The continuous economic development and growth of Thailand may be attributed to the government’s aggressive campaign to invite foreign investment in the country, and in the presence of an efficient workforce, workable business infrastructure and a strong support from the government. And like other industrial countries, Thailand employs different forms of corporate structures that have corresponding legal and tax implications.
The Thailand government has also identified specific business activities corresponding to the type of legal form a business entity will take. While the prospects of doing business in Thailand are promising, it is important that the process is started in the proper way, that is, with the help and assistance of a competent accounting and legal services firm based in the province where the business will be registered. This is the best way to go through with the setting up of business in Thailand, particularly Phuket.
Investors planning to set up a business in Phuket, Thailand must already know that the most commonly used form of business structure is the Thai Limited Company. Where the US calls it Limited Liability Company or LLC, Thailand calls it Thai Limited Company. This business structure involves a formalized incorporation process requiring two important documents – the Articles of Association and the Memorandum of Association. These two documents should be registered with the Thai Ministry of Commerce.
For a private Thai limited company, a minimum of seven shareholders or promoters is required to register the company. Except for some business activities where 51% of the company should be owned by Thai nationals, foreign nationals can own a private limited company 100%. Where ownership is divided between Thai nationals and foreigners, only a maximum of 49% shall be allowed to be owned by the investing foreigners.
As the easiest route to setting up a business in Phuket, the following procedures apply in the registration of a limited company in Phuket:
Step 1: Reservation of Corporate Name
Business investors should submit a list of proposed corporate name to Business Development Office (BDO) in the Ministry of Commerce, which should have been checked against the name reservation guidelines of the BDO. Validity of approved corporate name is 30 days without extension.
Step 2. Filing of Memorandum of Association
This document should be filed with the BDO under the reserved company name, the province where the company will be located, the business objectives, business capitalization, and all the names of the seven shareholders or promoters. Information on the business capitalization must include the number of shares and the par value of each share. The authorized capital must be issued.
Step 3: Convene a Statutory Meeting
When the capitalization and share structure has been determined, a statutory meeting will be called to present and approve the Articles of Incorporation and Bylaws, to elect the Board of Directors and to appoint an auditor. 25 percent of the par value of the subscribed share must be paid.
Step 4: Registration
Three months from the Statutory Meeting date, the directors must submit the application to establish the company. At this stage, company registration fees are paid.
Step 5: Tax Registration
Taxable companies should obtain a tax ID card and number for the company from the Revenue Department within 60 days of incorporation. The same tax number will appear on the VAT certificate and on the taxpayer ID card, which are normally obtained on the same date when the application is filed. The VAT certificate, however, will be mailed separately to the company’s registered address.
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