Thailand Economy Overview

Currency

฿ Thai Bhat (THB)

Working hours

40 – 48 hours/week

Public/bank holidays

13 public holidays

Capital

Bangkok

Languages

Thai & English

Population

71.8 million

Minimum hourly salary

328 – 354 THB

Tax year

1st Jan – 31st Dec

Date format

DD/MM/YYYY

Misclassification penalties

Penalties for misclassification may include back-payment of minimum wage, overtime, paid vacation, pension and employment insurance contributions. Interest of 10% or 20% may be applied, as well as punitive damages in seriouss cases. 

Fun fact

Thailand is nicknamed the “Land of Smiles” known for their friendliness and warm hospitality.

With a strategic location in Southeast Asia, Thailand gives foreign investors access to the fast-growing economies of China, India, Indochina, and the rest of ASEAN. Thailand’s 71+ million people are well-connected by excellent rail, road, port, and airport connections (that also connect with the rest of Asia). In addition, the country’s economy is growing fast, with the government offering numerous incentives to attract new foreign investors.

Overview of Thailand's Economy

Apart from the Asian Financial Crisis years, the Thai economy has grown steadily since the 1960s and has lifted millions of Thais out of poverty – making Thailand a newly industrialized upper middle-income country widely considered a development success story.   

As the second-largest economy in Southeast Asia, the Thai economy is largely dependent on exports that account for 2/3rds of the country’s GDP. The country is also: 

  • The largest exporter of computers and related electronic components in ASEAN
  • A major gem and jewelry exporter
  • The ASEAN leader in automotive production and sales
  • Among the world’s top 10 tourism destination countries and top 10 for medical tourism
  • A competitive and diversified agricultural and processed food exporter
  • The world’s second-largest exporter of rice 

Taxes

Employer Tax: 5%

Social Security Fund

5%

Employer Tax: 5%

Social Security Fund

5%

Income Tax

Income tax rate in Thailand is based on their assessable income (both cash and in kind).

Gross Income (THB)

Up to 150,000

150,001 – 300,000

300,001 – 500,000

500,001 – 750,000

750,001 – 1,000,000

1,000,001 – 2,000,000

2,000,001 – 5,000,000

More than 5,000,000

Tax Rate

Exempt

5%

10%

15%

20%

25%

30%

35%

Business Regulation in Thailand

During the 19th century, Thailand’s legal system was modeled on the French civil system, making Thai law primarily statute-based with Codes similar to those of European civil law jurisdictions. The legal system was also influenced by the common law legal tradition, where Supreme Court decisions are used as persuasive authority in lower court cases. Here are some further specifics. 

Civil and Commercial Code

For businesses, the Civil and Commercial Code of Thailand (CCC) covers a variety of legal matters, including property rights and contractual obligations. The CCC has undergone several amendments over the years to stay relevant and effective.

Regulations for Foreign Businesses

  • Foreign Business Act of 1999: This act regulates foreign ownership of particular Thai industries and foreign companies.
  • Alien Business Law (N.E.C. Announcement 281): This law prohibits foreigners from holding certain professions reserved for Thai nationals.

Foreign Business License Application

When a Foreign Business License application is submitted, there is a commitment to approve or provide a reason for rejection within 60 days and to issue the license within 15 days of approval. However, the approval process from the Minister of Commerce (with the approval of the Cabinet) or the Director-General (with the approval of the Committee) and staying in compliance with all requirements can be complex.

International Agreements and Trade

Thailand is involved in several agreements with ASEAN, Australia, Japan, and the USA that impact foreign investors from these countries or regions. Notably:

  • US-Thai Treaty of Amity: This treaty allows American nationals or companies to hold the majority of shares or all shares in companies conducting business on the same terms as Thai companies, but with extra requirements. However, Americans are still restricted from investing in certain sectors.

Benefits of Doing Business in Thailand

There is a heap of benefits to expanding your company into Thailand. From affordable living expenses to special economic zones, here are some more specifics.

Board of Investment (BOI) Incentives

The Thailand Board of Investment (BOI) promotes startups and projects in desirable sectors. Foreign investors can apply for 100% foreign ownership, own land for industrial projects, and receive various tax incentives for eligible activities, such as machinery and raw material importation.

Additionally, they can benefit from tax deductions for expenses like electricity, transportation, and water, and obtain work permits more easily for foreign workers. The BOI also offers other non-tax incentives to support foreign investment.

Special Economic Zones (SEZ)

Thailand’s Special Economic Zones (SEZs) offer excellent infrastructure, one-stop services, lower taxation, access to foreign labor, and other investment incentives. These zones are designed to help new SMEs and attract foreign investment, providing a conducive environment for business growth.

Corporate Tax Rate and Cost of Living

Thailand’s standard corporate income tax rate is 20%, which is among the lower rates in Asia and can vary depending on the taxpayer type. Additionally, the cost of living and doing business, including office space and other operational costs, tends to be lower in Thailand than in other Asian countries, making it an attractive destination for foreign businesses.

Business Expansion Options in Thailand

From subsidiary incorporation to branch registration – there are a number of different expansion options into Thailand. 

Thailand Employer of Record (EOR)

The Thailand EOR becomes the official legal employer of your Thailand team. This method is fast and efficient, making it perfect for companies that need to quickly deploy staff on the ground. 

An EOR handles payroll, benefits, taxes, and compliance with local labor laws, allowing businesses to focus on their core activities. They may also provide additional services, such as Thailand talent acquisition and visa support. 

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Recruitment Agencies

Recruitment agencies in Thailand help businesses expand by connecting them with skilled local talent across various industries.

Remote People provides recruitment solutions that simplify hiring and ensure compliance with Thai labor laws.

For businesses looking to grow in Thailand, Remote People offers the expertise and resources needed to build a local workforce quickly and effectively, making it a practical solution for market expansion.

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Thailand Professional Employer Organization (PEO)

Expanding into Thailand using a Professional Employer Organization (PEO) offers an easier, more simplified yet compliant way for businesses to establish a presence in Thailand without the need to set up a legal entity. Not only does working with PEOs help with market entry, but also HR management and compliance. Some Thailand PEOs even support with Thailand talent acquisition.

Partnering with a professional employer organization (PEO) allows companies to employ local staff in Thailand without the need to establish a legal entity. This approach is quicker and less expensive, making it ideal for businesses testing the Thailand market or those with limited operations. PEOs handle administrative tasks and ensure that companies comply with Thailand regulations, reducing the complexity and risk associated with hiring local employees.

An alternative to Thailand PEO where a company only needs payroll provision in Thailand is a payroll outsourcing provider. 

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Subsidiary Incorporation

A private limited company requires a Memorandum of Association (MOA), Articles of Association (AOA), and a minimum of three shareholders. All company shares must be subscribed (but cannot be offered to the public) with at least 25% of subscribed shares being paid up. 

If the foreigner wants more than 49% ownership, they must obtain:

  • A Foreign Business License
  • Approval from the Board of Investment (BOI)
  • Register under the US-Thai Treaty of Amity

Public limited companies require 15 promoters for the formation and registration, and the board of directors must have a minimum of five members (at least half must be Thai nationals). 

Branch Registration

A Thailand branch office allows 100% foreign ownership and can engage in business activities that generate income as a trading entity. However, a Thai branch must apply for a Foreign Business License before operating unless they manufacture or export products from the country.  

Business Opportunities in Thailand

Expanding into Thailand offers a lot of advantages due to its strategic location in Southeast Asia and the various government incentives available for foreign investors.

Business Opportunity Reason
Manufacturing Thailand has a well-developed manufacturing sector, with a particular focus on automotive, electronics, and food processing. The country’s strategic location, coupled with its competitive labor costs and supportive government policies, make it an ideal base for manufacturing operations serving both domestic and export markets.
Agribusiness With its abundant natural resources and strong agricultural traditions, Thailand offers significant opportunities in agribusiness. The country is a major exporter of rice, rubber, and other agricultural products, and there is growing demand for value-added food products and innovative agricultural technologies.
Tourism and Hospitality Thailand is one of the world’s most popular tourist destinations, known for its stunning natural beauty, vibrant culture, and warm hospitality. The country’s tourism industry presents opportunities in areas such as hotel and resort development, tour operations, and eco-tourism.
Digital Economy Thailand has embraced the digital economy, with a growing e-commerce market, a thriving startup ecosystem, and increasing adoption of digital technologies across various sectors. This creates opportunities for businesses involved in areas such as fintech, e-commerce, and digital marketing.

The country’s dynamic economy provides opportunities for businesses to thrive. Government initiatives, such as the incentives offered by the Thailand Board of Investment (BOI) and the establishment of Special Economic Zones (SEZs), further increase the attractiveness of Thailand as a market for foreign investment.

These business opportunities are supported by Thailand’s investor-friendly policies, which include a range of tax incentives, streamlined business registration processes, and special economic zones designed to attract foreign investment. Additionally, Thailand’s membership in the Association of Southeast Asian Nations (ASEAN) provides businesses with access to a large and growing regional market, while its strategic location makes it an ideal gateway to other key markets in Asia.