Thailand cracks down on foreign firms using Thai nominees

Bangkok, Thailand – On paper, it was a nail salon. But in reality, the establishment was allegedly a front for an adult content business run by an Israeli woman through the OnlyFans platform.

The woman’s company in Krabi province, southern Thailand, is just one of nearly 500 businesses – from beauty salons to cannabis farms – that authorities say were registered by a single accounting firm. All involve foreigners who falsely declared a Thai “nominee” as the majority owner to bypass laws on foreign ownership.

Under the Foreign Business Act, non-Thai nationals are generally barred from holding more than 49% of shares in local enterprises. To circumvent this, some foreign entrepreneurs pay Thais to file paperwork claiming they own at least 51% of the company, even though they have little to no involvement in operations.

After years of turning a blind eye to the use of Thai nominees, the government is now tightening checks and demanding evidence that listed Thai partners genuinely hold substantive stakes in the companies they front.

Since launching a series of inspections across popular tourist areas and cross-referencing official databases using artificial intelligence (AI), the government has flagged 50,000 foreign-linked businesses for closer monitoring.

Law firms report being inundated with inquiries from foreign business owners and property holders who fear their assets could be frozen or seized if found to be part of an illegal nominee scheme.

“They’re all afraid of losing their investments and facing criminal prosecution,” Brian Ramsden, managing director for foreign affairs at Lawyers for Expats Thailand, told Al Jazeera. “The excuse is always the same: ‘We knew it was illegal, but the lawyer told us it was okay.’”

Ramsden said his firm receives over 100 calls daily from foreign businesses seeking solutions. “If the company doesn’t actually operate, that’s a red flag,” he added.

Thai Prime Minister Anutin Charnvirakul is among those leading the campaign against fraudulent registration companies. During a visit to popular tourist spots in southern Thailand last month, he pledged to crack down on illegal businesses and dismantle criminal organizations using shell companies, a growing concern amid rising online scam networks in Southeast Asia.

“In cases where one person holds shares and owns more than 200 companies, that’s essentially selling companies, selling nominees so foreigners can do business,” he said. “This violates the legislative intent of the law, and we believe prosecutions can be pursued.”

On the tourist islands of Koh Samui and Koh Phangan alone, about 70% of 16,800 “registered legal entities” have some foreign ownership, the Ministry of Commerce said after an audit last month, though it added that foreign involvement does not necessarily mean wrongdoing.

Last week, authorities said they had referred 28 foreign suspects to prosecutors following an investigation into fraudulent registration companies in Phuket and Surat Thani provinces. The arrests came after authorities in Koh Phangan earlier announced the seizure of 30 land plots worth about 150 million baht ($4.5 million) and the arrest of two Thai citizens linked to illegal companies.

The tightening campaign comes amid complaints from some local businesses about unfair competition from foreigners. “There are foreigners investing in villas and turning them into Airbnb properties, and once they’re developed, Thais can’t compete on price,” Thong, a prominent Thai businessman who requested to be identified only by his nickname, told Al Jazeera. “It’s not right for foreigners to own outright because it leaves many Thais behind. That’s the real issue.”

The crackdown has also raised concerns that genuine foreign investors might inadvertently break the law, harming Thailand’s reputation as an investment destination. Although condominium ownership rules require 51% of projects to be reserved for Thais, it is common for developers in hotspots like Bangkok, Phuket, and Pattaya to sell entire blocks of units to foreign buyers.

In Pattaya, foreign entrepreneurs and investors are in a state of “high alert and tension,” said Victor Wong, a foreign investment and tax specialist in Pattaya. “The system is tightening without expanding legal entry points,” he said. “Clients are no longer looking for shortcuts; they’re seeking legal and sustainable structures to operate in Thailand with confidence.”

While the sudden enforcement of decades-old regulations has unsettled the foreign community, not all expatriates sympathize with the concerns about the crackdown. “This is not Thailand’s fault,” Ramsden of Lawyers for Expats Thailand said. “No one is holding a gun to the heads of foreigners. They come to Thailand, and most rational thought flies out the window. This is a matter of people not following the rules. This crackdown will make Thailand better and safer.”