Thailand, with its breathtaking beaches, rich culture, and welcoming people, has become a global hotspot for tourism and foreign investment. Among the various business ventures, running an Airbnb, especially in tourist hubs like Phuket and Chiang Mai has become increasingly attractive to foreigners. However, the process is layered with legal, regulatory, and financial obligations that must be thoroughly understood and adhered to. This comprehensive blog outlines everything Indian/Other foreign nationals need to know about establishing and running an Airbnb legally in Thailand.
Key points/ Regulations:
1. Property Ownership in Thailand
Land Ownership: Foreigners, including Indian nationals, cannot own land in Thailand under Thai law. However, there are certain regulations:
i. Long-term leasehold agreements-
• Thai law permits leaseholds of up to 30 years.
• Renewal is not automatic, it must be contractually agreed upon and properly documented.
ii. Forming a Thai company where foreign shareholding is below 49%. Thai national’s shareholding must be equal to or above 51%.
Building Ownership: While foreigners cannot own land, they can legally own buildings on leased land. Construction permits and contracts should clearly distinguish building ownership from land ownership.
Condominium Ownership:
i. Foreigners can own up to 49% of the total sellable area of a condominium project.
ii. The funds used must be transferred into Thailand in foreign currency and documented via a Foreign Exchange Transaction Form (FET Form).
iii. Condominiums prohibit short-term rentals (usually less than 30 days), u/s 17(1) of Condominium Act, 1979.
2. Contractual Obligations
If an Indian national partners with a Thai national, the contracts should address:
i. Capital contributions
ii. Profit-sharing ratios
iii. Decision-making authority
iv. Dispute resolution mechanisms
v. Exit strategies
These contracts should be legally drafted in both Thai and English and registered with relevant authorities.
3. Business Ownership and Structure
Foreigners cannot fully own businesses in sectors restricted by the Foreign Business Act (FBA), which includes most real estate and hospitality services.
Three primary options:
i. Forming a Thai Company: Requires at least 51% Thai shareholding.
ii. Board of Investment (BOI) Promotion: It is possible for large-scale ventures involving technology or manufacturing or renewable energy. 100% ownership can be owned by foreign national. This is a government agency under PMO, Thailand.
iii. According to US-Thai Treaty of Amity, US Companies shall be given national treatment, with 100% ownership with sole-proprietorship.
Company Director: Can be a foreigner but should have a valid work permit. Work permit can also be issued later after appointment to the position.
4. Business Licensing
To legally operate an Airbnb, the following licenses may be required:
i. Hotel License (under Hotel Act, 2004) is mandatory if the renting period is less than 30 days. This license is obtained from the Department of Provincial Administration.
Under sections 15 and 59, the penalty may include imprisonment for up to 1 year, a fine of not more than 20,000 baht, or both. Additionally, there may be a daily fine of not more than 10,000 baht for the duration of the violation of this clause.
This registration usually takes around 1.5 month. The documents required for obtaining Hotel License may require:
• ID Documents of the owner,
• Power of Attorney,
• Lease agreement or Property deed,
• Condominium/Building/Land layout,
• Proof of income.
Other requirements, if any, shall be notified by the license Ministry of Interior of Thailand.
ii. According to the 2023 Ministerial Regulation on the Types and Criteria of Hotel Businesses, the non-hotel accommodation registration may work in the limited use where there shall be a maximum of 4 rooms, 20 guests. There shall be no requirement of hotel license.
iii. Foreign Business License needed for operating business in restricted sectors such as agriculture, natural resources, media, land trading, etc.
iv. Local Municipality Permits for zoning, sanitation, waste management.
5. Taxation
Value Added Tax (VAT):
i. Mandatory if annual income exceeds THB 1.8 million (~47.3 lakhs)
ii. Must register with the Revenue Department.
iii. VAT rate is currently 7% as per Thai law. However, the standard rate of VAT is 10% (increased from 1st January, 2025) but the rate is currently reduced to 7% until 30 September 2025.
iv. Late filing penalties:
• THB 300 for returns filed within 7 days of the deadline.
• THB 500 for returns filed after 7 days (applies to all entities).
Income Tax:
i. Personal Income Tax (PIT) for individuals. It is differed in different slabs.
ii. Corporate Income Tax (CIT): Standard rate for Corporate Tax is 20% on net profit. However, this tax varies on the type of taxpayer.
• A 15% tax rate applies to net profits ranging from 300,000 THB up to 3 million THB.
• Net profits exceeding 3 million THB are taxed at a standard rate of 20%.
• Foreign companies disposing profit out of Thailand are subjected to a 15% corporate income tax rate, based on the amount disposed of.
Withholding Tax: In Thailand, withholding tax is applied to specific types of income paid to the companies, with rates varying based on the income type and recipient’s tax status. The entity disbursing the income must file a return through Form CIT 53 and remit the withheld tax to the District Revenue Offices within 7 days after the month of payment. Below are the withholding tax rates for some income categories:
• Interest – 1%
• Royalties – 3%
• Advertising Fees – 2%
• Service and professional fees – Varies between 3-5 per cent.
Tax Identification Number (TIN):
• Must be obtained within 60 days from the incorporation date.
• In the case of a foreign company, it must be obtained within 60 days from the date it begins carrying on business in Thailand.
6. Company Registration
If operating as a business:
i. Register a Thai Limited Company
ii. Requirements:
• Minimum 3 promoters
• Thai majority shareholders
• Registered address
• Articles of Association
• Submission of company name, objectives, and financial plan
• Holding of a statutory meeting to finalise the MOA and appoint the directors.
iii. Register with:
• Department of Business Development (DBD)
• Revenue Department- TIN must be obtained within 60 days of incorporation.
• Social Security Office- Within 30 days of hiring first employee.
7. Building Standards and Mandatory Forms
Building Code Requirements:
i. Must comply with Thai Building Control Act
ii. Proper fire safety, structural integrity, sanitation, parking spaces
Mandatory Forms:
i. Form B1: Application for construction permit
ii. Form Ror. Ngor. 1: Building modification notification
iii. Must be approved by local municipality
Inspections are mandatory before issuance of hotel licenses.
8. Costing and Capital Requirements
i. Company Setup: THB 25,000 – THB 50,000 (including government fee of 12,000 THB, additional 6,000 THB for every extra million THB in registered capital)
ii. Minimum Capital for Work Permit: THB 2 million per foreign employee
iii. Hotel License: ~ 20,000-30,000 THB (application fees)
iv. Condo Purchase: Depends upon location
v. Legal & Accounting: Annual fees range starts from ~ THB 20,000 to depending on services.
Proof of capital injection may be required for visa/work permit or DBD registration.
9. Legal and Non-Legal Compliances
Legal Compliances:
i. Registering business
ii. Obtaining licenses
iii. Paying taxes
iv. Labor laws and social security contributions
Non-Legal Compliances:
i. Maintaining property standards
ii. Guest safety and dispute handling
iii. Community relations
10. Remittance Regulations
Regulated under Foreign Exchange Control Act, 1942. Transfer up to USD 50,000 per transaction without requiring approval from the Bank of Thailand, provided the purpose of the transfer is legitimate.
i. Profits can be repatriated after deducting taxes
ii. Must show proper documentation (e.g., tax clearance, audit reports)
iii. Transfers over USD 50,000 require submission of FET form to the Bank of Thailand
11. Audits and Record-Keeping
i. Mandatory annual audits for all registered companies
ii. Maintain records for at least 5 years
iii. Submit balance sheets, income statements, profit & loss statements, etc.
12. Other Regulations/Requirements
i. Immigration Reporting in Form TM30: A notification must be given to the immigration authorities when a foreign guest stays at the property.
ii. Environmental Compliance: Waste disposal and noise pollution regulations
iii. Neighbourhood Restrictions: Some communities prohibit short-term rentals
Conclusion
Running an Airbnb in Thailand as a foreigner, particularly as an Indian national is not impossible, but it requires deep awareness of local laws and compliance obligations. Legal setup, partnerships with Thai nationals, proper licensing, and full financial transparency are essential. Engage local experts, legal, tax, and real estate consultants to ensure a legally compliant and successful Airbnb venture.
Hemant Goyat
