Introduction
Businesses in Thailand typically take one of the following forms:
- sole proprietorship
- partnership
- private limited company
- public limited company
- regional operating headquarters
- joint venture
- branch of a foreign corporation
- representative office of a foreign corporation
- regional office of a foreign corporation
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The most popular form of business organization among foreign investors is the private limited company. There are several reasons for this, including:
Businesses in Thailand typically take one of the following forms:
- A Thai company can obtain promotional privileges from the Board of Investment.
- The laws restricting foreign participation in certain businesses conducted in Thailand.
- A Thai company may be required in order to obtain licenses or permissions to conduct the business in Thailand.
- Tax advantages of a Thai company, including lower tax corporate rates and tax savings on profit repatriation.
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Brief description of business entities
Sole proprietorship
This is simply a business owned by one person with unlimited liability for any claims against the business.
Partnership
Three types of partnership can be formed in Thailand, the main difference being the liability that the partners will assume for the obligations of the partnership.
- In an unregistered ordinary partnership, all of the partners are jointly liable for the partnership’s obligations, without any limitation. A new partner in an unregistered ordinary partnership becomes liable for all obligations incurred by the partnership before or after his association with the partnership. This type of partnership is not a legal entity separate from the partners. For income tax purposes however, the partnership is liable to personal income tax as if it were a single person, and each of the partners is relieved from including the income in his own return.
- A registered ordinary partnership is a legal entity having a separate and distinct personality from each of the partners by virtue of its registration with the commercial registrar. A registered ordinary partnership is subject to corporate income tax.
- A limited partnership is one in which the liability of one or more of the partners is limited to their respective contribution, with one or more of the other partners having joint and unlimited liability. A limited partnership must be registered and is subject to corporate income tax.
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