Thailand is undoubtedly one of the most popular business destinations/centers in Asia today. This can be attributed to a number of things the most notable revolving around Thailand’s strategic location and the country’s favorable business climate. For instance, Thailand is ranked 18th in the world according to the ease of doing business. Thailand is also centrally located in Asia near trading giants like China. Thailand also stands out in regards to markets. The country’s population of over 66 million people provides an adequate market for goods and services locally. When you consider the neighboring markets, it’s easy to see why Thailand is one of the best places for doing business in Asia. Having understood why Thailand is favorable to business, let’s focus on other aspects of doing business in Thailand.
In Thailand, Foreign participation in the business is governed under the Foreign Business Act, which has all the information foreigners need to successfully set up businesses in Thailand. The Act lays out information like; the types of businesses foreigners can own as well as the restrictions and regulations behind foreign owned businesses. Although the Thai government allows foreigners to participate in business freely, there are some restrictions on insurance, real estate and finance related businesses. Foreign participation in such businesses is guided by Foreign Business Laws.
Thailand offers a number of investment and business incentives to anyone interested in setting up a business in Thailand. The incentives are for locals and foreigners. The majority of the business incentives Thailand offers are under the BOI (Board of Investment) which is in accordance with the Investment Promotion ACT (B.E. 2550) legal framework of 1977. Thailand’s business incentives are also under the IEA (Industrial Estate Authority) Act (B.E. 2522) of 1979 and the Petroleum Act (B.E. 2514) of 1971 among other statutes.
Under BOI incentives, the Thailand government offers incentives like state guarantees, business protection, and the relaxation of restrictions on foreign participation, taxation, incentives and special investment zones. In regards to state guarantees, the Thailand government offers guarantees against nationalization, price controls, competition from state monopolies and new state enterprises, etc. In regards to business protection, the Thai government offers business protection such as; executing bans on unfair competition, tax relief, impositions on surcharges on imports among other measures when deemed appropriate.
In regards to relaxation of restrictions on foreign owned businesses, the Thai government allows promoted companies the right to own land, hire foreigners, and remit foreign currency, etc. Some of the tax incentives the Thai government offers to encourage doing business in Thailand include; corporate income tax exemptions between 3 to 8 years, reduction or exemption of import duty on raw materials, imported machines among other components necessary for startups.
The Thailand government also offers special investment zones where business can participate in and enjoy incentives like; 50% corporate tax reductions over 5 years after tax exemption periods expire. Other special investment promotion zone incentives include; reduction in transportation, water and electricity costs. The Thailand government also offers a 25% infrastructure investment cost deduction. The Petroleum Act offers similar incentives to those offered by the BOI i.e. protection against nationalization, permission to own land, tax exemptions, etc. It is however important to note that the Petroleum Act is concerned with petroleum investments done in Thailand.
In summary, the above information summarizes the most important things potential business owners (both foreigners and locals) should know before setting up businesses in Thailand. Although the most important information has been covered above in regards to foreign participation and incentives, it is important to note that there is more than what is highlighted above. This article should therefore be used as a basis for further research.