Business Permits & Incorporation for Foreigners in Koh Tao

VAT

Standard Rate

7% (a temporarily reduced rate that has been repeatedly extended by Royal Decree; the statutory default is 10% if the reduction isn't renewed)

Registration Trigger

Businesses selling goods/services or importing goods for profit are subject to VAT rules regardless of registration status, though small operators below the standard revenue threshold may not be required to register as a VAT collector.

Note For Koh Tao

Most on-island dive shops, guesthouses, restaurants and tour operators that register as a Thai limited company will end up VAT-registered once revenue crosses the standard threshold, requiring monthly VAT filing.

Withholding Tax

Domestic Wht

Certain payments (rent, service fees, professional fees, etc.) require the payer to withhold tax and file Form P.N.D. 3/53, remitted to the Revenue Department within 7 days of the following month; this is credited against the recipient's final tax liability.

Foreign Company No Thai Presence

A foreign company not carrying on business in Thailand is generally subject to a final withholding tax of 15% on most Thai-sourced payments (interest, royalties, rent, service fees) and 10% on dividends, unless reduced by a double tax treaty.

Corporate Income Tax

Standard Flat Rate

20% of net profit for companies that don't qualify as an SME

SME Eligibility

To use the progressive SME rates, the company must be Thai-incorporated with paid-up capital not exceeding 5,000,000 THB and annual revenue from sales/services under 30,000,000 THB; exceeding either threshold in a given year triggers the flat 20% rate for that year.

Worldwide Vs Thai Source Income

A Thai-incorporated company (which is what almost any Koh Tao dive shop, guesthouse, restaurant or tour operator would register as) is taxed on its worldwide net profit, not just island-earned revenue. A foreign company without a Thai entity and without a local presence is instead generally hit with final withholding tax on Thai-sourced payments rather than a net-profit assessment.

Specific Business Tax

Applies To

An alternative tax for businesses excluded from VAT, mainly banking, finance, and profit-motivated real estate sales — not typically relevant to Koh Tao's dive/tourism/hospitality businesses, which normally sit under standard VAT/CIT rules instead.

Annual Filing Obligations

Annual Return

Corporate Income Tax return (Form PND 50) must be filed within 150 days of the close of the accounting period, alongside audited financial statements signed by a licensed Thai CPA.

Audit Requirement

Every Thai limited company, however small, must produce annual audited financial statements — there is no exemption for micro or single-owner companies.

Mid Year Prepayment

A mid-year estimated-profit return (Form PND 51) with prepaid tax is required partway through the accounting period, credited against the year-end liability.

Monthly Obligations

Monthly withholding tax returns and, if VAT-registered, monthly VAT returns are required regardless of the company's size.

Late Filing Penalties

Late filing carries fixed fines plus a monthly surcharge on any underpaid tax.

Nominee Shareholder Warning

Penalties

Penalties include imprisonment of up to 3 years and/or fines, with fines reported up to roughly 1,000,000 THB (about 30,700 USD), plus the risk of forced dissolution of the company.

Legal Status

illegal

Enforcement Trend

Enforcement against nominee and 'actual control' arrangements (preference shares, disproportionate voting rights, foreign-provided financing) has intensified significantly in 2024–2026, with authorities scrutinizing shareholding structures more closely than in the past — a relevant risk on Koh Tao given how common informal Thai-nominee dive-shop and bar ownership has historically been in Thai island tourism towns generally.

Description

Using a Thai national as a nominee shareholder who has no genuine financial stake, purely to let a foreigner control a company that looks Thai-majority on paper, is explicitly prohibited under the Foreign Business Act.

Freelancer Sole Proprietor Vs Company

Minimum Company Setup

A Thai limited company requires a minimum of three shareholders at incorporation.

Why Company Not Sole Trader

Because most relevant Koh Tao business categories sit on the FBA's restricted lists, a solo 100%-foreign-owned sole proprietorship is not a realistic legal path for anything beyond remote freelance work for overseas clients; a Thai Limited Company (commonly structured with Thai-majority shareholding, or with a Foreign Business Licence/BOI promotion for full foreign ownership) is the standard vehicle actually used.

Operating A Real Local Business

Anyone actually running an on-island operation with local staff, a premises, local clients, or a storefront (dive shop, bar, guesthouse, tour company) needs a registered Thai entity — in practice almost always a Thai Limited Company — plus, if hiring foreign staff or applying for a work permit, minimum capital and Thai-employee ratio requirements tied to that work permit.

Freelance Reality For Foreigners

Thailand does not offer a straightforward legal 'freelancer' or sole-proprietorship registration route for a foreigner to locally bill Thai or foreign clients from Koh Tao while being taxed as an individual business. Working for foreign clients remotely while physically on the island on a tourist or DTV-type visa is a widely used but legally grey practice — it is not the same as registering and operating a Thai business, and does not create the same tax filing obligations covered here (personal tax residency implications are covered separately).

Minimum Capital For Foreign Involvement

General Minimum

THB 2,000,000

Restricted Activity Minimum

THB 3,000,000

Context

Under the Foreign Business Act, a foreign investor generally must bring in at least this much capital to commence a business, with the higher figure applying to businesses on the FBA's restricted lists — which is relevant because most typical Koh Tao business types (dive operations/tour guiding, restaurants and bars, guesthouse/hotel operation) fall on the FBA's restricted List 3, meaning a company that is majority foreign-owned in one of these sectors would need a Foreign Business Licence rather than relying on the lower general threshold.

Typical Costs

Official Registry

Platform

DBD Biz Regist — the mandatory online filing platform for private limited company registration since January 1, 2026 (also supports name reservation, e-signatures for foreign shareholders/directors, and instant digital document issuance).

Authority

Department of Business Development (DBD), Ministry of Commerce

Official URL

https://www.dbd.go.th/dbdweb_en/

Realistic Timeline

Core Dbd Registration Only

A standard Thai private limited company filed through DBD Biz Regist takes 5 to 15 working days from name reservation to receiving the certificate of incorporation, assuming all documents are in order.

Alternative Route Timelines

BOI applications take roughly 2 to 4 months on top of incorporation, and Foreign Business Licence applications typically take 3 to 6 months and require a substantive case (capital investment, job creation, technology transfer).

Full Practical Setup Including Bank Account And Visa

The practical process of foreign company registration in Thailand, including business-visa preparation, commonly takes approximately 8 to 12 weeks for complete formation when a foreign director/owner also needs a Non-Immigrant B visa and Work Permit.

Typical Registered Capital

General Minimum

No hard legal minimum for a purely Thai-majority company, but banks generally expect to see at least 1,000,000 THB before opening a corporate account.

If Sponsoring A Foreign Work Permit

THB 2,000,000

If Foreign Majority In A Restricted Category

THB 3,000,000

Foreign Ownership Cap And Local Partner Rules

Default Rule

A Thai Limited Company is the standard vehicle foreigners use to operate on Koh Tao/in Thailand. Under Thailand's Foreign Business Act, foreign ownership of a Thai company is generally limited to 49%, meaning at least 51% of shares must be held by Thai nationals or Thai legal entities to avoid the company being classified as "foreign" and triggering FBA restrictions.

Why This Matters

It's not just a local custom, but a legal necessity in many cases to avoid falling under the FBA limitations, since a Thai-majority company can operate in most service/hospitality sectors (restaurants, dive shops, guesthouses, tour operations) immediately, whereas a foreign-majority company in a restricted sector would need to apply for a Foreign Business License first.

Enforcement Climate

Enforcement has tightened sharply: the DBD launched investigations into hundreds of companies suspected of using Thai nominees for foreign owners in early 2024, and from January 1, 2026, Thai shareholders in foreign-managed companies must submit three months of certified bank statements demonstrating that their share capital genuinely came from their own funds, with simple balance certificates no longer accepted.

Minimum Shareholders

Since a Civil and Commercial Code amendment effective February 7, 2023, the minimum number of promoters/shareholders for a Thai private limited company is two, reduced from the previous requirement of three — some older guides still incorrectly cite three.

Nominee Shareholder Warning

Thai law explicitly prohibits nominee shareholder arrangements, where a Thai person holds shares on paper without any real investment or role — Section 36 of the FBA makes this illegal, and both the foreigner and the Thai involved can face up to 3 years imprisonment and a fine of up to 1 million THB if caught, with the company also ordered to dissolve.

Legitimate Alternatives To A Local Partner

There are legal routes to majority or 100% foreign ownership without a Thai partner: a Foreign Business License (FBL) for restricted-category businesses, Board of Investment (BOI) promotion for eligible sectors (tech, R&D, certain manufacturing), the US-Thailand Treaty of Amity for US citizens/US-majority firms, or an export-only manufacturing structure. Foreign ownership of a Thai company is generally limited to 49%, unless an exemption or approval applies via one of these routes.