Thailand has relaxed some rules for foreign businesses by removing the need for a separate permit under the Foreign Business Act for seven specific types of services.
The new regulation was published in the Royal Gazette and is aimed at reducing duplicate approval requirements for businesses that are already regulated under other Thai laws.
However, the change does not mean foreign businesses can operate without regulation. Companies must still follow the relevant industry laws, obtain any required licences and meet other conditions set by Thai authorities.
Which Services Are Covered?
The new rules cover seven main categories.
1. Certain telecommunications businesses
Foreign businesses operating under a Type 1 telecommunications licence can be exempt if they provide services without operating their own telecommunications network.
2. Treasury centre services
Treasury centre businesses are also included in the exemption. These businesses typically manage financial activities such as cash and funding arrangements for companies within a group.
3. Internal HR, administration and IT services
Foreign companies can benefit from the exemption when providing administrative, human resources and IT services between related companies.
For example, a regional company could provide HR or IT support to another company within the same corporate group in Thailand.
4. Space for electronic financial equipment
The exemption also covers certain arrangements involving the rental of limited space for electronic financial-service equipment. This includes equipment used to provide financial services or automated machines that sell goods or services to employees.
5. Debt guarantees between related companies
Certain domestic debt guarantees between related legal entities are also covered. This applies to companies that meet the regulation’s definition of being related entities.
6. Petroleum drilling services
Foreign companies providing petroleum drilling services can qualify for the exemption when they have direct contracts with concessionaires, production-sharing contractors or service contractors operating under Thailand’s petroleum laws.
7. Certain securities and derivatives businesses
The rules have also been revised for some securities and derivatives activities. The changes cover certain dealers, advisers and fund managers, provided they meet the conditions set out under Thailand’s securities and derivatives laws.
The regulation also covers certain loans used to purchase securities and securities repurchase agreements.
What Does This Mean for Foreign Businesses in Thailand?
For foreign companies operating in these areas, the main change is that they may no longer need to obtain an additional approval under the Foreign Business Act for the activities covered by the exemption.
This could make the process of setting up or operating certain businesses simpler by removing an extra layer of approval.
However, foreign business owners should not assume that all permits have been removed.
The exemption only relates to permission under the Foreign Business Act. Businesses must still comply with other laws and regulations that apply to their industry.
For example, a company in telecommunications, finance or petroleum services may still need to hold the appropriate industry-specific licence or meet requirements set by the relevant regulator.
What Counts as a Related Company?
Some of the exemptions apply only when services are provided between companies that are legally considered related entities.
The new regulation sets out several ways for companies to qualify.
They can be considered related if more than half of their shareholders or partners are the same people. Another situation is when a shareholder or partner owns at least 25% of the capital in both companies.
A company can also be considered related when one legal entity owns at least 25% of another.
The rules also cover companies where more than half of the directors or managing partners of one entity hold the same positions in another entity.
These definitions are particularly relevant to exemptions covering internal HR, administration and IT services, as well as certain debt guarantees and space-rental arrangements.
