The Foreign Business Act is the Thai law that principally regulates foreigners’ possibilities of running a business in Thailand. It was approved in 1999 and contains 46 Sections and Appendices. Under the temporary military government, the Act has been the object for suggested revision (read more under Thailand’s contemporary politics).
In Section 4, the term “foreigner” is defined. Somewhat simplified it can be said that a company is regarded as foreign — that is non Thai — in the case when half of the shares or more are owned by physical persons without Thai citizenship or by juristic persons without any registration in Thailand.
Section 8 states that foreigners are prohibited from running a business in Thailand. The regulation is divided into three different lists which can be found in the accompanying appendix:
- The restrictions on the First List are based on so called special reasons (though not stated) and concern such activities as media, farming, forestry, Buddha images, trade with Thai antiques or national historical objects and land trading.
- The Second List — which is divided into three sub groups — concern activities related to the security of the nation, the nation’s culture and tradition, and natural resources and the environment: the first group includes production of and trade with weapon and domestic transportation on land, in water and in the air. The second group includes production of and trade with Thai antiques, silk and gold and silver goods. However, some exceptions can be approved by the government in cases where specific reasons exist.
- The Third List concerns businesses where Thai people are not yet ready to compete with foreigners, implying that most areas that covers services, such as accounting, legal service business, broker business, advertising, guiding, hotel business, and wholesaling of e.g. food and beverages, are prohibited. Under certain circumstances, exceptions can be made through approval from the Foreign Business Committee.
Section 15 states that a foreign company can engage in activities under the Second List if Thai physical or juristic persons own at least 40 percent of the shares in the foreign company.
Sections 34—38 stipulate the fines for those foreigners who breach the regulations under the Foreign Business Act — in general imprisonment not exceeding three years, fines amounting to between 100,000 and 1,000,000 baht as well as fines of 10,000 to 50,000 baht per day throughout the period of violation.
