Joint ventures in Thailand most often occur between Thai citizens and foreigners who want to expand the geography of their business and conquer new markets.
Joint ventures between Thai and foreign companies are especially popular in business areas such as high-tech manufacturing, tourism and hotel business, and other services.
One can set up a joint venture in Thailand choosing between:
- creating a Thai JV in the form of a partnership;
- registering an LLC in Thailand.
The first requires the registered parties to remain separate legal entities for tax returns.
The second requires the parties to file a tax number for tax filing purposes.
It is noteworthy that Thai legislation on the foreign investment regime provides for certain rules (investment protection, etc.) regardless of the form of the enterprise in which the investment was made, including these rules are applicable to a joint venture.
Foreign investors
Industry licenses may be required to register a company in Thailand. For example, it can be difficult to obtain a tourist license if the company officially employs at least one foreigner. Therefore, investors are advised to consult with specialists on legal issues regarding the preparation of the necessary documents for obtaining a license in Thailand.
The state provides support to joint ventures if their activities are regarded as strategically important for the country. For enterprises in the field of IT technologies, complex science-intensive modern production, preferential government programs are provided.
Special permissions
Generally, there are no citizenship or residency requirements for directors when establishing a joint venture in Thailand. This rule does not apply to companies that require permission to do business. Such companies are listed in the Foreign Business Law, so it is recommended that you familiarize yourself with it before establishing a JV in Thailand.
Labor and IPR rights
When a Thai joint venture is established, all employees on transfer receive rights, benefits, and social security without any discrimination. An employee can terminate an employment agreement with a joint venture by notifying the company's management in advance.
Obtaining IPR protection in Thailand largely depends on negotiations between the JV participants.
Final word
Despite the undeniable fact that Thailand is among the top 3 countries in Asia in the ranking of the best countries for business, it can be challenging for foreigners to do business with Thais. Differences in mentality, culture, the famous Thai sabay-sabay (the philosophy of a well-fed, comfortable and harmonious life, a relaxed acceptance of life as it is, without burdening oneself) - all these can create unpredictable difficulties when doing business in Thailand.
In order to correctly assess whether a business structure is suitable for a certain type of entrepreneurial activity, it is advisable to consult with specialists. Our experts provide advice on the registration of joint ventures in Thailand and other jurisdictions. Please reach out to us by filling out the feedback form or in any other convenient way.
