You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

May 30, 2019

Thailand to Relax Foreign Business Restrictions on Services Provided to Affiliates

Subscribe to Updates

On May 14, 2019, Thailand’s Cabinet approved the exemption of three categories of service business from Foreign Business License (FBL) requirements. The exemptions, which are expected to be enacted soon by Ministry of Commerce regulations, will permit foreigners to freely engage in the previously restricted activities. 

The categories of service business to be exempted are:

  • provision of loans to affiliates and subsidiary companies;
  • lease of office space to affiliates and subsidiary companies, including public utilities; and
  • provision of consultation services relating to management, marketing, human resources, and information technology to affiliates and subsidiary companies.

The new ministerial regulations are also expected to include definitions for “affiliate” and “subsidiary company”.

Direct foreign investment in Thailand is primarily regulated by the Foreign Business Act B.E. 2542 (1999) (FBA), which defines a foreigner as: (i) a person who is not a Thai national; (ii) a juristic person registered under foreign laws; or (iii) a juristic person registered under Thai law with more than 50 percent or more of its shares held by foreign parties (who can be either natural or juristic persons). Foreigners conducting business in Thailand must comply with FBA requirements, and other applicable local laws. The FBA details businesses that are reserved for Thai nationals into the following three lists: 

List One
Business activities which are prohibited to foreigners by special reasons (e.g., press, radio, broadcasting, farming, forestry, land trading, etc.);

List Two
Business activities related to national safety, security, or which have an impact on arts, culture, traditions, customs, folklore handicrafts, natural resources and the Environment (e.g., production and trading of firearms, antiques, mining, etc.); and

List Three
Business activities in which Thai nationals are not yet ready to compete with foreigners (e.g., provision of accounting services, legal services, architecture and engineering services, advertising business, trading activities, and other kinds of services).

Business activities under List One of the FBA are strictly prohibited to foreigners. However, foreigners may engage in business activities under Lists Two and Three of the FBA if they obtain approval and applicable licenses from the competent authorities. Foreigners will not be allowed 100% ownership if they wish to engage in business activities under List Two of the FBA—in that case Thai nationals must hold at least the minimum shares prescribed by the FBA.

Generally, service businesses not specifically listed above would be regarded as “other service businesses” under List III of the Act, which would require approval from the Ministry of Commerce.

This relaxation of the regulations results from the Cabinet’s decision that these service business activities, when provided solely to affiliates and subsidiary companies, have little impact on Thai businesses and their ability to compete with foreigners. The move is also intended to enhance efficiency and service standards by reducing operation costs and facilitate inter-company services among group companies.

For more information on these developments, or on any aspect of doing business in Thailand, please contact Supasit Saypan on [email protected] or +66 2056 5994.

Related Professionals

Practices

Corporate/M&A

Location

RELATED INSIGHTS​ 

June 6, 2025
As from July 1, 2025, as part of its ongoing efforts to digitalize and streamline the delivery of public services, the Vietnamese government will officially conduct administrative procedures, both online and offline, only via electronic identity (“e-ID”) accounts on the VNeID platform. In particular: Online administrative procedures carried out via the National Public Service Portal or via information systems for administrative procedures at the ministerial or provincial level are required to be implemented by using e-ID accounts only. When receiving dossiers, authorities will be required to check and verify the e-IDs of companies or individuals responsible for conducting administrative procedures. Further, it is worth noting that to complete the registration of an e-ID account for a company, the legal representative of the company must hold a level-2 e-ID account. Compliance Considerations Vietnam’s first regulation of e-ID accounts for individuals and organizations was issued in Decree No. 59/2022/ND-CP dated September 5, 2022, on electronic authentication and identification. This decree was subsequently replaced by Decree No. 69/2024/ND-CP dated June 25, 2024, which governs the same matters. Registration and operation of e-ID accounts are centralized through VNeID, a digital ID app developed by the National Population Data Center under the Ministry of Public Security of Vietnam. Although the registration of e-ID accounts for companies is not explicitly mandated by law, the absence of an e-ID account may hinder companies from completing administrative procedures, including licensing and reporting obligations. Such non-compliance could consequently result in administrative penalties. To mitigate unexpected non-compliance and administrative fines due to the lack of an e-ID account, companies should be well prepared for and implement the registration of a company e-ID account as soon as possible.
Read More
June 4, 2025
On April 2, 2024, the Cambodian Competition Commission (CCC) issued Decision No. 087 on Requirements and Procedures of Exemptions under the Law on Competition, outlining the requirements and procedures for requesting exemptions for agreements or activities that could prevent, restrict, or distort competition in Cambodia. Franchise agreements often include clauses such as price fixing, exclusive supply arrangements, or territorial restrictions, which could potentially raise concerns under the Law on Competition. Therefore, it is necessary for both franchisors and franchisees to understand how the law applies to their agreements and whether an exemption request may be required. Some arrangements under franchise agreements may fall within the scope of prohibited practices under the Law on Competition. These include horizontal and vertical agreements, abuse of dominant position, and anti-competitive business combination. If a business owner contemplates that their franchise agreement could be interpreted as anti-competitive, they must assess whether to apply for an exemption. Key Criteria for Exemption Under Decision No. 087, the CCC may grant an exemption if the applicant can demonstrate that the proposed agreement or activity meets all four of the following conditions: Significant and identifiable benefits: The agreement must provide clear technological, social, or economic benefits such as cost efficiencies, qualitative efficiencies, initiations of new technologies, or environmental and sustainable benefits. Necessity of the agreement/activities: These benefits must not be achievable without the proposed agreement or activity. The applicant must show that prevention, restriction, or distortion of competition are essential to realizing the benefits. Benefits outweigh harm: The positive impacts must significantly outweigh any adverse effects caused by the prevention, restriction, or distortion of competition, and the benefits should be likely to materialize within one year. No elimination of competition: The agreement must not eliminate competition in any substantial aspect of goods or services. Application and Supporting Documents
Read More
June 4, 2025
On June 1, 2025, Thailand’s Office of Central Company and Partnership Registration of the Department of Business Development opened a public hearing period on its draft notification regarding criteria and supporting documents for establishment of partnerships and limited companies in which foreign nationals are involved as investors or have signing authority. The draft notification requires applicants for registration of establishment of partnerships and limited companies to submit financial evidence of the capital contributions made by each Thai partner or shareholder in the following cases: When a partnership or limited company has partners or shareholders who are foreign nationals holding shares or equity amounting to less than 50% of the total capital contribution or registered capital in the partnership or company; or When a limited company has no foreign shareholders but has a non-Thai director who is an authorized or co-authorized signatory. The amounts shown in this financial evidence must be in accordance with the capital contribution or shareholding amount of each Thai partner or shareholder. Evidence can be provided in one of the following forms: Financial evidence issued by a bank to verify or demonstrate financial status. Copy of bank statement for the past six months. Copy of personal income tax or corporate income tax document (Form PorNgorDor.90 or PorNgorDor.91 for individuals; Form PorNgorDor.50 or PorNgorDor.51 for corporate shareholders). Any other supporting document showing the source of funds used for the capital contribution. The consultation period will be open until June 20, 2025, and the draft may be subject to additional revisions before it is finalized and made legally binding.
Read More
May 28, 2025
Tilleke & Gibbins attorneys in Vietnam have contributed the 2025 edition of Doing Business in Vietnam, a comprehensive Q&A-style resource from Thomson Reuters Practical Law that provides essential insights for companies navigating business operations in Vietnam. The guide presents a detailed overview of the country’s legal framework and regulatory environment, reflecting recent updates in Vietnamese legislation and practice. This annually updated guide offers key information on the following areas: Legal system: Structure of the Vietnamese judiciary and the role of codified law. Foreign investment: Conditions for market access, licensing requirements, foreign ownership restrictions, and investment incentives. Business vehicles: Formation and operation of legal entities, including limited liability companies, joint-stock companies, and representative offices. Employment: Employment contracts, social insurance, labor rights, and procedures for hiring foreign nationals. Tax: Overview of corporate income tax, personal income tax, value-added tax, and other tax obligations. Intellectual property: Procedures for protecting and enforcing patents, trademarks, copyrights, and other IP rights. Data protection: Compliance requirements under Vietnam’s data privacy laws, including the Personal Data Protection Decree. Competition law: Antitrust rules and regulatory oversight under the Law on Competition. Anti-bribery and corruption: Legal framework and enforcement practices aimed at curbing corrupt activities. E-commerce and digital business: Regulations governing online platforms, digital content, and cross-border services. Marketing and advertising: Laws and guidelines on advertising standards and consumer protection. Product regulation and liability: Safety requirements, product liability issues, and roles of relevant authorities. Doing Business in Vietnam is part of Practical Law’s global series of legal guides designed to support international practitioners and businesses. To access the most recent edition of the Vietnam guide, visit the Practical Law website and sign up for a free trial.
Read More