US ownership privileges in Thailand

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Published: 31st March 2011
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Thailand’s foreign ownership restrictions





Thailand’s Foreign Business Act (FBA) restricts non-Thai ownership of most types of business activities in Thailand to a maximum of 49%.





The maximum foreign ownership limit of 49% is applied to a huge array of business activities in Thailand, as prescribed in the three schedules of the FBA, as follows:





Schedule 1 Businesses – activities of media, agriculture, farming, primary industries, antique trading, trading in Buddha images, alms bowls and land. For this group of business activities, the FBA prohibits any foreign involvement (i.e. for this group of business activities, the foreign ownership limit is Nil).





Schedule 2 Businesses – activities in relation to national safety, security, domestic transport, arts, culture and tradition, and the extraction of Thai natural resources. These activities are subject to a maximum foreign ownership limit of 49% and can only be carried out with a higher level of foreign ownership with the permission of the Minister of Commerce and the approval of the Thai Parliamentary Cabinet.





Schedule 3 Businesses – activities involving all and any type of services activity in Thailand. Services activities are also subject to the 49% maximum foreign ownership limit, and can only be undertaken in Thailand with a higher level offoreign ownership with the permission of the Director-General of the Business Development Department with the approval of the Thailand Foreign Business Committee.





US ownership privileges





Whilst the foreign ownership restrictions under the FBA apply to all foreigners, US citizens and corporations have the privilege of establishing and operating their businesses in Thailand as majority US owned or wholly US owned.





That is, US citizens and US corporations are afforded the privilege of being able to override the 49% foreign ownership limit prescribed in the Thai FBA pursuant to the "Treaty of Amity and Economic Relations between the Kingdom of Thailand and the United States of America" (Treaty), which affords citizens and companiesof the USA and Thailand a privilege of national treatment with respect to business activities in the other’s country.





The Treaty however, does not override all the foreign ownership restrictions, and in relation to Thailand, it reserves the following six business activities exclusively to Thai nationals only:





Inland communications;


Inland transportation;


Fiduciary activities;


Banking or depository activities;


Land and natural resources; and


Trade in indigenous agricultural products.


Provided therefore a US corporation’s business activity in Thailand doesn’t involve any of the above six activities, a US corporation is able to override the foreign ownership limits prescribed in the Thai FBA.





Invoking US ownership privileges





The ownership privileges under the Treaty are not automatic, and a US citizen or corporation is required to invoke the Treaty privileges. This requires the US citizen or corporation to supply certain evidence documents to the Commercial Services Office of the Embassy of the United States in Thailand, which verifies the US origin of the citizen or the corporation, and issues a ‘certification document’.





The ‘certification document’ of the Commercial Services Office is then filed with the Thailand Ministry of Commerce to enable registration of the business entity in Thailand as a majority US owned or a wholly US owned entity.





RSM Thailand


http://financial-and-legal-thailand.com/category/business-articles/

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