03 October Updated Minimum Capital Provisions for Foreign Companies in Thailand
Thailand’s Ministry of Commerce, to fulfill various treaty and agreement obligations and for ease of enforcement, has abolished the previous three ministerial regulations on minimum capital for foreign companies, and issued a single new Ministerial Regulation re: Minimum Capital and the Period to Bring or Remit the Minimum Capital to Thailand B.E. 2562 (2019).
The new regulation took effect on August 28, 2019, and sets the timeline for bringing in, or remitting, the minimum capital to Thailand for foreign businesses using privileges under treaties and trade agreements. These currently include the following:
* U.S.-Thailand Treaty of Amity and Economic Relations
* Australia-Thailand Free Trade Agreement
* Japan-Thailand Economic Partnership Agreement
* ASEAN Framework Agreement on Services
* ASEAN Comprehensive Investment Agreement
Foreign-owned companies established under privileges granted by any of the above treaties or trade agreements must bring or remit the required minimum capital to Thailand by no later than August 29, 2029. This remittance period requirement also applies to those companies established before August 28, 2019, that have not yet brought or remitted the minimum capital to Thailand.
The minimum capital and payment schedules for foreign-owned companies not established under one of the treaties or trade agreements above remain unchanged. A foreign-owned company not subject to a foreign business license requirement must have minimum capital of THB 2 million, and the minimum capital must be fully paid up before the company commences business in Thailand. For foreign-owned companies that are subject to a foreign business license requirement, the necessary minimum capital is 25% of the average estimated expenses for three years of operation or THB 3 million, whichever is higher. Again, the minimum capital must be paid in full before the companies are allowed to commence business in Thailand.
Foreign individuals and branch offices of overseas companies are not required to make the full capital payment at once, and instead can bring in or remit their minimum capital in tranches: at least 25% of the minimum capital within three months, at least 50% of the minimum within one year, and thereafter at least 25% of the minimum capital per annum.
Foreigners are still required to submit evidence detailing the minimum capital remittance to the Department of Business Development, Ministry of Commerce, within 15 days of it being brought into or remitted to Thailand.
Any foreigner who operates a business in violation of these minimum capital requirements will be subject to a fine of THB 100,000–1 million, plus an additional fine at the daily rate of THB 10,000–50,000 throughout the period of the violation.
For more information on these developments, or on any aspect of doing business in Thailand, please contact Tilleke & Gibbins at [email protected] or +66 2056 5555.