Joint Ventures in Thailand: Strategic Partnerships for Growth

Entering into a joint venture (JV) in Thailand can be a powerful way to access new markets, combine strengths with local partners, and drive business growth. At BASE Law Firm, we support both Thai and international clients in designing, structuring, and governing joint ventures (protecting your interests while ensuring compliance with Thai legal and regulatory requirements).

Our service include:

JV structuring and legal planning
Contractual and incorporated JV setup
Foreign ownership and FBA compliance
Governance, control, and equity guidance
JV agreement drafting and negotiation
Ongoing regulatory and tax support

What Is a Joint Venture in the Thai Context?

In Thailand, a joint venture is not a standalone legal form under the Civil and Commercial Code. Instead, it is typically established through contractual arrangements between two or more parties.

There are two common models:

Unincorporated Joint Venture (“contractual JV”)
- Parties agree on a project-based collaboration (e.g., a construction contract, service delivery, or shared investment).
- The joint venture itself is not registered as a company under company law, but for tax purposes, the Revenue Department treats it as a juristic entity.
- It must apply for a tax ID and, depending on its activities, register for VAT.
- There has to be shared investment and profit/loss sharing, and partners typically have joint liability toward third parties.
Incorporated Joint Venture (“JV Company”)
- The parties set up a new Thai company, usually a limited company, where each partner holds shares according to their agreed stake.
- This structure offers more permanence and a corporate vehicle for long-term operations.

Foreign Participation & Regulatory Considerations

When a JV involves foreign partners, several critical legal and regulatory factors come into play:

The Foreign Business Act (FBA) limits certain types of business activities for foreign-owned companies.
Foreign partners may need to set up a branch office in Thailand if participating in an unincorporated joint venture.
If the JV company has a majority of foreign shareholders, it may be subject to additional licensing or FBA restrictions.
For tax purposes, the JV (whether incorporated or not) must register for tax, and in some cases VAT, depending on the business model.

Key Legal & Strategic Considerations for JV Formation

When structuring a JV, it’s essential to address several strategic and legal issues from the beginning:

Partner Compatibility: Align visions, corporate cultures, and strategic goals.
Governance & Control: Clearly define who manages day-to-day operations, who sits on the board, and how decisions are made.
Contribution & Ownership: Decide how much each party contributes (capital, assets, know-how) and how that translates into equity or profit share.
Intellectual Property: Protect IP rights, especially if technology transfer or proprietary knowledge is involved.
Exit Rights: Ensure the agreement includes terms for termination, buy-outs, or exit scenarios.
Dispute Resolution: Agree on applicable law (Thai or foreign), courts, or arbitration mechanisms in advance.

Tax & Financial Implications

The Thai Revenue Department considers both unincorporated and incorporated JVs as taxable entities.
Share of profits distributed to individual persons (natural persons) may be subject to personal income tax, while corporate partners may benefit from different tax treatment.
Incorporated JVs will need to file their own financial statements, maintain an accounting framework, and comply with Thai corporate reporting requirements.

Why Choose BASE Law Firm for Your Joint Venture

Expert Structuring Advice: We help you design a JV structure (contractual or incorporated) that balances legal protection, tax efficiency, and operational flexibility.
Regulatory Compliance: We guide you through Foreign Business Act requirements, licensing, and local approvals.
Drafting & Negotiation: We prepare robust JV agreements, including governance, capital contributions, exit terms, and dispute resolution.
Long-Term Support: After formation, we provide ongoing support with tax filings, board governance, corporate changes, and risk management.