Update: Foreign Business Act to be revised as E-Foreign Business Service gets rolled out

Home ยป Update: Foreign Business Act to be revised as E-Foreign Business Service gets rolled out

The Ministry of Commerce is set to roll out a new electronic foreign business platform this month. This initiative aims to digitize the process of obtaining a foreign business license (FBL) and provide a more convenient option for foreign businesses, reducing both the number of documents required and the time needed for approval.

This is a significant update for foreigners looking to set up business operations in Thailand, as foreign companies operating in the country must have either a Foreign Business License (FBL) or a Foreign Business Certificate (FBC) to do so. An FBL is a permit required for foreign businesses engaging in activities restricted to foreigners under the Foreign Business Act, and to obtain this, foreign businesses must apply to the Ministry of Commerce with detailed information about their business activities and objectives.

On the other hand, an FBC is issued to foreign businesses under specific conditions that exempt them from needing a full FBL. Examples include businesses engaging in activities promoted by the Board of Investment (BOI) or those benefiting from international treaties like the U.S.-Thai Treaty of Amity. The FBC allows these entities to operate legally without undergoing the entire licensing process required for an FBL, provided they demonstrate eligibility under relevant exemption criteria.

Applying for an FBL or FBC through the E-Foreign Business Service

Applying for an FBL or FBC through the current process has typically involved extensive paperwork, multiple visits to government offices, and a lengthy approval timeline. Applicants needed to prepare and submit multiple documents, attend interviews, and navigate various bureaucratic steps, often resulting in significant delays and inefficiencies.

The upcoming e-foreign business service aims to streamline and digitize this process. The new system will allow applicants to file applications online, undergo a preliminary examination, and pay the necessary fees digitally. E-licenses will be processed within 60 days at a cost ranging from THB 20,000 to THB 250,000, while e-certificates will be issued within 30 days for a fee of THB 20,000. Once approved, these documents can be conveniently downloaded from the website, making the overall process faster and more efficient.

Changes to Business Activities Requiring FBL or FBC

As mentioned earlier, the FBA restricts foreign participation in specific business activities. List 1 includes activities absolutely prohibited to foreigners; List 2 covers activities related to national safety, security, culture, and the environment, requiring special permission from the Ministry of Commerce and at least 40% Thai ownership; and List 3 involves sectors where Thai nationals are not ready to compete, although foreign entities can obtain permission from the Department of Business Development to engage in these activities.

However, the Ministry of Commerce has proposed changing the list of business activities that do not require permits, meaning the following may no longer need an FBL or FBC if the changes come to pass:

  • Telecommunication services regulated under the National Broadcasting and Telecommunications Commission (NBTC) licensing framework.
  • Corporate treasury services.
  • Software development.
  • Administrative services for subsidiary or affiliated companies.
  • Credit guarantee services for associate or affiliate companies.
  • Leasing space with utilities for electronics and vending machines.
  • Petroleum drilling.
  • Financial services lending money with securities as primary collateral under derivatives contracts.
  • Derivatives services where underlying assets are not subject to Thai derivatives regulations.
  • Agricultural futures trading.

Despite these changes, other regulations involving foreign business activities remain the same. Notably, Thai individuals or juristic persons are prohibited from acting as nominee shareholders or participating in business operations on behalf of foreigners, as stipulated in Section 36 of the Foreign Business Act of 1999.

As this update develops, requirements may change. Businesses must stay informed about the latest regulations. Silk Legal will provide updates as they become available.

Silk Legal can provide a range of services for several practice areas. This article is for information only. While we have tried to keep our updates as accurate as possible, changes to legislation or other factors may affect your decisions. Please feel free to contact us for a free consultation at [email protected].

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