U.S.–Thai Treaty of Amity

The Treaty of Amity and Economic Relations between the United States and the Kingdom of Thailand, signed in 1966, is one of the most important agreements shaping trade and investment between the two countries. This bilateral treaty grants special rights and privileges to U.S. citizens and American-owned businesses, allowing them to operate in Thailand on almost the same footing as Thai nationals. For decades, it has served as a cornerstone of U.S.–Thai economic cooperation, promoting investment, technology transfer, and stronger commercial ties.

Understanding how the Treaty of Amity works — including its benefits, limitations, and registration process — is essential for American entrepreneurs and corporations seeking to expand into the Thai market.

1. Background and Legal Basis

The Treaty of Amity was signed on May 29, 1966, in Bangkok, and entered into force on June 8, 1968, replacing earlier treaties of friendship and commerce dating back to the 19th century. The agreement was designed to promote bilateral trade and investment while ensuring that American businesses receive fair treatment under Thai law.

Under normal circumstances, foreign businesses in Thailand are governed by the Foreign Business Act B.E. 2542 (1999) (“FBA”), which restricts foreign ownership in various sectors such as retail, services, and agriculture. However, companies registered under the Treaty of Amity are exempted from most of these restrictions and may engage in a wide range of business activities that are otherwise reserved for Thai nationals.

The Treaty is still in force today and continues to govern economic relations between Thailand and the United States.

2. Key Rights and Benefits for U.S. Businesses

The Treaty grants American individuals and companies national treatment, meaning they are allowed to engage in business activities on the same basis as Thai nationals, except in a few restricted sectors. The main privileges include:

1. 100% Ownership – U.S. citizens and companies may own a business in Thailand without the need for a Thai partner, whereas most other foreigners are limited to 49% ownership under the FBA.

2. Equal Treatment – Treaty-certified American companies receive the same rights as Thai-owned companies in terms of legal protection, access to courts, and economic activities.

3. Ease of Doing Business – Amity companies can operate without needing a Foreign Business License (FBL), which is typically required for foreign entities engaging in restricted activities.

4. Eligibility for Certain Service Sectors – U.S. investors can participate in sectors such as consulting, wholesale, retail, construction, and other service-oriented businesses, which are normally restricted.

These advantages make the Treaty a powerful vehicle for U.S. investors seeking a strategic presence in Southeast Asia’s second-largest economy.

3. Restrictions and Limitations

Despite its wide-ranging benefits, the Treaty does not grant unlimited access to all business sectors. Certain areas remain reserved for Thai nationals to protect national security and cultural interests. Specifically, under the Treaty:

American companies cannot engage in the following activities:

• Land ownership (although long-term leases up to 30 years are permitted)

• Communications and transportation

• Exploitation of natural resources

• Banking involving depository functions

• Agriculture and fishery

Additionally, while the Treaty provides national treatment, it does not automatically exempt companies from complying with other Thai laws — such as labor laws, environmental regulations, or licensing requirements for specific professions.

4. Eligibility for Treaty of Amity Protection

To qualify under the Treaty, a business must meet the following conditions:

1. Ownership and Control – At least 51% of the shares and a majority of the board of directors must be U.S. citizens.

2. Company Type – The company must be registered in Thailand as a limited company (similar to a corporation).

3. U.S. Citizenship Verification – All American shareholders and directors must provide proof of nationality (e.g., U.S. passport or certificate of incorporation for U.S.-registered parent company).

Both individuals and corporations can enjoy Treaty privileges, provided the ownership structure meets the criteria.

5. Registration Process

Registering under the Treaty of Amity involves two main steps, supervised by the U.S. Commercial Service (at the U.S. Embassy in Bangkok) and the Thai Ministry of Commerce (MOC).

Step 1: Certification by the U.S. Commercial Section

• The company must first submit documentation proving that it is American-owned and controlled. This includes:

  • Articles of Incorporation (from the U.S. and/or Thailand)

  • List of shareholders and directors

  • Passports or certificates of citizenship

• Upon approval, the U.S. Commercial Service issues an official letter of certification confirming U.S. ownership.

Step 2: Registration with the Thai Ministry of Commerce

• The company presents the certification letter to the Department of Business Development (DBD) of the MOC.

• The DBD then issues a Certificate of Treaty Entitlement, officially recognizing the company as a “Treaty of Amity Company.”

• The company can then commence business in Thailand with full Treaty privileges.

This process typically takes 2–4 weeks, depending on document completeness and government processing times.

6. Comparison with Other Foreign Business Structures

Without Treaty of Amity protection, foreign investors must comply with the Foreign Business Act, which generally limits foreign ownership in Thai companies to 49%. To hold a majority stake, non-U.S. investors must apply for a Foreign Business License, which is often time-consuming and uncertain.

In contrast, Amity-certified companies enjoy a streamlined registration process and exemptions from FBA restrictions, making it far easier and faster to establish operations.

Other forms of business entities available to foreigners include:

• Thai Limited Company (49% foreign ownership limit)

• Representative Office (non-income-generating)

• Branch Office (requires FBL)

• BOI-promoted Company (possible 100% foreign ownership for promoted sectors)

However, the Treaty of Amity remains one of the most advantageous routes for American investors outside BOI promotion.

7. Practical Considerations for American Investors

While the Treaty of Amity provides strong advantages, investors should consider the following practical factors:

• Land Restrictions – Amity companies cannot own land but may lease property for up to 30 years.

• Visa and Work Permit – American employees still require non-immigrant business visas and work permits.

• Taxation – Amity companies are subject to the same corporate income tax and VAT as Thai companies.

• Compliance – Annual audits, shareholder meetings, and Ministry filings are mandatory.

Proper legal structuring and professional advice are recommended to ensure compliance with Thai corporate and tax regulations.

8. Economic Impact and Modern Relevance

The Treaty has played a vital role in promoting U.S.–Thai commerce for nearly six decades. Thousands of American businesses — from small consultancies to large corporations like Ford, Chevron, and IBM — have established operations in Thailand under Treaty protection.

According to the U.S. Department of Commerce, Thailand remains one of the United States’ largest trading partners in Southeast Asia, with bilateral trade exceeding USD 60 billion annually. The Treaty continues to encourage foreign direct investment (FDI), technology transfer, and job creation, strengthening economic cooperation between the two nations.

Even as Thailand modernizes its foreign investment framework, the Treaty of Amity remains a unique bilateral arrangement that reinforces the long-standing friendship and mutual economic benefit between the two countries.

Conclusion

The U.S.–Thai Treaty of Amity and Economic Relations provides American individuals and companies with exceptional privileges not available to most other foreign investors in Thailand. It allows majority U.S. ownership, equal business rights, and exemptions from restrictive provisions under the Foreign Business Act.

While the Treaty does not cover all sectors — and restrictions remain on land ownership, banking, and natural resources — it remains a powerful tool for Americans looking to establish a business presence in Thailand.

By understanding the Treaty’s provisions and registration process, U.S. investors can navigate Thai law more effectively and take full advantage of the opportunities available in one of Southeast Asia’s most dynamic economies.