Thailand is intensifying enforcement against foreign-controlled nominee companies used to acquire land and operate restricted businesses. The crackdown targets arrangements in which Thai shareholders appear to hold a legal majority while a foreign investor supplies the money, controls decisions, receives the economic benefits, or acts as the ultimate beneficial owner.
Permanent residence and citizenship
Permanent residence can remove many recurring visa requirements, while citizenship provides broader rights, including the ability to own land, work without a work permit, and operate businesses without the restrictions imposed on foreigners by the Foreign Business Act.
The permanent-residence process was described as generally requiring:
- A three-to-five-year record of employment, salary and Thai tax payments.
- For many Western applicants, income approaching 100,000 baht per month.
- Thai-language proficiency and an examination.
- Application within an annual quota allocated by nationality.
Applicants from countries with many candidates may face longer queues, while applicants from countries with few candidates may progress more quickly.
A person married to a Thai citizen may be able to apply directly for citizenship without first becoming a permanent resident. A single applicant, or someone married to a non-Thai citizen, would normally obtain permanent residence before applying for citizenship.
Citizenship is not assessed only on income and language ability. Authorities may also examine whether the applicant has a lasting connection to Thailand, including employment, property, family, children, charitable activity and community involvement. Applicants must also consider whether their original country permits dual citizenship.
Why nominee landholding is illegal
Section 86 of Thailand’s Land Act was described as prohibiting foreigners from directly or indirectly owning land except where a treaty permits it. No applicable treaty was identified, meaning foreigners generally cannot own Thai land.
The common nominee structure places 49% of a company in foreign hands and 51% in Thai hands. The Thai majority may consist of people who contributed no real capital and exercise no genuine control. In some arrangements, a lawyer, consultant or other intermediary holds a small controlling stake intended to prevent the foreign investor from being removed.
A structure does not become legal merely because its documents show Thai majority ownership. Relevant indicators of genuine ownership and control include:
- Who supplied the capital.
- Who directs the company’s decisions.
- Whether Thai shareholders attend and vote at meetings.
- Whether Thai shareholders receive dividends.
- Whether the company has employees, revenue and genuine operations.
- Whether it pays taxes and is registered for VAT where required.
- Who is identified as the ultimate beneficial owner.
- Whether the company owns only one property and otherwise conducts no business.
A foreigner may hold a genuine minority interest in a landowning business when the Thai shareholders have real economic ownership and genuinely control the company. The problem arises when the Thai ownership exists only on paper and the foreign investor is effectively calling the shots.
Many nominee landholding companies reportedly have no employees, taxable activity or operating revenue. Their only asset is the land and building occupied or controlled by the foreign investor.
Why enforcement is increasing
The relevant land and foreign-business restrictions have existed for decades, but enforcement has historically been inconsistent. The present campaign is described as broader, more sustained and increasingly connected to concerns beyond real estate.
Nominee companies may also be used for:
- Money laundering and undeclared transfers.
- Businesses legally reserved for Thai nationals.
- Unlicensed tourism services.
- Restaurants, schools, hotels and construction businesses controlled by foreigners.
- Factories employing workers without the required visas or work permits.
- Property sales structured as low-cost share transfers rather than registered land transfers.
Enforcement has concentrated on high-value tourist markets such as Phuket, Koh Samui and Koh Pha-ngan, where foreign investment and property-price increases have created large potential profits. Pai and other tourism centres were also cited as locations where foreign-controlled businesses have become highly visible.
One Koh Samui case was said to involve approximately 250 arrest warrants for Thai and foreign participants in nominee structures. An accounting office in Koh Pha-ngan was reportedly examined after more than 100 companies were registered at the same address with recurring shareholders.
Such patterns can be easy to identify. A Thai shareholder earning 20,000 baht per month, for example, may appear on paper to have invested tens of millions of baht across numerous companies.
Approximately 47,000 companies were said to be on an audit list, with more than 20,000 suspected of involving nominee arrangements. These figures were presented as estimates rather than confirmed final findings.
The enforcement campaign was also described as entering its second year and increasing rather than declining. It may gradually expand beyond southern tourist areas into Bangkok, Chiang Mai, Khon Kaen and other parts of the country, although authorities may lack the resources to investigate all regions simultaneously.
Criminal and financial consequences
Participation in an illegal nominee arrangement can expose both the foreign investor and Thai participants to criminal and civil consequences.
Possible outcomes described include:
- Imprisonment of up to three years.
- Civil fines.
- An order to dispose of illegally held land within six months.
- Deportation and blacklisting of foreign participants.
- Loss of the property or other assets.
- Prosecution of Thai nominees, advisers and facilitators.
Proposals were also described that would treat nominee-company offences as predicate offences under anti-money-laundering legislation. This could allow authorities to seize property for the state and pursue related offenders internationally.
Foreign investors should not assume that widespread use of a structure makes it safe. Previous non-enforcement, reassurance from friends or advice that “everyone does it” does not make the arrangement lawful.
Moving out of an illegal structure
Landholding and operating businesses should be assessed separately. A company that owns land through nominees may need to remove every indication that the foreigner owns or controls that land.
The available options include:
- Selling the land.
- Transferring it to a genuine Thai owner or legitimate Thai-controlled company.
- Leasing the property back under a registered agreement.
- Using another registered land-use right permitted under Thai law.
- Replacing the landed investment with a condominium held under the foreign-ownership quota.
A foreign investor should not simply transfer the property into another company with nominal Thai shareholders. The replacement owner must be commercially real, properly capitalized and genuinely Thai-controlled.
Lease arrangements are commonly limited to 30 years. A renewal cannot be guaranteed in advance, although a reputable developer may have a commercial incentive to renew leases because it earns continuing revenue from management, services and further development.
Legitimate ways to control property
A condominium acquired under the foreign quota was identified as the clearest form of direct and lawful foreign property ownership.
For villas and other landed property, one model is for a legitimate Thai developer to retain ownership of the land and grant the foreign buyer a registered lease or another permitted right. The transcript also described a hybrid registered right over a leased asset that may allow the holder to transfer, sell or mortgage the right during a period of up to 30 years. The precise name of this instrument in the transcript is unclear.
Large, established developments may offer more security than small projects because the developer has a continuing commercial interest in maintaining the estate, collecting service revenue and renewing customer relationships.
Small developments operated by an individual foreigner and Thai spouse may present greater risk when the developers intend to build several houses, collect the sale proceeds and leave. They may have limited capital and little interest in maintaining the arrangement for decades.
Where the original seller does not want to retain the land, a legitimate landholding company may purchase it and lease it to the foreign investor. The payment would pass from the foreign buyer to the holding company and then to the seller, with the lease registered at or shortly after the transfer.
Before relying on such a company, the investor should confirm that it:
- Is genuinely Thai-controlled rather than a nominee vehicle.
- Has sufficient paid-up capital to acquire the property.
- Has completed comparable transactions.
- Has a continuing commercial reason to honour the lease.
- Offers contracts with reasonable transfer, mortgage, inheritance and termination provisions.
A company with only 2 million baht in capital should not be expected to purchase a 20 million baht property without a credible explanation of its financing.
Due diligence before buying or leasing
Property due diligence should extend beyond reviewing a photocopy of the title document. A current title search at the Land Office may reveal registered mortgages, leases, claims or other rights that do not appear on an outdated copy supplied by the seller.
The review should cover:
- The current chanote and all registered encumbrances.
- Existing mortgages, leases and contractual rights.
- The seller’s ownership and authority to transfer the property.
- Criminal or civil cases involving the land or relevant parties.
- National-park boundaries and possible encroachment.
- Zoning and permitted land use.
- Whether a proposed commercial building is allowed in that area.
- Building permits and other regulatory approvals.
- The capital and ownership of any company involved.
- The source of funds used by Thai shareholders.
- The tax consequences of the purchase, lease and future sale.
- The enforceability of renewal, transfer, mortgage and inheritance clauses.
Contracts copied from the internet or generated without transaction-specific legal review may omit important Thai-law requirements or include provisions that cannot be enforced.
Investors should also verify the professional status of advisers. A person with legal knowledge or a law degree is not necessarily a registered practising lawyer. Foreign legal consultants may operate through advisory exceptions, while the actual Thai legal work is subcontracted to local lawyers. Buyers should determine who is professionally responsible for the advice and who will conduct the title search, draft the agreements and supervise registration.
Effects on the property market
The crackdown may increase demand for foreign-quota condominiums, registered leases and developments using legitimate Thai ownership structures.
It may also push existing owners to restructure or sell. However, a broad collapse in land prices was considered unlikely because demand for lifestyle destinations such as Koh Pha-ngan, Phuket and Koh Samui remains strong. The upper end of the villa market may instead move toward developer-owned land combined with long-term registered leases.
The longer-term effect could be greater transparency, more tax revenue and clearer separation between lawful foreign investment and businesses operating through nominees. Legitimate rental activity can still generate income when investors buy from credible developers, use the correct ownership or lease structure, comply with licensing requirements and pay Thai taxes.
Foreign buyers should treat land control, business operation and short-term rental activity as separate legal questions. A lawful lease does not automatically authorize a hotel, tourism or short-term accommodation business, and property ownership alone does not remove licensing, employment, tax or foreign-business restrictions.
