Tourism is one of the most developed industries in Thailand. During the last few years, accommodation and food-related businesses have become two of the most prolific clusters of tourism which is why many entrepreneurs are oriented towards opening hotels and restaurants in Thailand. Foreign investors are also allowed to set up restaurants in Thailand, however, they will be subject to the Foreign Business Act and not the Commercial Code like local enterprises.
Our company registration experts in Thailand can offer detailed information on the Foreign Business Act and the manner in which a foreign entrepreneur can co-own a business together with a Thai national. As per this Act, a foreign company is one that is registered in the country with 50% or more of its shareholding being foreign-owned.
The tourism and the sale of food and drinks is included in Annex 3 of the Foreign Business Act and for this purpose, a foreigner may engage in the said business activity (and others) once he has obtained a license from the Commercial Registration Department of the Ministry of Commerce and an approval from the Foreign Business Committee.
Because the requirements to open a company in Thailand are subject to control and regulation for foreigners, it is recommended to consult with one of our agents before commencing the company registration and the licensing process. Having a business plan is important when setting up any type of business; however, it is perhaps even more relevant for a restaurant because of the market particularities. Bangkok is a city that offers a cultural mix and it is common to find international restaurant chains or cafes alongside traditional Thai restaurants. This is why it is recommended to perform market research according to the type of restaurant investors with to open: what type of food will the restaurant serve? Where will it be located? What is the targeted clientele? Because Thailand is a popular tourist destination, investors may want to focus on opening a restaurant in areas that are attractive to tourists because it is likely that they will represent the majority of clients.
The main steps for opening a restaurant in Thailand are summarized below:
- Choose the business location: the location of the new restaurant can have an important impact on the success of the business; you should spend some time researching the market particularities and the opportunities in a certain area.
- Prepare the company documents: a new legal entity is to be registered and for this purpose, the founders need to draw up the company documents.
- Appoint the director: this is a step that will be handled as early as drawing up the company documents and it is advisable to appoint a Thai director/
- Register the company: once all of the pre-registration phases are handled, the company can be registered with the Ministry of Commerce.
- Tax and social security registration: the company needs to register for VAT purposes and for social security purposes for hiring Thai employees.
- Other licenses: the restaurant owners will need to apply for the food license and go through the safety compliance verifications, as needed.
Foreign restaurant owners who wish to work at the restaurant or who wish to hire foreign employees will need to comply with the specific requirements for work permit applications. the Labor Department issued an approval letter that is then used to apply for the Business Visa and this can take some time (in some cases longer than one month and the applicant needs to be outside of Thailand when the application is processed). One of our Thai company formation agents can give you more information about the business visa and the work permit extension.
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Registering a company for opening a Thai restaurant
Both local and foreign investors are required to follow the Commercial, respectively Foreign Business Laws in order to open a company in Thailand. These are the only differences when setting up a food business in Thailand. The process of company registration in Thailand is the same as for any other type of business, whether we are talking about an IT company or a bar. Once the company registration is completed, the licensing process begins.
The standard steps for company registration include the following:
- choose a type of company: these include the limited company and the public limited company; partnerships can also be formed between a foreigner and a Thai national.
- draw up the constitutive documents: for the limited companies, the Articles of Incorporation and the Bylaws need to be drawn up accordingly.
- register the business: this is performed with the Department of Business Development; not applicable to ordinary partnerships; the business also needs to be registered for tax and VAT purposes.
- obtain the tax identification number: this is to be obtained from the Revenue Department within 60 days from registration.
Licenses for restaurants in Thailand
In order to open a restaurant in Thailand, one must apply for various licenses. These are:
– a food license;
– a manufacturing license;
– an import license.
Approval for the labels of the products to be sold will also be required, together with the approval to promote the Thai restaurant through ads. The owner must also register the products they intend to sell or serve in the restaurant.
Other requirements when starting a food business in Thailand
The licensing part is not the only requirement a Thai restaurant must comply with, as there are also other certifications related to the premises or the qualifications of the personnel handling the food products. A sanitary permit is required in order to be allowed to prepare food in a Thai restaurant. Also, if the owner plans to sell alcoholic beverages, they will also be required to apply for a liquor license. Playing music in a restaurant in Thailand will also imply obtaining a special permit.
Restaurants in Thailand are subject to business taxation and observing the applicable accounting and annual reporting principles. The main taxes applicable to companies include the corporate income tax, value-added tax, withholding taxes, the property tax, stamp duty, etc. Companies are required to file an annual tax return within 150 days of the end of the accounting year (which is generally the same as the calendar year).
Locally registered companies follow the Thai accounting standards for filing audited financial statements. Restaurants can rely on the services provided by our local team of accountants in Thailand for preparing the annual financial statements, and the required audit. With our help, companies make sure that they observe the yearly filing deadlines and the general requirements.
Considering there are many variables to be taken into consideration when setting up a restaurant in this country, we invite you to contact our Thai company formation agents for full information on the requirements. We can also assist you to open any type of company in Thailand.