Introduction:

Hiring employees in Thailand involves much more than issuing an employment contract and paying salaries each month. Employers must comply with the Labour Protection Act B.E. 2541 (1998), the Social Security Act, work permit requirements for foreign employees, and a range of regulations covering working hours, statutory leave, termination procedures, and severance pay. 

Whether you are establishing your first company in Thailand, expanding an existing operation, or growing a BOI-promoted business, understanding your responsibilities as an employer can help reduce legal risk and avoid costly employment disputes. Thai Labour Courts are well known for providing strong protections to employees, and employers who fail to follow the correct procedures may face significant financial liability, even where there appears to be a valid reason for dismissal.

This guide explains the key employment law requirements that foreign employers should understand, from employment contracts and working hours through to termination, severance pay, work permits, and Social Security. It also explains how Lex Nova Partners supports businesses by combining employment, immigration, corporate, and tax advice under one roof.

Key Points

• Thai labour law applies to all employers, including foreign-owned businesses, and sets minimum standards for contracts, working hours, leave, and employee rights.
• Termination must follow the correct legal process, including proper notice, written reasons where required, and statutory severance pay to reduce the risk of Labour Court claims.
• Foreign employees need both a valid visa and work permit before starting work, and employers must meet the relevant corporate and immigration requirements.
• Remote employees working in Thailand remain protected by Thai labour law, with written remote working arrangements recommended to clarify each party’s responsibilities.
• Employment law often overlaps with immigration, corporate, and tax compliance, making integrated legal advice valuable for businesses operating in Thailand.

What are the basic employment law requirements for employers in Thailand?

The Labour Protection Act B.E. 2541 (1998) forms the foundation of employment law in Thailand. It establishes the minimum rights that employees are entitled to receive and the obligations employers must meet. While businesses are free to offer more generous terms, they cannot provide conditions that are less favourable than those required by law.

Employment Contracts

Thai law recognises both written and verbal employment agreements. However, written contracts are strongly recommended for every employee. A written agreement provides clear evidence of the terms that have been agreed and significantly reduces the risk of disputes relating to salary, benefits, working hours, duties, confidentiality, intellectual property, and termination.

Section 11 of the Labour Protection Act, states that contracts should specify job title and duties, working hours and location, salary and benefits, and any applicable probationary period. 

For ongoing positions, open-ended employment contracts are generally the most appropriate option. Fixed-term contracts are only permitted in limited circumstances, such as project-based work, seasonal employment, or temporary assignments. To qualify as a genuine fixed-term contract, the agreement must satisfy the requirements set out under Thai labour law. If it does not, the contract may instead be treated as permanent employment, together with the associated severance obligations.

Many employers also include a probation period. Although Thai law does not formally recognise probationary employment as a separate legal status, a period of up to 119 days is used in practice. Once an employee reaches 120 days of service, statutory severance rights may begin to apply.

Importantly, an employee cannot simply be dismissed because they have “failed probation”. Employers must still follow the correct legal termination process.

Working Hours and Overtime

Standard working hours in Thailand are limited to eight hours per day and 48 hours per week for most occupations. Employees must receive a break of at least one hour after working for five consecutive hours.

Any work performed beyond the normal working hours is generally treated as overtime. Employers cannot require employees to work overtime without their consent except in limited emergency situations permitted by law.

Where overtime is worked, employees are entitled to statutory overtime pay. Depending on when the work is performed, overtime may be payable at one and a half, two, or three times the employee’s normal hourly wage.

Minimum Wage

Thailand operates a provincial minimum wage system, meaning the applicable daily wage depends on where the employee works. The rates are reviewed periodically by the Wage Committee and may change from time to time.

Thailand’s minimum wage currently ranges from THB 337 to THB 400 per day. Foreign employees are subject to a different rate and the actual minimum wage requirements differ based on nationality.

Minimum salary for foreign employees

Minimum salary for foreign employees hired by a BOI company

New BOI rules also introduce mandatory minimum monthly salary thresholds for foreign employees. The exact salary required depends on the job title, the candidate’s experience, and their educational background.

These salary requirements must be fully met in order to obtain or renew BOI visa and work permit privileges, and will be reviewed at both the application and renewal stages.

Employers in Thailand are legally required to pay wages at least once a month and issue detailed payslips for employees. The requirements for paying salaries are set out in Section 70 of the Labour Protection Act.

Foreign employees may also be subject to minimum salary requirements for work permit purposes depending on their nationality and visa category. These immigration requirements are separate from the provincial minimum wage and should not be confused with each other.

Statutory Leave

Employees in Thailand benefit from several statutory leave entitlements, including:

• At least 13 paid public holidays each year.
• A minimum of six days’ paid annual leave after completing one year of service.
• Up to 30 days of paid sick leave each year.
• Ninety-eight days of maternity leave.
• At least three days of paid personal business leave.

Employers are free to provide additional leave benefits, but they cannot reduce these statutory minimum entitlements.

Work Rules

Businesses employing ten or more employees are required to prepare written work rules covering matters such as working hours, leave, disciplinary procedures, complaints, and termination. These rules must be communicated clearly to employees and filed with the Department of Labour Protection and Welfare.

Well-drafted work rules not only satisfy a legal requirement but also provide an important foundation for handling disciplinary matters and reducing the risk of future disputes.

Social Security

Employers must register employees with the Social Security Office and make monthly contributions to the Social Security Fund. Both the employer and employee contribute five percent of the employee’s salary, subject to the applicable statutory cap.

These contributions provide employees with access to benefits including medical treatment, maternity benefits, disability support, unemployment assistance, retirement pensions, and survivor benefits.

Complying with these requirements from the beginning helps employers avoid penalties while providing employees with the protections required under Thai law.

How do I legally terminate an employee in Thailand?

The Labour Protection Act B.E. 2541 (1998) forms the foundation of employment law in Thailand. It establishes the minimum rights that employees are entitled to receive and the obligations employers must meet. While businesses are free to offer more generous terms, they cannot provide conditions that are less favourable than those required by law.

Employment Contracts

Thai law recognises both written and verbal employment agreements. However, written contracts are strongly recommended for every employee. A written agreement provides clear evidence of the terms that have been agreed and significantly reduces the risk of disputes relating to salary, benefits, working hours, duties, confidentiality, intellectual property, and termination.

Section 11 of the Labour Protection Act, states that contracts should specify job title and duties, working hours and location, salary and benefits, and any applicable probationary period. 

For ongoing positions, open-ended employment contracts are generally the most appropriate option. Fixed-term contracts are only permitted in limited circumstances, such as project-based work, seasonal employment, or temporary assignments. To qualify as a genuine fixed-term contract, the agreement must satisfy the requirements set out under Thai labour law. If it does not, the contract may instead be treated as permanent employment, together with the associated severance obligations.

Many employers also include a probation period. Although Thai law does not formally recognise probationary employment as a separate legal status, a period of up to 119 days is used in practice. Once an employee reaches 120 days of service, statutory severance rights may begin to apply.

Importantly, an employee cannot simply be dismissed because they have “failed probation”. Employers must still follow the correct legal termination process.

Working Hours and Overtime

Standard working hours in Thailand are limited to eight hours per day and 48 hours per week for most occupations. Employees must receive a break of at least one hour after working for five consecutive hours.

Any work performed beyond the normal working hours is generally treated as overtime. Employers cannot require employees to work overtime without their consent except in limited emergency situations permitted by law.

Where overtime is worked, employees are entitled to statutory overtime pay. Depending on when the work is performed, overtime may be payable at one and a half, two, or three times the employee’s normal hourly wage.

Minimum Wage

Thailand operates a provincial minimum wage system, meaning the applicable daily wage depends on where the employee works. The rates are reviewed periodically by the Wage Committee and may change from time to time.

Thailand’s minimum wage currently ranges from THB 337 to THB 400 per day. Foreign employees are subject to a different rate and the actual minimum wage requirements differ based on nationality.

Minimum salary for foreign employees

Minimum salary for foreign employees hired by a BOI company

New BOI rules also introduce mandatory minimum monthly salary thresholds for foreign employees. The exact salary required depends on the job title, the candidate’s experience, and their educational background.

These salary requirements must be fully met in order to obtain or renew BOI visa and work permit privileges, and will be reviewed at both the application and renewal stages.

Employers in Thailand are legally required to pay wages at least once a month and issue detailed payslips for employees. The requirements for paying salaries are set out in Section 70 of the Labour Protection Act.

Foreign employees may also be subject to minimum salary requirements for work permit purposes depending on their nationality and visa category. These immigration requirements are separate from the provincial minimum wage and should not be confused with each other.

Statutory Leave

Employees in Thailand benefit from several statutory leave entitlements, including:

• At least 13 paid public holidays each year.
• A minimum of six days’ paid annual leave after completing one year of service.
• Up to 30 days of paid sick leave each year.
• Ninety-eight days of maternity leave.
• At least three days of paid personal business leave.

Employers are free to provide additional leave benefits, but they cannot reduce these statutory minimum entitlements.

Work Rules

Businesses employing ten or more employees are required to prepare written work rules covering matters such as working hours, leave, disciplinary procedures, complaints, and termination. These rules must be communicated clearly to employees and filed with the Department of Labour Protection and Welfare.

Well-drafted work rules not only satisfy a legal requirement but also provide an important foundation for handling disciplinary matters and reducing the risk of future disputes.

Social Security

Employers must register employees with the Social Security Office and make monthly contributions to the Social Security Fund. Both the employer and employee contribute five percent of the employee’s salary, subject to the applicable statutory cap.

These contributions provide employees with access to benefits including medical treatment, maternity benefits, disability support, unemployment assistance, retirement pensions, and survivor benefits.

Complying with these requirements from the beginning helps employers avoid penalties while providing employees with the protections required under Thai law.

How do I legally terminate an employee in Thailand? 

Terminating an employee in Thailand is rarely as straightforward as many foreign employers expect. Even where there are legitimate concerns about an employee’s performance or conduct, dismissal must follow the procedures set out under the Labour Protection Act. Failing to do so can expose an employer to claims for wrongful dismissal, statutory severance, compensation for unfair termination, and legal costs.

Thai Labour Courts place significant emphasis on employee protection. While every case depends on its own facts, employers that overlook the correct process often find that a defensible dismissal becomes an expensive dispute.

Notice Requirements

Unless an employee is being dismissed for one of the serious offences listed under Section 119 of the Labour Protection Act, employers must provide advance notice of termination or make a payment in lieu of notice.

The notice must be given on or before a wage payment date and takes effect on the following wage payment date. In practice, this usually means giving one full pay period’s notice, although the required notice cannot exceed three months.

Many employers choose to make payment in lieu of notice, particularly where they want the employee to leave immediately or where allowing them to remain in the workplace could create operational or commercial risks.

The Reason for Termination Matters

One of the most common mistakes made by employers is failing to properly document the reason for dismissal.

Following the 2019 amendments to the Labour Protection Act, employers are required to state the reason for termination in writing at the time the employee is dismissed. This is an important procedural requirement. If no reason is given, the employer may lose the ability to rely on that reason later if the employee brings a claim before the Labour Court.

For that reason, the decision to terminate should always be supported by appropriate documentation. Performance reviews, written warnings, disciplinary records, attendance reports, investigation findings, or evidence of misconduct may all become important if the dismissal is later challenged.

Dismissal With and Without Cause

Thai labour law clearly defines termination with and without cause. Section 119 of the LPA established the grounds for termination without severance, which include dishonesty, gross negligence, or serious breaches of company rules. 

In the situation where an employer makes the decision to terminate a member of staff, they must provide advance notice that equals one full pay cycle or provide a payment in lieu of this notice.

Severance Pay Obligations

Severance pay is required under Section 118 of the Labour Protection Act and is calculated based on the length of time the employee had been working for the company. The standard severance pay rates are as follows:

Failure to provide proper notice or pay the required severance can lead to legal consequences, including court ordered reinstatement of the employee or compensation/ damages, depending on the Labour Court’s decision.

If an employee is fired using either statutory or nonstatutory causes, the employee is entitled to the following statutory payments:

When Can an Employee Be Dismissed Without Severance?

Thai law recognises a limited number of circumstances where severance is not payable. Section 119 of the Labour Protection Act includes situations such as:

• Dishonesty or fraud against the employer.
• Intentionally committing a criminal offence against the employer.
• Wilfully causing significant damage to the business.
• Gross negligence resulting in serious loss.
• Repeated breaches of lawful work rules after receiving a written warning.
• Abandoning work without a valid reason for the period prescribed by law.

These exceptions are interpreted narrowly. Employers should avoid assuming that poor performance, personality conflicts, or isolated mistakes amount to serious misconduct. Where there is any doubt, obtaining legal advice before proceeding with termination is often far less expensive than defending a Labour Court claim afterwards.

Redundancy

In cases of redundancy or business restructuring, employers must provide advance notice and be able to provide a valid reason for the redundancy. The employer must also notify the Labour Inspector. 

If ten or more employees are affected, additional consultation procedures are required. This includes informing employee representatives or labour unions in advance, engaging in good-faith discussions regarding the reasons for termination, and exploring alternatives to redundancy. 

If these procedures are not properly followed, it may result in claims of unfair dismissal.

Can a foreign company hire foreign employees in Thailand?

Yes, but employing foreign nationals in Thailand involves more than simply offering a job. Before a foreign employee can begin working, both the employer and the employee must satisfy a number of legal requirements relating to immigration, employment, and corporate compliance.

For many foreign businesses, this is where employment law begins to overlap with company law and immigration. The business must also ensure it is properly structured to support the work permit application and continues to meet its ongoing compliance obligations.

Work Permits and Non-Immigrant Visas

A foreign national must obtain both a valid Non-Immigrant “B” (Business) Visa (or other form of visa that permits work such as a Non-Immigrant O (marriage) visa or the Long Term Residency (LTR) visa and a work permit before commencing employment in Thailand. Working without the appropriate authorisation is illegal and may expose both the employee and the employer to criminal and administrative penalties.

Importantly, holding a visa alone does not grant permission to work. Likewise, obtaining a work permit does not remove the requirement to maintain valid immigration status. The two are required together and should be managed as part of a single application strategy.

Thai-to-Foreign Employee Ratio

To support a Work Permit, businesses are required to employ four Thai employees for every one foreign employee. This is commonly referred to as the 4:1 ratio. The company must also have 2 Million THB registered capital per foreign employee as well.

However, this is not an absolute rule. BOI-promoted companies are not subject to this quota. Depending on the promoted activity, the BOI may approve additional foreign positions that would not otherwise be available under the standard quota. Foreigners who are married to a Thai National and have a Non-Immigrant O visa are subject to reduced requirements of 2 Thai employees and 1 Million THB is capital.

Businesses should therefore assess their eligibility before assuming the standard ratio applies.

Restricted Occupations

Not every occupation is open to foreign workers. Thailand reserves certain professions and occupations exclusively for Thai nationals, and work permit applications must accurately reflect the duties the employee will perform.

Applying under an unsuitable occupation category can lead to delays or refusal of the application. Before recruiting overseas talent, employers should confirm that the proposed role is legally available to foreign workers and that the employee’s qualifications support the application.

Why Coordination Matters

Many businesses view employment contracts, visa applications, work permits, payroll, and tax registrations as separate administrative tasks. In practice, they are closely connected.

For example, the salary stated in the employment contract should align with the work permit application and payroll records. Changes to an employee’s position may require updates to both immigration records and employment documentation. Likewise, terminating a foreign employee often triggers obligations relating to work permit cancellation, visa status, Social Security, payroll, and, for BOI-promoted companies, ongoing promotion conditions.

Managing each of these requirements separately can create unnecessary delays and increase the risk of inconsistencies.

At Lex Nova Partners, our employment lawyers work alongside our immigration, corporate, and tax teams to provide a coordinated service for foreign employers. Rather than treating work permits, employment contracts, payroll compliance, and corporate obligations as separate matters, we help clients manage the entire employment lifecycle through a single point of contact.

Do Thai labour laws apply to remote workers?

Yes. Employees who work remotely from within Thailand remain protected by Thai labour law. Simply allowing an employee to work from home, or signing an employment contract that refers to another country’s laws, does not remove an employer’s obligations under the Labour Protection Act where Thai law applies.

As remote and hybrid working arrangements have become more common, Thailand introduced specific provisions governing work-from-home arrangements through the Labour Protection Act (No. 8) B.E. 2566 (2023). These amendments provide greater certainty for both employers and employees by recognising remote work as a legitimate form of employment while establishing minimum requirements for remote working agreements.

Remote Work Agreements

Where employees work remotely, employers should ensure the arrangement is documented in writing. A well-drafted remote work agreement should clearly address matters such as:

• The employee’s normal working hours.
• The location from which the employee will perform their duties.
• The equipment and technology provided by the employer.
• Data protection and confidentiality obligations.
• Performance expectations and reporting procedures.
• The circumstances in which the employer may contact the employee outside normal working hours.

Setting these expectations at the beginning helps avoid misunderstandings while giving both parties greater certainty about their respective responsibilities.

Employment Rights Remain the Same

Working remotely does not reduce an employee’s statutory rights. Employees working from home remain entitled to the same protections as office-based staff, including minimum wage, overtime pay where applicable, statutory leave, Social Security benefits, and protection against unfair dismissal.

Employers should also remember that occupational health and safety obligations do not disappear simply because an employee is working from another location. Businesses should still take reasonable steps to provide a safe working environment and ensure employees have the equipment necessary to perform their role safely.

Cross-Border Remote Working

Remote working can become more complex where employees perform their duties across multiple jurisdictions. Issues relating to tax residency, permanent establishment risk, immigration status, payroll, and employment law may arise depending on where the employee is physically located and which entity they are working for.

For international businesses, these arrangements should be reviewed before they are implemented. What appears to be a simple work-from-home arrangement can have wider implications for corporate compliance, taxation, and immigration.

Lex Nova Partners advises businesses on both domestic and cross-border employment arrangements, helping employers structure remote working policies that align with Thai labour law while taking into account the wider legal and regulatory considerations that may affect international operations.

Why foreign employers choose Lex Nova Partners for Thai labor law consultancy

Employment issues rarely involve labour law alone. Hiring foreign employees, restructuring a business, or terminating staff can also affect work permits, visas, payroll, tax, Social Security, and BOI compliance.

Lex Nova Partners brings these areas together under one roof. Our employment, immigration, corporate, and tax teams work closely to provide practical advice that helps businesses stay compliant while supporting their commercial objectives.

We regularly assist clients with:

• Employment contracts and HR policies.
• Disciplinary procedures and employee terminations.
• Severance and redundancy planning.
• Labour disputes and Labour Court representation.
• Work permits and Non-Immigrant “B” Visas.
• Payroll, Social Security, and employment tax compliance.

Whether you are hiring your first employee or managing an established workforce, we provide clear, commercially focused advice tailored to your business.

If you would like to review your employment practices or discuss a specific workplace issue, contact Lex Nova Partners to arrange a consultation with our employment law team.

Frequently Asked Questions

What are the basic employment law requirements for employers in Thailand?

Employers must comply with the Labour Protection Act B.E. 2541 (1998): provide written employment contracts, observe maximum working hours of 8 per day and 48 per week, pay at least the provincial minimum wage, grant statutory leave (13 public holidays, 6 days annual leave after 1 year, 98 days maternity leave, 3 days personal leave), post written work rules if employing 10 or more staff, and contribute to the Social Security Fund.

How much severance pay is required under Thai law?

Severance ranges from 30 days wages (120 days to under 1 year service) to 400 days wages (20 or more years service), calculated on the employee’s last rate of basic salary plus fixed regular payments. No severance is payable for employees with under 120 days service or those terminated for serious misconduct under Section 119 of the LPA.

How do I legally terminate an employee in Thailand?

Give advance written notice on or before a wage payment date (effective the following pay date). State the reason for termination in writing at the moment of dismissal, under Section 17/1, reasons not stated at dismissal cannot be raised in a later dispute. Pay severance at the applicable LPA rate unless the employee is dismissed for serious misconduct under Section 119.

Can a foreign company hire foreign employees in Thailand?

Yes, subject to work permit and visa requirements. Foreign employees must hold a valid non-immigrant business visa and a work permit before starting work. The standard quota is 4 Thai employees per foreign employee. Penalties for employing workers without valid permits reach THB 800,000 per worker under the current 2026 enforcement framework.

What is the minimum wage in Thailand in 2026?

Daily minimum wages vary by province, ranging from THB 337 to THB 400 as of 2025. The Wage Committee reviews rates periodically. Verify the current province-specific rate with the Ministry of Labour or contact Lex Nova Partners for the applicable rate for your location.

What happens if I dismiss an employee without following Thai labour law?

Wrongful dismissal exposes the employer to standard severance plus compensation for unfair termination. Total awards commonly reach 6 to 18 months of salary inclusive of severance, plus legal fees of THB 100,000 to THB 500,000 or more. Employees pay no court fees and do not require legal representation, making the Labour Court highly accessible to claimants.

Do Thai labour laws apply to remote workers?

Yes, if the employee is physically located in Thailand. The LPA (No. 8) B.E. 2566 (2023) introduced formal provisions for work-from-home arrangements. Remote work agreements must be in writing and specify contact conditions. Thai law also applies where the employment contract references Thailand or where the work directly benefits a Thai entity.

Please note that this article is for information purposes only and does not constitute legal advice

Introduction:

Thailand’s electric vehicle (EV) sector has grown rapidly and is now an important part of the national economy, attracting interest from major manufacturers worldwide. Investment commitments under the EV 3.0 and EV 3.5 schemes have surpassed THB 137 billion, reinforcing Thailand’s role as a regional hub for EV production. 

For foreign investors, the key issue is not market potential, but regulatory change. The Thailand EV policy changes introduced in late 2025 and implemented through 2026 have completely changed the operating environment. Under the EV 3.5 framework, manufacturers must now produce two vehicles locally for every one imported in 2026, rising to three-to-one in 2027. 

Key Points

• Thailand’s 2026 EV policy shifts focus from imports to local production and supply chain development, with stricter compliance requirements.
• Manufacturers must meet a 1:2 production-to-import ratio, rising to 1:3 in 2027, or risk losing incentives.
• Export credits (1.5x) and extended deadlines provide flexibility in meeting production targets.
• Battery localisation rules now limit imported battery components to 10%, pushing domestic manufacturing.
• The EEC and BOI incentives remain central, offering tax benefits, foreign ownership, and support for EV and battery projects.

What Changed in Thailand’s EV Policy for 2026?

The Thailand EV policy changes approved by the National EV Policy Board in late 2025 introduced a wide range of changes to how incentives are awarded and the introduction of new mandatory requirements. 

The four key developments that have been introduced for 2026 include:

1. Production-to-import ratio tightened

Manufacturers operating under the new EV 3.5 Thailand policy must now comply with a 1:2 production ratio in 2026. This means for every imported EV, two must be produced domestically. This requirement will be increased to 1:3 by 2027 .

2. Export credit introduced

To help manage supply pressures, certain EV export incentives for Thailand were introduced. Under this policy, each EV that is exported counts as 1.5 units toward a manufacturer’s local production targets. 

In practice, this means that for every vehicle exported, manufacturers receive additional credit when meeting their production obligations under the incentive scheme. This reduces the pressure to sell all vehicles domestically and gives more flexibility in balancing supply and demand. 

This makes exports more valuable and encourages companies to use Thailand as a base for producing EVs for international markets.

3. Registration deadlines extended

The government has also extended registration deadlines to give manufacturers more time to align production with compliance requirements.

In this context, “registration” refers to the process of formally recording a vehicle with the relevant Thai authorities, including completing compliance checks and issuing registration documents. This is the stage at which a vehicle is officially recognised and counted toward a manufacturer’s production obligations under the incentive scheme.

Under the updated timelines, EV 3.5 deadlines extend further, with registrations permitted until January 2028. In practical terms, this gives manufacturers additional time to meet production targets, manage inventory, and complete registrations without falling out of compliance.

These extensions provide greater operational flexibility, particularly for companies scaling up production or adjusting to changes in demand.

4. Battery localisation rule tightened

From 1 January 2026, imported battery cells can account for no more than 10% of an EV’s factory price if manufacturers want those vehicles to qualify for local incentives .

Updates to hybrid vehicle tax rules 

Thailand has also adjusted excise tax rates for hybrid vehicles. While Battery Electric Vehicles (BEVs) remain taxed at a preferential 2%, hybrid vehicles now fall within a structured tax range.

The framework distinguishes between Plug-in Hybrid Electric Vehicles (PHEVs), standard Hybrids (HEVs), and Mild Hybrids (MHEVs), with rates based on electric driving capacity and carbon emissions.

• Plug-in Hybrid Electric Vehicles (PHEV): Rates are tied to electric-only driving range, with a 5% duty applied to vehicles capable of 80 km or more per charge, and a 10% duty for those with a range under 80 km.
• Standard (HEV) and Mild (MHEV) Hybrids: Taxes are determined by emissions, as outlined in the table below.

These adjustments incentivize the production and adoption of vehicles with higher electric ranges and lower carbon footprints, helping align Thailand’s automotive industry with global sustainability targets.

Who is affected?

Manufacturers that imported vehicles under EV incentive schemes may now be required to either commence local production or exit the programme by repaying the tax benefits received, including applicable penalties. This reflects a shift from initial market entry support toward a stronger focus on local production and compliance.

BOI Incentives for EV Manufacturers and Battery Makers

The BOI EV incentives on offer have made Thailand one of the most competitive frameworks in ASEAN for electric vehicle manufacturing and battery production. The BOI has designed the incentives to attract long-term industrial investment, with a clear focus on high-value activities such as battery cell manufacturing, advanced component production, and supply chain localisation.

For foreign investors, these BOI EV incentives offer other significant advantages beyond standard tax reductions. The BOI offers 100% foreign ownership, land ownership rights and reduced requirements for supporting visa and work permit applications for foreign investors. 

For eligible projects, obtaining a BOI promotion allows foreign manufacturers to enter the Thai market with fewer limitations and greater operational control. 

As well as the general incentives offered by the BOI, there are additional or enhanced benefits available for projects who are involved in the EV industry, for example:

• Battery cell manufacturing: 8-year corporate income tax exemption
• Battery modules: up to 8 years (capped)
• Battery packs: up to 5 years
• Charging infrastructure: 5-year CIT exemption for qualifying projects

These incentives are designed to move the industry beyond basic assembly into advanced battery manufacturing in Thailand.

Additional investment incentives

In an effort to further accelerate the industrial modernisation and strengthen supply chain localisation within Thailand’s EV and battery sectors, the BOI offers the following additional incentives.

90% Import Duty Reduction on Raw Materials

Manufacturers who undertake battery cell or module production under BOI-promoted activities, including high-energy-density battery manufacturing, may benefit from a 90% reduction on import duties for essential raw materials that are not available domestically. This incentive is granted on an annual basis and can be renewed for up to five years.

Automation, Sustainability, and Productivity Upgrades

Under the “Smart and Sustainable Industry” measure, companies investing in automation, robotics, and digital infrastructure can access a 3-year corporate income tax exemption, capped at up to 100% of the investment value, excluding land and working capital. In addition, import duty exemptions on machinery used for these upgrades is also available.

Localisation Programmes and Joint Venture Incentives

Thailand has introduced targeted measures to strengthen domestic supply chains through collaboration between foreign investors and Thai partners. For automotive parts manufacturing projects, forming a joint venture with a Thai partner holding at least 20% equity can unlock an additional 3-year corporate income tax exemption. 

The Thai partner must be at least 60% Thai-owned and have a minimum of three years’ experience in the automotive or auto-parts sector. These measures are designed to integrate local suppliers into global EV supply chains while facilitating technology transfer alongside foreign investment.

Workforce requirements

The Thailand Board of Investment has updated its rules so that foreign investment better supports Thailand’s wider economic goals. For investors, this means setting up a business that helps create local jobs, develop skills, and share technology, while still benefiting from the full range of BOI EV incentives.

For a company to maintain its BOI-promoted status, large companies are now required to follow clear staffing requirements. These are designed to balance hiring local employees with bringing in foreign expertise where needed.

• 70% Local Workforce: Large firms (companies with 100+ employees) are required to maintain at least 70% of their total workforce as Thai nationals. Exemptions are available to such companies who are involved in the service sectors (IT, consulting), temp roles, high-tech projects.
• Foreign Employee Thresholds: While foreign specialists are permitted, they must meet minimum salary thresholds to qualify for non-immigrant visas and work permits under the BOI’s “smart visa” or investment-related channels.

• Highly Specialized Roles: Exceptions are granted for roles requiring specific technical expertise unavailable in the local labor market. Companies must provide documentation justifying these hires to the BOI to receive work permit approval.

Why the Eastern Economic Corridor Is Where EV Investment Lives

The Eastern Economic Corridor (EEC) is a key part of Thailand’s Thailand 4.0 strategy, covering Rayong, Chonburi, and Chachoengsao. The EEC has been designed to build upon the region’s long-standing role as an industrial hub and is now being developed into a centre for advanced industries and innovation.

With strong government support and a clear, well developed framework, the EEC offers an attractive environment for both local and foreign investors to set up and grow operations.

The EEC focuses on next-generation sectors such as electric vehicles, intelligent electronics, advanced agriculture and biotechnology, medical and high-value tourism, and digital industries. These areas have been specifically chosen as focus areas for future economic growth.

To attract investment, the Thailand Board of Investment (BOI) offers incentives for qualifying projects in the EEC, including 100% foreign ownership, corporate tax exemptions of up to 15 years, import duty exemptions, and a reduced personal income tax rate of 17%. Additional support is available for research and development through the Eastern Economic Corridor of Innovation (EECi).

The Eastern Economic corridor EV ecosystem is the centre of Thailand’s EV industry. Nearly all major investments are concentrated in Rayong and Chonburi.

Why the EEC matters

The Eastern Economic Corridor also offers the following significant advantages for EV related businesses:

• Direct access to Laem Chabang deep-sea port
• Established automotive supply chains
• Dedicated industrial estates under Industrial Estate Authority of Thailand
• Infrastructure built specifically for large-scale manufacturing

Illustrative scenario:

A European Tier-1 supplier considering EV manufacturing in Thailand could set up their base in Rayong, obtain a BOI promotion, secure land through IEAT, and supply nearby OEMs such as BYD or MG, particularly where manufacturers are sourcing more parts locally.

In practice, how the project is structured will directly affect how quickly it progresses. Our Bangkok-based team works closely with companies across the EEC, advising on EV manufacturing in Thailand projects to help keep timelines realistic and avoid delays that can significantly extend setup periods.

Real Opportunities For EV Businesses in 2026

The Thailand EV policy 2026 framework has moved beyond early incentives and is now focused more on actual production and local supply chains. This shift is starting to highlight clear gaps in the market, especially in areas where local capacity still cannot meet demand. For investors, this points to more defined opportunities in parts of the supply chain that support localisation, improve cost efficiency, and strengthen long-term growth.

1. Battery cell manufacturing

Thailand still lacks large-scale domestic battery cell production. BOI incentives offer an 8-year CIT exemption, making this the highest-value opportunity in the supply chain.

2. Charging infrastructure

Around 70% of EV charging stations are concentrated in Bangkok. Regional expansion remains underdeveloped, particularly along highways and secondary cities.

3. EV components and Tier-1 supply

Local content requirements under the EV 3.5 Thailand framework are pushing manufacturers to source more parts within the country rather than relying on imports. In simple terms, automakers need to use a higher percentage of locally produced components to qualify for incentives and remain competitive in the market.

This is creating strong demand for Tier-1 suppliers, which are companies that supply directly to vehicle manufacturers. These suppliers typically produce key components such as battery systems, power electronics, drivetrains, and other high-value parts used in EV production.

For investors, this opens up a clear opportunity. Component manufacturers that set up local operations can benefit from BOI incentives, while also securing long-term demand from OEMs looking to meet localisation requirements. In practice, this means more stable supply agreements, closer integration with production facilities, and a stronger position within Thailand’s growing EV manufacturing ecosystem.

4. Hybrid manufacturing

Recent changes to tax structures have made hybrid vehicles more commercially viable again in Thailand. This has reopened the door for manufacturers that are not yet ready to move fully into battery electric vehicle (BEV) production but still want to participate in the shift toward electrification.

In practical terms, hybrid manufacturing offers a transitional step. It allows companies to adapt existing production lines, manage costs more gradually, and build local supply chains without committing immediately to full EV platforms.

For investors, this creates a more flexible entry point into EV manufacturing in Thailand. Hybrid projects can still benefit from targeted incentives and strong market demand, while giving manufacturers time to scale up capabilities and align with longer-term EV strategies.

Each of these opportunities requires a different legal structure, potential BOI category, and application process. For a project-specific assessment, you can schedule a consultation with Lex Nova Partners to map your entry strategy.

Practical Legal Setup for an EV Project in Thailand

Setting up an EV operation involves five structured stages.

Stage 1: Eligibility Check (1 week)

A business feasibility study helps assess whether a project is suitable for BOI promotion and the likelihood of approval.

As part of this process, our BOI specialists liaise directly with the relevant BOI officer to confirm eligibility, verify that the activity is still eligible for promotion, and identify the key conditions and requirements for companies. This provides clear, practical guidance before any formal application is submitted.

Selecting the correct BOI category at the outset is highly important. It is not uncommon for applications to proceed to the interview stage before being rejected due to incorrect category choice, requiring the process to be restarted and causing avoidable delays.

A feasibility study reduces this risk and helps streamline the application process. Lex Nova’s BOI team can assist with a structured feasibility assessment and initial eligibility review.

Stage 2: BOI application preparation (3 weeks)

The BOI application process requires detailed and well-structured information aligned with the specific business activity being proposed.

Applicants must submit key information including project details, capital structure, hiring plans (both Thai and foreign staff), and a list of assets such as machinery, software, and equipment. Supporting evidence of existing clients or business prospects is also important to demonstrate commercial viability.

A three-year business plan is a central part of the application. This plan is used by the BOI to assess the project and determine minimum investment requirements, so it must be realistic and commercially valid. While the plan is not strictly binding, any significant deviation from the approved activity may raise issues during compliance reviews.

In practice, the application forms can be technical and sometimes unclear, particularly for non-industrial activities. Despite this, all sections must be completed accurately, as the information is interconnected and may affect other parts of the application.

Additional supporting documents typically include a detailed employee plan, asset breakdown, appendices with operational details, and a presentation explaining the business model and target clients.

A well-prepared application should present clear, consistent financials, a credible business model, and evidence of market demand. The BOI places significant weight on the applicant’s ability to operate successfully in Thailand, particularly where there is an established parent company or proven track record.

Given the level of detail involved, careful preparation is essential. Incomplete or inconsistent information can lead to multiple rounds of queries from the BOI and delay the process, which typically takes around one month for initial review, depending on the complexity of the project.

Stage 4: BOI application submission and interview (3–4 months)

After the BOI application is submitted and accepted, the applicant will be invited to present the project to the BOI officer. This meeting is held online via Zoom, lasts around one hour, and requires a structured presentation explaining the business, operations, target market, and the value the project will bring to Thailand.

The presentation is a highly important part of the process. It gives the BOI officer a clear understanding of the project, which is important as they will later present it to the BOI Committee. In most cases, the applicant presents for up to 30 minutes, followed by questions from the officer.

In practice, the interview often leads to adjustments. The BOI may request changes to the scope of activities, and having experienced advisors involved allows these updates to be handled quickly and aligned with BOI expectations.

A well-prepared presentation can significantly improve the approval process. If the project is clearly explained and supported by consistent information, approval can move forward with limited follow-up. If not, the application may face multiple rounds of questions and delays.

Following the interview, the BOI officer submits the project for approval. Timelines vary depending on the investment size, currently taking around 6 to 8 months, and may be longer if additional approvals are required.

Once approved, the applicant has 30 days to accept the BOI terms. After acceptance, there is a six-month period to establish the company and meet the investment requirements, with extensions available if needed.

Careful preparation at both the application and presentation stages helps avoid delays and supports a smoother approval process.

Stage 5: Corporate setup (8 weeks)

Once BOI approval has been granted, the applicant has six months to register the company and meet the minimum investment requirement. To achieve this, the following steps should be completed.

Company setup and structure

A Thai limited company needs to be registered with at least two individual shareholders, one or more directors, and registered capital aligned with BOI requirements. While companies are initially registered with individual shareholders, shares can later be transferred to a foreign parent company.

Bank account and capital transfer

A corporate bank account must be opened to receive the investment funds. If the project has foreign shareholders, their portion of the capital must be transferred to Thailand from abroad in foreign currency, clearly stating it is for investment purposes. Once the capital has arrived in Thailand a  Foreign Exchange Transaction (FET) form must be obtained from the bank. 

Any incorrectly labelled or unclear transfers may be rejected and delay the process.

BOI certificate application

Once the capital is in place, the company applies for the BOI promotion certificate by submitting corporate documents and proof of funds. This usually takes around one month.

Post-registration compliance

The company must register for VAT (in most cases) and with the Social Security Office before hiring employees. Hiring foreign staff under BOI benefits can only proceed after the BOI certificate is issued.

Foreign Business Certificate (FBC)

If the activity falls under restricted categories, a Foreign Business Certificate is required before operations can begin. Without it, the company cannot legally operate or issue invoices, even if BOI promotion has been granted.

Immigration and workforce

Even if a company has obtained a BOI promotion, every foreign employee in Thailand needs to obtain the correct Visa and Work Permit. It is important to note that companies promoted by the BOI are not subject to the same requirements as other company structures. For example, BOI promoted companies are not restricted by the same mandatory capital and minimum Thai staff requirements.

In order for the company to be able to hire foreign staff, they must register their company into the Single Window for Visas & Work Permits system (formerly known as the E-Expert system). Registration on the Single Window system will allow the company to make future requests for foreign workers.

After a post has been submitted, opened, and accepted through the Single Window for Visas & Work Permits system, the applicant may apply for their visa and a work permit at the BOI Thailand Investment and Expat Services Center (TIESC).

Lex Nova Partners: Your BOI Application Partner

BOI applications require more than simply filing in the application form, they require proper planning and preparation to make sure that the project meets the BOIs requirements and specifications.

A successful application often depends on understanding how policies are applied in practice, not only how they are written. Lex Nova’s team offers extensive experience and familiarity with BOI procedures, and actively monitors BOI incentives news so clients can benefit from new opportunities as soon as they arise.

Real-Time BOI Policy Monitoring

Our team keeps up to date with all the latest news and developments through continuous tracking of BOI policy updates and latest BOI regulations directly from Thai-language sources. 

Our team reviews official announcements as soon as they are released, coordinates with BOI officials and industry contacts, and translates complex regulatory changes into practical English guidance. 

Bilingual English-French Expertise

Lex Nova offers bilingual legal support in English,Thai and French, allowing clients to discuss complex legal and commercial matters in a language more familiar to them. This means clients receive documentation support reducing misunderstandings common when communication relies solely on translation.

Full-Service Integration

As a full service law firm in Bangkok, we can assist with your BOI promotion, company formation,visa and work permit requirements, tax structuring, and ongoing compliance under one strategy. 

This approach avoids the delays and inconsistencies that arise when using multiple advisors. Learn more about our services here: https://lexnovapartners.com/expertise/

Frequently Asked Questions (FAQ)

What changed in Thailand’s EV policy for 2026?

The 2026 EV framework shifts from import incentives to local production and supply chain development. Manufacturers must now produce 2 EVs locally for every 1 imported (1:2 ratio), with exported vehicles counting at a 1.5x credit toward this requirement. Deadlines to meet production targets have been extended to give investors more flexibility, while new rules, including limits on imported battery components, are designed to promote more local sourcing.

What is the EV 3.5 scheme and who qualifies?

EV 3.5 is Thailand’s current incentive programme. It applies to manufacturers investing in local production and meeting localisation and compliance requirements.

What is the production-to-import ratio for EV manufacturers in Thailand in 2026?

1:2. Manufacturers must produce two vehicles locally for every imported unit, rising to 1:3 in 2027.

Can foreign EV manufacturers own land in the Eastern Economic Corridor?

Yes. Foreign ownership is permitted within IEAT industrial estates within the EEC area or through BOI promotion structures.

How long does BOI approval take for an EV manufacturing project?

Currently, around 8 months. Complex projects may take longer depending on technical scope and documentation.

Does Thailand still subsidise hybrid vehicles after 2026?

Yes, but differently. Hybrid vehicles now benefit from revised excise tax rates rather than direct subsidies.

What is the corporate income tax exemption for EV battery cell production?

8 years. This applies to projects that include full battery cell manufacturing processes.

Our Thoughts

The Thailand EV policy changes implemented in 2026 is expected to lead to a more structured and developed EV ecosystem. The framework is more restrictive to foreign investors due to localisation requirements, higher production obligations, and tighter compliance conditions, but still highly favourable for serious investors, particularly in battery manufacturing, supply chains, and EEC-based production.

At Lex Nova Partners, our Bangkok-based team handles corporate, tax, employment, immigration, and regulatory matters together under one coordinated workflow. We regularly support SME and foreign investors in Thailand, with bilingual English and French support available throughout the transaction process.

Before signing anything or paying a deposit, it is often advisable to obtain legal and tax structuring advice first. To discuss starting your business in Thailand, contact our team at +66 (0)6 5527 6323 or contact@lexnovapartners.com, or visit our office at Ocean Tower 2, 14th Floor, Sukhumvit 19, Bangkok. You can also schedule a 30-minute structuring call through the Lex Nova Partners contact page.

Please note that this article is for information purposes only and does not constitute legal advice

Introduction:

Buying a business in Thailand is often faster than building a company from scratch, but the process is considerably more complex than many foreign investors initially expect. While an existing business may already have staff, licences, operations, and an established revenue stream in place, a Thailand business acquisition may become problematic if the legal structure and liabilities are not properly reviewed before signing. 

Two of the most common issues are restrictions under the Foreign Business Act (FBA), which limits foreign ownership in many sectors and undisclosed tax, accounting, labour, or social security liabilities inherited from the target company. For this reason, proper due diligence is one of the most important parts of buying a business in Thailand.

This guide explains the recommended requirements and processes for buying a business in Thailand, including deal structuring, due diligence Thailand procedures, transaction documents, completion processes, and what to expect after completing the transaction. 

A proper Thailand business acquisition does not only involve a simple share purchase agreement. In practice, most transactions involve tax, employment, and immigration compliance, particularly where foreign directors, Board of Investment (BOI) privileges, or foreign staff are involved. 

At Lex Nova Partners, our team regularly supports foreign investors through the full acquisition process, including legal due diligence, transaction structuring, BOI and FBA considerations, employment matters, and post-acquisition compliance in Thailand.

Key Points

• Buying an existing business in Thailand is often faster than starting from scratch because it provides immediate access to staff, licences, revenue, and supplier relationships, but it also means inheriting the company’s historical liabilities such as unpaid taxes, employment disputes, and compliance issues.
• The Foreign Business Act (FBA) restricts foreign ownership in around 50 categories of business across three lists, meaning foreigners often need a Foreign Business Licence, BOI promotion, or the US-Thai Treaty of Amity to legally own and operate in many sectors.
• Deals can be structured as a share purchase (buying the entire company and its liabilities) or an asset purchase (buying only selected assets to avoid inherited liabilities), and the right choice depends on the target’s compliance history, tax exposure, and operational needs.
• Thorough due diligence covering corporate, financial, legal, employment, and lease matters is essential, and the purchase agreement should include seller guarantees, indemnity provisions, and protections like in-out clauses that tie part of the payment to post-sale performance.
• Common costly mistakes include trusting seller documents without verification, ignoring employee severance liabilities, using illegal nominee shareholder structures, overlooking change-of-control clauses in contracts, and treating immigration and work permit planning as an afterthought.

Why Foreign Investors Are Buying Thai Businesses Instead of Starting From Scratch

For many foreign investors, buying a business in Thailand is faster and more practical than creating a new company from the start. One of the biggest advantages of purchasing an existing business is that an existing business may already hold the licences, registrations, operational approvals, and supplier relationships needed to operate. This can significantly reduce the time, administrative work, and operational setup typically involved when establishing a new company from scratch.

Another important advantage is that an existing business may already be structured to support a visa and work permit for a foreign employee immediately. For example, the company may already meet the required registered capital thresholds and Thai employee ratio requirements needed for work permit sponsorship.

A Thailand business acquisition can also provide immediate access to staff, revenue, customers, lease agreements, and an established market presence. This is particularly important in sectors where operational continuity and brand reputation matter, such as hospitality, hotels, restaurants, F&B, export manufacturing, e-commerce, software, and professional services. 

In many cases, buying a business in Thailand allows the investor to begin operating almost immediately rather than spending months dealing with incorporation, licensing, recruitment, and setup delays.

However, acquisitions also come with significant risks. When acquiring an existing company, the buyer does not only acquire the business itself. They may also inherit historical tax exposure, employment disputes, accounting irregularities, compliance failures, hidden debt, and operational liabilities that were not immediately visible during the initial stages of negotiations. This is one of the main reasons why conducting proper due diligence procedures in Thailand is critical before any transaction moves forward.

Can a Foreigner Buy a Business in Thailand? The Foreign Business Act Reality

Thailand allows foreign ownership of businesses and also permits buying a business in Thailand as a foreigner. However, not all business activities can be undertaken by a foreign owned business.

The Foreign Business Act, (Foreign Business Act B.E. 2542 (1999)), is the primary legislation governing foreign business ownership in Thailand. The Foreign Business Act Thailand was introduced to protect certain sectors for Thai nationals while continuing to welcome foreign investment into areas that support economic development.

The Foreign Business Act is used to determine whether a business activities are restricted to a foreign business, whether a licence may be granted, and whether a company structure complies with Thai law.

Who Is Considered a “Foreigner” Under the FBA?

Section 4 of the foreign business act Thailand has a wide definition of what is considered a  “foreigner” The definition extends beyond nationality and covers both individuals and juristic persons. A foreigner includes:

1. A natural person who is not of Thai nationality.
2. A juristic person not registered in Thailand.
3. A juristic person registered in Thailand where at least 50 percent of the capital shares are held by non-Thai individuals or foreign entities, or where foreign investment represents at least half of the total capital.
4. A Thai-registered juristic person in which at least half of the shares are held by persons falling within the above categories, directly or indirectly.
5. A limited partnership or registered ordinary partnership where the managing partner is a non-Thai national.

The Three Restricted Business Lists

The foreign business act Thailand restricts approximately 50 categories of business, divided into three schedules:

List 1 – Strictly Prohibited Activities

List 1 covers businesses considered essential for national interests, such as newspaper publishing, animal farming, land trading, and certain agricultural activities. Foreigners are prohibited from engaging in these activities for “special reasons.” No licence or approval mechanism is available.

List 2 – Activities Related to National Security and Infrastructure

List 2 includes businesses connected to national security, domestic transportation by land, water, or air, and certain activities involving arts, culture, and natural resources. Foreign participation may be permitted, but only with approval from the Minister of Commerce and the Cabinet. In practice, such approvals are rare and subject to strict scrutiny.

List 3 – Service Businesses Where Thai Nationals Are Deemed Not Ready to Compete

List 3 is the most commercially relevant category for foreign investors. It includes “other categories of service businesses” not otherwise exempted by ministerial regulations. Foreign companies may apply for a Foreign Business Licence, subject to approval by the Director-General of the DBD and the Foreign Business Committee. A Foreign Business Licence also requires a minimum capital of at least THB 3 million per restricted business activity. Many professional services, consulting, and trading structures fall within this list. For the lawful routes to majority or full foreign ownership, see our guide on 100% foreign business ownership in Thailand.

Business Activities that Allow 100% Foreign Ownership Without Special Permissions

The following business activities are not restricted under the Foreign Business Act in Thailand and can be undertaken by a 100% foreign owned business.

Export Companies

Thailand actively encourages exports, and companies who exclusively export products outside Thailand can be foreign owned. In order to maintain this status, export companies must ensure their operations and revenue are only international, and they can’t sell directly within the Thai domestic market.

Manufacturing Companies

Manufacturing companies in Thailand can be 100% foreign-owned as manufacturing is not on Thailand’s “restricted” list for foreign ownership under the Foreign Business Act (FBA). This allows foreign investors to own and operate manufacturing businesses without needing a Thai partner.

Another advantage for manufacturing companies is their eligibility for a BOI promotion. BOI promotions offer many advantages including different types of tax exemptions including Corporate Income Tax exemptions and Tax exemptions on the import of machinery. BOI promotions can also allow full foreign ownership and the ability to own land which can be used for their factory etc. For current incentives, see our update on the latest BOI incentives for foreign investors.

However, if the manufacturing business involves activities related to restricted sectors (e.g., agriculture, mining, certain types of food processing), it may still be subject to FBA limitations.

Common Misconceptions About Foreign Ownership

There is a common misunderstanding that incorporating a Thai company automatically allows majority foreign ownership. However, if the business activity falls within a restricted list, foreign majority ownership may require the foreign investor to apply for a Foreign Business licence or an alternative option such as a Board of Investment (BOI) promotion or the Treaty of Amity (for American companies). The Treaty of Amity grants US investors national treatment but still excludes several reserved sectors, including land ownership, communications, transport, banking involving depository functions, fiduciary functions, and the exploitation of land and natural resources. In practice, most of the business activities that foreign investors wish to undertake are likely to be restricted by the foreign business act.

If the business cannot obtain either a Foreign Business Licence or BOI promotion and wishes to engage in a restricted activity, the foreign investor will have to work with a Thai partner.

Another misconception is that nominee shareholding arrangements can be used as an easy way to bypass these restrictions. However, recently Thai authorities have increased scrutiny of structures designed to conceal effective foreign control. The DBD has strengthened investigations into shareholder legitimacy, capital flows, and voting rights arrangements, particularly during 2024 and 2025. 

Since 1 April 2026, DBD Order No. 1/2569 also requires a Confirmation of Investment letter in certain cases involving foreign shareholders or foreign authorised directors, certifying that all shareholders have genuinely invested and that no nominee arrangement exists. For more on how Thai authorities are policing these structures, see our note on Thailand’s tightening rules on nominee shareholders.

Enforcement Trends and Penalties

Thai authorities are now actively examining whether Thai shareholders are genuine investors or merely holding shares on behalf of foreigners to avoid the restrictions of the Foreign Business Act.

Non-compliance with the Foreign Business Act in Thailand can result in significant consequences, including fines, imprisonment, suspension of operations, and in severe cases, business closure. Under Section 36 of the Foreign Business Act, a breach can carry imprisonment of up to three years and/or a fine of THB 100,000 to THB 1,000,000, alongside additional criminal liability under the Penal Code for false statements. Directors may also face personal liability if they knowingly participate in unlawful structures.

For advice on 100 percent foreign ownership structures and the most appropriate approach for your proposed activities in Thailand, we invite you to contact our team of experts directly. We can assess your business model, review the applicable restrictions under the Foreign Business Act, and advise on the most suitable legal pathway for your specific circumstances.

Share Purchase vs Asset Purchase: How to Structure the Deal

When buying a business in Thailand, one of the most important decisions is whether the transaction should be structured as a share purchase or an asset purchase. The structure of the transaction affects tax exposure, liabilities, employment obligations, licences, contracts, and the overall level of risk assumed by the buyer.

In practice, the most appropriate structure depends on the nature of the business, the industry involved, the company’s compliance history, and whether the buyer wishes to acquire the existing legal entity itself or only selected business assets. Certain regulated sectors may also require additional approvals or restructuring considerations under the Foreign Business Act, for example if the company is Thai owned and engaged in a restricted activity to a foreign company.

The sections below explain the differences between a share purchase and an asset purchase in Thailand, including the advantages, disadvantages, and practical considerations foreign investors should understand before proceeding with a transaction.

Purchasing Only the Assets of a Company

When considering buying a business in Thailand, investors may choose to purchase only selected assets of a company rather than acquiring the entire legal entity. In practice, an asset purchase allows the buyer to take control of specific business assets, such as equipment, inventory, intellectual property, customer databases, or lease rights, without assuming ownership of the company itself.

This structure is often used where the target company has historical liabilities, unresolved compliance issues, or operational risks that the buyer does not wish to inherit. Unlike a transaction structured through a share purchase agreement Thailand transaction, the buyer can selectively acquire assets while leaving behind unwanted liabilities and obligations.

Advantages of Purchasing the Assets of a Company

One of the main advantages of an asset purchase is the ability to avoid inheriting the seller’s liabilities. Because the buyer is not acquiring the legal entity itself, obligations such as unpaid taxes, employment disputes, outstanding loans, litigation, or previous regulatory breaches generally remain with the seller. This can significantly reduce legal and financial exposure following completion of the transaction.

An asset purchase also gives buyers greater flexibility. Investors can select only the assets relevant to their commercial objectives while excluding underperforming assets or unnecessary liabilities. In certain situations, this may be considered lower risk than proceeding under a full share purchase agreement Thailand structure.

Disadvantages of Purchasing the Assets of a Company

Despite these advantages, asset purchases also create practical and operational challenges. Purchasing assets alone does not automatically transfer the seller’s goodwill, brand reputation, customer relationships, supplier contracts, or workforce. Existing employees usually need to be rehired under new employment arrangements, while commercial contracts often need to be renegotiated from the beginning.

Asset purchases may also result in higher transaction costs. Different asset classes can attract different taxes, transfer fees, and registration requirements in Thailand. In addition, certain licences and regulatory approvals may not be transferable, requiring the buyer to apply for entirely new operational licences before the business can continue operating.

Purchasing the Whole Business

For many foreign investors, buying a business in Thailand can provide a faster and more practical route into the market than starting a company from scratch. An existing business may already have staff, licences, operational systems, suppliers, customers, and revenue in place, allowing the buyer to begin operating more quickly after completion.

Faster Route to Revenue and Operations

One of the main advantages of acquiring an existing business is the ability to continue operations without major interruption. Rather than spending months building a customer base, developing operational systems, and establishing supplier relationships, the buyer acquires a business that is already generating revenue and operating within the market.

This can reduce the time required to achieve profitability and allow the investor to focus on growth and expansion rather than initial setup.

Existing Infrastructure and Operational Systems

An established business may already have offices, production facilities, IT systems, machinery, inventory, and operational processes in place. This reduces the need for major upfront investment and allows the buyer to continue operations immediately after completion.

In addition, existing businesses often already have established supplier relationships, service providers, logistics arrangements, and internal workflows that have been tested over time. This can reduce operational risk compared to launching an entirely new business model.

Trained Workforce and Management Continuity

Acquiring an existing business also allows the buyer to inherit an experienced workforce that already understands the company’s operations, systems, customers, and internal procedures. This can reduce recruitment and training costs while helping maintain operational continuity after the acquisition closes.

For service-based businesses in particular, retaining experienced staff can be critical to preserving customer relationships and maintaining revenue stability.

Existing Market Presence and Brand Recognition

An established business may already benefit from brand recognition, customer loyalty, supplier confidence, and market credibility built over many years of operation. Rather than entering the market as an unknown company, the buyer acquires an existing reputation and operating history within the industry.

The company’s historical operations may also provide valuable insights into customer behaviour, pricing, competitors, and future growth opportunities within the Thai market.

Existing Licences and Regulatory Approvals

In many cases, an established business may already hold the operational licences, registrations, and approvals required to legally conduct its activities in Thailand. Depending on the industry involved, obtaining these approvals independently can sometimes take significant time and administrative work.

This can be particularly valuable in regulated sectors where licensing and operational approvals form a major part of the company’s commercial value.

Existing Capital and Work Permit Structures

Another practical advantage is that the company may already satisfy requirements for supporting foreign employees and directors. For example, the business may already meet registered capital requirements and Thai employee ratio requirements necessary for work permit sponsorship.

This can simplify the process of obtaining visas and work permits for foreign owners or management after completion of the transaction.

Thailand’s Investment Environment

Thailand continues to attract foreign investors due to its strategic location, developed infrastructure, manufacturing base, and regional access to ASEAN markets. Government incentives through the Thailand Board of Investment (BOI) may also provide additional advantages for qualifying businesses, including foreign ownership exemptions, tax incentives, and work permit support for foreign staff.

For many investors, acquiring an existing business in Thailand provides a faster route into the market while reducing many of the operational challenges associated with starting a company entirely from scratch.

The Step-by-Step Acquisition Process in Thailand

When looking to buy a business in Thailand, the following steps should be considered.

1. Conducting Thorough Due Diligence

Due diligence is a key part of a successful acquisition of an existing company. Undertaking due diligence allows prospective buyers to evaluate the target business’s financial health, legal compliance, and performance while identifying any hidden liabilities or risks.

Due diligence protects your investment by providing a complete understanding of the business’s value and potential risks.

Key Areas of Focus

1. Corporate Documentation:
   • Company Registration: Verify that the business is properly registered with the Department of Business Development (DBD) and compliant with Thai laws, including the Foreign Business Act.
   • Shareholder and Director Details: Review the company’s Articles of Association, shareholder agreements, and board resolutions to ensure everything matches with the proposed sale.
2. Financial Health:
   • Financial Statements: Examine audited financial reports, tax returns, and bank statements to assess revenue trends, profitability, and solvency.
   • Outstanding Liabilities: Check for any unpaid debts, tax arrears, or pending legal disputes that could impact future operations.
3. Contracts and Agreements:
   • Lease Agreements: Ensure that property leases are registered with the Land Department if exceeding three years, and review renewal clauses and termination rights.
   • Supplier and Customer Contracts: Review and agreements to understand the business’s ongoing obligations and relationships.
4. Operational Factors:
   • Employee Records: Review employment contracts, benefits, and severance policies to ensure compliance with Thai labor laws.
   • Assets: Verify ownership and valuation of assets, including real estate, machinery, intellectual property, and inventory.
5. Legal and Regulatory Compliance:
   • Identify any ongoing or past legal disputes, unpaid taxes, or compliance issues with permits and licenses.
   • Confirm that the company holds all necessary approvals to operate in its industry.

2. Drafting and Negotiating the Purchase Agreement

Drafting a proper purchase agreement is required to protect your interests and ensure a smooth transaction. Depending on the acquisition structure, you’ll need either a Share Purchase Agreement (SPA) or an Asset Purchase Agreement (APA). A properly drafted purchase agreement reduces the risk of disputes and provides a clear framework for the transaction, protecting both parties’ interests

Key Components of the Agreement

1. Description of the Transaction: Clearly define whether the sale includes the company’s shares, assets, or both. Specify any exclusions.
2. Financial Terms:
   • Purchase price and payment schedule.
   • Earnout provisions or performance-based payments, if applicable.
3. Representations and Warranties: Assurances from the seller about the business’s condition, compliance, and not having any hidden liabilities.
4. Indemnity Provisions: Protect the buyer against claims or liabilities arising from pre-sale activities.
5. Closing Conditions: Outline requirements to finalize the transaction, such as regulatory approvals, tax clearance, or debt settlements.
6. Post-Sale Obligations: Include non-compete clauses, transitional support from the seller, or employee retention agreements.

Protections for the Buyer in a Share Purchase Agreement

To protect yourself as the buyer, it is recommended to include seller guarantees in the agreement. These guarantees will protect the buyer from any hidden liabilities or undisclosed issues arise within a certain period after the sale, the seller remains liable for them.

In some cases, the buyers of the company may require the previous owner’s involvement for a transitional period. This can help ensure a smooth transfer of knowledge and operational continuity. The former owner may stay on as a consultant or manager for a set period, allowing you to learn the key requirements for the business before fully taking over.

What is an In-Out Clause in Thailand?

Another effective form of buyer protection is to include an in-out clause into the purchase agreement. An In-out clause links part of the purchase price to the company’s actual performance over a defined period after the sale. Instead of paying the full price upfront, an agreed amount is withheld and only paid if the business meets the agreed revenue and income targets.

This clause offers strong protection against sellers fraudulently inflating the company’s financials or misleading buyers about the company’s performance. If the revenue does not meet the buyer’s expectations, the withheld amount can be adjusted or forfeited, reducing the buyer’s risk.

3. Completing the Transfer of Ownership

Once the purchase agreement is finalized, the legal transfer of ownership must be completed. This process includes:

Share Transfer

• Execute a share transfer instrument with signatures from the transferor and transferee, witnessed by at least one witness, as required under Section 1129 of the Civil and Commercial Code (failing which the transfer is void).
• Record the transfer in the company’s register of shareholders and issue an updated share certificate to the buyer, which serves as proof of ownership of the shares. Until the transfer is entered in the register of shareholders, it is not enforceable against the company or third parties. The filing of the updated List of Shareholders (Bor.Or.Jor. 5) with the Department of Business Development is declaratory only.
• Pay applicable stamp duty based on the share transfer value.

Director Changes

• Call a board meeting to appoint new directors and define their authority.
• Update the company affidavit with the Department of Business Development (DBD) to show the new management structure.

Asset Transfers

• If purchasing assets, register the transfer of ownership for items such as real estate, vehicles, and intellectual property, with the relevant authorities.
• Ensure all asset-related taxes and fees are paid during the transfer process.

4. Post-Acquisition Restructuring

After acquiring the business, restructuring may be necessary to make sure the company meets your needs.

Key Areas for Restructuring include:

Corporate Governance

When acquiring a business, updating corporate governance documents is essential to reflect the new ownership structure and ensure compliance with Thai company laws. This includes reviewing and amending key legal documents such as the Articles of Association and shareholder agreements to match your business goals and protect stakeholder interests.

Rebranding

When acquiring a business, rebranding or repositioning can be an option used to bring the company in line with your long-term vision, especially if you plan to target a new market segment. 

Potential options include refreshing the brand identity, adapting the business model, or adjusting the company’s messaging.

If rebranding is required, it should be approached carefully and not have a negative effect on existing customers. 

Employee Retention and Recruitment

When acquiring a business, maintaining a strong workforce can help achieve a smooth transition. Keeping key employees allows for continuity in operations, retains key company knowledge, and helps maintain relationships with customers and suppliers. 

While retaining key staff is important, recruitment allows you to expand your team, bring in fresh expertise, and align the team with your long-term business goals.

Accounting

When acquiring a business in Thailand, it is recommended to change the company’s accountant. While it may seem convenient to keep the existing accountant, choosing your own allows you to gain clear and unbiased insight into the company’s finances and ensure that bookkeeping and tax compliance are handled correctly.

This is increasingly more important due to Thailand’s digitalization of its tax system, businesses that previously operated with poor accounting practices may struggle to continue doing so. Having a new accountant from the start helps you avoid unexpected tax issues and ensures your business operates legally and efficiently.

Six Costly Mistakes Foreign Buyers Make in Thailand

Many foreign investors assume that buying a business in Thailand follows the same process as acquisitions in their home country. In practice, Thailand business acquisition transactions involve legal, tax, accounting, employment, immigration, and regulatory risks that are commonly underestimated during negotiations.

Below are six of the most common and costly mistakes foreign buyers make when acquiring a business in Thailand.

Mistake 1: Inheriting Hidden Liabilities in a Share Purchase

One of the most significant risks when purchasing a business outright is inheriting the company’s existing liabilities. In a share acquisition, the buyer acquires the legal entity itself, including many of its historical obligations, risks, and compliance exposure.

Common liabilities that may transfer to the buyer include:

Unpaid Taxes

Outstanding corporate income tax, VAT, withholding tax, or social security liabilities may remain attached to the company after completion. This can result in fines, penalties, surcharges, or Revenue Department investigations against the business under the new ownership.

Undisclosed Lawsuits

The target company may already be involved in ongoing or potential legal disputes that were not disclosed during negotiations. These may include commercial disputes, employment claims, or regulatory investigations that could result in financial losses or reputational damage.

Contractual Obligations

Existing supplier agreements, customer contracts, financing arrangements, leases, or distribution agreements may continue after the acquisition closes. Some of these agreements may contain unfavourable pricing terms, exclusivity obligations, penalties, or financial commitments that the buyer cannot easily renegotiate or terminate.

Liability for Past Misconduct

Even where the buyer had no involvement in the company’s previous operations, they may still inherit exposure arising from the seller’s prior conduct. This may include breaches of contract, regulatory non-compliance, fraudulent activity, misrepresentation, labour law violations, or accounting irregularities committed before the transaction took place.

For this reason, conducting proper legal, financial, tax, and operational due diligence is one of the most important parts of buying a business in Thailand. Where a target is financially distressed, see our guide on business rehabilitation in Thailand.

Mistake 2: Failing to Properly Review Lease Rights and Property Arrangements

Many foreign buyers focus heavily on the company itself without considering the importance of the target business’s lease arrangements. In Thailand, lease structures can create major operational risks if they are not carefully reviewed during due diligence.

It is common for commercial leases to be structured as three-year agreements to avoid Land Department registration requirements. However, unregistered leases exceeding three years are generally not enforceable beyond the initial three-year period. If the business depends heavily on its premises, such as restaurants, hotels, factories, retail stores, or hospitality operations, weak lease protection can create serious long-term problems after completion.

Buyers should also carefully review whether the lease is transferable, whether landlord consent is required for a change of ownership, and whether the landlord may renegotiate rent or renewal terms after the acquisition closes. Wherever possible, investors should negotiate stronger lease protections directly with the property owner during the transaction process, including longer registered lease terms where appropriate.

Another area often overlooked is “key money,” which is commonly used in Thailand for commercial property transactions. Key money may take the form of an upfront payment to a landlord or existing tenant in exchange for lease rights, reduced rent, or access to a commercially valuable location. However, these arrangements are not specifically regulated under Thai law and may not always provide the protections foreign buyers expect.

Without proper lease protection in place, the business may face relocation risks, unexpected rental increases, operational disruption, or significant additional costs shortly after the acquisition is completed. For more on structuring premises, see our guide on commercial lease agreements in Thailand.

Mistake 3: Ignoring Employment Liabilities

Employment liabilities can become one of the largest hidden costs in a share acquisition. Under Thai labour law, employee rights and severance obligations remain with the company after the acquisition closes. A business with long-serving employees may carry significant severance liabilities that are not always immediately visible during the early stages of negotiations.

Proper due diligence should include reviewing employment agreements, salary structures, social security compliance, historical disputes, and accrued severance obligations before finalising the purchase price.

Mistake 4: Using Nominee Structures to Circumvent the Foreign Business Act

Some foreign investors are incorrectly advised to use Thai nominee shareholders to bypass foreign ownership restrictions under the Foreign Business Act. This structure is illegal under Thai law and has become a major enforcement focus for Thai authorities. Violations may result in criminal penalties, fines, imprisonment, forced restructuring, or business closure. 

Where foreign ownership restrictions apply, the appropriate approach is to use a lawful structure such as a Foreign Business Licence, BOI promotion, or, where applicable, the US-Thai Treaty of Amity.

Mistake 5: Overlooking Change-of-Control Clauses

Many buyers may fail to review whether key commercial contracts contain change-of-control restrictions. In practice, leases, distribution agreements, financing arrangements, supplier contracts, and franchise agreements may allow termination or immediate repayment if company ownership changes. These clauses can seriously affect the value and operational continuity of the business after closing. Proper legal due diligence should identify these risks early so that waivers, approvals, or revised commercial terms can be negotiated before completion.

Mistake 6: Treating Immigration and Work Permits as an Afterthought

Many foreign buyers focus entirely on the acquisition itself without planning how they will legally manage the business after completion. In reality, foreign directors and managers usually require a valid visa and work permit before they can actively operate the company in Thailand. Delays in immigration planning can create serious operational problems immediately after closing.

At Lex Nova Partners, immigration, corporate, tax, and employment planning are handled together as part of the acquisition process. This allows visa and work permit applications to begin during due diligence rather than after completion, helping foreign buyers transition into management of the business without unnecessary delays. For the available options, see our guides on Thai work permits and the LTR visa.

Why a Full-Service Firm Matters for Thai Acquisitions

A Thailand business acquisition is rarely just a simple share purchase agreement. In practice, acquisitions involve multiple legal and operational considerations that must be coordinated carefully from the beginning of the transaction.

The corporate side of the transaction covers proper structuring, due diligence, negotiations, and drafting the share purchase agreement. At the same time, tax considerations such as capital gains tax, VAT exposure, withholding tax, and stamp duty can significantly affect the overall transaction cost if not addressed early. Employment issues must also be reviewed carefully, particularly where severance liabilities, transfer of undertaking risks, or long-serving staff are involved. Immigration planning is equally important, as foreign buyers often require visas and work permits before they can legally manage the business after completion.

One of the most common problems during acquisitions is that different advisors are handling different parts of the transaction separately. A corporate lawyer may identify a risk that affects employment liabilities, while the tax implications may only become visible later in the process. When separate firms handle different parts of the transaction, important issues can easily fall through the cracks.

At Lex Nova Partners, corporate, tax, employment, immigration, and regulatory matters are handled together under one coordinated team. This allows issues identified during due diligence to be reflected immediately across the transaction structure and legal documentation.

Our team regularly supports SME with acquisitions in Thailand, particularly for foreign investors and French-speaking clients entering the Thai market. For buyers considering an acquisition, obtaining legal and tax advice before signing the LOI can often prevent costly restructuring issues later in the transaction.

Frequently Asked Questions

Can a Foreigner Buy a Business in Thailand?

Yes. Foreigners can legally buy a business in Thailand, but foreign ownership restrictions under the Foreign Business Act may apply depending on the business activity involved. In many cases, foreigners can still own more than 49 percent, and frequently up to 100 percent, of the business by using one of the routes below. The four main routes for foreign ownership are obtaining a Foreign Business Licence (FBL), securing BOI promotion, or if the business or investor is American, the US-Thai Treaty of Amity, or operating within sectors that are already exempt from FBA restrictions, such as certain export or manufacturing activities.

How Much Does It Cost to Buy a Business in Thailand?

In addition to the purchase price itself, transaction costs for SME acquisitions in Thailand typically range between 4% and 8% of the deal value. These costs usually include legal fees, financial and tax due diligence, government filing fees, translations, and transaction structuring advice. More complex acquisitions involving BOI structures, cross-border elements, or licensing issues may increase overall costs. At Lex Nova Partners, we can provide fixed-fee scopes for many SME acquisition transactions. See also our overview of Thailand’s SME policy updates.

How Long Does It Take to Buy a Business in Thailand?

A standard SME acquisition in Thailand typically takes between 3 and 6 months from signing the LOI to completion. Transactions involving BOI promotion, Foreign Business Licences, or complex restructuring may take between 6 and 12 months. The process usually includes initial negotiations, due diligence, transaction structuring, drafting the share purchase agreement, regulatory approvals where required, and completion filings with the Department of Business Development.

Is Buying a Business in Thailand a Good Investment?

Buying a business in Thailand can be a strong investment opportunity when the transaction is properly structured and fully reviewed during due diligence. Investors benefit from acquiring an operating business with existing staff, licences, supplier relationships, and customers already in place. However, acquisitions also involve risks, including hidden liabilities, employment exposure, Foreign Business Act restrictions, tax issues, and post-acquisition integration challenges. Careful legal, financial, and operational due diligence is essential before proceeding.

What Is the Difference Between a Share Purchase and Asset Purchase in Thailand?

In a share purchase, the buyer acquires the company itself, including its assets, liabilities, contracts, employees, and historical obligations. In an asset purchase, the buyer acquires only selected business assets while leaving the legal entity and many liabilities with the seller. The most appropriate structure depends on factors such as licensing requirements, employment considerations, tax exposure, operational continuity, and the buyer’s overall risk profile.

Do I Need BOI Approval to Buy a Thai Company?

Not always. BOI approval is generally only required if the target company already holds BOI promotion and the acquisition involves a change of control requiring BOI consent. In other cases, investors may choose to apply for BOI promotion after the acquisition if they need foreign ownership exemptions, tax incentives, or work permit support for foreign staff under Thailand’s investment promotion framework.

Can I Get a Work Permit After Buying a Business in Thailand?

Yes, provided the company satisfies the standard requirements for sponsoring foreign employees. In most cases, this includes at least THB 2 million in registered capital per foreign employee and a ratio of four Thai employees per foreign work permit. BOI-promoted companies may qualify for exemptions from these requirements. Depending on the structure involved, the visa and work permit process usually takes approximately 4 to 8 weeks.

What Taxes Apply When Buying a Business in Thailand?

Several taxes may apply depending on how the acquisition is structured. Share transfers generally attract stamp duty at 0.1% of the transfer value. Thailand does not levy a separate capital gains tax; gains on the sale of shares are taxed as ordinary assessable income. A non-resident individual seller is generally subject to 15 percent withholding tax, subject to relief under any applicable double tax treaty, while a corporate seller is taxed at the standard corporate income tax rate. Asset purchases may also trigger 7% VAT unless the transaction qualifies for a transfer-of-going-concern exemption under Thai tax rules.

Getting Started

Buying a business in Thailand can provide a faster and more practical route into the Thai market than building a company from scratch. However, a successful acquisition requires more than simply negotiating a purchase price. Corporate structuring, tax planning, employment liabilities, regulatory compliance, and immigration planning all need to be managed together from the beginning of the transaction in order to reduce risk and avoid costly issues after completion.

At Lex Nova Partners, our Bangkok-based team handles corporate, tax, employment, immigration, and regulatory matters together under one coordinated workflow. We regularly support SME and foreign investors in Thailand, with bilingual English and French support available throughout the transaction process.

Before signing anything or paying a deposit, it is often advisable to obtain legal and tax structuring advice first. To discuss a proposed acquisition in Thailand, contact our team at +66 (0)6 5527 6323 or contact@lexnovapartners.com, or visit our office at Ocean Tower 2, 14th Floor, Sukhumvit 19, Bangkok. You can also schedule a 30-minute structuring call through the Lex Nova Partners contact page.

Please note that this article is for information purposes only and does not constitute legal advice

As of January 2025, Thailand has implemented enhanced consumer protection measures for condominium reservation agreements. Designed to safeguard buyers during the pre-sale phase, the new regulations impose stricter obligations on developers to ensure transparency, clarity, and fairness in these transactions. The changes cover areas such as contract terms, disclosure requirements, deposit management, and buyer rights.

In this article, we will explore the specifics of these new Condominium Reservation Regulations and their impact on the Thai condominium market.

Key Points

• Developers must include clear, comprehensive terms in standard reservation contracts in Thailand to ensure buyers are fully informed.
• Buyers are entitled to complete and accurate details about the project, its specifications, and associated risks.
• Strict regulations govern the handling of reservation fees, providing buyers with added financial safeguards.
• Revised cancellation rights offer consumers greater control and balance the dynamics between developers and purchasers.

Purpose of the New Notification

The Notification of the Contract Committee regarding the Designation of the Sale of Reserved Condominium Units as a Contract-Controlled Business aims to remove unfair practices that have often disadvantaged buyers during the reservation process. 

By classifying these transactions as contract-controlled business, the government is introducing a structured and approachable framework that ensures both buyers and developers are held to clear, standardized terms. This is expected to help improve condo buyer protection in Thailand

Scope of the Condominium Reservation Regulations

The notification applies to all scenarios where consumers enter into reservation agreements with developers for condominium units. This includes transactions conducted via traditional methods and online platforms. The measures apply across multiple channels, including:

• Reservations at property exhibitions or promotional events
• Direct reservations at developer sales offices
• Transactions through real estate agents or brokers
• Online reservations on developer websites or third-party platforms

Key Components of the Standard Reservation Contract in Thailand

Under the new regulations, developers must use a Standard Reservation Contract, drafted in Thai and containing mandatory terms that prioritize transparency and consumer protection. The required components include:

Project and Unit Details

• Project name and location
• Reservation number for reference
• Detailed unit specifications, including size, layout, materials, and equipment
• Any additional benefits or premium items provided by the developer

Timelines and Milestones

• Date for signing the final sales contract
• Deadlines for obtaining required permits and approvals
• Completion schedules for construction milestones

Financial Information

• Total purchase price of the condominium unit
• Reservation fee amount
• Details of applicable discounts or promotions
• Accepted payment methods (e.g., bank transfer, credit card, cash)

Consumer Rights and Developer Obligations

• Circumstances under which buyers can terminate the contract
• Developer responsibilities concerning construction quality and timelines
• Dispute resolution procedures and remedies for contract breaches

Refund Policies

The contract must clearly outline conditions for refunds, including:

• Situations where refunds are applicable
• Processing timelines for refunds
• Deductions or penalties, if any

Prohibited Terms in Reservation Contracts

To further improve condo buyer protection in Thailand, certain terms are now explicitly banned in reservation agreements. These include:

Limiting Developer Liability

• Exemptions from liability for construction delays or contract breaches
• Shifting the burden of proof onto consumers during disputes

Unilateral Contract Changes

• Developer rights to modify terms, materials, or pricing without buyer consent
• Alterations to project details after the reservation is finalized

Unfair Termination Clauses

• Termination without proper notice
• Automatic forfeiture of payments for minor breaches by the buyer

Misuse of Reservation Fees

• Using reservation fees for purposes other than securing the unit
• Treating reservation payments as down payments without clear agreement

Data Protection Violations

• Unauthorized collection or use of personal information
• Sharing consumer data with third parties without explicit consent
• Retaining personal data beyond its necessary period

Exploitation of Common Property

• Charging residents for access to standard amenities
• Exclusive developer use of shared facilities
• Unilateral modifications to common areas without resident approval

Enhanced Consumer Protections from the Condominium Reservation Regulations

The regulations significantly enhance buyer rights by introducing the following safeguards:

Right to Terminate

Buyers may terminate contracts under specific conditions, such as:

• Developer failure to secure permits or approvals
• Unauthorized changes to project specifications or materials
• Breaches of material contract terms by the developer

Refund Rights

• Full refunds for developer non-compliance with agreed terms
• Pro-rated refunds based on project stage for terminations initiated by buyers
• Expedited refund processes with clear timelines

Transparency and Access to Information

Buyers are entitled to:

• A copy of the reservation contract in Thai
• Detailed project specifications, including floor plans and materials
• Updates regarding changes or construction delays

Protection Against Unfair Practices

The regulations prohibit:

• Arbitrary price increases or altered payment schedules
• Hidden fees or undisclosed charges
• Pressure tactics or misleading sales practices

Developer Obligations

The new framework establishes clear responsibilities for developers, including:

Refund Processing: Refunds must be processed within the specified timeframes (15 days for wire transfers, 45 days for credit card payments).

Contract Preparation: Two identical copies of the reservation contract must be provided, one of which remains with the buyer.

Project Transparency: Developers must disclose accurate project details and promptly communicate changes.

Construction Standards: All necessary permits must be obtained, and quality specifications adhered to.

Financial Management: Reservation fees must be used exclusively to secure the unit, with clear receipts issued for payments.

Timeline for Implementation of the Regulation

• Publication Date: October 3, 2024
• Effective Date: January 31, 2025

To facilitate compliance, authorities may phase in the regulations, prioritizing new projects while allowing grace periods for existing developments.

Penalties for Non-Compliance

Developers failing to comply with the new regulations face significant penalties, including:

Risks to Reputation: Public disclosure of non-compliant developers in official registers.

Financial Fines: Up to THB 200,000 per violation, with recurring fines for continued non-compliance.

Criminal Liability: Potential imprisonment of up to one year for severe breaches.

Administrative Actions: License suspension or project halts for major violations.

Impact on Thailand’s Real Estate Market

These regulations are expected to strengthen consumer confidence in Thailand’s real estate sector, especially in the Thai condominium market by improving transparency and buyer protections. 

Foreign investors, in particular, may view the market as more credible and secure, encouraging greater participation in foreign condo ownership in Thailand. However, stricter compliance requirements could impact project timelines, prompting developers to adopt more realistic schedules and phased rollouts.

Read Also : LTR Visa for Wealthy Investors in Thailand

Foreign Condo Ownership in Thailand

Foreigners can own up to 49% of the total floor area in a condominium development under Thailand’s real estate law. However, this cap may increase to 75% in the near future, subject to pending amendments.

To verify condo foreign ownership quotas, buyers should consult the relevant jurisdiction office before making a purchase.

How many condos can a foreigner buy in Thailand?

There are no restrictions on the number of units a foreigner can acquire, provided the ownership cap has not been exceeded.

Condo Due Diligence in Thailand

While these new regulations provide stronger safeguards, buyers are still encouraged to conduct thorough due diligence when purchasing property. Condo due diligence in Thailand involves verifying project approvals, developer credibility, and potential risks, ensuring a well-informed investment decision.

A detailed condo due diligence investigation can uncover important issues that may impact the investment’s value and overall profitability. Some common issues identified during the due diligence process include:

• Undisclosed Mortgages: The buyer may later learn that the property is subject to a mortgage not revealed during the transaction. This oversight could leave the new owner liable for settling the previous owner’s debts.
• Ongoing Legal Disputes: The company owning the land or property may be entangled in long standing legal conflicts. Purchasing such a property could expose the buyer to unexpected legal battles and associated costs.
• Outstanding Tax Liabilities: Buyers may discover that the previous owner failed to pay property taxes. In such cases, responsibility for back taxes, along with penalties, often shifts to the new owner.
• Non-Compliant Construction: If the building was constructed without the necessary permits or fails to meet regulatory standards, the buyer may face significant fines or be required to fund costly renovations to bring the property up to code.
• Boundary and Ownership Disputes: Unresolved disputes regarding property boundaries or condo ownership rights can complicate the transaction and result in legal complications for the buyer.
  

Thailand’s hotel industry has long been a key contributor to the country’s economy, attracting visitors from around the world with its wide range of accommodation, from luxurious resorts to local boutique hotels. Thailand has earned a reputation for offering world class hospitality and service.

As the tourism and hospitality industry sector continues to develop, the Thai government, through the Board of Investment (BOI), has introduced a series of incentives and regulations aimed at stimulating foreign investment in Thailand and encouraging sustainable growth in the hospitality industry.

Key Points

• Thailand’s hotel industry is a significant contributor to the country’s economy, attracting visitors from around the world with a range of accommodation options and excellent hospitality and service.
• The Thai government provides incentives through the Board of Investment (BOI) to stimulate foreign investment in the hotel sector, including 100% foreign ownership, tax exemptions, and facilitation of work permits for foreign employees.
• To be eligible for a BOI investment promotion, hotel projects must meet investment requirements based on the number of rooms, maintain majority Thai shareholding, and comply with revenue limits.
• The BOI also offers incentives to encourage investment in Thailand and promote sustainable tourism industry investments, such as developing ecotourism lodges, community-based tourism, renewable energy projects, sustainable agriculture, and waste management initiatives.

Understanding Thailand’s Hotel Industry

Thailand’s hotel sector and hospitality industry is a key driver of the country’s economy, with tourism being one of the most important sectors of the Thai economy. 

In recent years, Thailand has seen a significant increase in the construction of high-end luxury resorts and boutique hotels, particularly in popular tourist destinations like Phuket, Krabi, and Koh Samui. These properties cater to travellers seeking high end experiences, offering amenities and services that rival the world’s best. The growth of this particular area has been boosted by the increasing purchasing power of both domestic and international tourists, as well as the country’s reputation as a leading vacation destination.

The Thai hotel industry and hospital sector has also witnessed the emergence of several key trends that are shaping the sector’s future. These include the growing popularity of eco-tourism and sustainable hospitality, technology-driven guest experiences, and the expanded options of accommodation including serviced apartments, vacation rentals, and glamping experiences. 

These evolving trends have prompted hotel operators to adapt their strategy to meet the changing demands of modern travellers.

Hotel Ownership Restrictions

When considering whether to invest in a hotel related business, foreign investors must understand the regulations related to business activities permitted under the Foreign Business Act (FBA) and property ownership rights for foreign investors. 

Land Ownership

Foreign investors looking to own land in Thailand in order to build and/or open a hotel, face several significant challenges due to the country’s property laws. In practice, Thai law generally restricts foreigners from owning land outright. This is primarily due to the Land Code Act of 1954, which aims to maintain national control over land and resources. Foreigners can only own land indirectly through specific legal structures, such as Thai majority owned companies, obtaining a BOI promotion or leasehold agreements.

Permitted Business Activities for Foreign Investors

The FBA restricts foreigners or foreign owned companies from undertaking over 50 categories of business activities in Thailand. These restricted activities include owning hotels due to “Thai enterprises not yet being ready to compete with international companies”.

In order to achieve foreign ownership, investors have 2 options available, applying for a foreign business licence or a BOI promotion. 

Foreign Business Licence

A Foreign Business Licence can be applied and if granted would allow 100% foreign-owned businesses to own and run a hotel. However, the application process can be lengthy and there is no guarantee that the application will be approved.

Many foreigners prefer to create a company with Thai local partners and own less than 49 percent of the company’s shares to avoid the long registration process. Having a Thai company with Thai partners who own over 50% of the shares also removes the need for a Foreign Business License because the company is considered Thai.

However, foreigners can be majority hotel shareholders in specified areas and projects. For more information about this and whether your company would be eligible, please book a consultation with one of our legal experts here.

Eligibility Criteria for a BOI Promotion in the Hotel Sector

To be eligible for BOI investment promotion, hotel projects in Thailand must meet the following key criteria to invest in Thailand:

Investment Requirements:

Additional Criteria:

Total revenue from BOI-promoted and non-promoted activities not exceeding 500 million THB annually for the first three years.

• Minimum project investment of 500,000 THB, excluding land and working capital.

• At least 51% Thai shareholding (unless the project qualifies for a BOI promotion).

• Debt-to-equity ratio not exceeding 4:1.

BOI Incentives for Hotels

The Thai government, through the Board of Investment (BOI), has introduced a comprehensive set of incentives and regulations to attract foreign investment into the hospitality industry. These initiatives are designed to encourage the development of high-quality accommodations, promote sustainable tourism practices, and position Thailand as a premier destination for global travellers.

Obtaining BOI certification provides the following benefits for investors:

100% Foreign Ownership

While regular Thai Limited companies are typically limited to 49.9% foreign ownership due to the Foreign Business Act, BOI-promoted companies face no such restriction, allowing complete foreign ownership.

Foreign Business Certificate

BOI-promoted firms receive a Foreign Business Certificate, exempting them from the 50+ restricted business categories under the Foreign Business Act. This opens up opportunities for a wider range of business activities in Thailand.

No Employee Quotas

Unlike other structures, BOI-promoted companies face no quotas when hiring foreign skilled employees. For example, Thai Limited Companies typically need a 4:1 ratio of Thai to foreign employees, but this requirement doesn’t apply to BOI-promoted businesses. Additionally, the process of obtaining visas for foreign employees is significantly more straightforward with BOI approval.

Permission to Own Land for Hotel Operations

BOI promoted companies are eligible to own land in order to build their hotel, a perk that is not available to other foreign owned companies. However, it is important to note that any land ownership rights only apply to hotels and not to residential components (such as condos), nor mixed use projects where there is the intention to sell managed villas.

Facilitation of Work Permit and Visa Applications for Foreign Employees

Foreign employees can apply for and obtain their visas and work permits at the One Stop Service Center in Bangkok. This greatly speeds up the entire process as applicants can pick up their work permit and visa in a couple of hours. 

Tax Incentives

• Corporate Income Tax (CIT) exemption for up to 8 years, depending on the project’s location.
• Exemption from import duties on machinery*.
• Exemption from import duties on raw materials for production for export.

The specific incentives and benefits available to a hotel project depend on its location within Thailand. Projects situated in certain provinces, such as Krabi, Bangkok, and Phuket, may be eligible for additional benefits or face certain limitations compared to projects in other regions.

*Please note, projects located in the following provinces are not  eligible for import duty on machinery exemption:

• Krabi, 
• Bangkok, 
• Kanchanaburi, 
• Khon Kaen, 
• Chachoengsao, 
• Chon Buri, 
• Chiang Mai, 
• Nakhon Pathom, 
• Nakhon Ratchasima, 
• Nonthaburi, 
• Pathum Thani, 
• Prachuab Khiri Khan, 
• Phra Nakhon Si Ayuthaya, 
• Phang-nga, 
• Phetchanuri, 
• Phuket, 
• Rayong, 
• Songkla,
• Samut Prakan,
• Samut Sakhon,
• Saraburi and 
• Surat Thani

Sustainable Tourism Investments for Foreign Investors

Thailand’s tourism industry and hospitality sector is one of the most important sectors of its economy, but it’s also looking to embrace the shift towards more sustainable experiences and attract people to invest in Thailand for these areas. The government is actively seeking foreign investors to partner with on projects that promote these kinds of projects. 

Here are some examples of sustainable tourism industry investments in Thailand that are attractive to foreign investors:

Ecotourism Lodges

There’s a growing demand for unique travel experiences that are low-impact on the environment. Ecotourism lodges are a great investment opportunity, due to the large number of natural locations like national parks, rainforests, and islands available in Thailand.  These lodges can be designed to blend into the surroundings, use local materials and employ local people.

Community-Based Tourism

This form of tourism focuses on giving visitors an authentic experience of Thai culture and traditions, while also benefiting local communities.  Foreign investors can provide funding and expertise to help local communities develop CBT projects, such as homestay programs, cultural shows, and tours of traditional villages.

Renewable Energy for Tourism Businesses

Many hotels, resorts, and other tourism businesses are looking for ways to reduce their environmental impact.  Potential projects for foreign investors include the installation of solar panels, wind turbines, or other renewable energy sources.

Sustainable Agriculture and Food Production

Tourists are increasingly interested in eating fresh, local food within the hospitality sector.  Sustainable agriculture projects that provide local food to restaurants and hotels, including organic farming, hydroponics, or aquaponics could be of interest to investors.

Waste Management and Recycling

The tourism industry generates a lot of waste.  Foreign investors can help by financing projects that improve waste management and recycling in tourist destinations.  This could include composting facilities, waste-to-energy plants, or programs to reduce single-use plastics.

The Thai Board of Investment (BOI) offers a number of incentives for foreign investors who are interested in sustainable tourism projects.  These incentives can include tax breaks, reduced land costs, and expedited permitting processes. 

Hotel Licence Requirements in Thailand

Another important consideration for hotel businesses is the licensing requirements for operating the business. Depending on the number of rooms and capacity of the hotel, different licences may be required.

The Hotel Act and Licensing Requirements

The Hotel Act is the primary legislation governing the hospitality industry in Thailand. This Act defines the criteria for what constitutes a “hotel” and outlines the licensing requirements for hotel establishments. Key provisions of the Hotel Act include:

Hotel Definition: The Act defines a “hotel” as an accommodation establishment operated for business purposes to provide temporary lodging services to travellers or other individuals in exchange for compensation. A hotel licence will be required if the hotel has more than four rooms or can accommodate more than 20 guests.

Exemptions: Certain accommodations, such as those with up to 8 rooms and 30 guests, are exempt from the Hotel Act and do not require a hotel licence. However, such a hotel must obtain a non-hotel licence from the relevant authority.

Other relevant business licences

Depending on the services offered by the hotel, other business licences may be required including:

• Restaurant Business Licence
• Entertainment Licence
• Liquor and Tobacco Licence

To learn more about these licences and whether they are applicable to your business, please book a consultation with our experts.

Our Thoughts

The Thai hotel industry is a lucrative market with Thailand and provides many attractive opportunities for foreign investors. The BOI’s incentives, coupled with the government’s efforts to attract investment, have created a favourable environment for those looking to establish or expand their hotel operations in Thailand.

However, the legal and regulatory landscape is a big challenge to foreign investors that requires an understanding of the relevant laws, licensing requirements, and ownership structures. Our experts are available to provide guidance on how to best structure your project.