Foreign Business Act Thailand: when foreign-owned SMEs need a license and when they do not

gentlelawlawfirm
Feb 2
8 min read

Introduction

Foreign SMEs often hear about the “Foreign Business License” only after signing a lease, hiring staff, or onboarding customers. That is risky because the Foreign Business Act Thailand is not a formality. It is a restrictions framework that determines whether a foreign-owned SME can operate specific business activities in Thailand at all, and if yes, under what permission pathway.

This article explains the Foreign Business Act Thailand in a practical way: who is treated as a foreigner, how List 1 to 3 work, when a license is required, when certificates apply, and what common SME business models should check first.

Legal disclaimer: This article is general information only and not legal advice for your specific case. Outcomes depend on your exact activities, ownership and control, and current agency practice. Always confirm your facts with qualified counsel before acting.

Foreign Business Act Thailand: the decision logic in one page

For most foreign SMEs, the Foreign Business Act Thailand question can be answered by three checks:

Are you a “foreigner” under the Act?
Is your activity in List 1, List 2, or List 3?
If restricted, do you fall under a certificate pathway such as treaty rights or BOI promotion, or do you need a Foreign Business License?

We will walk through each step below.

Foreign Business Act Thailand: who is a “foreigner” for licensing purposes

Under the Foreign Business Act Thailand, “foreigner” includes:

a natural person who does not have Thai nationality
a juristic person not registered in Thailand
a Thai-registered juristic person where at least half of the capital is held by foreigners or where foreigners invest at least half of total capital, and certain partnership manager scenarios

Practical SME takeaway: A Thai company can still be treated as a “foreigner” under the Foreign Business Act Thailand based on shareholding or investment control, not just where it is incorporated.

Foreign Business Act Thailand: List 1, List 2, List 3 and what “restricted” means

The Act sets three categories of restricted businesses:

List 1: businesses foreigners are not permitted to operate (prohibited)
List 2: businesses tied to national safety, culture, natural resources or environment, allowed only with Minister approval with Cabinet approval
List 3: businesses Thai nationals are not yet ready to compete with, allowed only with Director-General permission with committee approval

This is why Foreign Business Act Thailand analysis is activity based. The same SME can be compliant or noncompliant depending on the precise service description, contracts, and where value is delivered.

Foreign Business Act Thailand: common SME activities that trigger List 3 licensing

List 3 includes many “SME-normal” activities such as:

accounting services
legal services
architectural and engineering services

List 3 also includes a broad “other service business” category, except those specified in a ministerial regulation.

Practical SME takeaway: If your foreign SME provides services in Thailand and your activity does not clearly fall into an exempted services category, the “other service business” bucket under the Foreign Business Act Thailand is often where licensing risk appears.

Foreign Business Act Thailand: when you do not need a Foreign Business License

Foreign SMEs commonly avoid an FBL under the Foreign Business Act Thailand in three main scenarios.

Scenario 1: Your activity is not in List 1 to 3

If the activity is not listed in the annexed Lists, the Act’s restriction route may not apply in the same way. However, the boundary is factual and wording-dependent, so you still need a careful activity classification.

Scenario 2: You qualify for a certificate pathway under Section 11 for treaty rights

DBD published guidance states that a Foreign Business Certificate under Section 11 is issued where the foreigner operates the business under a treaty or agreement that Thailand is obligated to abide by.

Practical note: This is not “automatic permission.” You still file and obtain the certificate through DBD under the stated pathway.

Scenario 3: You operate under BOI promotion or certain specific permissions and obtain the certificate

The Act provides a certificate pathway where a foreigner receives BOI promotion or other permission and the business is in List 2 or List 3, and the foreigner notifies the Director-General to obtain a certificate after verification. During the promotion or permission period, the foreigner is exempt from application of the Act except specific sections listed in the Act.

Practical SME takeaway: Under Foreign Business Act Thailand, BOI promotion can shift the compliance pathway from “Foreign Business License” to “certificate plus conditions,” but only for the scope that is actually promoted or permitted.

Foreign Business Act Thailand: retail and wholesale are not always the same rule

Trading models are a common source of confusion in Foreign Business Act Thailand compliance.

List 3 includes retail and wholesale, but the List 3 text itself embeds capital threshold conditions:

Retail: restricted where total minimum capital is less than 100 million THB, or where minimum capital per shop is less than 20 million THB
Wholesale: restricted where minimum capital per shop is less than 100 million THB

Practical SME takeaway: Do not guess. If you are a foreign-owned trading SME, you must map your capital structure and store model directly to the thresholds stated in the List 3 item wording under the Foreign Business Act Thailand.

Foreign Business Act Thailand: minimum capital concepts you must plan for

The Act includes minimum capital concepts for foreigners starting business in Thailand:

the minimum capital must not be less than 2 million THB, and
for businesses requiring permission under the annexed Lists, the minimum capital set for each business must not be less than 3 million THB (as described in Section 14).

Practical SME takeaway: Capital planning is not only a banking issue. Under Foreign Business Act Thailand, capital can be a compliance condition that affects whether you can operate, and how quickly you can obtain permissions.

Foreign Business Act Thailand: the licensing process in practice for List 3

DBD’s Bureau of Foreign Business Administration published an application preparation handbook that describes the submission of documents and the declaration of business details for applying to operate under List 3.

The handbook includes the type of evidence typically expected, including corporate profile documents, shareholding proportions, and a declaration of the details of the business for which the license application is made.

Practical SME takeaway: For Foreign Business Act Thailand licensing, authorities look at the business reality. Expect questions about what you do, how you generate revenue, where services are delivered, staffing plan, and technology transfer or local benefit framing depending on the application.

Key takeaways

Under Foreign Business Act Thailand, a Thai company can still be treated as a “foreigner” based on foreign shareholding or investment value.
List 1 is prohibited, List 2 requires Minister and Cabinet approval, List 3 requires Director-General permission with committee approval.
List 3 contains a broad “other service business” category that often affects foreign SMEs providing services.
Retail and wholesale have embedded capital thresholds in List 3 that can change whether an FBL is required.
BOI promotion and treaty rights can lead to certificate pathways that change the compliance route, but only within scope and conditions.

Common misconceptions

Misconception 1: “If I register a Thai company, the Foreign Business Act Thailand does not apply.” Not correct. The Act defines “foreigner” to include Thai-registered juristic persons where foreigners hold or invest at least half of total capital, among other conditions.

Misconception 2: “Services are usually fine, only trading needs licensing.” Not correct. List 3 includes many services and also a broad “other service business” category, except those specified by ministerial regulation.

Misconception 3: “Retail and wholesale always require a Foreign Business License.” Not always. The List 3 wording includes capital thresholds for retail and wholesale that affect whether the activity is treated as restricted under the Act.

Worked scenarios (illustrative and conditional)

Scenario A: Foreign-owned SaaS SME selling subscriptions to Thai companies If the SME provides services in Thailand, the Foreign Business Act Thailand analysis often starts with whether the service falls within List 3 service categories, including the “other service business” catch-all unless a ministerial regulation exemption applies. Output depends on the exact service description and delivery method.

Scenario B: Foreign-owned trading SME importing goods and selling B2C online For Foreign Business Act Thailand purposes, retail and wholesale are in List 3 with specific capital thresholds. You must assess whether your capital and store model fall below the thresholds that make the activity restricted, and then determine whether an FBL is required.

Scenario C: Foreign-owned company with BOI promotion for a specific promoted activity If the promoted activity is in List 2 or List 3, the Act provides a certificate pathway with DBD verification and a period of exemption from the Act except specified sections, subject to the promotion scope and conditions.

FAQ

What is the Foreign Business Act Thailand in simple terms? The Foreign Business Act Thailand restricts certain business activities for “foreigners” and requires approvals or licenses depending on whether the activity is in List 1, List 2, or List 3.
How do I know if my Thai company is considered “foreign” under the Act? A Thai-registered juristic person can be a “foreigner” if foreigners hold or invest at least half of total capital, among other conditions stated in the definition.
When do foreign SMEs need a Foreign Business License in Thailand? If you are a “foreigner” and your activity is restricted under List 3, you generally need permission from the Director-General with committee approval unless a certificate pathway applies.
What is the difference between a Foreign Business License and a Foreign Business Certificate? A license is permission to operate a restricted business. A certificate is used for specific pathways such as treaty rights under Section 11 or BOI promotion related certificates, depending on your legal basis and scope.
Are consulting and professional services restricted under the Foreign Business Act Thailand? Many services are in List 3, and the Act includes an “other service business” category that can apply broadly unless exempted by ministerial regulation.
Do retail and wholesale always require an FBL? Not always. List 3 specifies retail and wholesale as restricted where capital is below stated thresholds, so some models may fall outside the restricted condition if capital meets the thresholds.
Can BOI promotion remove the need for an FBL? For certain promoted activities in List 2 or List 3, the Act provides a certificate pathway with DBD verification and a defined exemption scope during the promotion period, subject to conditions.
What is the safest first step for a foreign SME? Write a precise activity description and map it to the Lists, then confirm foreign status and whether a license or certificate pathway applies under Foreign Business Act Thailand.

Glossary

Foreign Business Act Thailand: The Foreign Business Act B.E. 2542 (1999) restricting certain business activities for foreigners.
Foreigner: Defined term including Thai juristic persons with at least half foreign shareholding or investment value under specified conditions.
List 1, List 2, List 3: Annexed restricted business categories with different approval requirements.
Foreign Business License (FBL): Permission pathway for restricted activities, commonly List 3.
Foreign Business Certificate (Section 11): Certificate issued by DBD for treaty-based rights pathway.
BOI promotion certificate route: Certificate pathway and exemption scope during promotion period for certain List 2 or List 3 activities.
Other service business: List 3 category covering other services except those exempted by ministerial regulation.

Decision checklist artifact: Foreign Business Act Thailand compliance checklist for foreign SMEs

Step 1: Confirm foreign status

Are you a non-Thai individual or a non-Thai registered juristic person?
If Thai-registered: do foreigners hold or invest at least half of total capital, or do partnership manager conditions apply?

Step 2: Classify your activity against the Lists

Map your activity to List 1, List 2, List 3 wording, not marketing descriptions.
If services: check whether it falls into List 3 “other service business” unless exempted by ministerial regulation.

Step 3: Identify the correct permission pathway

If treaty rights apply: evaluate Section 11 certificate pathway and DBD filing route.
If BOI promoted: confirm promoted scope, then follow certificate issuance process with DBD verification and conditions.
If restricted and no certificate pathway: plan for Foreign Business License submission and documentation pack.

Step 4: Trading model check

If retail: compare your total and per shop capital to List 3 retail thresholds.
If wholesale: compare per shop capital to List 3 wholesale threshold.

Step 5: Capital planning

Confirm minimum capital requirements and timing for bringing capital into Thailand where applicable.

Call to action (GENTLE LAW IBL)

If you want a clear, defensible answer on whether your business model requires an FBL or a certificate pathway under the Foreign Business Act Thailand, GENTLE LAW IBL can perform an activity classification review, map your model to the Lists, and deliver an implementable compliance roadmap with a document checklist.