Foreign entities that fall within the definition of “alien” under Thailand’s Foreign Business Act (FBA) are advised that the provision of services are generally restricted (although there has been a gradual relaxing of this restriction).  Such entities nevertheless run afoul of the FBA by providing services to related entities, mistakenly assuming that the FBA’s restriction only applies to the provision of services to third parties.

Fortunately, certain services between related entities have recently been exempted from the FBA.  These services include the following:

• Domestic lending.
• Office leasing, including public utilities services.
• Consultancy services for management, marketing, human resources and information technology.

DEFINITION OF RELATED ENTITIES

Entities will be deemed related under any of the following circumstances:

• Where more than half of the shareholders or partners of one entity are also more than half of the shareholders or partners of the other entity;
• Where shareholders or partners which hold at least 25% of the total capital in one entity also holds at least 25% of the total capital in the other entity;
• Where one entity holds more than 25% of the total capital of the other entity; or
• Where directors or managing partners which have more than half of the managing power in one entity are also directors or managing partners which have more than half of the managing power of the other entity.