BOI or foreign business license: two instruments, not two discounts
Thai law does not offer a choice between two versions of the same permission. Under section 8(3), a majority foreign-owned company in a List Three business needs a licence from the Director-General of the DBD. The Foreign Business Commission must approve that grant. Section 12 then supplies an entirely separate escape route for promoted projects.
Section 4 sets the test that pulls a company into this regime at all. Any company registered in Thailand becomes a foreigner once half its capital shares sit with non-Thai holders. Fifty percent is therefore the trigger, not fifty-one. Companies structured at exactly 50:50 count as foreign, and directors regularly discover this after signing a lease.
| Feature | Foreign business licence (s.17) | BOI certificate (s.12) |
|---|---|---|
| Granting authority | Director-General, DBD, with Foreign Business Commission approval | Director-General, DBD, on production of a valid promotion certificate |
| Discretion | Merits assessed against the section 5 criteria | Ministerial act — validity of the promotion is checked, nothing more |
| Ownership permitted | Up to 100 percent foreign, as granted | Up to 100 percent foreign for the promoted activity |
| Scope | The business described in the licence | Strictly the promoted activity |
| Duration | Indefinite until the licensee ceases that business | Co-terminous with the promotion |
| Tax relief | None. The licence is a permission, not an incentive | Corporate income tax exemption under ss.31, 31/1 and 34 of the Investment Promotion Act, plus land ownership under s.27 |
Notice what the right-hand column does not say. A section 12 certificate carries no discretion either way. Once the promotion exists, the Director-General must issue the certificate within thirty days. That mechanical quality is exactly why the route feels easy. It is also why the limits catch people out.
Section 21 is where the real difference sits
Section 21 paragraph one of the Foreign Business Act settles durability in a single sentence, and almost nobody quotes it. A licence stays valid for an indefinite period until the licence grantee ceases the permitted business. A certificate, by contrast, stays valid only throughout the period in which the business is under investment promotion.
Read those two limbs together and the strategic position becomes clear. An FBL is an asset that sits on your Thai balance sheet for as long as you keep trading. A BOI certificate is a lease on permission. Promotions expire. Some get surrendered once the incentives run out. Others get withdrawn because a condition was missed. In each case the certificate falls away with the promotion. On that date the company reverts to an unlicensed foreigner operating a List Three business.
Buyers in an exit process test this precise point. During due diligence on a promoted target, experienced acquirers ask a pointed question. What happens to the operating permission if the group restructures and the promotion stops applying? Sellers who cannot answer see the price move.
The scope cliff inside a section 12 certificate
Section 12 exempts the promoted foreigner from the Foreign Business Act only for the promoted business. Sections 21, 22, 39, 40 and 42 continue to bite regardless. Revenue lines outside the promoted activity therefore receive no cover. The valid certificate in the filing cabinet does not help them.
This matters far more than it sounds, because almost every operating company grows sideways. Consider a promoted manufacturer that later charges its regional affiliates for shared accounting, procurement support or software licences. Manufacturing is promoted; intra-group services are not. Those service fees land in List Three item (21), “other service businesses”, with no licence behind them.
We see the same cliff in four recurring shapes:
- Group service charges. Management, IT, HR and procurement recharges billed from the Thai entity to affiliates abroad.
- Distribution of non-promoted product. Importing and reselling a sister company’s range alongside the promoted output. List Three items (14) and (15) then apply unless the capital thresholds are met.
- Consulting and after-sales service sold separately. Invoice the service on its own line rather than bundling it into the promoted goods. It then stands alone for FBA purposes.
- Leasing surplus capacity. Renting spare warehouse space or machine time to third parties.
None of these activities threatens the promotion itself. Each of them, however, is an unlicensed restricted business carried on by a foreigner. Section 37 applies to it independently. The correct fix is usually an FBL running in parallel with the promotion, or a second Thai entity. A quiet decision to carry on invoicing is not a fix.
Cost comparison: BOI or foreign business license
Government fees rarely decide this question, yet they behave in a way most summaries never show. The Rates of Fees annexed to the Foreign Business Act price a List Three licence by capital. A juristic person pays THB 5 for every THB 1,000 of registered capital. Fees floor at THB 20,000 and cap at THB 250,000. A certificate, whether issued under section 11 or section 12, costs a flat THB 20,000.
| Registered capital of the Thai entity | List Three licence fee (s.17 route) | Certificate fee (s.12 route) | Difference |
|---|---|---|---|
| THB 3,000,000 | THB 20,000 (statutory minimum applies) | THB 20,000 | Nil |
| THB 10,000,000 | THB 50,000 | THB 20,000 | THB 30,000 |
| THB 25,000,000 | THB 125,000 | THB 20,000 | THB 105,000 |
| THB 50,000,000 and above | THB 250,000 (statutory cap applies) | THB 20,000 | THB 230,000 |
Two observations follow. At the capital levels most service entrants use, the two routes cost the same in government fees. Anyone presenting the FBL as the expensive option argues from a large-capital case. At heavy-capital levels the gap reaches THB 230,000. That is real money. It remains trivial, though, against the tax relief a promotion delivers. Fees, in short, are noise. Durability and scope are signal.
Capital requirements bite harder. Section 14 requires minimum capital of not less than THB 2,000,000 for a foreigner commencing business in Thailand. That floor rises to not less than THB 3,000,000 for each business requiring permission under the Lists. Ministerial regulations may also fix the period for remitting that capital. Section 38 penalises breach with a fine of THB 100,000 to THB 1,000,000. A daily fine runs on top.
Timeline and sequence: BOI or foreign business license
Each individual step on the BOI path moves faster than its FBL equivalent. Yet the BOI path frequently finishes later. Sequencing explains the paradox. Promotion approval and acceptance both precede the certificate notification. An FBL application, by contrast, runs alongside incorporation.
| Stage | FBL route | BOI route |
|---|---|---|
| Preparation | Scope drafting, capital plan, Thai-language dossier | Project feasibility, mapping the activity to a promoted category |
| Decision period | 60 days from filing for List Three, under s.17 paragraph one | BOI published service standards: 40 working days up to THB 200m, 60 working days up to THB 2bn, 90 working days above that |
| Acceptance | Not applicable | Promotion must be accepted, then the company is incorporated or amended |
| Instrument issued | Licence within 15 days of permission, under s.17 paragraph two | Certificate within 30 days of notifying the Director-General, under s.12 |
| If refused | Written reasons within 15 days for List Three; appeal to the Minister, who decides within 30 days | No appeal machinery under the FBA; reapply to BOI or pivot to an FBL |
Practically, a clean List Three application reaches a licence in roughly three to five months from first instruction. The statutory 60-day clock runs only from a complete filing. A promoted project of moderate size typically needs four to seven months before the certificate is in hand. Promotion, acceptance and the corporate steps stack in series.
Choosing BOI or foreign business license by business model
No general rule survives contact with a real business plan. Still, the following allocations hold up across most market-entry matters we handle. Read them as starting hypotheses, not as conclusions.
| Business model | Indicated route | Why |
|---|---|---|
| Export manufacturing, single product family | BOI | Activity maps cleanly to a promoted category; tax relief and s.27 land ownership are decisive |
| Professional or B2B services sold to Thai third parties | FBL | Rarely promotable; List Three (21) applies; the business needs permanent cover |
| Regional headquarters billing affiliates | Both, or a restructure | Promoted headquarters schemes exist, yet recharges outside scope still need a licence |
| Trading and distribution below the capital thresholds | FBL | List Three (14) and (15) turn on capital; promotion seldom reaches pure resale |
| Technology firm with an R&D centre plus local sales | Both | R&D promotes well; the sales and support layer does not |
| Short-horizon project vehicle | BOI | Duration risk is immaterial where the entity will be wound up inside the promotion period |
Our drafting of the corporate objects and the business-scope description drives the outcome more than any of this. A scope written for the Revenue Department reads badly to the Foreign Business Commission. Narrow it enough to please the Commission, however, and it may fail to cover a later product launch. Getting that paragraph right is the work.
Where the Treaty of Amity sits alongside both routes
United States investors hold a third option that neither of the above describes. Section 10 disapplies sections 5, 8, 15, 17 and 18 to foreigners operating under a treaty binding on Thailand. Section 11 then directs those foreigners to notify the Director-General for a certificate, which must issue within thirty days.
The Treaty of Amity certificate resembles the BOI certificate in form and the FBL in durability. It lasts for the period the treaty prescribes, not for a promotion period. It does not, however, reach List One businesses or the land trading prohibition, and it carries no tax relief. American groups with a promotable manufacturing project often still prefer BOI. American service businesses usually prefer the treaty route.
Failure modes and how we close them
Six problems account for most of the remedial work that arrives at our desk on this topic.
- Relying on a 49:51 structure instead of choosing a route. Section 36 criminalises nominee shareholding. Penalties reach three years imprisonment. Fines of THB 100,000 to THB 1,000,000 apply to the Thai nominee and the foreigner alike. We test the shareholder register, the source of funds and the voting arrangements before anyone signs.
- Treating the certificate as entity-wide. We map every intended revenue line against the promoted scope and the Lists. That map shows where a parallel FBL or a second entity becomes necessary.
- Missing the promotion sunset. We diarise the promotion end date against the licence application lead time. The FBL work starts before the cliff, not after it.
- Drafting scope too narrowly or too loosely. We draft the objects clause and the scope description to satisfy two audiences at once. Your commercial plan is one; the Commission is the other.
- Ignoring section 18 conditions. Capital-to-loan ratios, resident director requirements and minimum capital retention periods attach to licences. Sections 19 and 38 enforce them.
- Forgetting the surviving obligations. Sections 21, 22, 39, 40 and 42 apply to certificate holders too. Those duties include displaying the instrument and notifying relocation or cessation within fifteen days.
Where to start if you are already trading
If your Thai entity already trades, we begin with a permissions audit rather than an application. The remedy depends on what you have already invoiced.
Settle the BOI or foreign business license question before incorporation, not after the first invoice. Retrofitting a permission always costs more than choosing one.
Consult the Department of Business Development and the Thailand Board of Investment for the current instruments and promoted activities. Our related guidance covers foreign business licence applications, BOI investment promotion and company registration in Thailand.
Frequently asked questions
Can one company hold BOI promotion and a foreign business licence at the same time?
Does a BOI foreign business certificate permit 100 percent foreign ownership?
What happens to the certificate when BOI promotion ends?
Capital, cost and timing
How much registered capital does each route require?
Is the BOI or foreign business license route faster in practice?
Structure the permission before you sign the lease
Lex Bangkok advises international groups on Thai market-entry structuring end to end. We test whether your revenue lines are promotable. Our drafting covers the objects clause and the business-scope description the Commission will accept. Filings follow: List Two and List Three licence applications, BOI promotion applications, and the section 12 certificate notification. Where an entity already trades, we run a permissions audit first. Where a promotion approaches its sunset, we build the transition to a standing licence before the cliff arrives.
Send us your shareholding structure, your intended revenue lines and your target launch date. We will tell you which permission your entity actually needs.