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Foreigners are often misinformed when trying to decipher between a trading and non trading entity [limited liability Thai company – LLC] in Thailand, and do not fully understand, nor is it explained properly, that all limited liability companies created in Thailand require some element of ‘trading’ whether your opinion or understanding of this company is either;

• • a company that does trade [creates some daily/weekly/monthly accounting activity] or
  • a company that does not trade [creates no daily/weekly/monthly accounting activity].

Also, when you open an LLC for any purpose in Thailand you are required to:

• • submit an end-of-year balance sheet and audit for each and every financial year that the company remains open and
  • ensure that the company reaches profitability within three (3) years of formation of said company.

Why is this necessary? The Department of Business Development [DBD], where the company was formed and/or any changes to said company are lodged and approved, ‘reserves the right’ to close ANY company that:

• • has not submitted an end-of-year balance sheet and audit for three (3) consecutive years and/or
  • does not reach profitability within three (3) years of opening the company.

Importantly, your Non B Visa and Work Permit may not be renewed [upon expiry each year) if the company has been running at a loss for two (2) consecutive years prior to renewal of the Visa and Permit.

Before you panic..! ‘reserves the right’ does not necessarily mean the DBD will definitely close your company but, it does mean that they maintain the option to do so should they wish to exercise such!

​A trading, or non trading LLC must abide by the very same accounting and tax laws as any other company and more information on accounting in Thailand can be found on the Accounting & Tax page of our website.

Prior to the formation of a company, you must first determine how many foreign Work Permits are required to establish the ‘paid up capital’ [the size] of the company. The equation is simple: each Work Permit requires 2,000,000 THB in paid up capital, therefore:

• • a company requiring NO (0) Work Permits must be at least 1,000,000 THB [in registered capital/size] and,
  • a company requiring ONE (1) Work Permit must be at least 2,000,000 THB [in registered capital/size] and,
  • a company requiring TWO (2) Work Permits must be at least 4,000,000 THB [in registered capital/size] and,
  • a company requiring THREE (3) Work Permits must be at least 6,000,000 THB [in registered capital/size] etc.

Given recent crackdowns on ‘Thai Nominee’ shareholders, it is preferable that each/every company, at the time of formation, has fully paid-up Registered Capital for ALL shareholders to avoid director loans and/or possible investigation. Samui Law Firm can walk you through and facilitate this important part of the Company Formation process!

Note: In Thailand, it remains a criminal offense for any Thai individual or Thai company to act as a ‘Nominee’ shareholder for a foreign directed company and jail terms of up to ten (10) years could be given to offending nominee(s)!