As a foreigner you are not allowed to open or operate a bar or restaurant business in Thailand as this type of business is restricted for foreigners in the foreign business act and reserved for Thai nationals. You would need to apply for a foreign business license to operate this business as a foreigner, you could get one as it is a list 3 business but for a small business this is not an option. Every foreigner setting up a bar, restaurant or guest house business in Samui takes the shortcut and circumvent foreign business restrictions by setting up a Thai limited company with less than 50% foreign participation and at least 51% Thai shareholders. A Thai company is not restricted by foreign business laws and the foreigner works through this Thai company.
A few basic steps involved for operating a bar in Thailand:
- apply for a non immigrant visa outside Thailand
- find Thai promoters and shareholders for the formation of the company (shareholders may be offered by the law or accounting office setting up the company, but be aware of sections 36 and 37 Foreign Business Act).
- formation of a Thai limited company with a minimum capital of 2 million baht
- work permit application (the above share capital allows 1 work permit for 1 foreigner)
- enter into a lease agreement for the property
- application licenses (liquor, cigarette, music)
Any future changes in the law governing foreign businesses or change in policy of enforcement of existing laws may affect the Thai company structure with foreign shareholders. It may affect control and the continuing of a foreign run and controlled Thai company. If you decide to start a business in a Thai company there is always a risk factor involved and you must calculate this in before you bring money into Thailand for the investment in a business.
Note on Thai (limited) company formation:
More documentation required when foreign shareholders are involved
New 2013 business registration rules will require all new companies with foreign shareholdings involved to declare the sources of funds used to finance the company shares. The new rules, which will take effect January 2013, are aimed at preventing the use of Thai nominee shareholders by foreigners.
All provincial and local business registration offices must now, when confronted with a company registration with any foreign shareholders involved, or a foreign director authorized to sign or co-sign in behalf of the company, ask for evidence from the Thai shareholders how they paid for their shareholding, even when the foreign shareholding in the Thai company to be registered is only 1%. Under the previous business registration rules this was only required when a foreigner held more than 39% of the shares.
The above is a tightening of the initial 2006 business registration rules which must be applied when foreigners are involved in the company formation.
Lease contract
You must enter into a lease allowing you (your company) to use the property for a bar business. In general only 3 year leases are offered, with an (insecure) option to renew the lease. Rent often includes 'key-money', which is often part of the rent and will be asked again when renewing the lease.
You remain a foreigner in a small island with often its own rules and locals running the area. For example, it is not uncommon for the local police to visit you for monthly payments. It is not straightforward for an outsider to do business in Samui.
See also
