For foreign investors looking to conduct business in Thailand, one of the most critical legal requirements to understand is the Foreign Business License (FBL). This license plays a vital role in determining whether—and how—a foreign company may legally operate in Thailand under the Foreign Business Act B.E. 2542 (1999). H&P Corporate lawyers have prepared this summary of the key aspects of FBL in Thailand.
Under this Act, the term “foreign” refers to any individual or corporate entity with 50% or more foreign ownership. The FBL is essentially a permit that allows foreign companies to operate in business sectors that are otherwise restricted under Thai law. These sectors are divided into three categories:
- List 1: Businesses strictly prohibited to foreigners
- List 2: Businesses permitted only with special approval from the Cabinet
- List 3: Businesses permitted, but subject to obtaining an FBL
This means that not all types of businesses are eligible to apply for an FBL. Generally, the business must not threaten national security, cultural heritage, or natural resources, and should not be in areas where Thai nationals are already competitive.
Who Needs an FBL?
You may be required to apply for an FBL if:
- Your company has more than 49% foreign ownership
- Your business operates in a restricted category under the Foreign Business Act
- You are not receiving investment promotion from the Board of Investment (BOI) or are not eligible under the US-Thailand Treaty of Amity
Common business types that often require an FBL include:
- Trading and retail ● Service businesses ● Construction ● Engineering and consulting ● Advertising, hotels, and restaurants
Exceptions to FBL Requirements
In certain cases, foreign companies may not need to apply for an FBL, such as when they qualify under:
- BOI promotion schemes
- The US–Thailand Treaty of Amity (for U.S. citizens/entities only)
- Free Trade Agreements (FTAs) or programs like IHQ (International Headquarters) and ROH (Regional Operating Headquarters)
Steps to Apply for an FBL
- Prepare required documents – including company registration papers, business plan, shareholder structure, and financial forecasts
- Submit application to the Department of Business Development (DBD)
- Wait for review – which considers factors such as the business’s economic contribution, local employment, technology transfer, and market competition
- Provide Additional Information or Revisions (if required)
Upon review, the officer may request clarification, additional documents, or revisions to the application. The applicant should respond promptly and completely to avoid delays.
- Submission to the Approval Board
- Once the DBD officer is satisfied with the application and supporting documents, the case will be forwarded to the relevant approval board or committee for final consideration.Receive approval – the process typically takes 60–90 days, but may vary depending on the nature of the business and additional ministry consultations
Challenges to Anticipate
The FBL process can be complex and time-consuming. Thai authorities carefully evaluate applications to protect domestic business interests. Applicants should be prepared to:
- Provide a clear and detailed business plan
- Demonstrate economic benefits and innovation
- Present plans for local employment and skills development
- Show intentions to transfer technology or knowledge
- Avoid negatively impacting Thai entrepreneurs
- Generate tax revenue and maintain transparent financial disclosures
Having a qualified legal advisor who understands Thai regulatory procedures significantly improves the chances of a successful application.
Applicant Qualifications
Foreign investors or foreign entity representatives applying for an FBL must:
- Be at least 20 years old
- Have either permanent residency in Thailand or a valid temporary stay permit
- Be legally competent
- Not have been convicted or fined under the Foreign Business Act in the past 5 years
- Not have been sentenced for fraud, creditor deception, misappropriation, or other business-related crimes under Thai law, immigration law, or public fraud statutes within the last 5 years
- Not have had a prior FBL revoked under the Act within the last 5 years
Required Registered Capital
Once granted, FBL holders must comply with capital requirements under the law:
- A minimum capital of THB 3 million is generally required
Conclusion
The Foreign Business License (FBL) acts as both a gateway and a regulatory safeguard for foreign investors in Thailand. While the process may seem daunting, with careful preparation and the right legal guidance, it is entirely possible to set up and operate your business legally and successfully in Thailand.
If you need assistance with an FBL application or wish to explore alternatives such as BOI promotion, please feel free to contact our legal team via [email protected] We are ready to support you.
