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”.

How to get license for e-commerce business in Thailand?

 

If your business in Thailand involves selling goods online or via e-commerce platforms, this situation necessitates your requirement to apply for an e-commerce license in Thailand. In the digital age, many businesses harness the internet’s potential to expand their reach and boost sales. E-commerce offers a global marketplace, enabling enterprises to engage with a vast network of customers worldwide.

Moreover, this business model often requires lower investment levels compared to traditional brick-and-mortar establishments. However, it’s important to note that online businesses operating in Thailand must obtain an e-commerce license to ensure their legal compliance.

The Thai Electronics Transaction Act governs the application process for e-commerce licenses in Thailand. Leading corporate law firms in Thailand with licensing capabilities are well aware of this act, but, you should also have an idea of it. Let us share the same with you!

Thai Electronics Transaction Act: Comprehensive Overview

The Electronic Transactions Act (ETA) governs civil and commercial electronic transactions in Thailand. It aims to encourage the use of electronic technology by minimizing uncertainty about the legal validity of electronic information. It also emphasizes that certain legal requirements through physical paperwork should meet the electronic process as well.

The ETA is based on the premise that data messages when specific conditions are met, have the same legal standing as other written documents. To clarify, data messages encompass all electronically generated, sent, received, stored, or processed information. Examples of data messages include e-mails, telegrams, telexes, and faxes.

In addition to the aforementioned, the Electronic Transactions Act (ETA) sets licensing and registration requirements for electronic transactions and provides a general framework for such transactions involving the public sector. The Electronic Transactions Commission promotes and develops electronic transactions and monitors the operations of businesses providing services related to electronic transactions. These services require prior notification and registration to obtain the necessary license.

Entrepreneurs selling products online should also be aware of the provisions of the ETA, as Thailand’s e-commerce industry is growing rapidly and Thai consumers are increasingly purchasing products online.

Documents Required to Obtain E-commerce Business in Thailand

To acquire an e-commerce license in Thailand, the applicant must provide the following documents at the District Office of the province of the main office (if outside of Bangkok) or at the Bangkok Metropolitan Administration:

1. Application for e-commerce registration (Tor. Por. form with the attachment), including details of your website.
2. ID card or passport of the applicant:
   • For an individual: ID card or passport
   • For a juristic person: ID card or passport of the authorized director and the company affidavit
3. Power of attorney (if applicable)
4. Clarification letter (in the event of late registration)

Information Required to Obtain E-commerce License in Thailand

To apply for an e-commerce license in Thailand, the website must be operational, and the website owner must provide the following details:

• Website name.
• Nature of goods or services sold.
• Start date of website operation (application must be made within 30 days).
• Payment methods accepted.
• Domain name registration or certification document from the service provider.
• Map showing the business location.

In case the commercial operator doesn’t have a landlord, the following additional documents are required:

• Letter of consent to use the premises or a rental contract.
• Copy of the location owner’s ID card and house registration or documents showing ownership of the property.

When and how to apply for an e-commerce license in Thailand?

Online business owners must obtain an e-commerce license within 30 days of starting operations. To do so, an application form must be submitted either to the District Office where the head office is situated or to the Bangkok Metropolitan Administration.

If your head office is outside Bangkok, you have to apply to the Provincial Administration Organization. 

In case the process seems daunting and you are unable to pave through the correct path or channels, let us help you out. Our team of experienced Thai corporate law professionals and licensing experts will surely take you out of the dilemma. Email us at officer@konradlegal.com.

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.

BOI Thailand Incentives for Existing Businesses in Thailand

 

The Board of Investment (BOI) of Thailand is always keen to facilitate the process of business registration and continuity for investors in the kingdom. Irrespective of nationality, the apex body governing the business ecosystem of Thailand, is always focused on attracting investors, be it foreigners or Thai to contribute to the GDP of Thailand.

Most of our clients or readers believe that BOI facilitates the business registration process in Thailand for foreigners only. This is a myth!

BOI Thailand values business ideas and intentions with equal weightage without discriminating on the grounds of nationality, as long as the business is legal. Furthermore, the Board also prioritizes the launch of innovative projects with special privileges.

Let’s bust another myth! It’s true that BOI Thailand promotes new businesses, but do note that it never overlooks the existing ones. This recent announcement of BOI Thailand proves the point aptly.

On February 7, 2024, the Board of Investment (BOI) of Thailand released various investment incentive measures for companies that are already operating in Thailand. With the motive of social, local, and economic development, BOI Thailand announced certain programs for existing businesses.

Social and Local Development (BOI Announcement No. 1/2567)

To address the PM2.5 problem and encourage social, local, and environmental progress, the BOI offers a corporate income tax (CIT) exemption of up to 200% of the investment capital (excluding land and working capital costs). This measure aims to alleviate PM2.5 pollution and promote sustainable development.

Eligibility Requirements for BOI Incentive:

• The project must make a minimum investment of 5 million THB, excluding land and working capital costs, to support local organizations.
• To boost competitiveness, the project must have a strategy for working together with local organizations.

Retention and Expansion Program (BOI Announcement No. 2/2567)

Within the past 15 years from 2009 to 2023, existing promoted individuals or businesses with at least three promoted investment projects under the same juristic person, with a combined investment value of THB 10 billion (excluding land and working capital costs) at the project approval stage, are eligible for BOI incentives to encourage ongoing investment in Thailand.

Eligible business expansion projects requiring an investment of at least THB 500 million will receive incentives, including an additional three-year CIT exemption for projects in Groups A1+, which can last up to 13 years, and up to eight years for projects in Groups A3, A4, and B.

Relocation Program (BOI Announcement No. 3/2567)

Intending to attract integrated business entities, the Board of Investment (BOI) offers incentives to companies that establish their manufacturing operations, regional headquarters, and research and development facilities all within Thailand.

Incentives for Manufacturing Projects in Thailand

1. Additional three-year Corporate Income Tax (CIT) exemption on the net profit from investment in manufacturing activities for applicants of such projects operating regional headquarters businesses in Thailand. This exemption can be claimed for a total of eight years.

2. Additional five-year CIT exemption on the net profit from investment in manufacturing activities for applicants of such projects that operate regional headquarters businesses and establish an R&D center in Thailand. This exemption can also be claimed for a total of eight years.

Investment Stimulation Measure for Economic Recovery (BOI Announcement No. 4/2567)

To stimulate large-scale investments in specified sectors and accelerate Thailand's economic recovery, the Board of Investment (BOI) offers an additional 50% corporate income tax (CIT) reduction on net profits generated from investments in Groups A1, A2, A3, and A4 for five years after the end of the CIT exemption period.

To qualify, projects must have an actual investment of at least 1 billion Thai baht (excluding land and working capital costs) within 12 months of receiving the investment promotion certificate.

The Bottomline

Although these BOI announcements appear to be focusing only on existing projects, yet, if your new project holds the potential to support the social, local, and economic development of Thailand, it will also be eligible for various BOI incentives. Any business idea that holds the following values will be eligible for BOI Promotions in Thailand:

1. You or your business has a plan to contribute to local employment in Thailand.
2. Your company has the potential to significantly contribute to the Thai economy's growth.
3. Your business deals in or executes innovative and creative projects that can add value to the existing Thai ecosystem.
4. Your project seeks the involvement of highly skilled workers, Thai or foreigners, to generate the expected and elite output.

With time, BOI keeps on enhancing its promotion policies to extend greater support to foreign investors and businesses. However, as of 2024, the following industries assure great return on investment with a strong probability of obtaining BOI Thailand promotion:

• Starting a Manufacturing Company in Thailand
• Incorporate a Food Production Plant in Thailand
• Getting Involved in the Future of the Food Industry in Thailand
• Start a Food Business of any type in Thailand
• Setting up E-commerce Business in Thailand

Please note that BOI Promotions for Foreign Investors in Thailand are not restricted to the above businesses only. You can apply your unique business idea at any time and start your business in Thailand. To apply for BOI Thailand Promotions, you will need local support to have the perfect and accurate answer to the following questions:

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.

Business Tax for Foreigners in Thailand

 

Venturing into a foreign market like Thailand presents lucrative avenues for business growth, but it also entails the responsibility of understanding and adhering to local tax regulations. For foreign businesses operating in Thailand, accurate tax filing is crucial to ensure compliance with the law and avert potential penalties. Therefore, tax registration is very crucial for global investors and expats in Thailand to start a business in Thailand.

Here’s a comprehensive guide to help foreign businesses understand their tax obligations in Thailand!

Tax Registration

Foreign businesses operating in Thailand are required to register for taxation purposes. This involves obtaining a Taxpayer Identification Number (TIN) from the Revenue Department. This is a mandatory process for all types of business in Thailand. However, Representative Offices need not apply for this registration process as they cannot perform any commercial activity. The registration process may vary depending on the type of business entity and the nature of its activities in Thailand.

Corporate Income Tax (CIT)

Foreign businesses that generate income in Thailand are subject to Corporate Income Tax. The standard corporate tax rate in Thailand is 20%. However, certain types of businesses may qualify for reduced rates or incentives under various investment promotion schemes. Check if you want to register for corporate income tax in Thailand.

Value Added Tax (VAT)

Businesses selling goods or services in Thailand may have to register for Value Added Tax (VAT) purposes. The current VAT rate in Thailand is 7%. Furthermore, businesses must file periodic VAT returns and remit the tax collected to the Revenue Department.

Withholding Tax

Foreign businesses that derive income from Thailand, such as dividends, interest, royalties, or service fees, may be subject to withholding tax. The withholding tax rates vary depending on the type of income and whether there is an applicable tax treaty between Thailand and the foreign business’s home country. Check to know all about withholding taxes in Thailand.

Transfer Pricing

Compliance with transfer pricing regulations is crucial for foreign businesses with related-party transactions. Thailand follows the arm’s length principle from the Organisation for Economic Co-operation and Development (OECD), requiring transactions between related parties to be conducted at fair market value to prevent tax avoidance.

Annual Financial Statements

Foreign businesses operating in Thailand typically need to prepare and submit annual financial statements by Thai accounting standards. These financial statements must be audited by a licensed auditor and submitted to the Revenue Department along with the tax return.

Tax Filing Deadlines

Foreign businesses need to be aware of the tax filing deadlines in Thailand to avoid late filing penalties. The deadline for filing Corporate Income Tax returns is typically within 150 days from the end of the accounting period. However, there may be extensions under certain circumstances.

Tax Treaties

Thailand has entered into double taxation agreements (DTAs) with numerous countries to prevent double taxation and promote cross-border trade and investment. Foreign businesses should review the provisions of the relevant tax treaty to determine their entitlement to tax benefits and exemptions.

Tax Compliance Services

Given the complexity of Thailand’s tax regulations, many foreign businesses opt to engage the services of tax advisors or professional accounting firms with expertise in Thai tax law. These professionals can guide tax planning, compliance, and dispute resolution.

Penalties for Non-Compliance

Failure to comply with Thailand’s tax filing mandates can result in penalties, fines, and even criminal prosecution. Foreign businesses should prioritize tax compliance to avoid legal and financial repercussions.

In conclusion, foreign businesses operating in Thailand must familiarize themselves with the country’s tax filing mandates to ensure compliance and avoid potential pitfalls. 

By understanding their tax obligations and seeking professional advice when necessary, foreign businesses can navigate the complexities of Thailand’s tax system successfully and focus on achieving their business objectives in the vibrant Southeast Asian market. For complete support on any of these mentioned fields, email us at officer@konradlegal.com.

As a leading tax firm in Thailand, we will be happy to help you with all types of tax registration, accounts audit, and tax filing processes.