THAILAND Law and Practice Contributed by: Tirayu Songdacha, Nutchaya Khayan, Piyachat Suwanwihok and Lalita Sriboonruang, MSC International Law Office
3.3 Sanctions, National Security and Foreign Investment Controls In terms of national security, Thailand does not main - tain a dedicated domestic sanctions regime. However, Thailand has acted in compliance with the UN Sanc - tions List. In addition, Thai financial institutions shall refuse to engage with sanctioned individuals or enti - ties to avoid compliance and reputational risks. Both IJVs and UJVs are under the Foreign Business Act B.E. 2542 (1999) (the FBA). The FBA serves as the primary legal framework restricting certain business activities that foreigners are, in principle, prohibited from conducting. The FBA sets out the procedures in case foreigners wish to operate such businesses pro - vided that such foreigners fulfil the requirements and act in compliance with the procedures under the FBA. In addition to the FBA, certain business sectors are subject to shareholding restrictions under other rel - evant laws. For example, the banking and non-life insurance industries require at least 75% Thai owner - ship. However, this 75% ownership requirement may be subject to exemptions or relaxations granted by the respective regulatory authorities on a case-by-case basis. 3.4 Competition Law and Antitrust Thailand’s Trade Competition Act B.E. 2560 (2017) (the TCA), enforced by the Office of Trade Competi - tion Commission (OTCC), may apply to joint ventures depending on their structures and purposes. If a JV’s formations or operations significantly reduce market competition, create a monopoly, or result in market dominance, the JV participants must comply with the requirements under the TCA. Certain JV formations that could substantially lessen trade competition must be notified to the OTCC within seven days of such completed formation, while those creating a monop - oly or market dominance require prior approval before proceeding. Non-compliance can lead to severe con - sequences, including fines, invalidation of the transac - tion, and other enforcement actions. 3.5 Listed Companies and Market Disclosure Rules When the JV participant that is a listed company makes an investment in a joint venture, the listed company
from corporate income tax on such dividends. Foreign shareholders are subject to a 10% withholding tax; however, the rate of withholding tax may lower when there is a double taxation agreement. A UJV distributes its profits through profit sharing. Profit shares paid to Thai-incorporated companies or to foreign companies, which conduct any other busi - ness in Thailand and participate in the JV, are fully exempt from income tax, regardless of the investment proportion or holding period. 3. JV Regulation 3.1 Legal Framework and Regulatory Bodies There is no specific primary regulator for UJVs. JV parties have contractual freedom to determine man - agement arrangements. However, a UJV is treated as a tax unit under the Revenue Code, which means that the UJV itself is required to register with the tax authorities and comply with all applicable tax laws and obligations. An IJV is primarily regulated by the Department of Business Development, Ministry of Commerce (DBD). In addition, the management and governance must comply with the CCC, along with any applicable sec - tor-specific regulations. 3.2 Anti-Money Laundering Compliance Thailand’s anti-money laundering (AML) framework is governed by the Anti-Money Laundering Act B.E. 2542 (1999), along with regulations on customer due diligence (CDD) and know your customer (KYC) pro - cedures. The Anti-Money Laundering Office (AMLO) serves as the primary regulatory authority, overseeing enforcement, investigations, and compliance guid - ance. AML obligations apply to both financial institu - tions and designated non-financial businesses such as real estate agents, gold traders, and digital asset providers, all of which are required to verify custom - ers, identify ultimate beneficial owners (UBOs), and report suspicious or large-value transactions to the AMLO.
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