Recent Department of Business Development rulings on aspects of the Foreign Business Act

Whether the provision of staff benefits by a foreign company is a restricted business under the Foreign Business Act (”FBA”)

Keywords: Mazars, Thailand, FBA, DBD, legal, foreign business affairs, commerce.

6 July 2023

Many majority foreign-owned companies provide benefits to staff members. Examples include a company residence, canteen, first aid rooms, advance payments for medical expenses, or a company shuttle bus.

The Foreign Business Affairs Division of the Department of Business Development (“DBD”) of the Ministry of Commerce recently issued a ruling stating that staff benefits provided by majority foreign-owned companies are not considered restricted businesses under the FBA in the following cases:

Expenses for such are not charged to staff members or the company does not earn income from the benefits provided.
Such benefits are stated clearly in the company’s work rules, staff handbook, or similar notifications and are available for the Thai authorities to refer to.
If the company makes an advance payment to staff members for things such as medical expenses, the company must not charge interest, and must not record it in its accounting books.

Scope of business activities for international transportation

Under the FBA, domestic transportation, regardless of whether by land, water, or air, is a restricted business. Foreigners must obtain a licence from the Minister of the Ministry of Commerce and the approval of the Cabinet before conducting such a business.

However, international transportation is not a restricted business under the FBA. Thus, foreigners are allowed to conduct such a business without obtaining a licence from the Ministry of Commerce. The Foreign Business Affairs Division of the DBD recently issued a ruling stating that the scope of business activities for international transportation are as follows:

ticket sales and reservations;
transportation of passengers and goods; and
contact and coordination with contractors for providing ground services in airports.

Source: DBD’s ruling in March 2023