Thinking of starting a business in Thailand as a foreigner? Learn the key differences between a Foreign Business License (FBL) and BOI promotion and how each option can open doors to foreign ownership
- Alice
- Apr 30
- 4 min read
Starting a business in Thailand as a foreigner can be a thrilling opportunity. With a growing economy and a rich culture, it draws many entrepreneurs. However, understanding the local legal landscape is essential for foreign owners. Two key options are the Foreign Business License (FBL) and Board of Investment (BOI) promotion. This post will highlight the differences between these paths and how they can open doors for foreign ownership in Thailand.
Understanding the Foreign Business License (FBL)
The Foreign Business License (FBL) allows foreigners to operate in specific business sectors in Thailand. This license, regulated by the Foreign Business Act of 1999, is critical for foreigners who want to start a business in sectors where foreign investment is limited.
To qualify for an FBL, investors typically need to show a substantial level of investment, usually at least 3 million THB (about 90,000 USD) for most business sectors. Additionally, they must create a comprehensive business plan.
Certain business types are restricted—such as traditional retail businesses or specific service sectors, like healthcare or legal services—which can only be operated with special permissions. This means, for example, that if you're looking to set up a restaurant primarily serving local customers, you might need to apply for special permissions alongside your FBL.
Obtaining an FBL is not quick. The process can take several months due to the extensive required documentation. However, securing an FBL allows for full foreign ownership, a significant benefit for those aiming for a long-term presence in Thailand.
The Benefits of BOI Promotion
The Board of Investment (BOI) promotion provides attractive incentives for foreigners establishing a business in Thailand. BOI Thailand offers benefits like tax exemptions, help with work permits, and the ability to fully own a company without needing additional licenses.
The BOI focuses on attracting investment in sectors crucial to Thailand's growth, including technology, agriculture, and renewable energy. For instance, companies in these areas can receive a 100% corporate income tax exemption for up to eight years, depending on the investment level.
To be eligible for BOI promotion, businesses must meet clear criteria set by the BOI, including submitting a detailed business plan that demonstrates how the business will boost the Thai economy. The BOI process is generally quicker and less complicated than obtaining an FBL, enabling earlier market entry.
Additionally, receiving BOI status often allows companies to operate in sectors where foreign ownership might typically face restrictions. For example, a tech startup may qualify for full ownership, even in a business area usually limited by the Foreign Business Act.
Key Differences Between FBL and BOI Promotion
Licensing and Legal Framework
The FBL is regulated by the Foreign Business Act, which imposes stricter restrictions. In contrast, BOI promotions are built around incentives designed to stimulate foreign investment. This makes the BOI approach seem more appealing due to its flexibility and support for certain industries.
Ownership Structure
A critical difference lies in ownership options. The FBL permits 100% foreign ownership in specified sectors. Conversely, BOI companies can also allow full foreign ownership, potentially opening markets otherwise closed to foreigners. For example, an investor in renewable energy might find more promising avenues through BOI than through an FBL.
Processing Time and Complexity
Acquiring an FBL is often more complex, requiring thorough paperwork and compliance with various regulations. The BOI application process is typically more streamlined, facilitating swifter business establishment in Thailand.
Tax Incentives
The BOI promotion offers significant tax benefits. Companies qualifying for BOI can receive multiple tax breaks, including exemptions from corporate income taxes for a set duration. Those holding an FBL usually do not receive similar incentives, unless negotiated separately.
Weighing the Options
Foreign Business License (FBL)
Pros:
Enables full foreign ownership in allowed industries.
Establishes legal recognition for foreign businesses.
Cons:
Lengthy and intricate application process.
Limited to specific sectors controlled by the Foreign Business Act.
BOI Promotion
Pros:
Provides various attractive incentives, including tax exemptions.
Allows for a more efficient application process.
Access to sectors usually limited for foreign ownership.
Cons:
Eligibility restricted to certain industries recognized by the BOI.
Requires proof of economic benefits to Thailand.
Final Thoughts
When considering starting a business in Thailand as a foreigner, understanding the differences between the Foreign Business License (FBL) and BOI promotion is crucial. Each pathway presents unique advantages and challenges that can greatly influence your business journey.
Evaluating your business goals, target industry, and investment level will help you choose the best option for your aspirations in Thailand. While the FBL provides ownership rights in specific sectors, BOI promotions can offer broader opportunities with appealing investment-friendly incentives.
The Thai market is full of potential for those willing to navigate its regulatory environment. By making an informed choice, foreign entrepreneurs can align their businesses with the local economy and contribute to Thailand’s growth story.
Can You Apply for Both?
In some rare cases, a company may apply for BOI promotion first and later apply for an FBL if additional business activities require it. However, most businesses choose one route based on eligibility and long-term strategy.
Our Advice for Foreign Investors
If your business aligns with Thailand’s targeted industries, BOI promotion is often the faster and more beneficial route. But if your activity falls outside the BOI scope, and you still want control, an FBL might be the right option just prepare for a longer process.
Before making a decision, consult with a local legal or investment advisor who understands both FBL and BOI regulations. The right structure will affect everything from your tax strategy to how fast you can hire expats.
Ready to Start Your Business in Thailand?
Our team specializes in helping foreign investors navigate the Thai legal and business landscape. Whether you’re looking into BOI promotion or need help securing an FBL, we’re here to guide you every step of the way.
👉 Contact us today for a free consultation.
Email : alice.lexfortuna@gamail.com
Call : +66 65734 0592
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