When You Need a Foreign Business License
The Foreign Business Act (FBA) B.E. 2542 (1999) restricts foreigners from operating certain types of businesses in Thailand. A "foreigner" under the FBA includes:
- Natural persons who are not Thai nationals
- Companies not registered in Thailand
- Thai-registered companies where foreigners hold 50% or more of shares
- Thai limited partnerships where foreigners contribute 50% or more of capital
Restricted activities are divided into three lists:
| List | Description | FBL Available? |
|---|---|---|
| List 1 | Prohibited activities (newspapers, rice farming, land trading, forestry) | No - Absolute prohibition |
| List 2 | Activities related to national safety/security, arts/culture, natural resources (requires Cabinet approval) | Cabinet Approval Required |
| List 3 | Activities where Thai nationals are not yet ready to compete (most services, retail, wholesale) | Yes - FBL Application |
List 3 Activities - Most Common FBL Applications
List 3 includes activities that Thai nationals are considered not yet ready to compete with foreigners, including:
- Accounting, legal, architectural, and engineering services
- Advertising services
- Hotel operation (except management)
- Retail of goods with capitalization under 100M THB
- Wholesale of goods with capitalization under 100M THB
- Restaurants, cafes, and food service
- Brokerage and agency services
- Construction (except specialized categories)
Why Not Use Nominees?
Using Thai nominees to circumvent FBA restrictions is a criminal offense under FBA Section 36-37, punishable by up to 3 years imprisonment and fines up to 1 million THB. The 2024-2025 enforcement wave has resulted in 852+ prosecutions. An FBL is the legal alternative.
Application Process Step-by-Step
The FBL application is submitted to the Department of Business Development (DBD) under the Ministry of Commerce. The process involves several stages:
-
1
Pre-Application Consultation
Meet with legal counsel to confirm your business activity falls under List 3, determine required documentation, and assess likelihood of approval. Some activities may alternatively qualify for BOI promotion.
-
2
Company Registration
Register your Thai company with the DBD. Foreign majority ownership is permitted, but the company must meet minimum capital requirements (typically 2M THB per work permit, with higher thresholds for FBL activities).
-
3
Document Preparation
Compile all required documentation including business plan, financial projections, technology transfer plans (if applicable), and Thai employment commitments. All foreign documents require apostille/legalization and certified Thai translation.
-
4
Submit FBL Application
File the application at the DBD office in Bangkok or provincial Commercial Registration offices. Pay the application fee. The DBD will review for completeness and may request additional information.
-
5
Foreign Business Committee Review
The application is submitted to the Foreign Business Committee for evaluation. The committee assesses the application against approval criteria and may request clarifications or additional documentation.
-
6
Decision and Notification
Upon approval, the DBD issues the Foreign Business License. If rejected, written reasons are provided and you may appeal or reapply with modifications.
-
7
Commence Operations
Begin business operations within the scope and conditions specified in the FBL. Any deviation from approved activities requires a new application or license amendment.
Required Documents
The following documents are typically required for an FBL application. Specific requirements may vary based on business type:
Company Documents
- Company registration certificate (Bor Or 01)
- Memorandum of Association and Articles of Association
- Shareholder list (Bor Or 05)
- Director registry and identification documents
- Company seal specimen
- Certificate of registered capital payment
Business Plan Documents
- Detailed business plan describing activities, market analysis, and competitive advantages
- 5-year financial projections (income statements, balance sheets, cash flow)
- Technology transfer plan (how foreign expertise benefits Thailand)
- Thai employment plan (number and positions of Thai staff to be hired)
- Investment plan showing capital expenditure in Thailand
- Marketing strategy for Thai market
Shareholder Documents (for Foreign Shareholders)
- Passport copies of all foreign shareholders
- For corporate shareholders: Certificate of incorporation, good standing certificate, board resolution authorizing investment
- Proof of funds for capital contribution
- Background information on foreign shareholders (track record, expertise)
Supporting Documents
- Office lease agreement or proof of premises
- Map showing office location
- Photographs of office premises (if already leased)
- Relevant licenses/certifications from home country (if applicable)
Translation and Legalization
All foreign-language documents must be translated into Thai by a certified translator. Foreign public documents require apostille (for Hague Convention countries) or embassy legalization plus Thai Ministry of Foreign Affairs authentication.
Processing Time
| Stage | Timeline | Notes |
|---|---|---|
| Document Preparation | 2-4 weeks | Depends on document availability, translation needs |
| DBD Completeness Review | 2-3 weeks | May request additional documents |
| Committee Review | 30-60 days | Statutory timeframe; complex cases may take longer |
| Decision and Issuance | 1-2 weeks | After committee approval |
| Total Timeline | 60-90+ days | From complete application submission |
Cost Estimates
Approval Criteria
The Foreign Business Committee evaluates FBL applications based on several factors. Understanding these criteria helps structure a stronger application:
Primary Evaluation Factors
- Technology Transfer: Does the business bring new technology, know-how, or expertise to Thailand?
- Employment of Thais: Will the business create jobs for Thai nationals? What training will be provided?
- Capital Investment: Is significant capital being invested in Thailand?
- Export Potential: Will the business generate foreign currency earnings through exports?
- National Benefit: Does the business support Thai economic development goals?
- Not Competing Unfairly: Will Thai businesses be able to compete fairly?
Factors That Strengthen Applications
- Significant Thai employment (beyond minimum requirements)
- Clear technology transfer or training programs
- Substantial capital investment in Thailand
- Export-oriented business model
- Partnership or joint venture with Thai companies
- Activities supporting priority industries
- Track record and credibility of foreign shareholders
Common Reasons for Rejection
- Insufficient demonstration of benefit to Thailand
- Activities that directly compete with established Thai businesses
- Inadequate capital relative to proposed business scope
- Poor or incomplete business plan
- Concerns about actual control versus stated structure
Conditions and Restrictions
FBL approvals typically come with conditions that must be maintained throughout the license period. Common conditions include:
| Condition Type | Typical Requirement | Frequency |
|---|---|---|
| Common Minimum Capital | Maintain registered capital of 3M THB or higher | Ongoing |
| Common Thai Employment Ratio | Employ minimum number of Thai staff (often 4:1 Thai-to-foreign) | Ongoing |
| Common Activity Scope | Operate only within specified activities on FBL | Ongoing |
| Moderate Technology Transfer | Implement training programs for Thai employees | Annual reporting |
| Moderate Reporting | Submit annual reports on business operations | Annual |
| Restrictive Geographic Limit | Operate only in specified locations | Ongoing |
Consequences of Condition Violation
- Warning and order to remedy within specified period
- Suspension of FBL
- Revocation of FBL
- Criminal prosecution under FBA (operating without valid license)
Annual Compliance and Renewal
FBL holders must maintain ongoing compliance with Thai law and license conditions:
Annual Requirements
- Annual Financial Audit: Audited financial statements filed with DBD within 5 months of fiscal year end
- Annual General Meeting: Hold AGM within 4 months of fiscal year end
- Tax Returns: Corporate income tax (PND 50), half-year tax (PND 51), monthly VAT returns
- DBD Annual Return: Confirm shareholder composition, directors, registered address
- FBL Condition Reporting: Report on compliance with license conditions (Thai employment, activities, etc.)
License Validity
A Foreign Business License is typically issued indefinitely, subject to ongoing compliance with conditions. However, the DBD conducts periodic reviews and can revoke licenses for non-compliance. Some FBLs may be issued for a fixed term requiring formal renewal.
Best Practices for FBL Compliance
- Maintain clear records of Thai employment and payroll
- Document technology transfer and training activities
- Ensure all business activities fall within FBL scope
- File all returns on time
- Consult counsel before expanding into new activities
- Keep capital requirements fully paid
FBL vs. BOI Promotion
Both the Foreign Business License and Board of Investment (BOI) promotion allow foreign majority ownership, but they serve different purposes:
| Factor | Foreign Business License | BOI Promotion |
|---|---|---|
| Purpose | Permit foreign operation of restricted activities | Incentivize investment in priority sectors |
| Eligible Activities | FBA List 3 activities | BOI-promoted activities only |
| Foreign Ownership | Up to 100% | Up to 100% (if approved) |
| Tax Incentives | None | CIT exemptions, import duty waivers, etc. |
| Minimum Investment | 3M+ THB (varies) | 1M-100M+ THB (varies by category) |
| Processing Time | 60-90 days | 3-6 months |
| Work Permit Benefits | Standard requirements apply | Expedited processing, exemptions possible |
| Land Ownership | Not permitted | May be permitted for approved projects |
When to Choose FBL Over BOI
- Your business activity is not BOI-promoted
- You cannot meet BOI minimum investment thresholds
- You need to start operations quickly
- You do not require tax incentives