Coming into force in January 2005, the Thailand-Australia Free Trade Agreement (TAFTA) was designed to stimulate increased two-way trade between Australia and Thailand, as well as improve business mobility, increase transparency, investments and promote cooperation in several arenas. The areas of cooperation targeted in this agreement include competition policies, customs procedures, government procurement and intellectual property protection.
Juslaws attorneys provide advice for foreign clients in setting up their businesses in Thailand, by encouraging clients to make the best advantage of all options available to them, include benefits applicable under free trade agreements. Our Corporate and Business Services practice provides expert guidance through all stages of a client’s business formation, acting as trusted advisors working hand-in-hand with clients to address the myriad of issues associated with not only the establishment of their business but also its ongoing operation. The guidelines for requesting a business operations certificate under TAFTA are set out in Section 10 of the Foreign Business Act of B.E.2542 (1999).
TAFTA has eliminated most of the tariffs that Thailand had previously imposed on goods imported from Australia. There are a number of other key benefits to businesses under the terms of the agreement. At the beginning of the agreement’s implementation, 94 per cent of the tariffs and quota barriers imposed by Thailand on Australian imports were to be reduced, with the balance reduced to zero by 2015 or 2020. The exceptions to this are tariffs on skim milk powder, liquid milk and cream, which will see be eliminated in 2025.
The agreement provides for more open access to the services market in Thailand by Australian companies, as well as a commitment to the future liberalization of two-way services trade. Australian investors now have greater access to opportunities in Thailand, with majority Australian shareholding permitted in certain business sectors, such as construction services, maritime cargo services, mining operations, restaurants and hotels and others listed in the agreement.
Numerous rights of Australian direct investors are protected, such as the right to transfer their funds out of Thailand when they wish, as well as the right to seek the impartial resolution of any dispute that may arise with Thai authorities, in relation to their investments. Visas and other requirements for the temporary entry of Australian businesspersons into Thailand are facilitated under the terms of the agreement. The application process is streamlined, including access to one-stop visa and work permit processes, reduced paperwork. A longer term of stay is permitted for business visa holders also. Certain criteria regarding the qualifications of persons having the right to request a business operations certificate under TAFTA have been set out.
The person applying for the certificate must be a juristic person establish under the laws of Thailand in the form of a registered ordinary partnership, limited partnership or limited company. The authorized directors must be of Australian or Thai nationality. If the juristic person is a registered ordinary partnership or limited partnership then the manager or managing partner must be a Thai national. All of the juristic person’s shareholders must be either Australian nationals or a combination of Australian and Thai nationals. If the entity was established under Australian law then the shareholding must be more than 50 per cent Australian. Shareholding percentages must be in compliance with the conditions set for the type of business under TAFTA for which the person in applying for the certificate.
The applicant’s company must also show a debt-to-equity ratio no greater than 3:1.
There are 18 types of businesses covered by TAFTA, ranging from land and marine mining to telecommunications consulting services. Share ownership percentages for Australian and Thai nationals vary by the type of business involved.