Under the Treaty of Amity, American citizens and companies may maintain majority ownership in a Thailand incorporated business. It also exempts them from most restrictions on foreign investment imposed by the Foreign Business Act.
The process of obtaining the certificate under US-Thai Treaty of Amity can be divided into three phases. Tila legal can assist you with submitting all required documents for verification and letter of approval by the commercial section at the Embassy in Bangkok.
National Treatment
Under the US-Thai Treaty of Amity, American business persons can establish and operate commercial enterprises in Thailand with the same rights as nationals of the host country. These include national treatment for Thai and American majority-owned companies operating in the same business activity. This treaty protects the right of Americans to obtain and maintain trademark protection for goods and services in Thailand and requires Thai authorities to enforce international arbitration awards against foreign firms that breach contracts. In addition, the U.S. Trade Representative’s annual Special 301 report notes that gratuity payments to civil servants responsible for regulating and enforcing the law remain common in many sectors, including intellectual property protection.
Generally, private property can be expropriated by the government only for public purposes in accordance with established Thai law and after due process is provided. However, despite these provisions, foreign investment in some sectors remains restricted by the Thai government. For example, under the Foreign Business Act of 1999, some service activities cannot be owned by foreigners.
Ownership Rights
Generally, Americans are permitted to own and operate businesses in Thailand without restriction. In some sectors, however, such as the telecommunications business and banking, specific laws govern foreign ownership.
While intellectual property rights protections in Thailand have improved, the Department of Intellectual Property struggles to examine patent applications and issue patents in a timely manner. As a result, patent filings have steadily increased while issuance rates remain low.
Additionally, the law requires that at least 51 percent of a company’s shares be owned by Thai citizens. Notwithstanding this requirement, many American investors choose to form joint ventures with Thai partners to take advantage of their familiarity with the local economy and regulations.
The Thai constitution protects property against being confiscated or nationalized without fair compensation, and the judiciary is generally effective at enforcing property and contract rights. Nevertheless, litigation is time-consuming, and judgments sometimes become subject to extralegal influence or challenge. A number of international arbitration awards have been upheld by Thai courts.
Foreign Investment
Under the Amity Treaty, US citizens or companies can own a majority of shares in any company that engages in business enterprises restricted to Thai nationals under the Foreign Business Act. Those companies receive “national treatment,” which exempts them from most restrictions on foreign investment and work permits.
To obtain Amity Treaty benefits, a business must be incorporated in the United States and submit notarized proof that the majority of the owners and directors are American citizens (by birth or naturalization). A US citizen should also serve as the managing director of the company in Thailand. If the managing director is a person of a different nationality, the person must co-sign with a US-based authorized director to bind the company.
Sunbelt’s expert staff will handle the entire process of setting up a company under the Amity Treaty. We are the most experienced firm in Thailand with this type of set-up and regularly obtain approval from the Board of Investment for our clients.
Migrant Workers
The Treaty permits American citizens to establish a business in Thailand. However, foreigners are required to obtain a work permit in order to operate a business in Thailand. A foreigner who does not have a work permit may be subject to fines or imprisonment. Foreigners who are employed by a firm that is a registered BOI investment project or in an occupation reserved for Thai workers have little difficulty obtaining a work permit. Other employers are required to meet strict requirements regarding the degree of specialization, size of the firm in terms of employees and capitalization, and the ratio of Thai workers to foreigners.