1. Individual Investors

Due to the restriction on foreign ownership of land in Thailand, individuals are generally restricted to owning condominium units within the quota set aside allowed for foreign ownership, and in addition, foreigners are permitted to leases on real estate, minority positions in limited companies and other real estate rights such as Usufructs, rights of habitation, and superficies. Further, subject to conditions, non-Thai nationals can be the creditors of a mortgage of Thailand land. Further, Thai law allows certain inheritance rights for non-Thai nationals of Thai families to inherit land in Thailand.

1. Commercial Investors

Commercial investors are normally relegated to being minority shareholders in limited companies holding land in Thailand. There are also provisions that allow for temporary foreign ownership of land pursuant to Thailand Board of Investment promoted companies.

In general, commercial investors in Thailand focus on the larger markets of Bangkok, Pattaya, Huahin, Phuket and Koh Samui. In recent years there has been rapid development of condominiums in the areas surrounding Bangkok’s MRT subway and BTS sky train stations.

• Foreign ownership under treaty provision

Section 86 of the Thailand land code Act states that “foreigners may acquire land by virtue of the provisions of a treaty giving the right to own immovable properties and subject to the provisions of this code”. However, there is no current treaty with any foreign countries which allows for foreigners to acquire ownership of land in Thailand since the last treaty that allows for foreign ownership was terminated in 1970. Violation of section 86 is punishable with a fine not exceeding 20,000 THB or an imprisonment not exceeding 2 years, or both as prescribed by law under section 111 of the Land Code Act.

• Foreign land ownership exemptions

Section 96 bis of the Thailand Land Code Amendment Act (1999) prescribes that foreigners can own a land not exceeding 1 rai or 1600 square meters for residential purposes through the Board of Investment or BOI. Thailand BOI requires a 40 million THB investment into Thailand under specific assets or government bonds that will help boost the Thai economy.  The BOI may also grant foreigners with an investment of at least 1 million THB in Thailand for no minimum prescribed period of time to buy up to 20 rai of land for residential purposes for employees. However, prior to obtaining any such grant, strict conditions on specified areas may be imposed and additionally requires approval of the Minister of Interior.

• Foreign ownership under Thai company name

Foreigners under a Thai company with at least 51% Thai shareholders and 49% foreign holders lawfully registered as a Thai limited company or a Thai partnership, may own a land in Thailand. Foreigners holding executive and director positions are entitled to buy up to 20 rai for employees’ residential purposes.

• Foreign land ownership through marriage with a Thai national

The Thailand Land Code Amendment Act of 1999 allows a foreigner married to a Thai spouse to legally own a land. However, the law requires that the land be registered under a Thai spouse. A foreigner spouse is required to sign a declaration that the land purchase was funded by the Thai national and not the foreigner.

The most commonly used types of Company registrations in Thailand take on the following forms:

• Thailand Sole Proprietorship

A sole proprietorship is a solo-owned business by a single natural person.Thailand sole proprietorship is restricted to foreign nationals living in Thailand.

• Thailand Partnerships

Thailand partnerships are contracts for an organization of two or more persons engaged in a business venture in which the profits and losses are shared proportionally. There are different types of business partnerships in Thailand. The legal responsibilities attached to the partners vary in the different types of partnerships although the general rules governing all types of Thailand partnerships are similar.

1. Unregistered Ordinary Partnerships

Business partners in an ordinary partnership in Thailand are equally liable for all obligations and debts of the partnership. This type of partnership is not required to register with the Thai Commercial Registration Office (CRD) so that the partnership is taxed at the rate applicable to individual partners.

2. Registered Ordinary Partnerships

A registered ordinary partnership in Thailand is registered with the Thai Commercial Registration Office. This type of partnership is taxed as juristic person. Registered ordinary partnerships are required by Thai law to submit an annual financial report and pay corporate income taxes. However, incomes may also be reported on individual partner’s tax returns.

3. Limited  Partnerships

A limited partnership in Thailand is required to register with the Thai Commercial Registration Office. Limited partnerships are taxed as juristic person and required to submit a financial report every 12 months.  The partners in a limited partnership are classified into two:

General partners– this type of partners in a limited partnership are financers. General partners are liable to the partnerships’ financial obligations and have full authority to manage the business.

Limited partners – a limited partner‘s liability is limited to the amount of money or valuable assets invested in the business.  Limited partners do not have the authority to manage the business.

• Thailand Limited Companies

Limited companies are probably the most commonly used business structure in Thailand particularly for non-Thais.  Limited private companies in Thailand are required to register a Memorandum of Association and Articles of Association. A Thailand limited private company must at least have 3 shareholders. A limited private company with a non-Thai national with more than 49% shares of the company is generally subject to the restrictions of the Foreign Business Act.

Read More:  Company Registration Thailand

Thailand foreign business restrictions

The following data are types of industries restricted to foreign investors to conduct in Thailand as prescribed in the Foreign Business Act:

List 1:  List of businesses that are exclusive to Thai nationals

• Newspaper publication, radio broadcasting and TV station
• Land trading
• Trading and auctioning of Thai antiques or Thai historical objects

List 2:  This list of businesses is grouped into 3 categories and is permitted to foreign investors under special conditions.

Category 1 – Business affecting national safety or security businesses

• Production, selling, repairing of firearms, gun powder and explosives
• Production, selling, repairing of ships, aircrafts or military vehicles
• Domestic land, waterway or air transportation, including domestic airline business.

Category 2- Business affecting arts and cultures, traditional and folk handicrafts

•  Trading of antiques or handicrafts
•  Production of Thai musical instruments
• Production of goldware, silverware, nielloware, bronzeware or lacquerware

Category 3- Business affecting natural resources or environment

• Manufacturing of sugar from sugarcane
• Mining, including stone blasting or crushing
• Wood fabrication for furniture and utensil production.

List 3 – List of prohibited international competitive business which Thai nationals are still unequipped to compete with.

• Production of plywood, veneer board, chipboard or hardboard
• Production of lime
• Engineering service business
• Architecture service business
• Legal and accounting service business
• Tour agency
• Selling food or beverages

Obtaining a Thailand Foreign Business License

Thailand companies with majority of foreign ownership require obtaining a foreign business license from the Foreign Licensing Department of the Ministry of Commerce. The process is often facilitated when Thai BOI approval is obtained. A foreign business license may potentially grant non-Thai nationals 100 % ownership for types of businesses under certain categories of otherwise prohibited businesses. Factors affecting the approval and issuance of a Thai foreign business license may include the impact on Thai employment, transfer of technology, benefits to the public and the ability of Thai nationals to perform the activity, among others. Generally, the application process for a Thailand foreign business license is very lengthy and complex. It may take a minimum of four months for foreign companies to receive a decision on its application.

The US- Thai Amity Treaty provides US citizens special rights to run businesses in Thailand and also provides Thai citizens special privileges to run businesses in the USA. The treaty allows US citizens in Thailand to hold a majority of shares in companies engaging in certain business enterprises in which majority ownership is generally restricted to Thai citizens under the Foreign Business Act.

Companies with the following requirements may qualify to register under the Treaty of Amity:

• At least 51% of the company shares must be own by American citizens.
• In general, the company directors must be American citizens.

Treaty of Amity business capital requirements:

• Businesses not restricted under the Foreign Business Act must have the capital requirement of 2 million Baht for a Treaty-protected company.
• Businesses that are required to obtain a Foreign Business License under the Foreign Business Act must have the minimum capital requirement of 3 million Baht for each business activity.

The primary benefit of the Amity Treaty to US citizens in Thailand is to manage and own companies in Thailand without needing majority Thai shareholders. In other words, foreigners who are not US citizens would normally require a Thai partner holding 50% or more of the shares in the company to legally conduct business in Thailand.

The Amity Treaty provides Americans an exception to the “Thai partner” requirement that is not available to other nationalities. However, the right is limited and does not apply to all types of business activities.