Introduction:
Establishing a non-profit organisation, foundation, or Association in Thailand is a great way for people to contribute positively to Thai society. Whether these entities will work in the education, health, environmental conservation, or the cultural preservation sector, the process of starting a non-profit requires completing a complex process.
This article aims to provide an overview on how to set up a non-profit entity in Thailand, including the necessary steps, legal requirements, and considerations to ensure a successful enterprise.
Key Points
- Establishing a non-profit organisation in Thailand is subject to strict legal compliance, including registration with the Ministry of Interior, maintaining a board of directors, and regular financial reporting to authorities.
- Non-profits can be structured as foundations (requiring 500,000 THB minimum capital (at least 250,000 THB cash contribution if other assets are included) and three directors) or associations (requiring ten members with no capital requirement), each with its own regulatory requirements.
- While foreigners can operate non-profits in Thailand, authorities will often require some Thai national involvement on the board of directors and may impose additional scrutiny on foreign-controlled organizations.
- Thai non-profits organisations have limited tax benefits compared to other countries, though some income from donations, grants, and fundraising events may be tax-exempt if used directly for charitable purposes.
- Operating costs are relatively low in Thailand, and the country’s position as a regional hub makes it attractive for non-profits, though organizations must avoid political activities and maintain transparency, especially regarding foreign funding.
What is a Non-Profit Organisation?
In Thailand, a Non-Profit Organization (NPO) is an entity established to serve a public or social purpose, such as education, healthcare, environmental protection, or human rights, rather than to earn profit for individuals. The key characteristics of Non-Profit Organisations in Thailand are as follows:
Mission-Centred Focus: Thai NPOs are mission-driven, this means that their aim is to address social, environmental, cultural, or humanitarian issues. They work across a wide range of areas, from community health and education to wildlife conservation and reducing poverty.
Legal Structure: Thai NPOs can be registered as foundations or associations under the Thai Civil and Commercial Code. Registered entities are required to meet specific requirements, such as submitting annual financial statements.
Funding Sources: NPOs in Thailand are able to receive both local and international donations, grants, membership fees, and, in some specific cases, revenue from social enterprises. In practice, many NPOs receive support from international non-governmental organizations (NGOs), foreign embassies, and private donors interested in supporting development in Thailand.
Tax Status and Challenges: Thailand does not provide a wide ranging set of tax exemptions for NPOs as in some other countries. While some donations to NPOs may be tax-deductible for donors, Thailand’s regulations make achieving tax-exempt status difficult.
Collaborative Partnerships: Many Thai NPOs partner with governmental bodies, international NGOs, and the private sector to expand their reach. These partnerships allow them to share resources, improve community outreach, and address larger and more difficult problems together.
What Types Of Non-Profit Organisations are there in Thailand?
In Thailand, non-profit organisations (NPOs) can take various forms, including foundations, associations, and non-governmental organisations (NGOs).
What is the difference between a foundation, an association, and an NPO in Thailand? This is an important distinction as each type serves a specific purpose and operates under a different legal framework:
Foundations
Foundations are established to support charitable, educational, scientific, or cultural activities without the intention of generating profit. Foundations operate independently and are governed by the Thai Civil and Commercial Code.
Foundations are considered a distinct legal entity under the Thai Civil and Commercial Code and are permitted to hold ownership of assets acquired either through allocation to the foundation or through donations.
Associations
Formed by a group of individuals for a common purpose, associations focus on activities that benefit their members or the public without distributing profits.
Associations are overseen by a board of directors, which manages their affairs in accordance with the law and the organization’s Articles of Association, under the supervision of the general meeting. An association may serve either its members or the public, depending on its registered objectives. Unlike foundations, which are legally required to operate solely for public benefit or charitable purposes, associations have greater flexibility in their activities while still having a nonprofit status.
NGOs
Non-governmental organisations often engage in advocacy, research, and community development projects. NGOs can operate under various legal structures, including foundations or associations.
What is the Legal Framework for Non-Profit Organizations?
Non-profits in Thailand are governed by Sections 110-136 of the Civil and Commercial Code. Here’s a summary of the relevant provisions and regulatory requirements:
1. Registration Process
- Application Submission: To register either an association or foundation, founders must submit an application to the local district office (in case of registration within Bangkok) or at local provincial offices (in case of registration outside Bangkok).
- Documents and Requirements: The application must include the organization’s name, objectives, location, AoA, organizational structure, and details about its directors or founders. For foundations, a clear description of the assets or funds provided for the purpose is also required.
- Approval and Oversight: The Ministry of Interior will review the applications to ensure that the NPO’s objectives satisfy Thai public policy and law. In order for the application to receive approval, the Ministry of the Interior must be able to confirm the legitimacy of funds and ensure that activities do not threaten national security, public order, or morality.
2. Legal Obligations and Compliance
Governing Documents
Both associations and foundations must have governing documents outlining the objectives, organizational structure, and regulations for management. These documents are necessary for registration and must be approved by the Ministry of Interior.
Board and Management Requirements
Thai law requires that associations and foundations have a board of directors responsible for decision-making and overseeing the operations of the organisation. Directors must act in the best interest of the organization and can be held liable for misconduct or negligence.
Reporting and Accountability
NPOs must maintain transparency in their financial activities, which often involves annual reporting of their operational performance to the Association Registrar, particularly concerning income sources, spending, and compliance with the stated objectives. Audits and other checks are sometimes required, especially for foundations with significant funds.
The following documents must be prepared annually:
• Operational Report for the past fiscal year;
• Audited Accounts and Balance Sheet for the past fiscal year;
• Copies of all the Minutes of Board of Directors’ Meetings for the past fiscal year.
4. Restrictions and Permissions
Political Activities
Thai law imposes limitations on NPOs in terms of political involvement. Organizations that aim to influence government policy, lobby, or engage in political advocacy may be subject to additional scrutiny or restrictions.
Additionally, the objectives of the NGO or association must not violate the law, public order, good morals or pose a threat to society, the sovereignty of Thailand, or other states.
Foreign Funding and Activities
Receiving foreign funding is permitted, but there are regulations and reporting requirements to ensure transparency, particularly for organizations working in politically sensitive areas.
5. Tax Status and Benefits
NPOs in Thailand do not automatically receive tax-exempt status. However, they may apply for certain tax benefits if they meet specific criteria and serve public benefit purposes, such as charitable or educational activities.
Tax Status for Foundations
A foundation’s asset management must only focus toward achieving its objectives, without any personal gain. Once registered as a legal entity, foundations will be classed as one of two categories:
1. Tax-Exempt Foundations
Certain foundations qualify for tax-exempt status under Ministerial Notification No. 531, which outlines criteria for organizations, charitable institutions, hospitals, and educational institutions eligible for income tax and VAT exemptions under the Revenue Code.
2. Taxable Foundations
Foundations that do not qualify for tax exemptions remain subject to taxation, although usually at lower rates than corporations or partnerships. However, not all income sources are taxable. The following types of income will be considered tax-exempt, for example, donations from individuals or organizations, whether given during the donor’s lifetime or through a will.
Foreign donations received from abroad.
If a foundation operates solely on donations, it remains tax-exempt. However, if donations are misused for personal uses, such as an individual donating to their own foundation and using the funds for unrelated purposes, this would be illegal.
Taxable Income for Foundations
Income generated from business, commercial, agricultural, industrial, or transport activities is considered taxable under Section 40(8) of the Revenue Code. Such activities will be subject to a tax rate of 2% of the total revenue.
Tax Status for Associations
Associations in Thailand are classified as nonprofit entities, but they are still subject to corporate income tax. However, the tax rates are lower than those applied to regular entities, depending on the type of income.
Taxable Income and Rates
- Passive Income (Section 40(1)–(7) of the Revenue Code)
- Includes: Interest, dividends, rental income, royalties, capital gains, service fees, and other similar earnings.
- Tax Rate: 10% of gross income (before deductions).
- Business-Related Income (Section 40(8) of the Revenue Code)
- Includes: Revenue from commercial, agricultural, industrial, transportation, real estate activities, or any other business operations.
- Tax Rate: 2% of gross income (before deductions).
Withholding Tax Exemption
Associations can apply for a withholding tax exemption from the Revenue Department. The required documents for the application include:
- Association Registration Certificate.
- Proof of Address (such as a lease agreement or a letter of consent with supporting documents like a land title deed, house registration, and landowner’s ID).
- Copy of the Thai ID card (or passport with an entry stamp) of the authorized signatory.
- A location map of the association’s premises.
- Photographs of the association’s office.
- Additional documents as requested by the Revenue Department.
Tax-Exempt Income
Certain types of income are exempt from taxation under Section 65(13) of the Revenue Code, including:
- Membership fees or maintenance fees collected from members.
- Donations, whether in the form of money or property.
- Money or property received as a gift, bequest, or other gratuitous transfer.
6. Dissolution and Asset Management
Upon dissolution, NPOs must allocate their remaining assets according to the original purposes stated in their registration documents or as directed by law. This ensures that the funds are used for public or charitable purposes and not for personal gain.
What are the Benefits of Establishing a Non-Profit in Thailand?
Social Impact
One of the primary motivations for setting up a non-profit is the potential to create a positive social impact. By working on issues such as poverty, education, and health care, non-profits can significantly improve the quality of life for many individuals and communities.
Tax Advantages
Registered non-profits in Thailand may enjoy various tax benefits, including exemptions from corporate income tax on certain types of income.
Credibility and Legitimacy
Establishing a non-profit organisation provides credibility and legitimacy when looking to attract donors, beneficiaries, and the government. A registered entity can enter into contracts, hire employees, and engage in fundraising activities, which are essential for sustainable operations.
Access to Funding
Non-profits can receive donations from the public and private sectors. Being registered as a legal entity allows organisations to issue tax-deductible receipts to donors, making contributions more attractive.
What are the Tax Benefits Available for Non-Profit Organisations?
In Thailand, registered non-profit organisations, particularly those considered foundations or associations under the Thai Civil and Commercial Code, may enjoy limited tax benefits.
While the tax benefits are not as extensive as in some other countries, certain types of income may be eligible for tax exemptions under specific conditions, including:
1. Exemption on Income from Donations and Grants
Registered non-profits in Thailand can receive tax-exempt income from donations and grants if the funds are used directly for the organisation’s stated charitable purposes. For example, if a non-profit receives a donation to support its educational programs, the donation may be exempt from corporate income tax as long as it is used to fund those programs.
2. Income from Fundraising Events
NPOs are often allowed to host fundraising events or activities, such as charity dinners, auctions, or concerts. The income generated from such events may be exempt from corporate income tax if it is used for the organisation’s stated purposes.
3. Membership Fees
Many associations, such as professional or trade associations, are required to collect membership fees from their members, as per Section 79 of the Thai Civil and Commercial Code. These fees may be exempt from income tax. This exemption applies when the fees directly support the organisation’s stated objectives rather than generating profit.
4. Investment Income Used for Charitable Purposes
If an NPO receives income from investments (like interest or dividends) and uses this income strictly for charitable purposes, this income may qualify for tax exemption. However, it must be carefully allocated and documented to demonstrate that it is applied to further the organisation’s mission.
5. Donor Tax Deductions
While this benefit applies to the donor rather than the organisation itself, donations made to certain registered non-profits in Thailand can be tax-deductible for individuals or businesses, depending on the organisation’s registration status and compliance with revenue codes.
Limitations and Conditions
While these exemptions are available, in order to take advantage of them, the NPO must satisfy the following conditions:
- The non-profit must be formally registered and recognized under Thai law.
- Documentation and proof of use for charitable purposes are often required.
- Income tax exemptions may be limited to specific activities that directly further the NPO’s objectives, rather than general revenue generation.
What are the Steps to Establish a Non-Profit Organisation in Thailand?
Step 1: Choose the Legal Structure
Deciding on the appropriate legal structure is very important. Foundations and associations have different requirements and implications:
- Foundations: Require a minimum capital of THB 500,000 or THB 250,000 if assets are included. Must have at least three directors, including a Thai national.
- Please note, that if the foundation is to be established established for purposes such as social welfare, promoting education, sports, religion, disaster relief, or for the treatment, research, and prevention of drug addiction or AIDS, or if it is established by a government agency, the required capital amount may be reduced to 200,000 THB. For such projects, if there are other assets, the cash contribution must be at least 100,000 THB, with the total value of cash and other assets not less than 200,000 THB.
- Associations: Typically require a minimum of ten members and do not have a capital requirement. They are also more flexible in terms of governance.
Step 2: Prepare the Necessary Documentation
The registration process involves submitting various documents to the relevant authorities. Key documents may include:
- Documents relating to the foundation: This includes the regulations of the organisation, bylaws, and a list of proposed activities.
- Asset Documentation: A detailed list of assets allocated for the organisation’s use, along with proof of ownership or donation commitments.
- Identification: Copies of identification for all board members and proof of their qualifications.
Step 3: Submit the Application
Once all documentation is prepared, the application must be submitted to the district registrar where the organisation will be headquartered. Before receiving a decision, the registrar in charge of the application may conduct an inspection to verify the information provided.
The approval process can take several months.
Step 4: Ongoing Compliance
After successfully registering a NPO the following compliance requirements must be ensured:
Tax Compliance: Organisations must apply for a tax identification number and fulfill all tax obligations as per the Revenue Code.
Annual Reporting: Non-profits must submit annual financial statements and activity reports to the relevant authorities.
Can Non-profit Organisations be 100% Operated by Foreigners?
Yes, foreigners can establish and operate non-profit organisations (NPOs) in Thailand, but certain requirements and limitations may apply. The restrictions for foreigners to be able to control or operate an NPO depends on several factors:
1. Registration and Legal Structure
Foreigners can serve as founders, board members, and managers of non-profit associations or foundations. However, in practice, Thai authorities may require that the organization include at least some Thai nationals on the board of directors, particularly for foundations
For associations, while it’s possible for the membership and leadership to be majority foreign, some local authorities might impose additional scrutiny if an organisation is entirely foreign-controlled.
2. Approval from the Thai Authorities
The Ministry of Interior, who is responsible for the registration of NPOs, will closely examine the submitted application, especially those with majority foreign involvement. It is possible that additional requirements or approvals may be needed for organizations that are 100% foreign-operated.
Foreign-operated NPOs often need to clearly state their objective, sources of funding, and how they will benefit the Thai public. Authorities will carefully review this information to ensure they align with the national interest.
3. Restrictions on Political Activities and Foreign Influence
Thai law restricts NPOs from engaging in direct political activities, and this restriction is strictly applied to foreign-controlled organizations. Authorities may be concerned about foreign influence if an NPO is entirely foreign-operated, so the organization must focus only on its stated charitable or social purposes.
NPOs that receive foreign funding, especially if entirely foreign-operated, may face additional transparency requirements. They must report funding sources and explain how funds will be used, which helps authorities monitor foreign influence.
4. Funding and Financial Requirements
Foundations, in particular, must show proof of initial capital, and foreigners funding a foundation may face more strict KYC protocols before being approved. Authorities may require evidence that foreign funds are legitimate and will be used strictly for charitable purposes.
Regular financial reporting is required for all NPOs, this requirement helps Thai authorities ensure that funds are not misused and that the organization is fulfilling its stated objectives.
5. Staffing Requirements
Foreigners can serve in operational roles within the NPO, but Thailand’s work permit and visa regulations apply. Foreign staff or managers need work permits, which the NPO must arrange, and the organization needs to ensure compliance with labour laws.
In order for an NPO or Organization to be able to support a Work Permit for a foreign employee, the entity must be properly registered under Thai law.
Unlike Work Permit requirements for a Limited Company, there are no capital requirements for hiring foreigners, however, the association or NGO is generally required to maintain a 1:1 ratio of foreign employees to Thai staff.
It is important to note that the approval of the Work Permit application is solely based on the discretion of the relevant authorities and approval is not guaranteed. Applications will be considered on a case by case basis. The final decision will be made based upon the necessity of hiring foreign employees in relation to the Association’s objectives and operational needs.
6. Tax and Compliance Considerations
Foreign-operated NPOs may not automatically receive tax-exempt status. They must apply for tax benefits through the Revenue Department and demonstrate that their operations genuinely serve the Thai public interest.
To qualify for tax exemptions, NPOs must be recognized as serving a public or charitable purpose, and additional scrutiny may apply if the organization is 100% foreign-operated.
FAQs about Non Profit Organizations in Thailand
How long does it take to register a non-profit organization in Thailand?
The registration process for a foundation or association in Thailand typically takes between 3 to 6 months, depending on the completeness of the application and the responsiveness of the authorities.
What are common challenges faced when setting up a non-profit in Thailand?
Common challenges include navigating Thai-language documentation, lengthy bureaucratic procedures, and meeting strict government scrutiny, especially for organizations with foreign involvement or politically sensitive missions.
How can language barriers be overcome during the registration process?
Most legal and registration documents are in Thai. To overcome this, it’s advisable to hire a local legal firm, professional translator, or consultant experienced in non-profit registration to assist with paperwork and liaising with government officials
Our Thoughts
Thailand is an excellent location for establishing a nonprofit. As a regional hub, Thailand provides easy access to neighboring countries, enabling nonprofits to expand their reach across borders. Within Thailand itself, there are significant opportunities to address areas like education, healthcare, poverty alleviation, and environmental conservation.
Additionally, Thailand offers several practical advantages for nonprofits. The relatively low operational costs allow organizations to allocate more resources directly to their programs, maximizing their effectiveness. The Thai government also supports initiatives focused on rural development, environmental protection, and education, creating opportunities for collaboration with local authorities. Combined with a culturally supportive and community-driven society, Thailand presents an ideal environment for nonprofit organizations.
