The US-Thai Treaty of Amity creates a favorable environment for American businesses to operate in sectors such as real estate development and live entertainment organizations. However, to benefit from the privileges outlined in the Treaty, companies must adhere to specific requirements.
For example, American citizens can own the majority or entire company and are exempt from certain restrictions imposed on foreign investment in Thailand. This article will explore some of the unique registration advantages offered by the US-Thai Treaty of Amity.
Under the Amity Treaty, American citizens can maintain a majority shareholding or wholly own their company, branch office, or representative office in Thailand. This essentially gives them national treatment, exempting them from most of the restrictions imposed on foreign investment by the Alien Business Law of 1972.
The Overseas Private Investment Corporation (OPIC) can provide debt financing and political risk insurance for investments by American companies in Thailand. This can include equity, loans and loan guarantees in fields like agriculture, manufacturing, franchising, energy, infrastructure, and more.
However, the Treaty does not allow Americans to engage in activities reserved for Thais. These include communications, transportation, fiduciary functions, banking involving depository functions, land ownership, and domestic trade in indigenous agricultural products. American investors considering these sectors should seek specific legal advice, as additional permits and/or alternative business structures may be required. Also, partnering with a local Thai partner may be beneficial in order to leverage their knowledge of the Thai economy and regulations.
There are a few requirements that companies must meet in order to qualify for the treaty. First, the company must have a minimum of 51 percent American ownership, which can be achieved through shares held by American citizens or legal entities. In addition, the company must be legally registered in Thailand and have a foreign business certificate from the Ministry of Commerce.
However, the treaty does not override specific Thai laws governing certain industries like agriculture and inland transportation. Companies looking to operate in these sectors should seek legal advice, as they may face additional regulations or restrictions.
Additionally, companies operating under the treaty cannot directly own land in Thailand, requiring alternative solutions like leasehold arrangements or setting up a Thai subsidiary to buy land. The registration process involves many legal complexities, and professional assistance is highly recommended. Emerhub’s team of experts can help ensure your company meets the required criteria and abides by all legal obligations.
The US-Thai Treaty of Amity offers a number of benefits for American citizens and companies who wish to operate in Thailand. However, it is important to know the limitations, requirements and registration process before pursuing this option.
Under the treaty, American businesses are exempt from the Foreign Business Act and can operate on the same basis as Thai companies. This includes avoiding restrictions on foreign ownership, land ownership, and minimum capital requirements.
In order to qualify for this protection, companies must be majority owned by American citizens with over 50% of the company’s directors being American. Additionally, the company must be properly incorporated in the United States before it can apply to register as a US-Thai Treaty of Amity company in Thailand. Documentation must be provided proving this, along with an affidavit stating the percentage of shares held by Americans. The documents should then be certified at the US Embassy as part of the application process.
The US-Thai Treaty of Amity allows companies incorporated in the United States or majority owned by American citizens to enjoy national treatment, meaning they are exempt from restrictions on foreign investment. This enables these companies to gain access to a wide range of investment opportunities in Thailand.
However, these companies must adhere to a requirement of majority American ownership and control at all levels of ownership up to the ultimate parent company, and may not have directors from third countries. Additionally, the company must have a minimum capital of 3 million baht. Professional legal and accounting assistance is required, adding to expenses.
A Thai shareholder or director is not a requirement, but having one can facilitate smoother interaction with local business partners and authorities. Furthermore, some investment promotion programs offered by the BOI require at least a percentage of Thai ownership and participation. In order to qualify for these benefits, a business entity must submit a letter from the Commercial Service Office at the US Embassy in Bangkok confirming that it is an Amity Treaty protected company.