Despite the ongoing pandemic and its impact on travel measures, applications for foreign investments have increased by 140% this year.
For the first nine months of 2021, the total investment application reached over $15 billion, with $11 billion coming directly from foreign investors. Among the different foreign investors engaged with Thailand, American business owners have topped the list as one of the most prominent investors this year. Here’s why.
Openness to Foreign Investment
Thailand is generally a welcoming country for foreign investment. However, it also somehow limits foreign participation through its Foreign Business Act.
According to the act, certain sectors are not permitted to majority-owned foreign businesses unless exemptions and additional licenses are obtained. Fortunately, due to the 1996 US-Thailand Treaty of Amity and Economic Relations, many US investors are eligible for an exemption for some of the otherwise prohibited sectors.
Among the different industries, the Prime Minister is urging foreigners to focus on medical tourism, energy, the environment, and digital technology.
While US nationals benefit significantly from the treaty, some sectors are still not open for Thailand company registration. Communications, fiduciary functions, transportation, land and natural resources exploitation, and domestic trade of local agricultural products remain prohibited.
Convenient Bilateral Investment Agreements
Despite the limited restrictions placed on US nationals, the United States and the Kingdom signed a Bilateral Trade and Investment Framework Agreement in October 2002. Through this agreement, both countries can conduct a forum to discuss and come to a unified decision regarding trade and investment issues and opportunities. Some of the topics of discussion include customs, market barriers, intellectual property, and other mutual concerns.
What’s more, in 2016, Thailand and the United States signed the advantageous Intergovernmental Agreement to pass the Foreign Account Tax Compliance Act. This act requires foreign entities to report their foreign assets to their US account holders. If they fail to do so, they will be subject to withholdable payments. This law is important because it allows US authorities to gain information regarding the financial assets of their citizens conducting businesses in foreign countries. As a result, they can strengthen their tax compliance on a global scale, benefiting both nations involved.
Transparency of Thai Regulations
Thai laws are typically readily available to the general public, including foreign investors. In addition, the Thai government makes it a point to consult stakeholders on policies regarding health and intellectual property before officially passing a law.
In areas related to cybersecurity and digital issues, the government plans to draft initial regulations and open them to the public. Afterwhich, the government will amend the laws accordingly while taking into consideration stakeholders’ comments.
Foreign investors can conveniently visit the official Royal Thai Government Gazette website to get updates on regulation amendments and access existing laws.
Investment Incentives
Investment incentives have always been available for foreigners eyeing Thailand as a business destination. However, with the emergence of COVID-19, the government provided new incentives to continuously attract foreigners to the country and therefore help with its economic recovery.
As of September 2021, the cabinet passed a resolution involving tax, immigration, and land ownership incentives for skilled professionals and foreign investors.
- Tax incentives – With these in place, eligible applicants can enjoy equal tax rates as Thai nationals. In addition, they get to benefit from tax exemptions for income obtained overseas. What’s more, according to the Eastern Economic Corridor Scheme, they can apply for a 17% fixed rate for their income tax.
- Immigration incentives – Besides tax incentives, qualified American business owners can benefit from immigration incentives that allow them to receive a 10-year resident visa covering their spouses and children living in the Kingdom. Once the visa application is approved, they will also be issued a work permit automatically, which previously did not exist in the country. On the other hand, long-term residents who want to extend their stay in Thailand will not need to submit written notices if they want to stay longer than the prescribed 90 days in the country.
- Land ownership incentives – As a way to entice foreigners further, the government has offered qualified candidates relaxed restrictions in terms of rent and foreign ownership of land.
These incentives will be operated and overseen by the country’s Office of National and Economic Social Development Council and will be valid for five fiscal years starting from 2022 to 2026.
Conclusion
Now more than ever, the business climate in Thailand is thriving, and Americans are seizing incredible opportunities by strengthening their ongoing relationship with the Kingdom. Foreign business owners are therefore encouraged to register a Thai company and benefit from the overall economic recovery.
