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July 20, 2023

Company Under US-Thailand Treaty of Amity

The US-Thailand Treaty of Amity and Economic Relations, often simply referred to as the Treaty of Amity, stands as a special agreement that encourages and simplifies the process for American businesses to establish a presence in Thailand. This article aims to shed light on the Treaty of Amity's restrictions, capital requirements, and the procedural steps to secure the Treaty of Amity certification in Thailand.

Treaty of Amity Company Restrictions

The Treaty of Amity offers American companies many privileges, but these come with certain restrictions. These restrictions are designed to protect specific sectors in Thailand. Under the Treaty of Amity, U.S. companies cannot engage in the following industries:

  1. Communications
  2. Transport
  3. Trustee functions
  4. Banking that involves depository functions
  5. Exploitation of land or other natural resources
  6. Domestic trade in indigenous agricultural products

It's important to note these exceptions when considering the scope of your business in Thailand.

Capital Requirements under the Treaty of Amity

The Treaty of Amity doesn't expressly state a minimum capital requirement. However, the Thai government typically requires a reasonable amount of capital relative to the scale of the proposed business operation.

For businesses that seek to hire foreign employees, the Ministry of Commerce generally imposes a minimum capital requirement of THB 2 million.

Treaty of Amity Certification Procedure

  1. Company Registration: Initially, you must register your company with the Thai Ministry of Commerce. Be sure to comply with the ownership structure stipulated in the Treaty, i.e., the company should be majority or wholly American-owned.
  2. Document Procurement: Obtain important documents such as the company affidavit, list of shareholders, articles of incorporation, balance sheets, and other related documents.
  3. Certification Application: Submit the completed application form to the U.S. Commercial Service, along with a letter outlining your company's operations, proof of American nationality of individual or corporate shareholders, and copies of the obtained documents.
  4. Document Verification and Certification: The U.S. Commercial Service will examine the submitted documents, confirm the majority American ownership, and if everything checks out, issue a certification letter.
  5. Final Approval: The certification must then be submitted to the Thai Ministry of Commerce for final approval. Upon verification, they will issue a Foreign Business License.
  6. Company Incorporation: Once you've received the Foreign Business License, the company incorporation process can commence.

It's important to note that the process of obtaining Treaty of Amity certification can take weeks to months. As such, it's recommended that you initiate the process well in advance of when you intend to begin operations.

All companies, even those enjoying benefits under the Treaty of Amity, must comply with Thai law, including tax obligations. It's always prudent to work alongside a local legal or business consulting firm to ensure your business operates within the legal framework.

In conclusion, the U.S.-Thailand Treaty of Amity provides American businesses a unique edge in penetrating the Thai market, making it possible to circumvent the usual restrictions on foreign investments in Thailand. By understanding the correct procedures, American businesses can capitalize on the benefits of this treaty to their full advantage.

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