Foreign business restrictions relaxedHLB Thailand Tax Team
The Ministry of Commerce has enacted a new regulation to add the provision of loans and certain services to related companies to the list of service businesses that do not require a foreign business license under the Foreign Business Act.
The following service businesses will no longer require a foreign business license:
- Provision of loans in Thailand to related parties.
- Lease of office space with utilities to related parties; and
- Providing advice to related companies on management, marketing, human resources and information technology.
The relaxation will benefit juristic persons carrying on business in Thaiand that are subject to the Foreign Business Act, such as foreign companies and Thai companies that are majority foreign owned.
Juristic persons are related for the purposes of this regulation if they meet one of the following conditions:
- More than half of the shareholders/partners in a juristic person are the shareholders/partners representing more than half of the shareholders/partners in another juristic person.
- A shareholder or partner holding at least 25% of the value of the capital in a juristic person holds at least 25% of the value of the capital in another juristic person.
- A juristic person holds shares or is a partner with a value of 25% or more of another juristic person’s capital.
- More than half of the authorized directors of a juristic person are more than half of the authorized directors of another juristic person.