Ignite Finance easing way for Global Investor to Start Finance Business in Thailand

 

Are you planning to start a finance business in Thailand? Now is the perfect time to steadfast your planning process and register your company in Thailand. If banking, derivatives, securities, digital assets, or insurance are the sectors you are planning to focus on, the “Ignite Finance” initiative is for you.

Announced by the Honorable Prime Minister of Thailand on July 19, 2024, the “Ignite Finance” initiative is targeting global investors to transform Thailand into a Global Financial Hub.

Ignite Finance: Thailand’s Vision for a Global Financial Hub

The Ignite Finance initiative is a part of the “Ignite Thailand” scheme. Ignite Thailand has successfully implemented promotional measures to boost foreign direct investments in tourism, wellness and medical, agriculture and food, aviation, logistics, future mobility, and digital industries. Now it is focusing on the Finance industry.

Now a question may trigger your senses – why the finance industry? The most probable set of answers are as follows:

• There is a worldwide digital growth in the finance industry. As Thailand has already started boosting its digital ecosystem, this can be a plan to enhance its involvement in the finance sector of the kingdom.

• The dependency of Thai consumers has increased greatly on digital payment and purchase interfaces. This calls for implementing a more developed and secure digital ecosystem in the Thai finance industry.

• Ever since the discontinuance of the COVID lockdown, the global tourism footfall in Thailand has witnessed a year-on-year increase. International tourists may face issues in making international transactions with limited financial systems and infrastructure in place. Therefore, a boost in these segments is necessary to cater to their requirements and make their stay pleasant in Thailand.

• The greatest reason is that the Board of Investment of Thailand has opened doors to innovative and creative projects in almost all industries. The Finance Industry was lagging in the queue. This initiative can place the same in a position of priority.

Read our article on the importance of BOI Thailand promotions for global investors. 

Aren’t the reasons interesting? Then certainly you are now interested in knowing about the benefits of the “Ignite Finance” scheme. These privileges will certainly inspire you to boost your preparations to start a finance business in Thailand. However, there are certain strategic reasons in place to illuminate better trajectories behind the announcement of “Ignite Thailand”, which are as follows:

• To strengthen Thailand as a “global financial hub”, it is targeting the implementation of regulatory reforms, incentives, and a productive ecosystem.
• Expansion of financial accessibility for underserved communities and small businesses in Thailand.
• Developing a nation as a global financial hub automatically brings in a positive change in the economic structure without any investment budget.
• Attracting foreign direct investment, investors, and skilled professionals will automatically add to the returns with new ideas and knowledge in the kingdom.

Benefits of the “Ignite Finance” initiative

As announced by the PM of Thailand, Mr. Srettha Thavisin, and Deputy PM-cum-Finance Minister, Mr. Pichai Chunhavajira, the scheme mainly focuses on the following three points:

Bring reforms in the regulatory system of the finance business

This key element is going to be of great advantage for foreign investors planning to start a finance business in Thailand. Various Thai protocols often restrict global investors from exercising their full business idea in Thailand. A reformation of these existing regulations can give some relief.

As stated by Mr. Pichai Chunhavajira, the thought process is actively planning the introduction of a new financial business law. The goal of this law will be to facilitate foreign direct investment in Thailand in the finance sector. This will certainly help in making the process of incorporation and continuity of business in Thailand easy for foreign investors.

Introduce new forms of incentives

These incentives can be both tax and non-tax in category. Some of the already-announced benefits include easing of work permit issuance process and disbursement of additional incentives in the form of grants.

Implementation of this key element will make the process of bringing in skilled professionals to Thailand easier. Furthermore, the tax incentives will certainly reduce the annual financial liabilities of foreign companies in Thailand.

Empowering the finance ecosystem favorable for business operations

This key element includes the implementation of modern and innovative solutions to ease the process of financial business operations. Aiming towards a seamless transactional, procurement, and disbursal mechanism, this seeks a robust digital infrastructure.

This key element is going to increase the ease of operations of finance companies in Thailand, Additionally, this will extend opportunities to the key players of other industries in the digital and information technology domain.

Types of Finance Businesses to benefit from “Ignite Thailand”

The initiative targets the entire financial industry as a whole. However, if you try to understand the pattern of the benefits announced, the following types of finance businesses can avail greater advantages:

• Equity, Derivative, and Debt Security Services
• Digital Wallets or Payment Gateways
• Tourist/Travel Insurance Services
• Digital Currency or Commodity Trading Platforms
• Digital Asset Procurement and Protection Platforms
• Insurance Services of all categories

This isn’t any exclusive list. The scheme has great potential to support any type of business in the Thai finance industry. Therefore, this is the correct time if you want to start a fintech business in Thailand as well. It is because you can now gain access to a more developed digital ecosystem through the implementation of the “Ignite Thailand” initiative.

Starting a finance business in Thailand offers a wealth of opportunities, particularly with the support of the “Ignite Finance” program. By leveraging its benefits, you can establish a successful finance business in Thailand and tap into the dynamic Southeast Asian market. 
Embrace this opportunity to ignite your financial venture in the Land of Smiles. Email us at officer@konradlegal.com to get in touch with our updated corporate law professionals and avail the benefits of “Ignite Thailand”.

BOI Thailand Promotions for Green Investment Projects

 

Thailand has a well-established history of enforcing environmental protection policies. The country's development strategies prioritize green growth, and it has set consistent climate change mitigation targets. To foster green initiatives and industries, Thailand offers investment incentives as well.

Nevertheless, this time the Board of Investment of Thailand devised a plan and proposal to mitigate environmental threats. The Board of Directors of BOI Thailand has taken steps to encourage investments that reduce PM2.5 particulate pollution, as announced by BOI Secretary-General Narit Therdsteerasukdi.

Image Source: Board of Investment (BOI) Thailand

To address the current smog situation, BOI collaborates with the Ministry of Natural Resources and Environment to empower local organizations and farmer groups through various environmental management methods that lead to sustained PM2.5 pollution reduction.

Scope of Investment

The announced measures expand the scope of investment promotion support to include community and social development. They involve supporting local organizations and farmers to improve environmental standards within communities.

Specific focus areas include forest management in areas like community forests, conservation forests, and national forest reserves, aiming to alleviate the nationwide issue of PM2.5 pollution.

In addition, BOI prioritizes promoting investments in projects with minimal harmful effects environmentally and reducing pollution across various sectors such as industry, energy, transportation, and agriculture. Past efforts include supporting alternative energy production and use, upgrading industries with energy-efficient machinery and environmentally friendly technologies, and promoting electric vehicle industries.

Eligible Activities and Promotion

Activities eligible for benefits under these investment promotion measures include constructing firebreaks in wet-forest areas, building moisture-retaining ridges, providing firefighting tools and equipment, and offering training on forest fire prevention and control.

Operators involved in forest management and PM2.5 pollution reduction activities that meet the Ministry of Natural Resources and Environment criteria can receive a corporate income tax exemption for three years, not exceeding 200% of the actual investment in supporting local organizations and farmer groups.

The investment promotion measures have been extended for an additional year beyond the original end date, encompassing three measures: investment stimulation for economic recovery, a retention and expansion program, and a relocation program.

The deadline for submitting investment promotion applications has been extended to the final business day of 2024.

Already Promoted Projects

In other news, BOI's board of directors approved investment promotion privileges for two projects worth a combined 18.67 billion baht. The first is a biofuel production project using used vegetable oil, with an investment value of 10 billion baht. The second is a Smart Distribution Centre project, focusing on warehouse management and digital technology for product distribution across various industries.

Do you have a plan to start a Green Project in Thailand? Then be assured that it will be eligible for BOI Promotion in Thailand granting you all the benefits as announced.

As a leading corporate law firm in Thailand, Konrad Legal can help you in obtaining BOI Promotion in Thailand.

Are these benefits applicable to all global investors and are you eligible to apply for BOI Thailand promotions?

1. What are the steps of getting a BOI Thailand Promotions Certificate?
2. What to do before and after registering your BOI Company in Thailand?

To get answers to such or more complicated questions, you must consult with a leading corporate law firm in Thailand with experience in BOI Company Registration.

For direct support, feel free to email us at officer@konradlegal.com.

Mistakes to avoid before Starting Foreign Business in Thailand

 

Are you a foreign investor with plans of starting a business in Thailand? There are numerous great reasons for foreign investors to start a business in Thailand, due to which the kingdom is growing rapidly as the business hub of Southeast Asia. However, in our practical experience, we have seen global investors committing great mistakes due to which they either fail to incorporate their business or operate it properly in Thailand.

Surprisingly, the mistakes are done mistakenly!

Yes, and the primary reasons behind these mistakes are as follows:

1. Complex Thai Civil and Commercial Code
2. Unclear assumption of the Foreign Business Act of Thailand
3. Inability to adhere to the documentation protocols
4. Complex licensing and tax registration standards
5. Difference in International Financial Revenue Standards (IFRS) and Thai Financial Revenue Standards (TFRS)

Many other uncertain causes compel foreign investors to make mistakes in the process of starting a company in Thailand. These causes depend on the level of knowledge and personal preferences of the investors. Therefore, finding out the accurate cause is pretty difficult.

As a leading corporate law firm in Thailand would like to point out the major mistakes that you must avoid in the process of company registration in Thailand.

Selecting Improper Business Structure

There are 6 prominent business structures for foreigners in Thailand. However, each of these business structures comes with its own set of characteristics and aspects of liabilities for the owner. Therefore, while starting your business in Thailand, you should not make any mistake in selecting the business structure, Following are a few suggestions:

• Never assume that you need a Limited Company on a mandate to start your business in Thailand. You should explore other options like limited partnerships or sole proprietorship options as well.
• If you already have an existing business in your home nation, try to go for a representative or branch office type of business structure in Thailand. This will incur less investment and is easy to incorporate.
• Try to avoid incorporating subsidiaries. The incorporation of subsidiaries follows a complex registration process and has tough compliance standards. Furthermore, it grants limited liabilities to owners.

Ignorance in the Documentation Process

To incorporate any type of business structure in Thailand, documentation and paperwork needs special attention. The complexity of the Thai Civil and Commercial Code,  Foreign Business Act, and TRFS may seem to be a maze to you. Take the help of some reliable corporate law firms in Thailand like Konrad Legal and keep in mind the following aspects:

• Cross-check and ensure that you submit all the documents as necessary for the application.
• You have to consider Thai as the official language. Although English translations are accepted officially, certain document requirements must be in the Thai language.
• You must demonstrate your financial stability. Do so by providing the correct documents as per the mandate of the application of the type of company you are incorporating.

Not Obeying the Timeframe

Many foreign business registration processes get hindered due to the lack of patience. You must remember that every application and statutory registration process in Thailand has a stipulated timeframe. Therefore, for your company registration in Thailand, you should:

• Do not rush to arrange the documents. Keep your calm and arrange for all the necessary documents.
• Avoid expecting instant results as the minimum duration of company registration can be of few weeks. In case your documentation is incomplete or lacks clarity, it may extend to months.

Remember that there won’t be any shortcuts to decrease the timeframe. Therefore, support from a corporate law firm can make the documentation process perfect which will automatically make your process adhere to the natural timeframe.

Mistaking the Compliance Obligations

If you stick to the above guidelines, you will never face any issues in registering your business in Thailand as a foreigner. But, mere registration is not enough. There are various post-registration tasks that you should never neglect.

Corporate Income Tax Registration: Your business will have a valid legal entity only if it is tax compliant. Therefore, your business must have a tax ID for which you have to apply for corporate income tax registration in Thailand.

VAT Registration: If your business anticipates annual revenue of over 1,800,000 Baht must register for Value Added Tax (VAT) with the Thailand Revenue Department. VAT registration is also mandatory for Thai businesses sponsoring foreign workers’ work permits. Additionally, Thai corporations must acquire a business permit by registering for VAT. 

Essential Licenses and Permits: Depending upon the type of business, you must equip your new company with the necessary licenses and permits after incorporation. Examples are travel licenses for tourism businesses, alcohol licenses for bars, etc. 

The Bottomline

The greatest mistake that a majority of foreign investors make while starting their business in Thailand is having an assumption of “I can handle it alone”. It won’t be possible as we have witnessed that even Thai persons make mistakes on regulatory and statutory compliances. 

Therefore, it is always a wise decision to take the support of a local Thai corporate lawyer or corporate law firm. By doing so, you will be free from the following stresses:

1. Understanding and communicating in the Thai language
2. Translation of documents from English or your native language to the Thai language
3. Notarization of documents
4. Maintaining application requirements and error-free documentation
5. Identifying the right authority to put forth your application 

There can be various other grounds on which you may seek help including the post-incorporation license and permit applications. To get a combined service of company incorporation, accounting and taxation, and payroll management, we can help you throughout. All you have to do is go on a free consultation with us. Email us at officer@konradlegal.com to book your appointment with our legal, accounting, and tax experts in Thailand.

Best Business Structures for Foreign Investors in Thailand

 

Thailand serves as a strategic gateway to Asia, attracting increasing interest from foreign investors seeking to establish or expand their businesses in the region. To gain a foothold in the Thai market and achieve foreign ownership, there are various business structures available for consideration.

Business Structures in Thailand for Foreigners

The business structures in Thailand that allow foreign ownership are:

• Sole proprietorship
• Partnership
• Limited Company
• Regional Office
• Representative Office
• Branch Office

Sole Proprietorship Business in Thailand for Foreign Investors

A sole proprietorship is a single-owner business structure and comes with unlimited liability. Such a type of business can engage in any legal business activity, except for businesses providing services. The owner can choose to be taxed as an individual or not.

Foreigners generally cannot operate a sole proprietorship in Thailand. However, exceptions are there for the U.S.–Thai Treaty of Amity. This treaty permits Americans to hold 100% foreign ownership of their business in Thailand. Furthermore, foreigners married to Thai nationals can register the business under their spouse’s name.

Although it is about a single owner, yet, the process is not simple. Contact us for professional consultation on registering a sole proprietorship company in Thailand.

Limited Partnership Business Structures in Thailand

In a limited partnership, there are two types of partners:

• Limited partners: Their liability is limited to their investment.
• General partners: They are personally liable for the debts and obligations of the partnership.

A limited partnership encompasses two types of partners: one with limited liability and the other with unlimited liability. Registration is mandatory for limited partnerships, and before registration, they are considered ordinary partnerships. Limited liability partners can only contribute money or other assets.

The managing partner solely resides within the unlimited partner’s capacity. Foreigners acting as managing partners must secure a valid non-immigrant business visa alongside a work permit. Limited partnerships permit up to 49% foreign ownership. However, surpassing this threshold necessitates the acquisition of a Foreign Business License by the foreign partner.

Limited Company Structure for Foreign Investors in Thailand

Private Limited Company

In Thailand, the most common business structure is a private limited company. To establish such a business, it involves a Memorandum of Association (MOA) and Articles of Association (AOA) in Thailand. The shares of such a company cannot be offered to the public.

A minimum of three shareholders is required for a private limited company, and shareholders enjoy limited liability. All shares must be subscribed, and at least 25% of those subscribed shares must be paid up.

Foreign investors are generally limited to owning up to 49% of the company. However, if a foreign investor seeks 100% ownership, they must obtain the following:

• Foreign Business License
• Promotion from the Board of Investment (BOI)
• Register through the Treaty of Amity (for U.S. citizens only)

Public Limited Company

Public limited companies in Thailand can offer shares, debentures, and warrants to the public. Additionally, they also can list their securities on the Stock Exchange of Thailand (SET). The Securities and Exchange Act B.E. 2535 (A.D. 1992) governs the rules and regulations regarding the procedure of offering shares to the public in Thailand.

A minimum of 15 promoters is necessary to register a public limited company in Thailand. Additionally, the board of directors must consist of at least five members, with at least half being Thai nationals.

Regional Office in Thailand

A regional office, established by a foreign head office, is a non-juristic entity. Regional offices are not separate legal entities and operate in Thailand on behalf of the foreign head office.

To operate in Thailand, a foreign company must have at least one active branch or affiliate in Asia. Regional offices cannot make purchases, propose sales, negotiate, or enter into business agreements in Thailand.

Foreign head offices wishing to establish a regional office in Thailand must apply for a Foreign Business License.

The Foreign Business Act (FBA) delineates seven distinct activities that regional offices can partake in, as outlined in List Three of the act:

• Communicating, coordinating, and directing, on behalf of the head office, the operation of branches and affiliates which are located in the region
• Financial management
• Marketing control and sales promotion planning
• Product development
• Providing services in consulting and management
• Services in research and development
• Training and personnel development

According to the second paragraph of section 14 in the FBA, a minimum capital of THB 3 million is required for establishing a regional office.

Representative Office in Thailand

A representative office in Thailand is a non-trading entity that does not generate income. It is a type of non-profit organization financially supported by its head office located in another country. Up to 100% foreign ownership is permitted.

The primary purpose of a representative office is to operate a service business in Thailand for its head office, an affiliated company, or a group company in another country. It provides non-revenue-raising services to the foreign head office by engaging in a limited range of activities, such as:

• Overseeing local procurement of goods and services in Thailand
• Inspecting and ensuring the quality and quantity of goods purchased by the head office in Thailand
• Relaying information to distributors and consumers about new products and services from the head office
• Communicating reports about local business developments and activities to the head office
• Advising on various aspects related to goods distributed by the head office to distributors or consumers
• Possessing limited signing authority for essential operational contracts, such as the lease of premises
• Facilitating exports of products ordered by the head office or its affiliated companies

Branch Office in Thailand

Foreigners seeking a physical presence often establish a branch office in Thailand, which permits full foreign ownership. This branch office can conduct business activities that generate income and serve as a trading entity.

Before commencing operations, the branch must secure a Foreign Business License. However, branches involved in manufacturing or exporting products from Thailand are exempt from this requirement.

Conclusion

When foreign investors seek foreign ownership of a company in Thailand, they can choose from available foreign business structures. It’s crucial to ensure compliance with the provisions of the Foreign Business Act to avoid legal violations during the process.
Contact us for a hassle-free experience of company registration in Thailand. To schedule an appointment, simply email us at officer@konradlegal.com.

BOI Thailand Benefits for Commercial Fleet Owners in Thailand

 

What’s the Scheme?

Thailand's National Electric Vehicle Policy Committee has implemented tax incentives to facilitate the shift from commercial fleets of large trucks and buses to battery-powered electric vehicles (BEVs).

Key Takeaways

• To encourage the adoption of electric trucks and buses, Thailand's EV Board approved tax incentives that target reducing pollution and supporting companies' net-zero goals.
• By providing special tax deductions to companies purchasing electric trucks and buses and financial support to battery cell manufacturers, the nation is positioning itself as a hub for EV manufacturing.
• With over 78,000 registered EVs benefiting from tax discounts and subsidies, the EV3 program, which promotes EV passenger cars, has already demonstrated success. Participating companies are, however, required to manufacture locally.

The News in detail!

In a move to promote the adoption of electric vehicles (EVs), the Thailand National Electric Vehicle Policy Committee (EV Board) has implemented several incentives. Firstly, tax incentives have been approved to encourage companies to switch their large commercial trucks and buses to battery-electric vehicles (BEVs). Secondly, cash grants will be provided to manufacturers of EV battery cells. These policies aim to expand Thailand's support for the entire EV ecosystem and strengthen its position as a significant hub for EV manufacturing in the region.

To promote eco-friendly practices, reduce pollution, and position Thailand as a significant player in the EV manufacturing industry, a series of incentives have been introduced. These incentives provide special tax deductions for companies procuring electric trucks and buses to support their progress towards net-zero emissions targets. Additionally, cash grants are offered to manufacturers of EV battery cells, facilitating the development and production of these essential components.

Thailand plays a substantial role in the automotive industry, positioning itself among the top 10 countries worldwide regarding automotive production and total exports. Notably, Thailand stands out in Southeast Asia as the first country to provide special incentives for both the supply and demand sides of electric vehicles (EVs). Through the 30@30 policy, Thailand has established a clear goal: to have at least 30% of domestically-produced cars be EVs by the year 2030.

Eligible companies will receive a special tax deduction to encourage the purchase of electric-powered buses and trucks. For vehicles manufactured domestically, companies can deduct expenses up to twice the actual price, with no upper limit. Imported vehicles will qualify for a deduction of 1.5 times the actual price.

Eligibility to avail of the Benefits

The eligible large electric vehicles include container trucks, liquid trucks, hazardous substance trucks, special trucks, tow trucks, as well as both air-conditioned and non-air-conditioned electric buses.

Furthermore, the EV Board also approved a plan to promote local manufacturing of battery cells for EVs and energy storage systems (ESS). Financial support will be provided through Thailand’s Competitiveness Enhancement Fund, along with other benefits available under the Competitiveness Enhancement Act for companies meeting specific criteria.

To qualify for investment promotion under this scheme, a company must meet the following requirements:

• Being a leading and well-recognized battery manufacturer providing batteries to EV manufacturers;
• Having a clear plan to produce battery cells for batteries used in EV, and also if possible to produce battery cells for batteries used in ESS;
• The batteries must have a high energy density of not less than 150 Wh/kg;
• The battery must have a life cycle of not less than 1,000 cycles, counting from 70% of the nominal capacity at a depth of discharge of not less than 80% at a test temperature of 20-25 degrees Celsius.

These measures are expected to significantly increase the adoption of electric trucks and buses, reduce pollution from transportation and manufacturing sectors, and support companies’ efforts to achieve their net-zero targets.

EV Sector Update

The meeting also heard an updated report on the EV3 measures to promote the use of EV passenger cars.

Statistics as of 31 January 2024 show that, since the scheme started in 2022, a total of 14 manufacturers and importers of BEV cars and pickups have registered a total of 78,554 EV cars to enjoy the excise tax discounts and subsidies. According to the conditions of the EV3 scheme, these companies will have to produce in Thailand at least one vehicle for each vehicle imported.

What it has for you?

If you already own a fleet of commercial vehicles, now is the time to upgrade yourself. In addition to gaining tax incentives, you can enjoy special deductions in the prices. You must note that the scheme is open to both local and global investors in Thailand.

In addition to supporting the fleets, BOI also aims to promote the EV Industry as a whole starting from the manufacturing segments. Read our article on BOI Promotion for the EV Industry in Thailand.

Are these benefits applicable to all global investors and are you eligible to apply for BOI Thailand promotions?

1. What are the steps of getting a BOI Thailand Promotions Certificate?
2. What to do before and after registering your BOI Company in Thailand?

To get answers to such or more complicated questions, you must consult with a leading corporate law firm in Thailand with experience in BOI Company Registration.

For direct support, feel free to email us at officer@konradlegal.com.