Everyone is well aware of the “draconian” laws concerning foreign businesses in Thailand. A company must have the status of a Thai legal entity, which means that foreigners must own less than 50% of the shares. To officially employ one foreign worker, a company must have registered capital of at least 2 million baht and employ four Thai nationals. In general, there is little concern for foreigners—everything is designed to benefit the local population.
While foreign investors and entrepreneurs are trying to find ways to avoid involving Thai shareholders in their companies—and, failing to find solutions, come up with various methods to protect their capital—the Thai government has already resolved these issues and is now working on how to communicate this information to interested parties.
In Thailand, it is possible to register a company with 100% foreign ownership. Such a company, being a foreign legal entity, can own land. It can also employ foreign staff in the required number without being tied to registered capital requirements or the number of Thai employees.
Of course, not everyone benefits—only those types of businesses considered “useful” to the state. The key question is how to transform your business into one that qualifies as beneficial, or how to obtain these privileges before starting operations.
So, let’s start from the beginning.
Who grants these privileges?
The Thailand Board of Investment (BOI) is a government agency whose main function is to enhance competitiveness and support foreign investors. As part of this mission, the BOI offers investors a package of tax incentives, removes certain restrictions imposed by Thailand’s Foreign Business Act, laws on the employment of foreign workers, and the Land Code.
In addition to tax and non-tax incentives, the BOI also provides business support services:
- Offers comprehensive information and консультации on establishing and running a business in Thailand
- Organizes site visits to business locations
- Assists in finding suppliers, subcontractors, and joint venture partners
- Provides contact details for public and private organizations
- Facilitates coordination between foreign businesses and other institutions
Conditions for receiving incentives
1. Types of activities
Projects eligible for BOI incentives must be economically beneficial to the country and use efficient management methods. Eligible activities are divided into seven categories:
- Agriculture and agricultural products
- Mining, ceramics, and basic metals
- Light industry
- Metallurgy, machinery, and transport equipment
- Electronics and electrical appliances
- Chemicals, paper, and plastics
- Services and public utilities
2. Business requirements
- Added value must be at least 20% of revenue from goods or services
- Use of modern production processes and new technologies
- An effective environmental protection system
3. Location requirements
For determining the level of incentives, the country is divided into three zones:
- Zone 1: Bangkok and surrounding areas (6 provinces)
- Zone 2: More remote provinces such as Chonburi, Rayong, and Ayutthaya (11 provinces)
- Zone 3: All other provinces with lower income levels and less developed infrastructure
A company can be located in any zone, but generally, the farther the business is from Bangkok, the greater the incentives provided by the BOI.
Offered incentives
- The ability to establish and operate a company with 100% foreign ownership without needing a foreign business license—eliminating the need for Thai partners and complex investment protection structures.
- The ability to employ foreign specialists in the required number, regardless of Thai staff. However, Thai employees are still necessary for roles that do not require foreign expertise.
- The ability for a foreign company to own land.
Tax incentives:
- Corporate income tax exemption for up to 8 years, depending on the type and location of the business
- Exemption from import duties on raw materials and equipment
Investment security in BOI-approved projects
- All investments are made officially and properly recorded. There is no need to involve Thai partners purely for legal status or to create safeguards against claims on foreign capital.
- Additional state guarantees: a BOI-approved project cannot be expropriated by the government; the state will not create competing enterprises or monopolies in the same sector; export permissions are guaranteed, and more.
- The BOI protects approved projects. If a company encounters problems with government bodies, the BOI can intervene upon receiving a complaint.
Benefits of working with the BOI
- Exemption from corporate income tax (20% of net profit) for up to 8 years—a decisive factor for many businesses when choosing a project location. Combined with exemptions from customs duties, this creates significant savings, especially given Thailand’s relatively high duty rates.
- No unnecessary or forced staffing expenses. Companies avoid hiring unneeded employees, and the cost of employing foreign specialists is significantly lower than under standard Thai company structures.
Simplicity of processes
- Initially, a 100% foreign-owned company is registered. Investors officially transfer funds to the company account in justified amounts. Obtaining production licenses—especially within industrial parks—is straightforward.
- The process of obtaining business visas and work permits for foreign specialists can take just a few hours.
- Interaction with government authorities becomes much smoother and more productive with official BOI certification.
Final note
The size of investment must correspond to the type of business activity. The minimum registered capital is 1 million baht, meaning even small and medium-sized businesses can obtain BOI approval if all requirements are met.
The BOI strategy for 2015–2021 предусматривает increasing corporate tax exemption periods for projects engaged in research and development. Priority in determining incentives will shift toward the quality of business organization and products, followed by location and investment size.