Zero-Tariff Export from Thailand

A Practical Guide for Foreign Investors

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EP 6: Can Trading or Service Companies Benefit from Zero-Tariff Exports?

After understanding Free Trade Agreements (FTAs) and Rules of Origin, many investors ask a critical follow-up question:

“Do we really need to manufacture in Thailand — or can a trading or service company still benefit from zero-tariff exports?”

The answer is nuanced.

In most cases, trading and service companies cannot independently create zero-tariff eligibility — but under the right structure, they can play a strategic role.

Understanding this distinction is essential before choosing a business model.

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Zero-Tariff Benefits Are Product-Based, Not Company-Based

FTA benefits apply to products, not corporate registration types.

Zero-tariff treatment depends on:

• Origin qualification
• Manufacturing transformation
• Regional value content
• Proper documentation

A trading license or service registration alone does not generate origin.

This is where many investors misunderstand the system.

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Scenario 1: Pure Trading Company

A pure trading company:

• Imports finished goods
• Re-exports them without substantial transformation

In this case:

❌ No additional origin is created
❌ No new tariff benefit is generated
❌ The product retains its original country of origin

If the goods were not originally qualifying for FTA benefits, simply routing them through Thailand does not change that status.

Key principle:
Minimal handling, repackaging, or labeling does not qualify as origin transformation.

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Scenario 2: Light Assembly or Processing

Some investors establish operations that:

• Assemble components
• Perform light processing
• Conduct packaging or finishing

The critical question becomes:

Does this activity meet the applicable Rules of Origin under the chosen FTA?

If the activity results in:

• Sufficient Regional Value Content (RVC), or
• A qualifying Change in Tariff Classification (CTC),

then zero-tariff eligibility may be achievable.

If not, the structure remains legally valid — but not tariff-efficient.

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Scenario 3: Service Companies Supporting Manufacturing

Service companies can play an indirect but strategic role in FTA utilization.

For example:

• Supply-chain management
• Procurement coordination
• Quality control
• Regional headquarters operations

While these activities do not directly create origin, they can:

• Improve compliance
• Optimize sourcing patterns
• Align operations to meet RVC thresholds

In other words, service entities can support zero-tariff strategies — but not substitute manufacturing substance.

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A Common Investor Miscalculation

Many investors assume:

“We can set up a trading company in Thailand and use Thailand’s FTAs.”

This is rarely correct.

FTAs do not reward corporate registration —
they reward economic substance and transformation.

A structure that looks efficient on paper may fail origin qualification entirely.

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The Substance Test

Customs authorities evaluate:

• Where raw materials are sourced
• Where value is added
• What manufacturing processes occur
• Whether transformation is meaningful
• Whether documentation matches operational reality

If the answer reveals insufficient substance, preferential treatment may be denied.

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When a Hybrid Structure Makes Sense

In some cases, investors combine:

• Manufacturing operations (to generate origin)
• A trading entity (to manage exports and contracts)
• A service entity (to centralize management and support)

This layered structure can work — but only when carefully designed to align with:

• FBL or BOI requirements
• Transfer pricing rules
• Customs compliance
• FTA origin criteria

Improvised hybrid models often collapse under scrutiny.

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Strategic Takeaway for Investors

If your goal is zero-tariff export from Thailand:

• Pure trading structures are rarely sufficient
• Service companies alone cannot create origin
• Manufacturing substance is usually required
• Origin planning must precede corporate registration

The question is not whether trading is allowed —
it is whether trading supports a defensible origin strategy.

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How BRW Helps Structure It Correctly

At BRW, we help foreign investors:

• Assess whether trading, manufacturing, or hybrid structures are appropriate
• Evaluate whether planned activities meet FTA origin thresholds
• Align FBL, BOI, tax, and customs considerations
• Design defensible export models that withstand audits
• Avoid “legal but non-qualifying” setups

Zero-tariff exports are achieved through structural design, not creative paperwork.

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At BRW – Boonrawee Co., Ltd., we offer comprehensive legal, business, and property consulting services to support foreign investors and business owners looking to establish and grow in Thailand.

Our services include:

• Helping you understand and comply with Thai property and land ownership laws.
• Company registration and structuring for business and property purposes.
• Applying for BOI or IEAT promotions if land ownership or special privileges are needed.
• Drafting and reviewing land lease agreements to ensure legal protection.
• Finding suitable land or property locations that match your business needs (factory, office, or commercial spaces).
• Advising on site selection for business operations, including industrial estates, office buildings, and commercial zones.
• Providing architectural design and construction services for buildings, offices, and factories, including customized designs to meet specific business requirements.
• Coordinating with professional architects, engineers, and contractors to ensure your building project complies with Thai laws and standards.

📞 Contact BRW today for expert advice and a one-stop solution to establish your business and property in Thailand!