Main Legal Measures to Protect Foreign Investment in Thailand
Last Updated: Apr 20, 2022
According to the Board of Investment of Thailand (BOI), during the first quarter of 2021 investment applications in Thailand increased by 80% over the same period of the previous year, led by projects in the medical, electrical and electronic sectors.
At Smart Legal Solutions are aware that one of the main concerns of foreign investors is how to maintain the full control over its investment in Thailand. Consequently, at Smart Legal Solutions, we provide to our clients the best solutions to protect and manage their investment according with the existing possibilities offered by the Thai law.
The Foreign Business Act B.E. 2542 is the main governing law related with foreign investment in Thailand, which limits the ability of foreigners to engage in certain activities reserved only for Thai nationals. During the past years, the Thai government has implemented some legal amendments to attract the foreign investors into Thailand. However, some legal aspects and restrictions may still represent a difficulty for foreign nationals to manage their business and/or investment in Thailand.
Main foreign investment protection schemes to conduct a business in Thailand:
Investment Promotion Act
According to the Investment Promotion Law B.E. 2520, the BOI was established with the objective of attracting investments from both foreign and local entrepreneurs to carry out certain commercial activities susceptible to promotion, which are considered beneficial for the social and economic development of the country and the protection of its natural environment.
The major advantages of registering a company in Thailand under BOI promotion include, but are not limited to: 100% foreign ownership (regardless it’s nationality), exemptions or reductions on corporate taxes, multiple work permits without the requirement of hiring four Thai employees, own a land by the company in connection with its business activity etc.
US-Thai Amity Treaty
The US-Thai Amity Treaty is a bilateral Agreement between US and Thailand, which provides especial benefits to American nationals who wish to establish a business in Thailand. Under this Treaty, those companies registered in Thailand which are owned by US nationals, whether corporate or individual persons, can be exempted from most of the foreign investment’s restrictions from the Foreign Business Act. That is why nowadays, the Amity Treaty is the preferred way for most American nationals, who are intended to set up a new company in Thailand.
The Treaty allows US nationals to form a company in Thailand by 100% US ownership, since according with the Treaty, at least the 51% of the company shares must be held by American nationals and the majority of directors with authorized signature must be American citizens. However, certain business activities, such as fiduciary, banking, land trade are still restricted for foreign investors, regardless of their nationality.
Contact Smart Legal Solutions to obtain the best protection to conduct your business in Thailand.
By: Mr. Julio Pingarrón
Founder of Smart Legal Solutions