Setting Up a Subsidiary Company in Thailand

Thailand is one of Southeast Asia’s leading destinations for foreign investment, with top investment industries including automotive and EVs, electronics and semiconductors, food processing and agribusiness, tourism and hospitality, digital economy & technology, and healthcare and medical devices. key economic indicators (GDP, FDI, population, strategic location. It’s strategic location, well-developed manufacturing base, and strong connectivity to both regional and global markets make Thailand an ideal growth opportunity for ASEAN and international expansion.

However, setting up a subsidiary in Thailand involves navigating local procedures, foreign ownership regulations, tax requirements, and ongoing compliance.

Whether you are an international company seeking to set up your business in Thailand or a local company embarking on a new venture, our expert company setup services at ALTIOS can ensure a seamless incorporation and registration process for your business.

Why Foreign Companies Choose Thailand for Regional Expansion

• Strategic Location: Thailand is located at the heart of mainland Southeast Asia and serves as a strategic gateway to the larger ASEAN market, providing businesses with convenient access to a regional market of 2.2 billion consumers. Thailand has a network of 17 Free Trade Agreements (FTAs) covering 24 economies (as of December 2025), and is a member of RCEP, the world’s largest free trade agreement accounting for nearly 28% of international trade.
• Strong Manufacturing & Industrial Ecosystem: Thailand is a global manufacturing and distribution hub with well-developed supply chains, a skilled workforce, and established industries such as automotive, electronics, food processing, and industrial sectors.
• Competitive Business Costs: In comparison to many other developed markets, Thailand offers competitive labour and operating costs while providing access to a skilled, multilingual workforce across a variety of industries, which allows businesses to scale efficiently. Thailand’s Corporate Income Tax (CIT) of 20% and Value-Added Tax (VAT) of 7% are also lower than ASEAN averages (20.85%, 9.44%).
• Investment Incentives: The Thailand Board of Investment (BOI) offers a range of incentives for foreign investment, including corporate tax exemptions, import duty reductions, and permission for greater foreign ownership for eligible activities.

What is a Thai Subsidiary?

A Thai subsidiary is a separate legal identity incorporated under Thai law that can operate independently from its foreign parent company. The most common form is a Private Limited Company, which allows businesses to conduct commercial activities, enter into contracts, hire employees, own assets, and generate revenue within Thailand. The parent’s liability is generally limited to its investment in the subsidiary. Depending on the industry and applicable laws under the Foreign Business Act (FBA), foreign investors may be permitted to own up to 100% of the subsidiary, or the subsidiary can be jointly owned with Thai shareholders.

Common Business Structures in Thailand

Overview of Thailand’s Business Entity Types:

• Sole Proprietorship: 1 owner with unlimited liability
• Ordinary Partnership: 2 or more partners who are jointly and wholly liable
• Limited Partnership: 2 or more partners, at least 1 limited partner with liability limited to amount of capital contributed, at least 1 general unlimited liability partner
• Private Limited Company: 3 or more promoters/shareholders with liability limited to their investment in the company
• Public Limited Company: 15 or more promoters/shareholders with limited liability, at least 5 directors, shares may be freely sold and traded
• Branch Office: Extension of foreign parent company rather than separate legal entity, parent company assumes full liability
• Representative Office or Regional Operating Headquarter (ROH): Limited to providing internal support services, cannot earn income in Thailand

Since sole proprietorships and partnerships are generally not used by foreign companies, foreign investors entering the Thai market typically establish either a subsidiary (Private Limited Company), branch office, or representative office. Each has key differences in taxation, liability, and permitted activities, so the business should select the type of structure that aligns with their business objectives.

Feature	Private Limited Company	Branch Office	Representative Office or ROH
Legal Status	Separate legal entity	Extension of foreign parent company	Non-operating entity
Ownership	Up to 100% foreign owned	Fully owned by parent company	Established by foreign parent
Taxation	Taxed as a Thai resident company on income derived in Thailand and subject to Thai corporate income tax	Taxed on Thailand-sourced income	Not subject to corporate tax (cannot generate revenue)
Liability	Limited to subsidiary	Full liability assumed by parent company	Full liability assumed by parent company
Permitted Activities	May conduct full commercial operations	May conduct commercial activities approved under registration and required licenses	Limited to non-commercial activities such as market research, liaison, and sourcing
Ability to Sign Contracts	Yes	Yes	Limited to contracts necessary for permitted non-commercial activities
Revenue	Permitted	Permitted	Not Permitted

In Thailand, foreign ownership heavily depends on the business activity and applicable exemptions under the Foreign Business Act (FBA). For most foreign investors seeking to establish long-term presence in the region, a subsidiary remains the ideal structure due to its limited liability. Branch offices are best suited for companies that want to conduct business in Thailand while operating directly under their parent company. Representative offices are for companies wishing to explore the Thai market before making a long-term investment.

Can a Foreign Company Own 100% of a Thai Subsidiary?

Yes, a foreign company can own up to 100% of a Thai subsidiary. However, whether full foreign ownership of the company is permitted depends on the company’s business activities and regulatory framework. Thailand regulates foreign investment through the Foreign Business Act (FBA) 1999, which restricts foreign ownership in certain sectors unless exemptions or approvals are granted.

The FBA divides restricted activities into three lists:

List 1: “Businesses that foreigners are not permitted to conduct for special reasons.”
Fundamental cultural and national security activities including domestic media, rice farming, land trading, etc.

List 2: “Businesses related to national safety or security, activities affecting arts and culture, traditional and fold handicraft, or natural resources and the environment.”
Generally subject to majority Thai ownership, but foreigners can operate in these sectors with special permission from the Cabinet. Includes activities like domestic transportation, weapon production, auctioning, and mining.

List 3: “Businesses in which Thai nationals are not yet ready to compete with foreigners.”
These activities are restricted to help Thai companies remain competitive with foreign businesses. Foreign companies can only operate these businesses by obtaining a Foreign Business License (FBL). They include accounting, legal, construction, retail, advertising and other service-related sectors.

Foreign investors who want to own more than 49% of the company have three options:

• Obtain a Foreign Business License (FBL) from the Department of Business Development (BD).
• Obtain a Foreign Business Certificate (FBC) after securing certification from the Board of Investment (BOI).
• Obtain a Treaty of Amity (this is for American investors only).

Key Requirements for Setting Up a Subsidiary in Thailand

Shareholder & Ownership Requirements

• After incorporation, the company must have at least 3 owners. Foreign ownership may be restricted to no more than 49% of the company under the Foreign Business Act (FBA), depending on the business activities of the company. Shares cannot be sold to the public.
• For FBA-restricted business activities that do not qualify for an exemption, foreign investors may be required to establish a company with majority Thai ownership, where Thai shareholders must hold at least 51% of the company’s shares. Exact ownership structures depend on the applicable industry.
• Nominee Shareholders: Thailand strictly prohibits using nominee shareholders to circumvent foreign ownership restrictions. Thai nationals must be genuine beneficial owners of their shares, or this may result in significant penalties, including fines, imprisonment, and the revocation of business licences.

Director Requirement

• A private limited company must appoint at least one director. Directors do not need to be Thai nationals unless required by specific licences or foreign ownership regulations.

Registered Office Address

• Every company must maintain a registered office address in Thailand for official correspondence and statutory records.

Registered Capital

• There is generally no statutory minimum capital for a Thai company. However, foreign-owned companies or those applying for a Foreign Business License (FBL) may need to meet minimum capital requirements (commonly THB 2–3 million, depending on the circumstances) to support work permit applications.
• Foreign Business License (FBL): An FBL enables foreign-owned businesses to engage in certain restricted activities under List 3, granted on a case-by-case basis by the Ministry of Commerce. It depends on the economic benefits, technology transfer, and its contribution to Thailand.

Articles of Association

• Every company must adopt Articles of Association, which set out the company’s internal governance rules and management structure.

Treaty of Amity (U.S. companies)

• The Treaty of Amity and Economic Relations between Thailand and the United States allows qualifying U.S. companies to operate in many sectors with up to 100% U.S. ownership. There are still restrictions for certain industries such as transportation, local media, and land ownership.

Board of Investment (BOI) Incentives

• Companies may be permitted 100% foreign ownership in eligible industries from the Thailand BOI. The Board of Investment offers Corporate Income Tax (CIT) exemptions for up to 13 years, and a 50% reduction in CIT for an additional 5 years. In addition, the promotion includes import duty exemptions, no restrictions of foreign currency remittances, and easier access to Long-Term Resident (LTR) visas and work permits.

Step-by-Step Process to Register a Subsidiary in Thailand

• Choose the Business Structure:

Determine whether a private limited company, branch, or representative office is the best structure for your business expansion plans.

• Access Foreign Ownership Requirement

Review whether your business activities would be subject to restrictions by the Foreign Business Act (FBA). Determine whether you need a Foreign Business License (FBL), qualify for Board of Investment (BOI) promotion, or other exemptions by the Thai government that can permit foreign ownership.

• Reserve the Company Name:

Submit your company name to the Department of Business Development (DBD) for approval. Once approved, you can move forward with your reserved name for incorporation.

• Prepare Incorporation Documents:

Prepare the required documents, including the Memorandum of Association, Articles of Association, shareholder and director information, registered office details, and registered capital details. Ensuring all documents are complete and accurate will help streamline the registration process.

• Register with DBD:

Submit the application for incorporation through Thailand’s Department of Business Development (DBD). 

• Register for CIT& VAT:

Register with the Revenue Department to obtain a taxpayer identification number and card within 60 days. Foreign businesses in Thailand are required to register for Value Added Tax (VAT) if their annual turnover exceeds THB 1.8 million, and registration must be completed within 30 days of meeting this revenue requirement.

• Open a Corporate Bank Account:

Open a corporate bank account with a Thai financial institution for capital, business transactions, payroll, and ongoing operation management. Most banks require an initial deposit between THB 1,000 to 10,000.

• Register with Social Security:

If hiring the company should register with the Social Security Office (SSO) and establish payroll processes and tax withholding obligations.

• Apply for Necessary Licenses:

Apply for any industry-specific licenses or permits required for your business activities. Businesses hiring foreign nationals must obtain the appropriate Non-Immigrant B Visa and Work Permit before official employment.

• Set Up Accounting, Payroll & Tax Compliance:

Establish company systems or bookkeeping, payroll, tax filings, and statutory reporting to ensure your company complies with all regulatory and employment requirements.

Taxation & Financial Considerations for Thai Subsidiaries

Corporate Income Tax (CIT)

• Thai subsidiaries are generally subject to a corporate income tax of 20% on net profits derived from Thailand business activities. Resident businesses are taxed on profits earned in Thailand, and eligible businesses may apply for tax incentives through the Thailand Board of Investment (BOI).

Value Added Tax (VAT)

• Companies with annual taxable revenue above the prescribed threshold must register for Value Added Tax (7% on gross receipts, compared to the ASEAN average of 9.44%, although 0% or exported goods & services used abroad) with the Revenue Department, and are responsible for charging, collecting, and remitting VAT while filing regular VAT returns.

Withholding Tax (WHT)

• Thai businesses may need to withhold tax on certain payments like dividends, interest, royalties, service fees, and payments to non-residents. The applicable tax rate depends on both the nature of the payment and any relevant double taxation agreements, generally 15% for interest and royalties but 10% for dividends.

Branch Tax

• Foreign companies with branches in Thailand pay 20% on profits from Thailand, and an additional 10% profit remittance tax when sending after-tax profits back to their headquarter office.

Stamp Duty

• Stamp Duty is a tax imposed on certain legal documents and transactions rather than income, governed by the Thai Revenue Code. It may only apply to documents such as lease or loan agreements, but businesses should assess whether stamp duty applies to their transactions to avoid any penalties.

Double Tax Agreements (DTAs)

• Thailand has signed more than 60 Double Taxation Agreements worldwide to help prevent double taxation on cross-border income. This provides greater tax certainty for international businesses.

Post-Incorporation Compliance Requirements

After incorporation, Thai subsidiaries must comply with several ongoing statutory obligations. Companies must maintain accurate accounting records, prepare audited annual financial statements in accordance with Thai Financial Reporting Standards (TFRS), and file corporate income tax returns. Where applicable, companies may also need to file Value Added Tax (VAT) returns with the Revenue Department.

Private limited companies must hold Annual General Meetings (AGMs) and submit annual filings to the Department of Business Development (DBD). Employers must also maintain registration with the Social Security Office (SSO), continue to make mandatory social security contributions, withhold personal income tax, and comply with employment laws. In addition, companies must maintain up-to-date statutory records and keep track of any changes to key corporate information such as the company’s registered office, directors, shareholders, or registered capital.

How Long Does It Take to Set Up a Subsidiary in Thailand?

A standard subsidiary can typically be incorporated within 2-6 weeks in Thailand, but the timeline for full operations is usually longer due to tax registrations, bank account set up, and license requirements.

• Standard Subsidiary: 2-6 weeks assuming no industry-specific approvals are required
• BOI-Promoted Company: 1-3 months, depending on the complexity and the BOI approval process
• Foreign Business License: 2-4 months or longer. The FBL application is reviewed by the Ministry of Commerce, then the license is issued within 15 days after approval.

Step	Estimated Time
Company name reservation and approval	1–3 business days
Preparation of incorporation documents	3–7 business days
Company registration with the Department of Business Development (DBD)	3-7 business days
Corporate bank account opening	1–4 weeks
Tax and employer registrations (Revenue Department/VAT)	1–2 weeks
Social Security registration	Within 30 days of hiring
Foreign Business License (if required)	2-4 months
BOI Promotion (if applicable)	1-3 months

Cost of Setting Up a Subsidiary in Thailand

Costs of subsidiary set up in Thailand depend on the company’s unique business activities, structure, and approvals required. Businesses should budget for government registration fees, legal and incorporation fees, accounting and bookkeeping services, annual audit fees, and office maintenance costs. There are additional expenses that include industry-specific licenses or permits and setting up a corporate bank account in Thailand. For foreign-owned companies applying for a Foreign Business License (FBL) or hiring foreign employees, there may be extra expenses for registered capital requirements as well.

After incorporation, companies should also plan for ongoing compliance costs, including accounting, payroll administration, corporate tax and VAT filings, annual financial statements, statutory filings, and Social Security contributions. Careful financial planning can help businesses manage compliance efficiently and establish a strong foundation for long-term success in Thailand.

Why Many International Companies Use a Local Expansion Partner like Altios

Expanding into a new market involves much more than just incorporating your company. It requires local expertise about regulations to establish compliant operations and build a strong foundation for the long-term growth of your business. At ALTIOS, we provide comprehensive support throughout their entire setup journey, from selecting the appropriate business structure to preparing all necessary documentation and obtaining required registrations.

ALTIOS helps businesses reduce operational risks by managing and supporting company incorporation, compliance, payroll, recruitment, and human resources. We help ensure that your company remains compliant with Thailand’s regulatory requirements so that you can focus on your core business. Beyond just Thailand, our regional presence across the Asia-Pacific enables companies to scale efficiently and execute long-term organic growth throughout ASEAN and the wider APAC region.

Whether your business is looking to explore market entry, establish a regional headquarters, or plan long-term growth in Southeast Asia, ALTIOS can provide tailored support to help you build and grow your business with confidence.

Frequently Asked Questions (FAQs)

Conclusion

Thailand is one of Southeast Asia’s leading investment destinations with access to one of the region’s largest consumer markets. However, successfully establishing your business in Thailand involves more than just company incorporation. It is important to maintain compliance with foreign ownership regulations, licensing requirements and tax obligations.

Whether you are establishing your first Thai subsidiary or expanding your operations for long-term growth in the ASEAN region, having the right local partner can significantly simplify your expansion process and reduce risk. At ALTIOS, our experienced team guides you through every step of the company setup process with end-to-end support.

To learn more about how our expert services can support your success in Thailand and beyond, contact ALTIOS today!