A Start-up’s Guide to Laws in Thailand

A Start-up’s Guide to Laws in Thailand

So, you’ve set your sights on the Land of Smiles for the home base of your new start-up. Well, it’s not hard to see why given its friendly start-up ecosystem.But, before you settle in, here are some laws you need to know so you can have a hassle-free experience setting up your start-up there.

A Start-up’s Guide to Laws in Thailand

1. Application for a Business Licence
 
To operate legally in Thailand, you need to get a business licence. As a foreigner, you need a Foreign Business License obtained from the Department of Business Development (DBD).
 
It may take some time but there are ways to speed up the process. For example, if you are doing e-commerce and satisfy some of their criteria, you can apply for a Board of Investment (BOI) promotion. This will get you that Foreign Business License you need within weeks. The BOI promotion also has other perks – tax incentives, work permits for foreigners and 100 per cent foreign ownership.
 
The last perk is a major boon because Thai laws favour the locals. Most companies need to be at least 51 per cent Thai-owned. Being able to be totally foreign-owned frees up a lot more options for your start-up.

2. Single Gateway Policy
 
In 2015, Thailand’s military junta announced that the local government was planning to implement a Single Gateway Policy to monitor internet traffic. This policy has been compared to The Great Firewall in China which has been known to have reduced online gateways from ten to just one.
 
Although the policy is still in the works and widely controversial in Thailand, the nature of the Single Gateway Policy means that business owners must be extremely sensitive to local censorship when thinking of content to market their business. Even if Thailand makes up only two per cent of global internet users, you should be sensitive and cautious in terms of advertising and content production.

3. The minimum capitalisation amount
 
Thai companies are required by law to fork out a nominal amount of cash for capitalisation. While the capitalisation amount for local companies can go as low as 100,000 Baht (US$3,000), companies with foreign investors usually require a registered capital of 2,000,000 Baht (US$58,400) to provide a single, non-Thai with a work permit and a visa.
 
In addition to acquiring foreign work permits and visas, obtaining a licence for your company would also mean a higher capitalisation amount.
 
Capitalisation is not fixed in Thailand, and it would be best to receive legal advice before setting up your business there.

4. Limitations for foreign businesses
 
The Foreign Business Act (FBA) in Thailand is a guideline that outlines the different types of businesses that foreigners are allowed to be involved in. Foreign businesses, for example, are not allowed to be in the media and news industry or in various types of farming industries. Various businesses also need approval from Thailand’s Ministry of Commerce and other legislative stakeholders.
 
If you’re planning to bring your business into Thailand, do your research. The more familiar you are with the FBA, the easier it will be for you to settle in.

5. Thai employment requirements
 
Keen to bring a friend over as an extra hand to run your business? You might want to think again.
 
Thai Employment Laws function on a 4 to 1 ratio. This means that for every foreigner hired in your company, you need to hire four Thai employees.

While bringing your business overseas might be a bold and strategic move, don’t forget that new lands come with new rules and Thailand is no exception. Be sure to educate yourself so you can make a calculated choice.

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