Business with Thailand

News & Opportunities

- 8 November 2022: Study Report of the MRT Brown Line Project Khae Rai-Lam Sali (Bueng Kum) Section

- 20 December 2022: Project on MRO: Maintenance Repair and Overhaul, Line Maintenance, and aircraft washing services at Airport

- 21 March 2022: Seminar on Market Sounding for "The Study of Public-private Partnership Bhumibol Reservoir Diversion Route"

- 21 March 2022: Extension of Private Sectors Opinion Hearing Period for the Preparation of Draft Invitation, Draft Request for Proposal, and Draft Concession Contract of MRT Orange Line Project (Bang Khun Non - Min Buri (Suwinthawong) Section)

With a size of approximately 513,115 square kilometers, the kingdom of Thailand is located in Southeast Asia, surrounded by the following countries:

• Myanmar 
• Laos 
• Cambodia 
• Malaysia

Thailand has a population of about 69 million people. The capital and biggest city is Bangkok with around 10 million inhabitants.

The major religion is Buddhism.

The official language is Thai. In most major companies, especially foreign ones, English is the common language.

There is a direct access to the Pacific Ocean (Gulf of Thailand), as well as to the Indian Ocean (Andaman Sea). The Pacific side has a coast length of 1,840 kilometers and the Indian coast side 865 kilometers, which equals a total coast length of 2,705 kilometers.

The Kingdom of Thailand is a constitutional monarchy with a parliamentary type of government.

The Thai Baht (THB) is Thailand's official currency. At the current date, the official rate is 38.52 THB for 1 Euro (15/01/2019).

Restrictions

Business activities of foreign individuals and companies in Thailand are restricted by the Foreign Business Act (FBA).
Generally speaking, the FBA distinguishes between three fields of business: production, trade and services. It is generally not applicable for production. 

In order to become active in trade or to offer services, foreigners usually need a Foreign Business License. If and under which conditions a license will be issued depends on the category (Annex 1-3 to FBA) the proposed activity falls under. The responsible governing authority will consider each license application individually. It is therefore hard to predict the outcome of an application.

Restrictions can be lifted for companies that are promoted by the BOI or located in Industrial Estates. Foreigners may not own landed property. It is possible for non-Thai citizens to own an apartment or condominium but this is subject to numerous restrictions. In many cases, tenure may be a good alternative.

Establishing a business in Thailand

Thai corporate law knows five types of society:

• Private Limited Company (Ltd)
• Public Limited Company (PLC) 
• Unregistered Ordinary Partnership 
• Registered Ordinary Partnership 
• Limited Partnership 

Only the Ltd and PLC are of practical relevance.

The basic structures of Thai entities are similar to those of German companies, but differ in details. Differences arise mainly with regard to the founding process.

Apart from forming a new corporation, there are several other ways to conduct business in Thailand:

Foreign corporations can establish a representative office in Thailand. A representative office may only perform auxiliary activities for the foreign entity. It cannot conduct business activities.

ROHs (= Regional Operating Headquarters) enjoy special tax privileges. They may carry out supporting services such as marketing activities or market analysis for the parent company. 

In theory, it is also possible for foreign companies to establish a branch office in Thailand, but the branch would need to acquire a FBL before undertaking business activities.

A commercial agent is a Thai citizen that conducts business for one or several foreign companies.

Foreign corporations may also form a Joint Venture with Thai companies. The law does not specify in what form a Joint Venture is to be conducted. Therefore, this may be done in all existing types of societies in all combinations permitted by law.

Labor Law

Thai labor law is regulated mainly by the Labor Act and the Social Security Act.

There is a statutory minimum wage. The wage rate differs, depending on the Province. All employment contracts in Thailand are covered by social security; contributions are divided proportionally between the employer and the employee. 

The Labor Regulations Act governs the founding of employers‘ associations and labor unions. 

In case of the termination of an employment contract, the Labor Protection Act needs to be observed. Statutory notice periods apply to the termination of indefinite contracts unless the contract is terminated due to serious misconduct of the employee. The Labor Court is responsible for labor related disputes.

Taxes in Thailand

Thai tax law is mainly based on the Revenue Code (RC) and numerous government regulations. Taxes include:

• Income tax
• Corporate tax
• Petroleum tax
• Value added tax
• Special business tax
• Excise tax
• Stamp duty

The Value Added Tax rate is officially 7%.

With regard to income taxes, a Double Taxation Agreement has been signed between Thailand and Germany.

Import and Export

Thailand is a member of the ASEAN Free Trade Area (AFTA). In principle, no license is required for the import of goods from Thailand into Germany.

Exceptions are listed in the Annex to the Federal Act on Foreign Trade (Außenwirtschaftsgesetz). Restrictions may also derive from the applicable customs law or EU-Regulations. Similar regulations also apply for the import of goods into Thailand. 

Special provisions for certain goods are made in the Export and Import Act and the List of Goods under Import Control. 

Import duty in Thailand is levied in accordance with the Brussels Nomenclature (HS Code). Customs rates usually depend on the value of the goods.

Legal Proceedings

German court decisions are neither recognized nor enforced in Thailand. Several international agreements exist in the field of arbitration, making proceedings to enforce foreign judgments considerably more promising and less complicated. 



*All information has been researched to the best of our knowledge and with the utmost care. Nevertheless no liability is assumed for accuracy and completeness. This section is only intended to give a general overview over relevant legal regulations in Thailand. It is not designed to replace the consultation of a qualified lawyer.

Central Location

Being a central economic location in Southeast Asia, the Kingdom of Thailand is used by many foreign companies as a home base for further expansion in the Asian region. 

Thailand is one of the ASEAN Member states. The implementation of AEC (ASEAN Economic Community) in 2015 strengthens Thailand’s position by facilitating investment and trading activities with other ASEAN members.

The country has plenty of natural resources and offers a good infrastructure.

Growth

GDP was US$ 506.2 billion in 2018 and is expected to grow by 4.2% in 2019.

Stable Framework

The kingdom of Thailand has a stable financial business environment and offers manifold opportunities for investments. 

The most important aspects of the Thai economy are engineering, the production of automobiles, construction and chemical industries, electronics, food products and tourism.

Renewable Energy, Energy Efficiency

The economic growth of the past years and the expected strong growth of the upcoming years come along with a significant increase in energy consumption. 

Given this development, Thailand is massively expanding its energy production from renewable sources, which results in a substantially increased demand for reliable and efficient technology in this sector.

The GTCC actively supports German companies in entering this market within the framework of the German Energy Solutions Initiative supported by the German Federal Ministry for Economic Affairs and Energy (BMWi)