If you own a business in Thailand, you are usually categorized into:
- Partnership; or
- Limited company
Ordinary and Limited Liability Partnerships – How They Operate
In Thailand, a partnership may be limited or ordinary. Two or more people act as co-owners of a Thai company. A limited company is created by separating the capital investments equally. The obligations of each shareholder, in turn, is limited to the shares each person holds. A registration fee is paid that is 1% of the capital, which ranges between 1,000 and 5,000 THB.
Ordinary Partnerships – Registration is Not Mandatory
An ordinary partnership does not need to register in the country’s Commercial Registration Office. However, it is a good idea to do so if you wish to be taxed as a juristic person, or be recognized, legally, as have certain duties and rights. Non-juristic persons do not hold the legal status to be a shareholder in a company.
If you own an ordinary partnership that is registered, you must pay corporate income taxes and present an annual financial statement. Otherwise, the company’s taxes will pass through to the partners’ individual tax returns.
Limited Liability Partnerships
Besides an ordinary partnership, partners may also form a limited liability partnership (LLP). The general partner(s) manage the business while a limited partner or partners contribute the capital. Thai LLPs must register with the Commercial Registration Office. They are taxed as juristic persons or corporate entities. An LLP must present a financial statement yearly.
Forming a Limited Company
In Thailand, you must follow the mandates established by the Ministry of Commerce (MOC) when you form a business. Of the corporate entities, most business people choose to establish a limited company. The limited company must be created by at least three members in the company. If you set up a limited company in Thailand and are based in another country, your minimum capital requirement falls at two million baht.
Limited companies in Thailand must adhere to stringent financial requirements. The financial statements must be approved and certified by an auditor who has been approved by the company’s shareholders. While larger established limited companies must file documents with the Revenue Department and Commercial Registration Department, small companies of this type may be allowed to waive this requirement.
Primary Businesses That Should be Registered in Thailand
If you wish to invest in Thai business and register it, you can do so if you have established yourself as:
a limited company, which, again, requires that three shareholders make a specific minimum investment;
a partnership, normally overseen by at least two managers or owners; or
a joint venture, which is created by legal entities or a group of people
How to Register a Limited Company
If you own a limited company, or set your business up in this way, you can establish it as a public company or private business. Your company will be regulated by Thailand’s Civil and Commercial Code if it is private, or be legislated by Public Company Act if your limited company goes public.
Foreign Investment and Registration
If you are a foreign investor in a limited company in Thailand, you cannot fully own the business, as you can only possess 49% of the company’s shares. Once you decide on the type of entity you wish to form, registration may begin. If you wish to incorporate your business, you need to propose a company name by contacting the Department of Business Development. This department is part of the Ministry of Commerce (MOC).
To register your company, you also need to set up a corporate bank account and receive a seal for your company. Moreover, you will need to get approval from the Partnerships and Companies Registration Office for statutory paperwork.
Be prepared, as this process can be rather complex and requires help from a specialist in registration. The business will also need to register with tax authorities to handle the payment for the VAT or value-added tax.
All businesses in Thailand must be registered with the Department of Business Development and the country’s Revenue Department for taxation purposes.
If you need the assistance of a corporate lawyer in Thailand, please contact us.