Thailand Foreign Business License: Rental Services

“Rental services” refers to procuring immovable property, such as land or office space, or movable property, such as machinery, equipment or motor vehicles for lease to customers. Rental services falls within Category (21) of List Three annexed to the Foreign Business Act of 1999. Therefore, any foreigners that plan to engage in rental services in Thailand must apply for a Foreign Business License from the Director-General of the Department of Business Development and the Foreign Business Committee according to Section 17 of the Act. In considering the application, the government goes by the following guidelines:

• The applicant may be a foreign company registered overseas or a company registered in Thailand having the status as a “foreigner”, i.e. with at least 50% of the shares or capital held by foreigners.
• The applicant must be offering rentals of land or office space (including public utilities) to other companies with whom its has a continuous business relationship and without engaging in this activity as its principal business or the applicant must be offering rentals of movable property in the form of products that is produced or distributed by the applicant or companies in its corporate network or the applicant must be a commercial bank offering rentals of immovable property that it owns.

The application for a Foreign Business License must include the following information:

• Where land or office space is to be offered for rent: It must be established that the rental service will be of benefit to the business relationship between applicant and its business partner who is the tenant. For example, the land or office space may be used as a coordination center between the applicant and its business partner.
• The identity of the tenant must be clearly specified and tenants must only be companies with whom the applicant has a continuous business relationship.
• The main business activity of the applicant will be considered since in this case the applicant cannot engage in rental services as its principal business activity. In the case where office space is rented out, the government committee consider the proportion of the office that is rented out to the proportion of the office that is used by the applicant for its main business.
• Where movable property is offered for rent: the relationship between the property and the applicant must be clearly established since the applicant is only allowed to rent out products that it or companies in its corporate network produces.

Applying for a Foreign Business License in complex. Foreign companies that are planning to set up business operations in Thailand are advised to consult with competent legal counsel before proceeding.

 

Category: Administrative Law, Business in Thailand, Company Registration