Thailand Foreign Business Act: What Foreigners Cannot Do

The Foreign Business Act B.E. 2542 (1999) is Thailand's primary law restricting foreign participation in certain business activities. For anyone planning to start or invest in a business in Thailand, understanding this law is not optional. It determines what you can legally do, what requires special permission, and what is completely off-limits.

This guide explains the three lists of restricted activities, the legal exceptions that allow foreign participation, and the severe penalties for violations including the increasingly common prosecution of nominee structures.

Who Is a "Foreigner" Under the FBA?

The FBA defines "foreigner" (or "alien") more broadly than you might expect. You are considered a foreigner if you are:

A natural person who is not of Thai nationality
A juristic person not registered in Thailand
A Thai-registered juristic person where 50% or more of capital is held by foreign natural persons or foreign juristic persons
A Thai limited partnership or registered ordinary partnership where the managing partner or manager is a foreigner

This means a Thai company with 51% Thai shareholders and 49% foreign shareholders is treated as a Thai company under the FBA. However, authorities increasingly scrutinize whether those Thai shareholders are genuine investors or merely nominees.

The Three Lists of Restricted Activities

The FBA organizes restricted business activities into three lists, each with different levels of restriction and different pathways (if any) for foreign participation.

List 1: Absolutely Prohibited No Exceptions

These activities are completely prohibited for foreigners. There is no license, no exception, and no legal pathway for foreign participation.

Newspaper business: Publishing, editing, or distributing newspapers
Radio and television broadcasting: Operating radio or TV stations
Rice farming and crop cultivation: Growing rice, field crops, and horticulture (except where exempted by ministerial regulations)
Animal husbandry: Raising livestock
Forestry and timber conversion: Natural forest exploitation
Fishing: Marine fishing in Thai waters
Extraction of Thai medicinal herbs: Harvesting traditional Thai medicinal plants
Trading and auctioning Thai antiques: Dealing in national historical objects or Thai folk art
Land trading: Buying and selling land (this overlaps with Land Code restrictions)

List 2: National Security & Safety Cabinet Approval Required

These activities require Cabinet approval for foreign participation due to national security, safety, or cultural significance. In practice, approval is rarely granted.

Weapons and ammunition production: Manufacturing or selling weapons, explosives, gunpowder, or war equipment
Domestic land, water, and air transportation: Operating transport services within Thailand
Trading domestic agricultural products: Domestic wholesale of rice, sugar, certain crops not listed in List 1
Auctioning: General auctioneering (except for international auctions)
Mining: Extracting minerals under the Mineral Act (with specific exemptions)
Timber processing: Processing timber from protected plantations

List 3: Thai Competitive Advantage FBL or Exception Required

These activities are restricted to preserve Thai competitive advantage but can be performed by foreigners with a Foreign Business License (FBL), BOI promotion, or treaty exception.

Accounting services: Including bookkeeping and auditing
Legal services: Practicing Thai law (note: foreign lawyers can advise on foreign law)
Architectural services: Designing buildings and structures
Engineering services: Civil, mechanical, electrical engineering
Construction: Building construction (with capital thresholds)
Brokerage and agency services: Acting as middleman in various transactions
Retail: Selling goods directly to consumers (with minimum capital requirements)
Wholesale: Selling goods to retailers (with minimum capital thresholds)
Advertising: Creating and placing advertisements
Hotel business: Operating hotels (except hotel management)
Tour guide services: Guiding tourists
Restaurant and food services: Operating restaurants (with some exceptions)
Other services: Various consulting, management, and professional services

Legal Exceptions: How Foreigners CAN Operate

Despite the restrictions, there are legitimate legal pathways for foreigners to engage in many business activities. These are not loopholes; they are specific exemptions built into Thai law.

BOI Promotion (Board of Investment)

The Board of Investment promotes certain industries considered beneficial to Thailand's economy. BOI-promoted companies can receive:

Permission to operate restricted List 3 businesses
Permission for majority (or 100%) foreign ownership
Permission to own land for promoted activities
Tax holidays and import duty exemptions
Work permit facilitation for foreign employees

Key Point: BOI promotion is activity-specific. You must engage in the specific promoted activity and meet investment thresholds to maintain benefits.

Treaty of Amity (US Citizens Only)

The US-Thailand Treaty of Amity (1966) grants American citizens and US-majority companies special privileges:

Permission to operate most List 3 businesses without FBL
Permission for majority American ownership in most sectors
National treatment (same treatment as Thai companies)

Exclusions: The treaty does NOT exempt List 1 activities, communications, transport, fiduciary functions, banking, or exploitation of land or natural resources.

Foreign Business License (FBL)

For List 3 activities not covered by BOI or treaty, foreigners can apply for a Foreign Business License from the Department of Business Development:

Application reviewed by Foreign Business Committee
Minimum registered capital requirements (typically THB 3 million per activity)
Must demonstrate benefit to Thailand (technology transfer, employment, etc.)
Processing time: 60-90 days (can be longer)

Reality Check: FBL applications are often rejected, especially for retail, services, and activities where Thai companies already compete effectively.

Criminal Penalties for FBA Violations

The FBA contains severe criminal penalties for violations. These are not theoretical; Thai authorities actively prosecute violations, especially nominee arrangements.

Section	Offense	Penalty
Section 36	Thai person acting as nominee (aiding foreigner to circumvent FBA)	Up to 3 years imprisonment AND/OR fine up to THB 1,000,000, plus daily fine up to THB 50,000 for continued violation
Section 37	Foreigner operating restricted business without proper license	Up to 3 years imprisonment AND/OR fine THB 100,000 to THB 1,000,000, plus court-ordered business cessation or dissolution
Section 41	Director/partner/representative of violating company	Up to 3 years imprisonment AND/OR fine THB 100,000 to THB 1,000,000
Section 38	Violating court order to cease business	Daily fine THB 10,000 to THB 50,000

Section 36: The Anti-Nominee Provision

Section 36 specifically targets nominee arrangements. It states that Thai nationals who assist foreigners to engage in restricted business by:

Holding shares on behalf of foreigners
Acting as nominee shareholders to enable foreign business control
Helping foreigners circumvent FBA requirements

face the same criminal penalties as the foreigner illegally operating the business. This is why both the foreigner AND the Thai nominees are prosecuted in crackdown cases.

Real Enforcement: 2024-2025 Cases

Phuket Law Firm Network - September 2024

The DSI filed criminal charges against 23 defendants (Thai nationals, foreigners, and corporate entities) who orchestrated nominee arrangements for approximately 60 companies. The law and accounting firm helped establish shell companies with Thai nominee shareholders to enable foreign business operations.

Sentences: Initial 10-year terms reduced to 5 years (suspended for 2 years), 1-year probation, THB 200,000 fine per defendant, company dissolution orders.

23 Convictions

Operation Nominee Sweep - May 2024

The largest single enforcement operation targeted Russian-owned businesses in Phuket. Investigators found that Russian nationals registered over 1,600 companies in Phuket (versus approximately 30 per year historically) using Thai nominees.

Results: 231 arrests, 98 foreign suspects, 37 Thai nominees, 96 companies charged, THB 1.5 billion in assets seized.

231 Arrests

Ongoing 2025 Inspections

Thai authorities announced plans to inspect 46,918 companies across seven provinces (Bangkok, Phuket, Chon Buri, Chiang Mai, Krabi, Surat Thani, Prachuap Khiri Khan). Priority targets are approximately 1,000 companies with foreign shareholdings between 0.001% and 49.99% in tourism, real estate, hotels, and e-commerce sectors.

46,918 Companies Targeted

How Authorities Detect Violations

The Department of Business Development (DBD) and Department of Special Investigation (DSI) use multiple methods to identify illegal structures:

Funding Trail Analysis

Do Thai shareholders have verifiable income to fund their share subscriptions?
Can Thai shareholders explain where they got the money to invest?
Are dividends paid proportionally to Thai shareholders, or do they flow back to foreigners?

Control Signal Detection

Who actually signs contracts and authorizes payments?
Whose email address is used for business correspondence?
Who attends board meetings and sets company policy?

AI-Powered Database Cross-Referencing

Same Thai individuals appearing as shareholders in multiple unrelated companies
Discrepancies between DBD filings and tax returns
Immigration records showing foreigners on tourist visas managing businesses
Bank records showing payment patterns inconsistent with ownership structure

The "2 of 3 Directors" Myth

A persistent myth claims that having 2 Thai directors out of 3 total makes a company "Thai." This is false. The FBA looks at share ownership, not directorship. A company with 3 Thai directors but 51% foreign shareholding is still classified as a "foreign" company under the FBA. Directorship composition is irrelevant to FBA classification.

Proposed Legal Reforms

Thai lawmakers are considering reforms that would strengthen enforcement and increase penalties:

Anti-Money Laundering Act Amendments

Passed legislative review in August 2024, these amendments would:

Classify nominee arrangements as money laundering predicate offenses
Allow AMLO to seize assets from both offenders and facilitators
Establish a 15-year prescription period (allowing prosecution of old violations)

Foreign Business Act Amendments

Proposed changes would:

Redefine "foreigner" to include those exercising control through Thai representatives
Create clear statutory definitions for "nominee" and "nominee transaction"
Close loopholes allowing indirect foreign ownership

What You Should Do

If you are considering starting or investing in a Thai business:

Determine if your activity is restricted: Check all three lists carefully. Many common business activities fall under List 3.
Explore legal exceptions: BOI promotion, Treaty of Amity (US citizens), or FBL application may provide a legal pathway.
Do not rely on nominee structures: The 2024-2025 crackdown demonstrates these arrangements are actively prosecuted with severe consequences.
Consult a licensed Thai lawyer: Proper structuring requires professional legal advice before incorporation.
Maintain compliance: Even legal structures require ongoing compliance with reporting, capital, and operational requirements.