Thailand intensifies crackdown on foreign nominee arrangements, impacting investors
Stricter oversight prompts caution among foreign business operators
Thailand is currently undergoing a period of significant legal and economic changes, impacting its previously attractive environment for foreign investors. The country, which has long relied heavily on tourism and foreign capital, is intensifying its crackdown on nominee arrangements and clarifying property lease laws, creating uncertainty for foreign investments.
Phuket, known for its stunning landscapes and vibrant tourism, has historically attracted foreign residents and investors, significantly influencing its real estate and tourism sectors. However, Thailand’s desire for foreign investment is often in conflict with its protectionist laws, leading to informal arrangements that are now under scrutiny.
The enforcement actions, which were not rigorously applied before 2015, are now being intensified, marking a shift towards stricter legal adherence.
Thailand’s Foreign Business Act (FBA) of 1999 regulates foreign business participation, replacing earlier regulations from 1972. It categorises business activities into three lists, each with varying restrictions on foreign engagement.
The act prohibits nominee arrangements where Thai nationals hold shares or act as fronts for foreigners in restricted businesses. This prohibition aims to protect national sovereignty and ensure fair competition.
Enforcement against illegal nominee shareholdings has surged since 2015. Between September 2024 and January 2025, a multi-agency task force led by the Commerce Ministry prosecuted 820 illegal nominee businesses, with damages estimated at 12.5 billion baht (US$381 million). By May 2025, this number rose to 857 entities, with damages reaching 15.288 billion baht (approximately US$468 million).
Foreign nominee
Southern regions like Phuket and Koh Samui, with significant foreign investment, particularly from Russian buyers in luxury properties, are major targets of this enforcement.
The crackdown extends beyond shareholding structures, with officials probing companies with foreign stakes as low as 0.01% to ensure genuine Thai participation. New enforcement mechanisms include a Memorandum of Understanding between the Ministry of Commerce and the Ministry of Interior aimed at preventing unlawful land acquisitions by foreigners.
Additionally, the Department of Business Development plans to inspect nearly 47,000 businesses, focusing on tourism, real estate, e-commerce, and hospitality sectors.
This initiative involves multiple high-level agencies, including the Commerce Ministry, the Department of Special Investigation, the Land Department, the Anti-Money Laundering Office, and the Provincial Police Region 8. The crackdown is driven by concerns over economic and national security, with foreign-owned condos and villas being used as illegal daily rentals, creating unfair competition for licensed hotels.
Penalties for violating the FBA’s provisions are severe, including up to three years’ imprisonment, fines up to 1 million baht, and daily fines of 50,000 baht (US$1,530) for continued violations.
The government is considering amending the Anti-Money Laundering Act to make FBA violations a predicate offence, allowing asset seizures. This move highlights the serious view of nominee activities as threats to national security and economic stability.
The Land Code also restricts foreign land ownership, and nominee arrangements used to bypass these laws are under investigation. Foreigners owning land unlawfully through nominee structures face the risk of being forced to sell the land within 180 days to a year, possibly at below-market value, reported The Phuket News.
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