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French companies in Thailand and institutions: a decisive relationship for success?
Setting up a French company in Thailand is not an improvised process. Local institutions play a central role. They are the guarantors of the legal, fiscal, and economic framework in which French companies can grow. A French company must understand these mechanisms to access the many advantages offered by the Board of Investment (BOI), the Department of Business Development (DBD), and the tax authorities.
This legal context is based on the provisions of the Thai Civil and Commercial Code. Article 1096 states that a limited liability company comes into existence upon registration with the Registrar. Article 5 of the Foreign Business Act B.E. 2542 (1999) defines prohibited or restricted activities for foreign investors. The Investment Promotion Act B.E. 2520 of 1977, particularly Articles 16 to 31, offers a framework for tax incentives and rights for BOI-promoted companies. The bilateral tax treaty between France and Thailand, concluded on December 27, 1974, prevents double taxation and enhances legal certainty.
At Benoit & Partners, we guide French companies through establishing and expanding their presence in Thailand. Understanding the legal framework, local institutions, and regulatory requirements is crucial for success. Our team specializes in advising on the role of Thai government bodies, legal compliance, and business development strategies. We ensure your company’s smooth entry and growth in the Thai market. With our support, you can navigate the complexities of Thailand’s business landscape and build a legally compliant foundation for your operations.
This article examines how a French company in Thailand can use the legal framework and institutional support to establish itself long-term.
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Table of Contents
Registering a French company with the relevant authorities
The role of the Department of Business Development
Any French company operating in Thailand must first register with the Department of Business Development (DBD). This step includes reserving the name, filing the Memorandum of Association, drawing up the articles of association, and final registration. The DBD verifies the shareholding structure, share capital, corporate purpose, and compliance conditions. This procedure is governed by Articles 1096 to 1111 of the Thai Civil and Commercial Code.
Cases requiring a Foreign Business License
If more than 49% of the company is owned by foreign interests, it is considered a “foreign company” within the meaning of Article 4 of the Foreign Business Act B.E. 2542. In this case, it must apply for a Foreign Business License (FBL), unless it is promoted by the BOI. A French company in Thailand, an institution subject to the FBA, must therefore justify the activity it wishes to carry out and meet the eligibility conditions set by the authorities, in particular the criteria mentioned in Articles 8 and 9 of the law.
BOI support for the development of French companies in Thailand
The Board of Investment is crucial for any French company in Thailand seeking growth in promoted sectors. The BOI provides tax incentives, such as corporate tax exemptions for 3 to 13 years (Article 31 of the Investment Promotion Act). It also exempts customs duties on machinery (Article 28) and allows foreign ownership without capital restrictions (Article 27).
Besides tax breaks, the BOI helps foreigners obtain visas and work permits (Article 24). It allows full company ownership and exempts the company from obtaining an FBL (Article 37). A French company in Thailand can therefore operate legally in sectors that normally prohibit foreign investment.
French companies in Thailand: Tax obligations and bilateral agreement
Declaration and local taxation
A French company in Thailand faces a 20% corporate income tax rate under Article 65 of the Thai Revenue Code. It must register with the Revenue Department within 60 days of starting commercial activity (Article 3). The company must keep accounts in Thai as per Article 69. Certified accountants must verify financial statements, and the company must file them annually with the DBD.
The company must also file monthly VAT returns under Articles 77/1 to 91 of the Thai Revenue Code. It must pay withholding taxes as per Article 50. Contributions to the social security fund, as per the Social Security Act B.E. 2533, are mandatory when the company hires employees. Failing to comply with these rules leads to penalties and late payment interest. In cases of fraud or wilful omission, the French company faces tax penalties, interest, and even criminal penalties.
Protection offered by the Franco-Thai tax treaty
The Franco-Thai tax treaty, signed in 1974 and effective from 1975, provides mechanisms to avoid double taxation. French companies allows by Article 23 to receive a tax credit in France for taxes paid in Thailand. Article 24 prohibits tax discrimination against French companies established in Thailand.
Article 25 outlines an amicable procedure to resolve disputes regarding the interpretation of the agreement. A French company in Thailand, registered for tax purposes, must document its income accurately and retain withholding certificates to support its tax credit claims. The company must keep Thai withholding certificates (PND 54, PND 1, etc.) to claim tax credits. A preliminary analysis of income classification and exemption rights, based on Articles 7 (industrial and commercial profits) and 10 to 12 (passive income), is highly recommended. The treaty’s provisions, particularly Articles 23 (tax credit) and 24 (non-discrimination), allow a French company in Thailand to claim a tax credit or exemption on locally taxed income.
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Franco-Thai institutions supporting French companies in Thailand
Support from the French Embassy and Business France
The French Embassy in Thailand, through its Economic Department and Business France, supports all French companies in Thailand. It offers market analysis, prospecting, and assistance with setting up operations. These services help French companies integrate better into the local economy.
The strategic role of the FTCC
The French-Thai Chamber of Commerce (FTCC) acts as a local relay for French companies. It facilitates access to professional networks, organizes economic events, and offers tailored legal services. A French company in Thailand has access to a dynamic and responsive business community.
The complementary role of the Bangkok Chamber of Commerce and Industry
In addition to the FTCC, some French companies in Thailand join the Bangkok Chamber of Commerce and Industry (BCCT). The BCCT connects a large network of international economic players. Historically Anglo-Saxon, the BCCT offers inter-chamber events and valuable resources. French companies can use these to expand their network and access current economic information.
Other institutions and local representatives
Other structures also support French companies in Thailand, such as established institutions. For example, the embassy’s regional customs attaché service provides detailed information on customs duties and import/export regulations. The Agency for French Education Abroad (AEFE) helps expatriate executives’ families by guaranteeing access to French-language schools.
Local representatives, such as French Foreign Trade Advisors (CCEF) or sector-specific business clubs, offer valuable support. They assist with issues like land access and connecting with Thai suppliers. A French company will benefit from a development-friendly environment within this structured institutional network.
Ensuring the ongoing compliance of your French company in Thailand
After the setup phase, a French company in Thailand must maintain legal and tax compliance. Articles 1135 to 1206 of the Thai Civil and Commercial Code govern annual accounting obligations. These require keeping accounting records, preparing balance sheets, and conducting statutory audits. Article 3, Section 7 of the Thai Revenue Code mandates the renewal of tax registrations and the submission of monthly returns (VAT, WHT, etc.).
The company’s articles of association must be updated if there is a change in shareholding or registered office, as per Article 1152 of the Civil and Commercial Code. Major changes must be reported to the relevant authorities. In some cases, new authorization may be required under the Foreign Business Act.
To anticipate inspections by immigration, tax, or BOI authorities, the company needs strong internal management. This includes contracts, corporate records, fund movements, and data protection obligations. A French company in Thailand will benefit from implementing appropriate legal governance, with support from a competent law firm.
Why choose Benoit & Partners to support your French company in Thailand
Benoit & Partners is a Franco-Thai law firm known for its expertise in supporting French companies looking to establish or expand in Thailand.
The firm assists at every project stage: legal feasibility studies, investment structuring, obtaining necessary licenses, BOI support, tax optimization, compliance with the Foreign Business Act, drafting partnership agreements, and handling labor, tax, and commercial litigation.
With its deep knowledge of local administrative practices and processing times of institutions (DBD, Revenue Department, Land Office, Immigration Bureau), Benoit & Partners ensures efficient procedures and anticipates legal risks.
The firm’s teams are experienced in handling sensitive cases involving international structuring, cross-border taxation, real estate law, and commercial litigation. This multidisciplinary approach provides a French company in Thailand with comprehensive, strategic support.
Conclusion
The success of a French company in Thailand relies on understanding the legal framework and collaborating with local institutions. From incorporation to business development, each step requires a compliant, strategic, and supported approach. The BOI offers significant tax advantages, including a 13-year tax exemption in some cases (Section 31 of the Investment Promotion Act). The FTCC, the Embassy, the DBD, the BOI, and the tax authorities form a unified ecosystem for economic development. By partnering with a skilled Franco-Thai law firm, a French company in Thailand gains legal security and a strong presence in the ASEAN region.
If you need further information, you may schedule an appointment with one of our lawyers.
Setting up a French company in Thailand offers tax exemptions (3-13 years) and 100% foreign ownership when the BOI promotes it. It also provides customs duty exemptions on machinery and legal advantages in restricted sectors.
The process includes registering with the Department of Business Development (DBD), reserving the company name, filing the Memorandum of Association, and ensuring compliance with local laws and shareholding structures.
An FBL is required if foreigners own more than 49% of a company and the company is not BOI-promoted. It ensures the business complies with the Foreign Business Act.
The treaty prevents double taxation, allowing French companies to claim a tax credit in France for taxes paid in Thailand, ensuring legal security.
Failure to comply with tax obligations can result in penalties, interest, and criminal charges. It’s essential for companies to adhere to tax and reporting requirements to avoid legal risks.