How to Choose the Right Legal Form for Your Business in Thailand

Thailand is a gateway to Southeast Asia’s vibrant economy, with excellent infrastructure, a skilled workforce, and government incentives aimed at attracting foreign investment. But before diving into this exciting market, entrepreneurs; both local and foreign—must take a strategic first step: choosing the right legal form for their business.

The legal structure you choose affects not only your company registration in Thailand but also how you’re taxed, how much control you have, and how much liability you bear. Whether you’re planning a small service-based firm or a large import-export business, selecting the proper structure is essential.

This guide breaks down the main types of legal entities available in Thailand and helps you decide which one best suits your business needs.

Why Legal Form Matters

Selecting the correct legal entity when setting up a company in Thailand has a direct impact on:

• Ownership rights and foreign equity limits
• Liability and asset protection
• Access to work permits and visas
• Tax responsibilities and audit requirements
• Ability to raise capital and grow the business

Making the wrong choice can lead to compliance issues, higher taxes, and restrictions on ownership. That’s why it’s important to understand your options before starting the process of company registration in Thailand.

Main Business Structures in Thailand

1. Sole Proprietorship

A sole proprietorship is owned by a single individual and is suitable for very small, low-risk businesses.

• Best for: Thai nationals running a small business
• Ownership: 100% Thai
• Liability: Unlimited

Pros:

• Easy and inexpensive to register
• Full control by the owner

Cons:

• The owner bears all risks and debts
• Not suitable for foreign investors
• Limited growth and credibility

2. Partnership

Thailand recognizes three types of partnerships:

• Unregistered Ordinary Partnership
• Registered Ordinary Partnership
• Limited Partnership

Foreigners can participate in partnerships under certain conditions, particularly in limited partnerships, where liability can be limited for some partners.

Pros:

• Shared responsibilities and resources
• Simple tax regime for smaller partnerships

Cons:

• General partners may have unlimited liability
• Less flexible than companies for foreign ownership

3. Thai Limited Company (Co., Ltd)

This is the most common structure used for company registration in Thailand, including by foreign investors.

• Best for: Small to medium-sized businesses, joint ventures
• Ownership: Requires at least 3 shareholders; foreign ownership limited to 49% in most cases (unless exempted)
• Liability: Limited to capital contributions

Pros:

• Suitable for foreign investors via Thai nominee structures or BOI promotion
• Separate legal entity with limited liability
• Can employ foreign staff and apply for work permits

Cons:

• Foreign ownership is typically capped at 49% unless exceptions apply
• Requires compliance with corporate governance and tax filings

4. Foreign-Owned Limited Company (via BOI or Treaty)

If you’re a foreign investor seeking majority or full ownership, there are legal pathways:

• Board of Investment (BOI) Promotion: Offers incentives, 100% ownership, and tax exemptions in promoted industries.
• U.S. Treaty of Amity: Allows U.S. citizens to own 100% of a Thai company.

Best for: Foreign tech, manufacturing, or export-focused businesses

Pros:

• Full or majority foreign ownership
• Tax and non-tax incentives
• Easier work permit and visa processing

Cons:

• BOI approval process can be complex and time-consuming
• Restrictions apply to non-promoted sectors

5. Representative Office

A non-trading office established to represent a foreign company in Thailand.

• Activities: Market research, quality control, sourcing—not direct sales
• Ownership: 100% foreign-owned
• Liability: The Parent company bears full responsibility

Pros:

• No corporate income tax (if no income in Thailand)
• Establishes local presence without commercial risk

Cons:

• Cannot generate revenue
• Annual reporting required

6. Branch Office

A branch office is a direct extension of a foreign parent company and can generate income in Thailand.

• Best for: International businesses expanding to Thailand
• Ownership: 100% foreign
• Taxed: Same as Thai companies

Pros:

• Can engage in revenue-generating activities
• Foreign parent maintains control

Cons:

• Requires a Foreign Business License
• Regulatory compliance can be complex

Also Read: Documents Needed to Start a Business in St. Kitts and Nevis

Legal Restrictions on Foreign Ownership

Thailand’s Foreign Business Act (FBA) restricts foreign ownership in many sectors. Without special approval, foreigners can own no more than 49% of a Thai company operating in restricted industries (e.g., retail, construction, services).

To exceed this cap, companies may:

• Apply for BOI promotion
• Use treaty-based structures
• Operate in unrestricted industries

Choosing the Right Legal Form: Key Considerations

1. Ownership Structure

Are you a Thai national, a joint venture, or a 100% foreign entity? If you’re a foreigner, your choices will be influenced by the Foreign Business Act unless you qualify for exemptions.

2. Business Activity

Different structures are suited to different business types. For instance, a rep office is fine for research, but you’ll need a limited company for trading or service provision.

3. Liability Exposure

To protect personal assets, avoid sole proprietorships and general partnerships. A limited company or branch office offers limited liability.

4. Capital Requirements

BOI-promoted projects and branch offices may require higher registered capital (usually at least THB 2 million per foreign employee).

5. Visa and Work Permits

Only certain company types can sponsor foreign staff. A Thai limited company (with proper capitalization and revenue) or a BOI-promoted company can help secure visas and work permits.

Steps for Company Registration in Thailand

1. Reserve a company name with the Department of Business Development (DBD)
2. Prepare MOA (Memorandum of Association) and register with at least 3 shareholders
3. Register the company at the DBD with required documents
4. Obtain tax ID and VAT registration (if applicable)
5. Open a corporate bank account
6. Apply for business licenses and work permits

The entire process generally takes 2–4 weeks, but more time may be needed for BOI or FBL approvals.

Also Read: Requirements to Start a Business in Germany for Non-residents

Conclusion

Thailand offers a range of legal structures to suit different business types and investor profiles. Whether you are a local entrepreneur or a foreign business expanding into the Thai market, your choice of legal form will influence every aspect of your operations—from ownership and liability to taxation and staff hiring.

For foreign investors, navigating company registration in Thailand for foreign entities can be complex, especially due to restrictions under the Foreign Business Act. However, with proper planning, legal guidance, and possibly BOI support, foreign entrepreneurs can thrive in Thailand’s dynamic economy.

Always consult with local legal and accounting professionals before making your final decision on setting up a company in Thailand.

Frequently Asked Questions

1. Can a foreigner own 100% of a company in Thailand?

Yes, but only under specific conditions such as BOI promotion, U.S. Treaty of Amity (for Americans), or if the company operates in an unrestricted industry. Otherwise, the default foreign ownership cap is 49%.

2. How long does it take to complete company registration in Thailand?

Standard company registration takes about 2 to 4 weeks. If you’re applying for BOI promotion or a Foreign Business License, it may take longer.

3. What is the minimum capital requirement for company registration in Thailand?

The minimum capital for a Thai limited company is typically THB 2 million if you plan to hire foreign staff. Otherwise, it can be as low as THB 1 million, depending on the business activity.