Thailand is currently experiencing a massive growth in opportunities related to e-commerce with current estimates for the next five years predicting an average growth of 18.2% per year. Thailand has one of the highest internet and mobile internet adoption throughout Southeast Asia. Furthermore, Thai companies that are adopting social media and messaging platforms such as LINE have seen even faster growth as Thais have quickly adopted to purchasing goods and services through mobile devices.
Over the past year, Silk Legal has seen a definite uptick in clients inquiring about Board of Investment promotion for potential e-commerce operations in Thailand. The BOI’s e-commerce program allows 100% foreign ownership of the business. This is ideal for many start-ups and investors who have holding companies located in jurisdictions that are friendly towards technology investment, such as Singapore or Hong Kong, whereby the Thailand company can be a wholly owned subsidiary of those companies.
The most important incentives offered by the BOI for e-commerce investors are:
- Right to hire foreign workers to support the business and not be subject to normal capital and Thai/Foreigner employee ratios of normal Thai limited companies.
- Relaxed foreign remitting of profits to parent company.
- 100% foreign ownership.
However, BOI promotion for the e-commerce business does not include merit based or tax incentives.
The application process for a BOI Company will require the assistance of an experienced legal advisor as there are certain points that the BOI officer will look for in an application. From our daily experience dealing with these matters, the BOI tends to take notice of the following:
- Detailed pitch deck explaining what the business is, how it operates and the revenue model.
- Compliance with BOI requirements on the revenue model based on taking a commission of a third party’s product.
- Insufficient budgeting of computers, software and resources for employees.
- Human Resources plan and the required number of Thai employees to foreign workers.
- Technology transfer and staff training.
- Lack of supporting details and information.
Where applications become difficult is if the company engages in additional activities that are outside of the scope specified by the BOI for promotion. Depending on the nature of those additional business activities, the investor may then require a Foreign Business License (FBL) in order to comply with the Foreign Business Act and operate legally within Thailand. We have assisted clients who had encountered such issues as they were unaware that they were actually in contravention of the Act.
Silk Legal are the go-to professionals for BOI applications in Thailand. Our successful record of assisting clients obtain BOI promotion is extremely high. Making mistakes will cost your firm valuable time and extra scrutiny in the application process. Let our team guide you with the process.