US-Thai Treaty of Amity

The US-Thai Treaty of Amity allows American citizens and businesses to maintain majority ownership in their Thai companies, without needing a Foreign Business License. It also enables them to engage in activities that would otherwise be restricted by the Foreign Business Act.

Companies registered under the treaty can take advantage of Thailand’s regional trade agreements.

Business Opportunities

The US-Thai Treaty of Amity provides many benefits to American citizens seeking to establish businesses in Thailand. These benefits include the ability to own the majority of shares or even entire companies, and exemption from some restrictions placed on foreign investors.

American investors are also entitled to national treatment, which allows them to operate their business in Thailand under the same terms and conditions as Thai companies. This is an important benefit since the Foreign Business Act (FBA) stipulates that foreigners can only conduct certain restricted business activities unless they apply for incentives and privileges through the Board of Investment.

Exceptions to the FBA can be granted by the Ministry of Commerce under the authority of the government, depending on various circumstances. Other international treaties that Thailand has entered into may also provide for exceptions to the foreign investment restrictions. However, it is critical that prospective foreign investors consult with qualified legal counsel to determine whether or not they are eligible for such exceptions.

Investment Security

Under the Treaty of Amity, US citizens and companies can maintain complete or majority ownership of an American-owned business in Thailand, whether incorporated as a joint venture, limited company, branch office, or representative office. Companies registered under the Amity Treaty enjoy “national treatment,” meaning they are exempt from most restrictions imposed on foreign investment by Thai law, such as the Foreign Business Act (FBA).

The United States and Thailand also work together to promote regional security and prosperity; infectious disease prevention, control, and research; combatting emerging pandemic threats; humanitarian assistance for displaced persons; and the promotion of democracy and human rights. The United States and Thailand co-host the Indo-Pacific’s largest multinational military exercise, Cobra Gold, annually.

Despite the economic slowdown following the coup, the Thai government continues to welcome foreign investment as a way of boosting the economy. However, concerns remain over regulatory uncertainty and the prevalence of gratuity payments to civil servants responsible for enforcing the law.

Dispute Resolution

Dispute resolution is available through the courts or arbitration. However, local law firms note that the government has resisted enforcement of international arbitration awards in several cases.

Under the Treaty of Amity, US citizens and companies can maintain complete ownership and control over their business in Thailand and receive ‘national treatment’ that exempts them from most restrictions under the Foreign Business Act. There are some exceptions, including restrictions on communications, transportation, fiduciary functions, banking involving depository functions, land ownership, and the exploitation of natural resources.

To qualify for the Treaty of Amity, a US majority owned company must submit proof of its incorporation in the United States and affidavits from shareholders or partners stating that they are American citizens. A company must also obtain a certificate from the Ministry of Commerce to be recognized as a US treaty beneficiary. Widespread commercial intellectual property counterfeiting and piracy remain substantial problems in Thailand. Moreover, the Thai Securities Exchange (SET) has an active Social Responsibility Initiative to encourage listed companies to consider sustainability and corporate governance when conducting business.

Compliance

The Treaty stipulates that companies wishing to benefit from its protection must meet certain requirements. To qualify as a “Treaty company” an American business must show that the majority of its shareholders or partners are US citizens and that it is a legally established business entity.

Applicants must submit documentation of their business activities and a letter from the Commercial Service office at the U.S. Embassy in Bangkok certifying that the applicant meets all of the Treaty requirements. This is usually a simple process that takes less than a month.

Companies that qualify as a treaty company are granted national treatment in Thailand, which means they are exempt from most of the restrictions on foreign investment imposed by the Foreign Business Act. However, they can still be subject to additional restrictions and must comply with work permit regulations. GPS Legal has the expertise to advise on all of these matters. Contact us today for a consultation.

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