Thailand’s Foreign Business Act
The cornerstone legislation relating to foreign investment and M&A transactions in Thailand is the Foreign Business Act 1999 (FBA).
The operation of certain businesses in Thailand by foreign nationals is restricted by FBA under the administration of the Ministry of Commerce (MOC). For the purpose of the FBA
restrictions, a foreigner is classified as a foreign individual, a company incorporated outside Thailand, or a company incorporated in Thailand that is majority-owned by foreign individuals or foreign companies.
The FBA sets out three lists of business categories in which the participation of foreign nationals is either prohibited or restricted. Foreign nationals are prohibited from participating in the businesses specified in list one, which includes antiques trading, broadcasting, farming and forestry.
Foreign nationals are restricted from participating in businesses relating to national safety, arts, culture, tradition, customs and folklore, handicraft or natural resources and the environment, as specified in list two unless they obtain a permission from the Minister of Commerce and approval from the Thai cabinet.
Foreign nationals are also restricted from participating in the businesses specified in list three unless they obtain a permission from the Director General of the department of business development at the MOC. List three comprises 21 categories of restricted businesses, including accountancy, engineering, construction (with certain exceptions), retailing and wholesaling (with certain exceptions), advertising, hotel operation (excluding hotel management), tour guiding, sale of food and beverages, and the catch-all category other services.
Certain service businesses are exempt from the FBA by virtue of ministerial regulations such as: commercial banking business and the related businesses of commercial banks, bank representative offices, life insurance and non-life insurance businesses, securities business and other businesses under the law on securities, asset management company business and business where a government unit or state enterprise is a party.
If a foreigner obtains a promotion certificate from the Thailand Board of Investment (BOI) under an activity that is restricted under the FBA, the foreigner can obtain a foreign business certificate. A foreign business certificate may also be granted if a foreigner is eligible under an international treaty, such as the Treaty of Amity between the United States and Thailand. Generally, the administrative process for obtaining a foreign business certificate is less onerous than for an FBL.
The formation of a private limited company is the most common approach for foreign direct investment. A private limited company is eligible for investment promotions granted by the BOI. A representative office and a branch office are also common forms of business organisation for foreign investment in Thailand; however, they do not qualify for investment promotions from the BOI.
Board of investment
The board of investment of Thailand oversees various tax and nontax incentives and privileges for various industries, such as agriculture and agricultural products, electronics and electric appliances, technology development, and high value services, including certain service activities.
Under the Investment Promotion Act, the BOI offers both tax and non-tax incentives, as summarised below:
Investment Incentives for the Eastern Economic Corridor
In 2017/18, the government instituted new investment schemes to support the growth of important economic areas within the Eastern Economic Corridor (EEC) area, initially within the provinces of Chachoengsao, Chonburi, and Rayong. The key privileges are: