US-Thailand Treaty of Amity. The Treaty of Amity and Economic Relations between the Kingdom of Thailand and the United States of America, commonly known as the US–Thailand Treaty of Amity, is a bilateral agreement that provides special rights and protections for American individuals and companies conducting business in Thailand. Signed in 1833 and updated in 1966, the treaty reflects the long-standing diplomatic and economic relations between the two countries. The treaty remains highly significant, as it grants US nationals and companies unique advantages under Thai law not afforded to other foreign investors.

This article offers an in-depth examination of the US–Thailand Treaty of Amity, including its legal framework, benefits, limitations, qualification criteria, application procedures, and practical challenges.

Legal Framework

The Treaty of Amity is a binding international agreement, recognized under:

• The Constitution of Thailand, which accords treaty obligations the force of law.

• The Foreign Business Act B.E. 2542 (1999) (FBA), which governs foreign participation in business sectors in Thailand.

Under Section 10 of the FBA, treaties that allow broader foreign participation than the FBA’s restrictions are honored, and the Treaty of Amity operates as an exception to the general restrictions on foreign business activities in Thailand.

Key Provisions of the Treaty

The Treaty of Amity provides that:
US nationals and US-incorporated companies are entitled to engage in business in Thailand on the same basis as Thai nationals.
US companies can own a majority or 100% of shares in a Thai-registered company, bypassing the FBA’s usual 49% foreign shareholding limit.
US companies are exempt from certain restrictions on business activities that apply to other foreign investors.

However, the treaty does not override restrictions in the following sectors:

• Land ownership.

• Communications.

• Transport (domestic air and inland waterways).

• Fiduciary and banking business (except for those granted specific permissions).

• Exploitation of natural resources.

• Domestic trade in agricultural products.

Advantages of the Treaty

• Majority US ownership permitted in Thai-registered companies.

• No requirement to obtain a Foreign Business License (FBL) for most business activities permitted under the treaty.

• National treatment: US companies are entitled to the same legal rights as Thai-owned companies in sectors covered by the treaty.

This provides significant strategic advantages in setting up and operating businesses in Thailand compared to companies from non-treaty countries.

Eligibility Criteria

To qualify under the Treaty of Amity:

For companies incorporated in the US:

• The company must be incorporated in the US.

• The company must be at least 50% US-owned.

For companies incorporated in Thailand:

• At least 51% of shares must be held by US individuals or US-incorporated entities.

• A majority of directors must be US nationals.

• The company must not have nominee shareholders in breach of Thai law.

Application and Certification Process

Company Formation

• The business must be registered as a Thai limited company at the Department of Business Development (DBD), Ministry of Commerce.

• The company structure must comply with treaty ownership and management requirements.

Certification by the US Embassy

• Submit documents to the US Commercial Service at the US Embassy Bangkok, including:

  • Articles of incorporation.

  • List of shareholders (confirming US ownership).

  • List of directors (confirming US majority).

  • Company affidavit.

• The US Embassy reviews and, if satisfied, issues a certification letter verifying the company’s eligibility under the treaty.

Application to Ministry of Commerce

• The certification letter and supporting documents are submitted to the Foreign Business Administration Division, DBD, to obtain a Certificate of Treaty of Amity Protection.

• The DBD registers the company as a US Treaty company, authorizing it to operate in Thailand under treaty privileges.

Timeframe

The process generally takes:

• 1–2 weeks for US Embassy certification (depending on document completeness).

• 2–4 weeks for the DBD to issue the treaty certificate.

Actual timing can vary depending on case complexity and workload at the relevant offices.

Practical Limitations and Considerations

Land ownership

• The treaty does not confer land ownership rights. US companies must lease land or use other lawful structures (e.g., superficies) for property rights.

Restricted sectors

• The treaty does not permit US companies to engage in sectors specifically excluded by its terms or subject to other laws restricting foreign participation (e.g., telecommunications).

Nominee structures prohibited

• The use of Thai nominees to meet legal requirements or mask foreign ownership is illegal and subject to criminal penalties under the FBA.

Ongoing compliance

• The company must maintain its US ownership and management structure. Changes (e.g., share transfers to non-US nationals) may jeopardize treaty protections.

Interaction with Other Laws

• Labor laws: US treaty companies must comply with Thai labor law, including requirements for work permits for foreign staff.

• Tax law: Treaty companies are subject to the same corporate income tax and VAT laws as Thai companies.

• Double Tax Agreements (DTA): The Treaty of Amity is distinct from DTAs. US companies should assess their tax obligations separately.

Revocation and Loss of Treaty Protection

A company may lose its treaty protection if:

• It no longer meets ownership or management requirements.

• It engages in activities outside the scope of the treaty’s permitted sectors.

• It violates Thai law (e.g., using nominee shareholders).

In such cases, the company may be required to comply with the FBA as an ordinary foreign business operator, including applying for a Foreign Business License.

Comparison with Other Foreign Business Options

Case Example

A US technology consulting firm sets up a wholly-owned subsidiary in Thailand under the Treaty of Amity. The company provides IT consulting services to Thai clients and operates without the need for a Foreign Business License, enjoying national treatment under Thai law. The company leases office space and obtains work permits for its US staff in compliance with labor laws.

Conclusion

The US–Thailand Treaty of Amity provides significant legal and commercial advantages for US individuals and companies seeking to invest or operate in Thailand. However, the benefits are subject to strict compliance with ownership, management, and operational conditions, and the treaty does not override other key restrictions, such as land ownership and sectoral prohibitions. Careful structuring, proper certification, and ongoing compliance are essential to securing and maintaining treaty protection.