Changes of Foreign Business Act
The government is considering excluding four types of business activities from List 3 of the Foreign Business Act to attract foreign investment, according to the Bangkok Post.
The four types of business are telecommunications services only for license type 1 (telecommunications business operator without its own network for services); treasury centers; aviation/aircraft maintenance; and software development.
We remind you that the Foreign Business Act contains three Lists of activities, each prohibiting or restricting for foreign companies business.
Types of activities from List 1 are in general prohibited for foreign companies (mass media, rice farming, livestock raising, etc.).
Activities from List 2 relating to national safety or security, or affecting arts, culture, tradition, local handicrafts or natural resources and environment. Foreign companies may carry out such activities only after approval by the Cabinet.
Types of activities from List 3 in which Thai nationals are not ready to compete with foreigners. Foreign companies may carry out such activities of obtaining a foreign business license.
That is why in most companies with foreign investment, the number of foreign shares is limited to 49%. Only if this condition is met, the company will have the status of a Thai (non-foreign) legal entity and the restrictions on the Foreign Business Act will not be applied.
If the above activities are excluded from List 3 of the Law, foreign investors will be able to own 100% of the company shares and will not need to obtain a license for foreign business. This means that it is not necessary to apply to the Board if Investment (BOI) to obtain a BOI certificate for obtaining a foreign business license, only if the purpose of getting a BOI certificate is to exempt from corporate income tax.
We have already mentioned about the exclusion of certain types of activities from the lists of this Law. Let's hope that in the near future software developers will be able to open 100% foreign companies in Thailand and without worries about Thai partners who can be trusted with 51% of company shares.