DBD warns against aiding nominee-linked businesses in Thailand
The department says data analysis found foreign entities may have operated restricted businesses in Thailand without permission.
- The Department of Business Development (DBD) is investigating foreign-controlled businesses suspected of using Thai nominees to illegally operate in sectors restricted by the Foreign Business Act.
- Initial checks using database analysis have identified 6,551 foreign juristic entities potentially operating in breach of the law, prompting in-depth investigations with partner agencies.
- The DBD warns that individuals, including Thai nationals, who knowingly aid or consent to these illegal nominee structures can be prosecuted as co-offenders.
- Penalties for such offenses are severe, including imprisonment for up to three years and/or fines ranging from THB 100,000 to THB 1 million.
Poonpong Naiyanapakorn, director-general of the Department of Business Development (DBD) under the Ministry of Commerce, said the department had launched a proactive operation to inspect suspected juristic entities after finding cases in which foreigners with shareholdings of 50% or more were illicitly operating businesses listed in the annexes to the Foreign Business Act 1999 without permission, which would be a clear legal offence.
The department has used technology to analyse and link databases to screen juristic entities at risk of illegal business operations.
Initial checks found 6,551 foreign juristic entities operating businesses in Thailand without permission, potentially in breach of the Foreign Business Act.
The Department of Business Development is now carrying out in-depth checks and coordinating with partner agencies, such as the Department of Special Investigation (DSI), the Royal Thai Police and tax agencies, to expand the investigation to related networks.
It stressed that “foreign business operators or investors” wishing to invest and operate businesses in Thailand must strictly comply with the Foreign Business Act.
The Act sets conditions for foreign business operations through “three annexed lists” that determine which activities foreigners may undertake in Thailand, divided by importance as follows:
- List 1: “foreigners are absolutely prohibited from operating businesses”. This list covers businesses that foreigners are barred from operating for special reasons, as they are related to the basic livelihood of Thai people and are reserved for Thais, such as rice farming, gardening, field crop farming, fishing in Thai waters, timber extraction from natural forests and land trading.
- List 2: “related to national security, culture and the country’s resources”. This list covers businesses related to national security or those that have significant effects on the economy and society. Foreigners may operate such businesses, but must obtain permission from the minister with Cabinet approval, such as businesses related to security, including arms, transport and communications businesses, and businesses related to natural resources.
- List 3: “Thais are not yet ready to compete, and permission is required”. This list covers businesses in which Thais are not yet ready to compete. Foreigners may operate such businesses, but must obtain permission from the director-general of the Department of Business Development with the approval of the Foreign Business Commission, such as service businesses, including accounting and law, retail and wholesale businesses, tourism businesses and hotel businesses.
Offences under the Foreign Business Act carry both imprisonment and fines.
Those who operate businesses without permission, those who knowingly consent to an offence or those who fail to take reasonable steps to prevent an offence may be prosecuted as co-offenders and face imprisonment of up to three years, a fine of THB100,000 to THB1 million, or both.
The Department of Business Development confirmed it would continue proactive action by using linked database systems and risk-analysis technology to screen juristic entities whose conduct may be unlawful.
It also asked the public to provide tip-offs to help protect the country’s economic system and make it transparent and fair through the Department of Business Development website, www.db0d.go.th.
For more information, contact the Foreign Business Administration Division at 0 2547 4425-6, the Protection and Suppression of Illegal Business Division at 0 2547 4400, the Department of Business Development, Ministry of Commerce call centre at 1570, or the Department of Business Development website at www.dbd.go.th.
