Alien business law in Thailand

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Please note: The Ministry of Commerce has proposed a Foreign Investment Law (FIL) that has been approved by the Cabinet and that is currently in the parliamentary process. When approved, it will replace the Alien Business Law.

A. Introduction
Aliens in Thailand derive their legal rights primarily from the domestic laws of Thailand. In general, aliens enjoy the same basic rights as Thai nationals.

Restrictions on alien ownership in commercial banks, insurance companies, commercial fishing, aviation business, commercial transportation, commodity export, mining and other enterprises exist under various laws. In addition, Thai participation will frequently be required in those activities seeking promotion from the BOI.

B. The Alien Business Law
The Alien Business Law of 1972 primarily serves to define and narrow the scope of foreign participation in Thai business activities.

An “alien” is defined as a natural or juristic person without Thai nationality and includes:
A juristic person with at least one-half of shares in its registered capital being held by aliens or juristic persons in which the capital contribution by aliens is valued at least one-half of its total capital
A juristic person with more than half of the number of its shareholders, partners or members being aliens, regardless of the amount of capital invested by aliens 
A limited partnership, or a registered ordinary partnership of which the managing partner is an alien

C. Businesses Subject to Regulation
Businesses that initiate activities that fall under categories A, B and C (listed below) of the Alien Business Law are subject to the limitations imposed by law. Activities outside of the apparent scope of the Alien Business Law include many manufacturing industries, leasing and lending activities. Some of these businesses may be subject to restrictions under other Thai laws, regulations and practices.

Businesses in Categories A and B are closed to aliens. Alien enterprises granted promotional privileges by the Board of Investment are permitted to engage in a Category B business.

While businesses in Category C remain open, Thai authorities grant permits to foreigners for work in these categories only when they are convinced that such new businesses could not be competently conducted by an organization in which the majority ownership is Thai.

Category A - Closed to Aliens
Agricultural Businesses
Rice farming
Salt farming, including manufacture but excluding rock salt mining
Commercial Businesses
Internal trade in local agricultural products
Land trade  
Brokerage or Agency
Auctioneering
Service Businesses
Accounting
Architecture
Advertising
Law
Barber, hairdressing, and beautification
Other Businesses
Building construction


  Category B - Closed to Aliens unless promoted by the Board of Investment
  Agricultural Businesses
Cultivation
Orchard farming
Animal husbandry, including silk worm raising 
Timbering 
Fishing
  Industrial and Handicraft Businesses
Rice milling 
Manufacture of flour from rice field crops
Manufacture of sugar
Manufacture of beverage, with and without alcoholic blending 
Manufacture of ice
Manufacture of drugs
Cold storage
Wood processing
Manufacture of product from gold, silver, niello, or bronze
Manufacture of casting of images of Buddha and manufacture of alms bowls
Manufacture of wood carvings
Manufacture of lacquerware
Manufacture of all types of matches 
Manufacture of lime, cement, or cement by-products
Stone blasting or crushing
Manufacture of plywood, wood veneer, chip board or hard board
Manufacture of garment or shoes except for export 
Printing press 
Newspaper publication
Silk combing, silk weaving or printing of pattern or silk pattern
Manufacture of products from silk, silk treads, silk cocoon or silk material
  Commercial Businesses 
Retailing of all products except those specified in Category C (Below)
Sale of mining products except those specified in Category C 
Sale of all types of food and beverage except those specified in Category C
Sale of antiques, period antiques or works of art
  Service Businesses
Tour agencies
Hotel business except hotel management
Business under the law on service-providing establishments
Photography, photographic developing and printing
Laundry 
Tailoring and dressmaking
  Other Businesses 
Internal transport by land, water, or air


Category C – Open to Aliens
Industrial and Handicraft Businesses
Manufacture of animal feeds
Extraction of vegetable oil
Manufacture of embroidering and knitting products including weaving, dyeing, and pattern printing 
Manufacture of glass containers including light bulbs
Manufacture of crockery
Manufacture of writing and printing paper
Rock salt mining
Mining
Commercial Businesses
Wholesales of all types of products within the country except those specified in Category A (Above) 
Export of all types of products  
Retailing machinery, equipment and tools 
Sale of food and beverage for the promotion of tourism
Brokerage or agency
Auctioneering
Service Businesses
Except for those specified in Category A and Category B
Other Businesses
Other constructions except those specified in Category A

Many American-owned enterprises have invoked the provisions of the Treaty of Amity and Economic Relations between Thailand and the United States to claim exemption from the law. The treaty requires national treatment be granted to persons of each country by the other country. To receive protection, Americans must register under the treaty. Although on paper the treaty appears self-executing, the Thai Government will not recognize the American applicant until such applicant proves its American nationality.

D. Permits
An alien desiring to engage in any business specified in Category C as listed above must submit an application to the Department of Commercial Registration and must receive a permit - an Alien Business License - prior to beginning business activities. Permits will be valid for a fixed period and will be subject to conditions therein stated.

Ministerial Regulations under Section 8 of the Law and recent announcements of the Department established the following standard conditions for companies applying for Alien Business permits: 
The total debt financing used in the business shall not exceed seven times the capital owned by the shareholders, partners and proprietors of the business
Money remitted from abroad shall not be less than the amount declared as capital investment to be made in Thailand
The number of Thai and alien directors shall be in proportion to capital held
At least one person responsible for operating the business must have his domicile in the Kingdom
Upon expiration of the permit, the portion of the capital of the shareholders, partners or business proprietors owned by Thai nationals shall not be less than that owned by aliens.


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