Register LLP in Thailand

 

To start a business in Thailand, business owners have two partnership options. An ordinary partnership involves two or more individuals sharing unrestricted responsibility. A limited partnership, on the other hand, consists of at least two people but provides limited liability to the limited partner, whereas the general partner has unlimited liability. Using the second concept, you can register a LLP in Thailand. It will be a Limited Liability Partnership firm in Thailand.

Understanding the intricacies of forming a limited partnership in Thailand can be challenging for business owners. Konrad Legal is here to offer assistance. Our legal team can assist with the preparation and submission of the necessary documentation on your behalf, ensuring a smooth process. Additionally, we can provide clarity on how liability is distributed within a limited partnership structure, helping you make informed decisions about your business.

Benefits of a Thai Limited Liability Partnership (LLP)

The allure of benefits draws many individuals to establish a limited liability partnership firm in Thailand.

Among the partners, the ordinary partner gains the most significant advantage due to limited liability. The ordinary partner is only held accountable for the amount of capital they invested. For instance, a limited partner who contributes 1 million Baht to the business may only lose that specific sum, even if the partnership incurs additional expenses, thereby limiting the extent of their potential losses.

In Thailand, a limited partnership provides entrepreneurs with operational flexibility. The Thai government permits limited partnerships to engage in various activities without limitations. Businesses can operate in various industries, although they may require licenses based on the scope of their operations. If necessary, Konrad Legal can assist you in acquiring the necessary licenses.

Additionally, existing partners have the authority to decide whether or not to admit new partners into the business. Unanimous approval from all partners is required before a new partner can be integrated into the business.

Furthermore, this partnership enables foreign ownership of up to 49 percent without the need for a foreign business license. This makes it convenient for foreigners seeking to establish businesses in Thailand to collaborate with nationals. It is noteworthy that if a foreign shareholder holds more than 49 percent of the business, they must obtain a foreign business license in Thailand to obtain which, we have dedicated services to help you.

Drawbacks of an LLP in Thailand

Unfortunately, there are also some drawbacks to consider before starting a limited partnership in Thailand.

First, the general partner has unlimited liability for the debts and obligations of the partnership. Assume that both partners invest 1 million Baht into the business. The limited partner is only liable for that amount, but the general partner’s liability is not limited, and can lose much more money. This puts the general partner at greater risk when operating the business.

Some also view business management as a drawback when operating a limited partnership in Thailand. The general partner has full control of the day-to-day operations. The limited partner cannot assume control of the daily operations without upgrading to a general partner.

Also, unlike an ordinary partnership, partners must file paperwork to set up a limited partnership. In addition, they must go through steps to dissolve the partnership. While many view this as an obstacle, we make the process of documentation and paperwork easy for the partners. The legal team can even help dissolve the partnership if needed.

Legal Requirements for LLP in Thailand

There are certain requirements in place for setting up a limited partnership in Thailand.

First, if the general partner is a foreigner, they will need a work permit or a non-immigrant business for business or work purposes. A foreign business license is also necessary if a foreign partner invests more than 49 percent into the business.

Thailand’s government requires 2 million Baht in capital to start the business. The partners do not need to contribute equally.

Timeline for Setting Up a Limited Partnership in Thailand

It takes approximately one week to set up a limited partnership in Thailand if you proceed correctly. This is the reason our clients choose us to ensure that the entire process goes smoothly and you can start your business fast.

To begin the process, the partners must complete and apply for registration to the Department of Business Development. Along with the application, the partners must settle the applicable fees.

The application can be cumbersome sometimes. It must include data and information related to the partners and the business as a whole comprising the objectives and nature of the same. 

If you’re ready to set up a limited partnership, contact Konrad Legal today by emailing us at officer@konradlegal.com. You will receive a quote and then can move ahead with us in the process of registering your limited liability partnership in Thailand.

Starting Regional Operating Headquarter in Thailand

 

Are you planning to control your subsidiaries or associated enterprises located worldwide from Thailand? Register a Regional Operating Headquarter or ROH in Thailand to do so and avail the Board of Investment (BOI) promotions in Thailand. To Register your ROH in Thailand, we can help you throughout the process after you check your eligibility to have so from this article.

Conditions: Regional Operating Headquarter (ROH) in Thailand

To register a Regional Operating Headquarter in Thailand, it must comply with the following conditions:

a. No. of Associated Enterprises/Subsidiaries worldwide

To be eligible to obtain recognition as Regional Operating Headquarters in Thailand, the company must have associated companies or subsidiaries in countries outside Thailand in the following order:

• One associated enterprise/subsidiary by the end of the 1st and 2nd Accounting period.
• Two associated enterprises/subsidiaries by the end of the 3rd and 4th Accounting period.
• Five associated enterprises/subsidiaries by the end of the 5th Accounting period onwards.

b. Paid-up Capital and Spending

• The organization must have a paid-up capital of 10 million THB at the end of each accounting period.
• An ROH must have a total business spending of at least 15 million THB per year which must be the total operating costs in Thailand excluding any type of expense made overseas.
• The business must have a total investment spending or actual payment of at least 30 million THB annually.

c. The associated enterprises or subsidiaries must have actual business operations with a physical office, management, and employees working for the same.

d. The overall strength of the skilled staff must be maintained at 75% of the total employees by the end of the 3rd accounting period.

e. Average remuneration for at least 5 employees must be at least 2.5 million THB per annum by the end of the 3rd accounting period.

Benefits of Registering ROH in Thailand

On registering a Regional Operating Headquarter in Thailand, both the business and the expatriate founder benefit individually.

Benefits for the Business

• Exemption from corporate income tax (CIT) on net profits for income. It must be derived from services provided to foreign branches or associated enterprises of the registered operator for 10 years.
• A 10% CIT rate on net profits for income derived. The income should be from services provided to domestic branches or associated enterprises of the registered operator for 10 years.
• A 10% CIT rate on net profits for qualified royalties for 10 years.
• A 10% CIT rate on interest received from foreign branches or associated enterprises of the registered operator for loans granted. Note that such loans must be from other sources and extended to the registered operator’s branches or associated enterprises for 10 years.
• Exemption from CIT for dividends received by the registered operator from associated enterprises incorporated abroad for 10 years.
• Exemption from CIT for dividends paid out of the registered operator’s concessionary profits to its juristic shareholders incorporated abroad and not carrying on business in Thailand for 10 years.

Benefits for the Expatriate

• Expatriates can choose from a tax rate of 15% on their remuneration. It must be derived from the registered operating headquarters (ROH) for eight consecutive years.
• Tax exemption in Thailand on income paid by a foreign company for services rendered abroad. To be eligible for this, there should not be any direct/indirect deduction as an expense of the ROH or its associated enterprises in Thailand. This applies to expatriates planning to work in another country the ROH.

The Bottomline

A company can apply for an extension of the ROH privilege for five more accounting periods. This is possible only if it meets all the required criteria in each accounting period. Furthermore, it must accumulate business spending of more than 150 million THB by the end of the 10th accounting period.

As the name itself, a “Regional Operating Headquarters” provides big benefits for expatriates in Thailand. If you are a foreign investor and planning to set up your business as an ROH in Thailand, feel free to write to us at officer@konradlegal.com and book your round of free consultation with us.

What Licenses Are Needed to do Business in Thailand?

 

Rapidly evolving as the business hub of Southeast Asia, Thailand is becoming one of the most preferable destinations to attract foreign direct investment. If you are planning to register your company in Thailand, then you must go through this article. This article will guide you comprehensively on the requirements of respective licenses to do business in Thailand.

We all know that simply registering a company can never serve your purpose of operating the same. To operate you will need relevant permits and licenses. In Thailand, the regulations are pretty stringent and non-adherence can lead to severe penalties. This article will serve well as your guide to knowing about the licenses that may be mandatory for your upcoming business in Thailand.

Do You Need a Business License in Thailand?

First of all, you must know whether the type of company or business you are going to set up in Thailand needs a business license or not. To ascertain these facts, check out the following pointer:

1. Will you set up a company in Thailand or a branch or representative office of your existing business?
2. What will be the “nature of business” and in which industry will you be doing it?
3. Are you going to bring in foreign nationals to Thailand as your employees?
4. Is your business eligible for relaxation under any bilateral treaty between your nation and Thailand?
5. Have you checked about the Board of Investment Promotions in Thailand? Is your business eligible for any BOI Privileges?

Depending on your answers to the above questions, you can ascertain whether you need a business license in Thailand or not. However, it is always wise to consult with a reliable corporate law firm in Thailand to reach this decision. Remember that this is a statutory requirement and you must make an informed decision to prevent any type of penalties or fines in the future.

To make the process simpler, we have answered these questions comprehensively. This will help you have a basic understanding before you speak with any corporate lawyer in Thailand.

License Requirement based on your Business Structure in Thailand

Foreign investors can incorporate 6 types of business structures in Thailand. You should select a business structure that complies well with the nature and purpose of your business in Thailand.

For your information, almost all types of businesses in Thailand need a Foreign Business License. Foreign Investors must apply for a Foreign Business License in Thailand to start their business in Thailand as various business verticals are restricted for foreigners in Thailand.

However, if you are planning to start a representative office in Thailand, you need not apply for a Foreign Business License in Thailand. Furthermore, there are requirements based on the nature and industry of your business in Thailand that ascertain your license requirements.

Your Business Nature and Industry Finalizes Your License Requirements in Thailand

As talked about in the previous section, a Foreign Business License is mandatory for almost 99.9% foreign investors, unless, they plan to start their representative office. However, the nature and industry of your business invoke certain license requirements as follows:

Medical License

Starting a medical company in Thailand necessitates obtaining specific licenses. The type of license needed depends on the activities undertaken in the medical field.

If you plan to operate a service business like a rehabilitation center or nursing home, you must acquire a medical service business license from the Department of Health Service Support.

For medical manufacturing activities, if your factory has machinery totaling 50 or more horses or employs 50 or more people, you’ll need a Factory license from the Department of Industrial Works. If neither of these criteria is met, you should apply for a Business Establishment license from the Local Administration Organization.

Before conducting any clinical research, a Science Laboratory Capacity Certificate from the Department of Medical Science is mandatory.

Moreover, according to the Thai Drug Act Be 2510 (AD 1967), obtaining permission from the Food and Drug Administration (FDA) is essential before marketing medical equipment, pharmaceutical products, or medical food.

E-commerce License in Thailand

In Thailand, businesses that run one or more websites to sell goods or services must obtain an e-commerce license. The application can be submitted once the website is operational and requires the following details from the website owner:

• Name of the website
• Nature of goods or services sold on the website
• The date on which the website started operating (application should be made within 30 days from the start date)
• Method of payment for purchases
• Document evidencing the domain name registration or certification document from the service provider (ISP or web host)

Check out why you should start an e-commerce business in Thailand.

Licenses for Restaurants and Bars in Thailand

In Thailand, the licenses needed by a restaurant depend on the services it offers. However, some obligatory licenses are required by most restaurants.

These licenses include:

• Restaurant license: This license is a must for establishments with premises of at least 200 square meters. Thai eateries smaller than 200 square meters need a certification of notice.
• Liquor license: This license is required for restaurants serving alcoholic drinks on their premises.
• Music license: Restaurants with live music or any music playing on their premises must obtain this license.

All these licenses are granted for one year and must be renewed annually by the restaurant.

License for Financial Services Businesses in Thailand

In Thailand, companies aiming to provide financial services must secure specific licenses from the Bank of Thailand. These services include commercial banks, finance companies, credit finance companies, asset management companies, and e-payment channel services.

Furthermore, specialized financial institutions aligned with governmental policies fostering investment and economic growth within Thailand require additional authorization from the Ministry of Finance.

Import/export Licenses in Thailand

Certain import/export companies in Thailand require specific business permits based on the category of goods being traded. Specialized licenses are mandatory for importing controlled goods like food, medicines, and cosmetics from Thailand’s Food and Drugs Administration.

Additionally, a permit from the National Broadcasting Department is necessary for importing electronic devices like mobile phones. Finally, a customs paperless license from Thailand’s customs department is necessary for import/export companies to facilitate the movement of goods under their name.

License for Travel Agencies in Thailand

In Thailand, running a travel agency necessitates a Tourism Authority of Thailand-issued Tourism license. Without this license, there are prohibitions on arranging and selling tours and packages, booking accommodations, and distributing travel tickets.

The license is divided into three categories: inbound tourism (serving foreign visitors to Thailand), outbound tourism (catering to Thai travelers going abroad), and domestic tourism (serving Thai travelers within Thailand).

A majority of Thai ownership is necessary for travel agencies in Thailand, and a local director’s signature is mandatory to obtain the tourism license. Notably, there may be restrictions to the local director’s signing authority to matters directly related to the tourism license. This structure allows foreign shareholders to maintain control over other aspects of the business’s activities.

Education Business License in Thailand

When registering an education business in Thailand, a license and approval from the Ministry of Education or the Department of Social Welfare are essential prerequisites. The type of education offered by the business determines which authority must grant the approval.

Before starting an education business, you need to consider several key factors, such as the business premises and the legal structure of the company. Any deficiencies in addressing these elements correctly will lead to the rejection of the application for the required license.

Other Factors Confirming Requirements of License to do Businesses in Thailand

To bring in Foreign Workers to work for business in Thailand

Every foreign worker you bring into Thailand must hold a valid work permit to work for your company. It is your responsibility to facilitate the process of work permit issuance for your foreign employees. In the process, a valid commercial and business license is one of the mandatory documents for the same.  

Bilateral Trade Treaty between Thailand and native nation of Investor

The need for a foreign business license is to permit foreign investors to undertake business activities that are normally only for Thais. However, certain bilateral trade treaties expand the scope of availability of business verticals in Thailand to the respective natives. Therefore, it is always advisable to check if your nation holds a bilateral treaty with Thailand and check the permitted business categories.

Eligibility to obtain Board of Investment Promotion in Thailand

Although a Board of Investment promotion never exempts the requirements to obtain any relevant license, yet, there are discounts on licensing fees. Therefore, if your business becomes eligible for BOI Promotion in Thailand, check if you are getting these benefits or not. This will reduce your setup cost significantly.
Business licensing in Thailand covers a wide range of considerations. You must avail the consultation of some reputed corporate lawyer or law firm in Thailand. To set up an appointment with us, email us your license requirements at officer@konradlegal.com.

Starting a Fintech Business in Thailand

 

Driven by the rapid expansion of fintech, the global business environment has seen unprecedented change. This transformation, fundamentally reshaping business operations worldwide, has Southeast Asia at its forefront. As a region, Southeast Asia is leading the way in embracing fintech innovations and setting new trends.

In the ongoing globalization efforts of multinational corporations, one prominent destination in Southeast Asia is Thailand. This country has emerged as a strategic hub for fintech expansion. The digital marketplace in Thailand is thriving, fueled by favorable regulatory frameworks and supportive government policies that promote the growth of fintech initiatives. Furthermore, Thailand possesses a skilled and tech-savvy workforce, making it an attractive location for fintech companies.

While Thailand presents a highly favorable environment for fostering the growth of fintech, aspiring entrants must acknowledge the inherent challenges alongside the opportunities, particularly in setting up operations. Amidst various options, this article focuses on incorporation through Thailand's Board of Investment (BOI) as a viable route for establishing a presence in this dynamic market.

To effectively penetrate the thriving digital market of Thailand, the BOI application emerges as the optimal choice for fintech companies. This article presents a comprehensive overview of the substantial benefits offered by the BOI application. We will explore tax incentives, promoted industries, business categories within fintech, regulatory hurdles, and the application process. By gaining a thorough understanding of the advantages and intricacies of the BOI route, fintech companies can strategically navigate the landscape and capitalize on the immense potential of Thailand's digital market.

Fintech Landscape of Thailand

Thailand's fintech sector has witnessed a notable trajectory of growth in recent times. This remarkable development owes itself to a combination of factors. Supportive government policies, a tech-savvy and adventurous population, and a thriving startup ecosystem have all contributed to Thailand's success in the fintech domain. Presently, Thailand is ranked fifth in terms of fintech funding among Southeast Asian countries. The nation is focused on strengthening its digital monetary systems through the active engagement of commercial banks and the central bank.

Over the past three years, the nation has experienced exponential growth in digital financial transactions. E-wallets and mobile payment platforms have gained immense popularity, while peer-to-peer lending networks have emerged as a reliable alternative to traditional bank loans, enhancing the accessibility and convenience of credit.

Thai government support, including funding, mentorship, and incubation programs, has spurred the fintech sector's growth. Thailand 4.0 initiative promotes financial infrastructure development and fintech growth. Measures like tax benefits, R&D funding, and special economic zones encourage investment and innovation.

The central bank plans to enhance its infrastructure for electronic banking and fintech. Adopting the ISO 20022 standard simplifies electronic invoicing and factoring, empowering businesses to utilize transaction data.

The Bank of Thailand introduced a consultation paper on virtual bank licensing. Virtual banks will provide new financial solutions through digital channels. The bank plans to finalize regulations and start the application process in 2023, with a maximum of three licenses granted initially.

Acknowledging the vast opportunities in Thailand's fintech market, multinational companies are keen to capitalize on them. To do so effectively, many strategically leverage the benefits provided by the BOI (Board of Investment) application for fintech. This approach enables them to smoothly and efficiently enter this thriving market, maximizing their potential for success.

Benefits of BOI certification for the fintech sector

For foreign fintech companies seeking to enter the Thai market, the BOI certification offers a multitude of benefits that make it a compelling choice. These advantages encompass both tax incentives and non-tax incentives, creating a favorable environment for business growth and expansion.

BOI Tax Incentives

Corporate Income Tax exemption: Among the prominent advantages of acquiring BOI certification is the availability of lucrative tax incentives. While numerous BOI initiatives emphasize manufacturing and industrial sectors, BOI-approved fintech companies can enjoy substantial tax exemptions or reductions for a period of up to eight years. The duration of tax benefits is influenced by both the level of investment and the nature of business activities conducted. Relevant tax incentives include:

• Exemptions from corporate income taxes for a duration of three to eight years
• Exemptions from taxes imposed on dividends sourced from promoted projects during the corporate income tax holiday period
• Permission to carry forward losses as deductible expenses for a period of up to five years

The details of the BOI tax incentives can vary depending on the specific product or service offered by the promoted project. Additionally, the BOI aims to reduce regional disparities within Thailand. Therefore, the project's geographic location can affect the level of benefits it receives.

BOI Non-Tax Incentives

Foreign Ownership: In Thailand, certain fintech companies certified by the Board of Investment (BOI) could potentially bypass conventional restrictions and be granted the privilege of complete foreign ownership. This allowance offers enticing opportunities for international investors looking to establish a presence in the Thai market and could prove beneficial to those seeking to tap into the country's growing fintech industry

Easy Work Permit and Visa Processes: Companies certified by the BOI (Board of Investment) can enjoy expedited procedures when obtaining work permits and visas for foreign executives, professionals, and skilled workers. This streamlined process is aimed at facilitating the recruitment and retention of international talent, which contributes to a more diverse and skilled workforce. As a result, these certified companies can benefit from an enhanced ability to attract and retain top-notch international talent, leading to a more competitive and dynamic workforce.

Support and Facilitation: Certified fintech companies receive support and facilitation services from the BOI. These services assist businesses in efficiently navigating regulatory requirements, obtaining necessary licenses, and establishing connections with relevant government organizations.

Land Ownership: A unique privilege granted to BOI-certified companies is the authorization to possess land in Thailand for business purposes, a privilege not afforded to non-BOI applicants.

Repatriation of Profits: Entities certified by the BOI have the privilege of repatriating profits and investment-related funds with no restrictions.

Foreign Currency Remittance: With BOI certification, international businesses can remit money in foreign currencies, facilitating seamless financial operations and enhancing their global reach.

Safeguarding of Investments: Firms accredited by the BOI gain protection against nationalization, ensuring the safeguarding of their investments and business operations.

BOI promotion schemes for the tech industry in Thailand

Amongst the BOI-promoted activities, various tech sectors categorized within BOI Category 5 qualify for the promotion schemes offered by BOI. Some of the renowned tech industries that fall under this category include:

• Category 5.7: Under this category, two distinct types of software industries are eligible for BOI promotion:
• Category 5.8: E-Commerce
• Category 5.9: Digital Services (Including fintech). Digital services cover a vast spectrum of offerings, such as software platforms, managed services, and digital architecture design. These services also extend to various industry-specific fintech domains, encompassing insurtech, regtech, medtech, agritech, and more.

A Fintech company can qualify for BOI promotion on meeting the following conditions:

• Before applying for BOI Thailand investment promotion, one must secure approval from Thailand's Ministry of Digital Economy and Society.
• The project should involve hiring digital specialists and have a capital investment (excluding land and working capital costs) of at least 1 million baht (approx. USD 28,000).
• Projects must incorporate digital services into their offerings.
• Projects with investments of 10 million baht or above (excluding land and working capital expenses) must obtain ISO2000 certification or other quality standards approved by Thailand's Ministry of Information and Communication Technology within two years of commencing full operations.
• Revenue generated from sales or services directly related to the promoted digital services business will be considered revenue for the promoted business.

Promoted business categories within the fintech sector in Thailand

Acknowledging the pivotal strategic significance and potential of the fintech sector to stimulate robust economic growth in the country, the BOI actively supports and promotes investments in specific segments of the industry. Within the fintech sector, some of the encouraged business categories are as follows:

Digital payments and e-wallets: Among the fintech sectors that attract the Bank of Thailand's (BOI) attention is the realm of digital payments and e-wallets. The BOI's framework provides incentives to companies that specialize in delivering reliable and convenient digital payment solutions. These incentives not only drive innovation in payment technologies but also make digital financial services more accessible and user-friendly for the Thai population.

Peer-to-peer (P2P) lending platforms: The BOI provides backing to fintech companies involved in facilitating peer-to-peer lending endeavors. This sector holds significant promise in broadening access to finance and empowering individuals and small enterprises to obtain loans or investments from a community of peers. Aligned with its mission to mitigate regional inequalities, the BOI fosters investment in P2P lending platforms, thus enhancing the diversity of Thailand's financial sector and fostering increased financial participation. These platforms benefit from regulatory oversight, assistance in expanding their activities, and acknowledgment of their contribution to advancing alternative lending options.

Blockchain technology: The BOI also champions the integration of blockchain technology within the fintech sphere. It actively promotes companies utilizing blockchain for diverse purposes, including supply chain management, smart contracts, and identity verification. The transparency, security, and efficiency inherent in blockchain can transform industries beyond finance. Through its support of blockchain-focused enterprises, the BOI fosters innovation and enhances Thailand's technological prowess.

Insurtech: The BOI acknowledges the profound impact technology can have on the insurance industry, prompting it to advocate for investments in insurtech startups. These startups specialize in creating and delivering innovative insurance solutions powered by state-of-the-art technologies. BOI's support offers various benefits, such as customized regulatory assistance for insurtech's distinctive hurdles, access to financing and strategic partnerships, and the chance to collaborate with established players in insurance. This not only spurs innovation within the insurance realm but also bolsters the resilience and efficiency of Thailand's financial services sector as a whole.

Regulation hurdles

Challenges in Obtaining and Maintaining BOI Certification

The procedure for obtaining the BOI certification is intricate and demands a substantial commitment in terms of time and effort. Securing approvals for business operations and staffing can present obstacles. Even after the establishment, adhering to the BOI's operational requisites often proves demanding.

Common hurdles in achieving and maintaining compliance include:

• Drafting and presenting a comprehensive feasibility study for the approval process
• Providing evidence of the necessity for specific expat managerial and staff roles
• Submitting compelling justification for the capabilities and work history of foreign employees
• Ensuring strict compliance with Thai accounting and financial reporting regulations

How Konrad Legal can help?

Amidst these complexities, Konrad Legal, a leading corporate law firm in Thailand, stands out as a highly experienced partner for facilitating BOI certification in Thailand. Our team offers comprehensive support to guide businesses through the BOI application process, including submitting required documents, engaging in crucial interviews, and fulfilling compliance obligations, ensuring a seamless experience.

In partnership with Konrad Legal, fintech companies can overcome regulatory challenges, including crafting compelling feasibility studies, substantiating key roles, and fulfilling stringent accounting requirements.

Embark on a journey of growth, innovation, and success in Thailand's thriving fintech ecosystem with Konrad Legal by your side.