Thai vs Foreign Company Setup: Which Is Right for You?

Deciding how to structure your business in Thailand is one of the most important choices a foreign entrepreneur will make. Should you go with a Thai majority company, or opt for a foreign-owned structure through avenues like BOI promotion, the U.S. Treaty of Amity, or an export-only business? Each path has its own pros and cons. In this guide, we’ll explore both options in a warm, expert tone – giving you the facts, insider tips, and comparisons you need to make an informed decision. Our goal is to build your trust and help you find the best setup for your business in Thailand, whether you’re launching a digital agency or opening a restaurant. Let’s dive in and see which structure is right for you.

Understanding Your Options: Thai-Majority vs Foreign-Owned Companies

In Thailand, a company’s “nationality” is determined by its shareholding. A Thai-majority company (Thai nationals owning at least 51%) is considered a Thai company, not subject to foreign ownership restrictions. This means it can operate in sectors reserved for Thais without special permits. In contrast, a foreign-majority company (foreigners owning more than 49%) is deemed “foreign” and must comply with the Foreign Business Act (FBA) if it engages in restricted businesses. To legally run certain businesses as a foreign company, you would need a Foreign Business License (FBL) or qualify for an exemption like the Board of Investment (BOI) promotion or the U.S.-Thailand Treaty of Amity.

What does this mean in practice? A typical Thai company can have up to 49% foreign shareholding and be treated as Thai. Any company with foreign ownership at 50% or above is considered foreign and could require licensing or special approval to operate in many sectors. Here’s a quick comparison:

• Thai-Majority Company: You partner with at least one Thai shareholder who holds 51% (or more) of the shares. Your business is “Thai” in the eyes of the law, avoiding most FBA restrictions. You won’t need a Foreign Business License for sectors in FBA List 2 or 3. This setup is common for small businesses and startups because it’s straightforward and has lower upfront requirements in many cases. However, it means relinquishing majority ownership on paper, which raises questions about control and trust.

• Foreign-Owned Company: You (and other foreigners) own more than 49%, up to 100%. To do this legally in restricted sectors, you must qualify for an exemption or license. Options include:

  • BOI-Promoted Company: If your business is in certain industries (tech, manufacturing, export, etc.), the Board of Investment may grant promotion allowing majority foreign ownership. BOI companies enjoy perks like work permit ease and tax incentives.

  • Treaty of Amity Company: U.S. citizens can leverage the U.S.-Thailand Treaty of Amity, which allows 100% American-owned businesses in Thailand (with some sector exceptions) to be treated as Thai companies. You’ll still need to meet capital requirements (usually at least THB 3M registered capital) and obtain a Foreign Business Certificate under the treaty.

  • Foreign Business License (FBL): This is a license granting permission to a specific foreign company to operate in a restricted sector. Obtaining an FBL can be time-consuming and uncertain – authorities weigh the business’s benefits to Thailand (technology, jobs, etc.) and may impose conditions. Many small investors avoid this route due to the complexity.

  • Export-Only Business: If your company will manufacture or export 100% of its products (no domestic trading), it may be exempt from FBA restrictions. For example, purely export businesses and certain manufacturing activities are not on the restricted lists, allowing 100% foreign ownership without a special license. (You’d still follow general company registration rules and capital requirements.)

Founder Control Tip: Worried about giving up control with a Thai majority company? Ensure you work with a trusted Thai partner and use legal agreements to protect your interests. You can issue different share classes or set up voting agreements so that, day-to-day, you retain operational control even if you own 49%. Many foreign founders successfully operate this way while staying compliant.

Now that we know the basic difference, let’s look at key decision factors to consider when choosing between Thai-majority and foreign-owned setups.

Key Decision Factors for Your Decision

1. Legal Permissions & Business Licenses

Thai Majority Route: If you have a Thai-majority company, you generally don’t need to apply for a Foreign Business License to operate in most sectors. Your company is treated as Thai, so it can engage in businesses listed in FBA List 2 or 3 (e.g. services, restaurants, trading) without special permission. This makes initial setup faster and simpler in terms of legal permissions. For many entrepreneurs, avoiding the red tape of an FBL is a huge advantage.

Foreign-Owned Route: If foreigners own >49%, you must ensure your business activity is allowed:

• If it’s a restricted service or retail activity, you’ll need an FBL or a Foreign Business Certificate (treaty/BOI) before operating. For example, running a “sale of food and beverages” (restaurant/bar) is on List 3 of restricted businesses – a foreign company would need an FBL to do this legally, unless it’s treaty-protected or BOI-promoted. FBL applications can take months and are not guaranteed.

• Some activities have thresholds: e.g. retail trade by a foreign company is restricted if the total capital is under THB 100M, or if each shop has less than THB 20M capital. In simpler terms, a foreigner-owned retail business must invest heavily (≥฿100M) or else get an FBL.

• BOI or Treaty exemptions: If eligible, these essentially bypass the FBA restrictions. A BOI-promoted company or Treaty of Amity company can operate like a Thai company in many sectors. However, they come with their own application processes and criteria (BOI approval or U.S. nationality requirements).

Compliance Alert: Thinking of using nominee Thai shareholders just to meet the 51% Thai share rule without giving up real control? Be careful – nominee arrangements are illegal under Thai law. Thai authorities have cracked down on companies that use “proxy” Thai owners. The safer approach is to either genuinely partner with a Thai who will own shares, or pursue a legitimate foreign-owned structure through BOI, Treaty, or FBL. Staying compliant will protect you from legal troubles down the line.

2. Capital Investment Requirements

Money matters. The amount of registered capital you’re willing and able to put into the company can influence your choice.

• Thai Majority: Minimum registered capital for a Thai company can be low (even 1 baht per shareholder in theory). In practice, if you plan to sponsor visas/work permits, THB 2 million per foreign work permit is expected as paid-in capital. But if it’s just you and you don’t need a work permit (unlikely), you could start with a smaller capital. Most small Thai-majority businesses start with ฿1M or ฿2M capital, which is enough to hire 1 foreign director with a work permit (more on work permits below).

• Foreign Majority: The FBA sets higher minimum capitals:

  • Generally, a foreign company must have at least THB 2 million capital even if the business is unrestricted.

  • If the business is restricted under FBA List 2 or 3, the minimum capital is THB 3 million (per business activity). This THB 3M rule also applies for Treaty of Amity companies (since they still need to follow FBA capital rules).

  • Some sectors have even higher thresholds (e.g. as mentioned, retail/wholesale at ฿100M for exemption).

  • BOI companies often have project-based investment requirements (depends on the promoted activity, sometimes there’s a minimum investment or expenses requirement, but the BOI may allow gradual investment).

In short, going fully foreign tends to require more capital up front. You’ll need to show money in the bank and actually fund the company with that capital. For many small entrepreneurs, pooling ฿3M (about USD $90k) is a consideration – if that’s steep, starting with a Thai partner might be easier to meet capital needs.

3. Thai Staff & Work Permit Requirements

A key practical factor is how you’ll legally work in your business. Thailand has rules tying foreign work permits to the company’s Thai employment and capital.

• Standard Rule: For a typical company (Thai or foreign), to sponsor one foreign work permit, the company must have 2 million baht paid-in capital and 4 Thai employees in the social security system. Each additional foreigner requires another 2M capital and four more Thai staff (up to a certain limit). For example, if you want to hire yourself as the foreign director, you’ll need at least 2M capital and to eventually hire four Thai employees to keep your work permit. This rule applies across the board, meaning even a Thai-majority company needs to hire Thais if it wants to legally employ a foreigner (you).

• Thai-Majority Companies: You are not exempt from the above, but some entrepreneurs find it easier to hire a few Thai staff (even in basic roles) to meet the requirement. The key point is that just having a Thai partner doesn’t remove the need for Thai staff when a work permit is involved. You should budget for at least 4 Thai employees as your business grows (they could be anything from an admin assistant to a salesperson, depending on your needs). On the bright side, having Thai employees is good for local integration of your business and many small companies manage this by the end of year one.

• Foreign-Owned Companies: They also must follow the 4 Thai per work permit rule, unless they have special status:

  • BOI-promoted companies enjoy relaxed work permit rules. BOI companies use a different system (often the One Stop Service Center) where the strict 4:1 rule may not apply in the same way. In fact, BOI companies can sometimes sponsor multiple work permits with fewer Thai employees, depending on the project and approvals – one of the perks of BOI.

  • Treaty of Amity companies are treated as Thai for business purposes but still need to follow work permit regulations. So an Amity company doesn’t bypass the need for Thai staff for work permits.

  • FBL companies (if you went that route) often have conditions in their license requiring a certain number of Thai employees within a few years. So either way, if you are foreign-run, you’ll be expected to hire local talent. This is good to plan for business growth and showing commitment to Thailand.

Bottom line: If you’re a solo entrepreneur not planning to hire any Thai staff, neither structure legally allows you to get a work permit (unless you go for certain visa alternatives like a one-person BOI Smart Visa in some tech category). Most serious entrepreneurs will need to hire some Thai team members eventually. It’s both a compliance requirement and a practical benefit to help you navigate local business culture.

4. Local Licensing & Industry-Specific Considerations

Consider the nature of your business: Are you starting a consulting firm, a tech startup, a restaurant, or a bar? Different industries may push you toward one structure or the other.

Let’s compare two broad categories as examples:

Service Businesses (e.g. digital agencies, consulting, IT development):
If you’re offering services, know that “service businesses” are generally restricted for foreign companies under List 3 of the FBA. This means a foreign-owned service company would typically need an FBL. Many foreign entrepreneurs in consulting or digital services choose a Thai-majority company initially to avoid waiting for an FBL. For instance, a marketing agency or software development shop can be registered with a Thai partner and start operating immediately, then hire foreigners under the normal work permit rules.

However, there are exceptions and strategies:

• If your service is tech-related, you might qualify for BOI promotion (e.g. software development, fintech, or data services can get BOI promotion for “technology-based business”). With BOI, you could be 100% foreign, no Thai partner needed, and still operate legally in services. BOI also lets you bring in foreign experts more easily. The trade-off is the application process and meeting BOI milestones.

• If you’re American, Treaty of Amity can be a game-changer for services. Under the treaty, your company can be 100% U.S.-owned and do almost any service business legally (except a few like telecom, transportation, etc. that are treaty-excluded). You’d still register at least 3M capital and get a Foreign Business Certificate, but it’s very doable and much faster than a normal FBL. For an eligible American entrepreneur, this is often the best of both worlds: you keep full ownership and can operate a service business without a Thai nominee. If you’re not American, unfortunately this route isn’t available to you.

• Export of services: If your agency’s clients are all overseas and you’re technically bringing foreign money into Thailand, that’s great for the balance of trade but Thai law still classifies it as a service business domestically. So you’d still need an FBL if foreign-owned. (Don’t confuse it with export of goods, which is different.)

Retail & Hospitality Businesses (e.g. restaurants, bars, retail shops):
These often involve on-the-ground operations, local licenses, and regulatory approvals that can be easier with Thai involvement:

• Restaurants/Bars: Running a restaurant, café, or bar as a foreigner has a few hurdles. Not only is “sale of food and beverages” a restricted business for foreigners, but you also need local permits like a food shop license, alcohol license, entertainment license (for bars/nightlife) and possibly others depending on your venue. While a foreign-owned company can apply for these, having a Thai-majority structure often makes local licensing smoother. Local officials may prefer dealing with Thai directors for certain permits, and in some cases, specific licenses (like alcohol) might require a Thai national as the applicant or license holder. With a Thai partner, you tick that box. In practice, most small foreign restaurateurs go with a Thai company (often with a Thai spouse or trusted friend as partner) to get up and running quickly, rather than attempting the FBL route which could delay opening by many months.

• Retail Stores: If you want to open a shop or trading business, note that retail is restricted for foreigners below the high capital threshold. A Thai-majority company can open a shop with relatively low capital (just enough to get started). A foreign company would need to inject heavy capital (≥฿100M) or secure an FBL that may be challenging to obtain for a small retail operation. Again, unless you have BOI promotion (which typically doesn’t cover small retail) or a treaty advantage, Thai-majority is the practical choice for a boutique, e-commerce business targeting Thai customers, or similar.

• Hospitality (Hotels): Hotel businesses are a bit special – the law allows foreign-owned companies to manage hotels but not own land. Many foreign hoteliers use Thai-majority companies to own the property or land (since Thai companies can own land, whereas foreign ones generally cannot except via BOI in some cases or if on lease). Also, hotel licenses might require Thai directors. If you’re simply running a small hostel or guesthouse, a Thai company will simplify matters. If you plan a large hotel chain and can invest heavily, you might consider BOI (as large tourism projects can get promotion).

Local License Advantage: Thai-majority companies often have a local license advantage. Need a liquor license for your bar? Or a food vendor permit for your cafe? These applications usually require a Thai national’s ID on the forms. With a Thai company, your Thai director or shareholder can represent the business for these licenses, making the process smoother. Foreign-owned companies may still get it done, but expect extra scrutiny and possibly needing a Thai manager to be officially named for certain permits. Going Thai-majority can save time and hassle when dealing with local authorities.

5. Control, Risk, and Trust Factors

While not a formal “requirement,” we must talk about the elephant in the room: control and trust. Handing 51% of your company to someone else is a big decision. Many foreign entrepreneurs use Thai majority structures with a nominee (a Thai who holds shares but really just as a formality). As mentioned, that’s illegal and can be risky. A better approach is to choose a Thai partner who is truly involved or compensated in some way that aligns with your interests (even if you retain 100% of financial risk/benefit through side agreements). If you don’t have a trustworthy Thai partner, you might lean towards the foreign-owned route despite the higher cost, because at least then you retain official control.

On the flip side, if you do have a Thai spouse or a close Thai friend/business partner who will own shares, the Thai-majority route becomes far more comfortable and attractive. You get simplicity and they get equity. Many businesses in Thailand operate successfully on this partnership model. Just make sure to have clear shareholder agreements in place, define roles, and document any loans or arrangements (for example, if you provided all the capital, record it properly as a loan or preferential shares, etc.). Good legal advice is key here.

For those who value full ownership and control above all and have the resources, pursuing a BOI promotion or an FBL (or treaty if applicable) might be worth the extra effort and expense. It can be a longer road at the start, but you won’t have any question marks over ownership later.

Thai vs Foreign Structure: Which to Choose?

So, which is right for you? It depends on your priorities and situation:

• If speed, simplicity, and lower initial cost are paramount – and you have a way to include a Thai partner you trust – then a Thai-majority company setup is likely the best for you. You can get started quickly, handle local business licenses more easily, and avoid dealing with government approvals for foreign ownership. This is often ideal for small service providers, restaurants, or bootstrapped startups testing the waters. Just be mindful of how you structure control and always follow the legal guidelines (no dummy shareholders).

• If retaining full control/ownership is non-negotiable, or your business can leverage special schemes – then consider a foreign-owned setup via BOI, Treaty of Amity (if you’re American), or an export-focused entity. This is suitable for businesses that plan a significant investment, operate in promoted sectors, or have the patience to navigate the licensing process. For example, a tech startup with global clients might go for BOI to enjoy 100% ownership and hiring flexibility. An American consultant might register under the Treaty to avoid needing a Thai partner altogether. A manufacturing export business can be 100% foreign from day one because it’s not selling in Thailand. These routes give you control and peace of mind that you fully own your company, at the cost of more paperwork and higher entry requirements.

Often, the decision is also influenced by nationality and business type:

• Non-U.S. entrepreneurs in general services or local trading often find Thai-majority as the only practical choice, unless they can get BOI.

• U.S. entrepreneurs have a unique advantage with Treaty of Amity – if that’s you, strongly consider using it so you don’t have to find a Thai shareholder.

• Businesses that require physical premises and local permits (food, retail, hospitality) lean toward Thai structures for ease.

• High-tech, import-export, or large-scale projects lean toward foreign structures via promotions because they can meet the criteria and benefit from them.

Pros and Cons at a Glance

To summarize, here’s a quick pros and cons comparison:

Thai-Majority Company – Pros:

• Easy, fast setup (no special approval needed to start operating)

• Lower official capital required to register (can start smaller, though 2M needed for each work permit)

• Able to operate in any sector open to Thai companies (no foreign license needed)

• Smoother acquisition of local permits and licenses (Thai director can handle applications)

• Can own land and certain assets as a Thai entity (useful for property-based businesses)

• Often less government scrutiny in day-to-day operations, since it’s a Thai entity

Thai-Majority Company – Cons:

• You only legally own 49% (risk if relationships sour; need strong trust and agreements)

• Potential legal risk if using nominee shareholders (strictly illegal and can lead to penalties)

• Still must meet Thai staff and capital requirements to employ foreigners (no exemption just for being Thai-owned)

• Profit repatriation needs structuring (you might pay dividends to yourself at 49%, and perhaps treat remaining as local partner’s share or other arrangements)

• Financiers or international partners might be wary of the structure if they know you don’t have majority control

Foreign-Owned (BOI / Treaty / FBL) – Pros:

• Full ownership and control by foreigners (you keep 100% of shares, or majority if multiple foreign partners)

• No need to rely on a Thai partner or risk nominee legal issues

• Qualifying for BOI or Treaty can bring additional benefits – e.g. BOI tax holidays, easier work permits, visa facilitation; Treaty companies get national treatment almost like Thai companies

• Enhanced credibility for some investors/customers knowing it’s an international company (case-by-case, but some prefer clarity over nominee setups)

• You still can hire Thai staff on your own terms (aside from meeting legal minimums), and you can appoint all foreigners in management if desired

Foreign-Owned (BOI / Treaty / FBL) – Cons:

• Higher startup cost (must inject significant capital – typically ฿3M+ – and show funds)

• Longer lead time before you can operate fully – need to obtain approvals or certificates (BOI application can take a few months; Treaty registration ~4-6 weeks; FBL can take many months with uncertain outcome)

• Not all businesses qualify (e.g. small local services with no innovation might not get BOI, non-Americans can’t use Treaty of Amity)

• More complex administration – additional reporting to BOI, or compliance with FBL conditions (government may check you maintain hiring or capital as promised)

• Work permit still requires Thai staff and capital unless BOI (so you might not escape the 4 Thai per expat rule completely, except BOI gives flexibility)

As you can see, both options can work – it comes down to your priorities: speed vs. control, cost vs. compliance ease, and the nature of your venture.

Guided Next Steps

Choosing between a Thai vs foreign company setup is not one-size-fits-all. It’s about aligning the structure with your business goals, resources, and risk tolerance. Many successful businesses in Thailand actually evolve their structure over time – you might start as a Thai majority for simplicity, then once you grow, you pursue BOI promotion to become fully foreign-owned (or vice versa). The key is to start on the right foot for your situation today.

If you’re still unsure which path is best for you, don’t worry. You don’t have to navigate this alone. This is a complex decision with legal and practical nuances, but with the right guidance, it’s absolutely manageable.

Curious which setup fits you best? We’re here to help. At Thai-Co, we specialize in helping foreign entrepreneurs make the optimal choice and handle all the paperwork, whether it’s incorporating a Thai company or securing BOI and Treaty approvals. We take the time to understand your business model and long-term vision, so you get a structure that’s both compliant and advantageous.

Ready to make an informed decision? Book a free consultation with Thai-Co to discuss your company setup options. We’ll answer all your questions and guide you step-by-step – ensuring you save time, avoid pitfalls, and set a strong foundation for your Thailand venture.

Choose the right structure now, and you’ll pave the way for smoother growth and success in the Land of Smiles. Contact Thai-Co today and let’s build your business the right way from day one!