Thailand tightens foreign business laws to curb nominee practices
Thailand has several laws regulating the entry and activities of foreigners, as detailed by Auramon Supthaweethum, Director General of the Department of Business Development (DBD).
The Immigration Law permits temporary residence, and the Alien Employment Act allows temporary employment, subject to permits and exceptions for banned occupations.
The Foreign Business Act of 1999 restricts certain businesses to protect Thai interests, requiring foreigners to obtain official permission for restricted businesses. The Act, overseen by the DBD, aims to balance protecting Thai enterprises with encouraging foreign investment.
The government is focused on preventing nominee businesses where foreigners use Thai nationals as proxies. A committee has been established by the prime minister to ensure compliance, supported by a subcommittee to identify and investigate nominee operations.
The short-term plan includes inter-agency data sharing, inspections, publicising arrests, and setting up a complaint centre under the DBD.
Medium-term strategies involve developing electronic systems to analyse corporate data, identifying high-risk nominee businesses, and aiding allied agencies. The long-term plan involves reviewing violations under the act.
From September 1 last year to January 31, 820 nominee cases were investigated, with losses exceeding 12.5 billion baht (US$364 million). Auramon stated that the DBD conducts annual inspections of foreign enterprises suspected of nominee structures.
In 2024, 26,019 corporate entities were reviewed, particularly in tourism, real estate, hotels/resorts, and logistics. Six companies were flagged for potential violations, with four linked to nominee activities, holding shares in 77 other companies.
Foreign business
Information was forwarded to the Department of Special Investigation (DSI) and law enforcement. Two cases involved unauthorised foreign businesses, leading to legal action.
In 2024, the DBD is screening 26,830 companies across tourism, real estate, and e-commerce/logistics in provinces including Chiang Mai, Chon Buri, Phuket, Krabi, Surat Thani, Prachuap Khiri Khan, and Bangkok.
An online complaint centre, established on December 4 last year, has received two complaints regarding entertainment businesses in Chon Buri, currently under investigation.
Auramon highlighted collaboration with the Tourism Department, the Tourism and Sports Ministry, the DSI, and the Immigration Bureau to tackle nominee businesses in tourism. A memorandum of understanding with the Central Investigation Bureau aims to combat illegal practices like using Thais as nominees and preventing foreigners from engaging Thais as proxies.
People who spot violations related to foreign businesses or nominee activities are encouraged to report them to the Nominee Complaint Centre via the DBD’s website at www.dbd.go.th. The Thai Chamber of Commerce notes that foreign nominee businesses exploit legal loopholes in Thailand for tax evasion and money laundering.
Sanan Angubolkul, Chairman of the Thai Chamber of Commerce, stresses the need for immediate resolution to ensure fairness for Thai entrepreneurs. Foreign nominees often operate in sectors reserved for Thai nationals, such as retail, restaurants, hotels, tourism, and real estate, using legal loopholes to operate businesses under Thai names.
The chamber calls for rigorous measures to address the nominee business issue, urging the government to reform the monitoring system by leveraging big data and artificial intelligence to scrutinise shareholders and directors exhibiting risky nominee behaviour.
All shareholders and directors should disclose the source of investment funds, with penalties for accounting firms aiding nominee groups.
The government should review and amend the Foreign Business Act to reflect current economic conditions, defining sectors open to foreign investment and those safeguarded for Thai interests.
A collaborative public-private committee should regulate foreign investments, and stricter penalties should be enforced, integrating data from various ministries to track illegal activities, reported Bangkok Post.
Sanan emphasises that unchecked nominee activities could undermine Thai enterprises’ competitiveness and create economic unfairness.
The government must implement preventive, corrective, and punitive measures to ensure fair competition for Thai businesses while ensuring that foreign investors comply with Thai laws within transparent regulations.
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