
- Comprehensive Support: From initial consultation to ongoing management, we cover every aspect of business establishment and operation.
- Client-Centric Approach: Our commitment to client success ensures personalized and effective solutions.
Contact Victory InterLaw Today
Looking to establish your business in Thailand? Victory InterLaw is here to help you choose the right structure and provide all the support you need. Contact us now to schedule a consultation and start your business journey with confidence.
