Includes steps involved in establishing a local office.
The primary organizational structures for commercial enterprises are sole proprietorships, partnerships, limited liability companies, joint ventures, or foreign branch operations. The organizational structure is similar in nature to those found in the United States; however, limited liability companies are more often privately held rather than public corporations. The majority of foreign corporations operating in Thailand do so through private limited liability companies.
There are three major forms of partnership in Thailand:
Unregistered ordinary partnership
Registered ordinary partnership
As in the United States, each form of partnership has different levels of liability for partners and different tax consequences for the partners and partnerships. If a company chooses to be a formal organization, it may decide to form a private limited company or a public limited company. Generally, a private limited company is similar to a U.S. privately held corporation, while the latter may offer shares to the public.
Thailand also offers the possibility of establishing a representative or a regional office for companies engaged in non-revenue generating activities. Typically these offices engage in market research and assessment, provide quality control and purchasing services to a head foreign office, or provide warranty support services for products sold by the company’s head office to the Thai market.
In any process of establishing an office, individuals and companies are strongly advised to consult with legal or other professional advisors during the beginning stages of business planning to ensure compliance with all applicable laws and regulations and selection of the optimal business structure for their activities in Thailand. American firms should also ensure there are no restrictions on foreign entity participation in a particular sector, whether there are import licenses or other special licenses required, and identify special incentives that may be available from Thai organizations such as the Board of Investment (BOI) and the Industrial Estate Authority (IEAT).
The U.S.-Thai Treaty of Amity and Economic Relations of 1833, commonly referred to as the Treaty of Amity, allows U.S. majority-owned businesses or branch offices, incorporated in Thailand, to operate in business sectors generally prohibited for foreign firms according to the Alien Business Law. However, there are still government restrictions in the following areas: communications, transport, banking, exploitation of land and natural resources, and the trade of domestic agricultural products. To register under the Treaty of Amity, a U.S. company should obtain documents from the Commercial Section at the U.S. Embassy in Bangkok, and file an application with the Department of Commercial Registration at the Thai Ministry of Commerce.