Glossary, ownership

Foreign Business Act in Thai property

พระราชบัญญัติการประกอบธุรกิจของคนต่างด้าว พ.ศ. 2542

The Foreign Business Act B.E. 2542 (1999) restricts the businesses that foreigners and foreign companies may operate in Thailand. A Thai-registered company counts as foreign when half or more of its shares are held by foreigners.

The Act sorts restricted activities into three lists. List One is closed to foreigners outright and includes trading in land. List Two needs cabinet approval. List Three, which covers most service businesses, needs a Foreign Business Licence from the Department of Business Development unless a treaty or Board of Investment promotion applies.

For property buyers the Act matters in three ways. First, its ownership test sits alongside the Land Code's rule that a company with more than 49% foreign shareholding cannot own land. Second, section 36 criminalises the use of Thai nominee shareholders to disguise foreign control, with up to three years in prison and fines of THB 100,000 to THB 1 million. Third, it bears on rental activity: letting a property you own is generally treated as passive investment, but operating a letting or property management business is a service that may need a licence.

Where that line falls is a grey area. Take independent legal advice before using any company structure. See Thai company ownership risks.

General guidance, not legal or tax advice. Take independent legal advice before you commit to a purchase.

Terms related to foreign business act

Nominee shareholder: A nominee shareholder is a Thai national who holds shares in a company on behalf of a foreigner so that the company appears to be Thai-owned. Using nominees so that a company can hold land is illegal under the Land Code and the Foreign Business Act.
Hotel licence: A hotel licence is the permit required under the Hotel Act B.E. 2547 (2004) to offer paid accommodation for stays of less than one month. Without one, letting a condominium or villa by the night or week is unlawful.
Condominium Act: The Condominium Act B.E. 2522 (1979) is the statute governing how condominiums in Thailand are registered, owned and managed. Sections 19 and 19 bis set out which foreigners may own units and cap foreign ownership at 49% of a building's unit floor area.