The allure of Phuket, with its stunning landscapes, vibrant tourism, and perceived opportunities for both a relaxed lifestyle and lucrative ventures, has historically attracted a substantial influx of foreign residents and investors. This foreign presence has profoundly shaped the island’s economic trajectory, particularly within its burgeoning real estate and tourism sectors.
However, the current landscape reveals a fundamental tension: Thailand’s desire for foreign capital and tourism often clashes with its long-standing protectionist laws. This inherent conflict has historically led to informal arrangements, which are now under intense scrutiny.
The current intensification of enforcement actions, while legally justified, creates a degree of uncertainty for foreign investors, marking a distinct shift from a period when anti-avoidance provisions were not subject to rigorous enforcement prior to 2015. This signals a deliberate policy pivot towards stricter adherence to the law, compelling those who previously operated under older assumptions to re-evaluate their positions.
The Legal Foundation: Safeguarding Thai Economic Sovereignty
Thailand’s legal framework governing foreign business participation is primarily rooted in the Foreign Business Act (FBA) of 1999, which replaced earlier regulations from 1972. The FBA categorises business activities into three distinct lists, each with varying levels of restriction for foreign engagement. List 1 encompasses sectors strictly prohibited for foreigners, such as media outlets and land trading. List 2 includes businesses affecting national security or culture, requiring ministerial and cabinet approval. List 3, a broad category titled "Businesses in respect of which Thai nationals are not ready to compete with foreigners," covers a wide range of service activities and generally requires a Foreign Business License (FBL) from the Department of Business Development (DBD).
A Thai-registered company is legally deemed “foreign” under the FBA if foreign nationals hold 50% or more of its shares. A critical aspect of the FBA is its explicit prohibition of “nominee” arrangements. These occur when a Thai national holds shares or acts as a legal front on behalf of a foreigner to enable the foreigner to operate a restricted business without proper authorisation. Section 36 of the FBA specifically targets these anti-avoidance provisions. Such practices are considered illegal as they undermine the FBA’s core purpose: to preserve national sovereignty, maintain economic stability, and ensure fair competition for Thai-owned businesses.
Focus on Tourism and Real Estate
Investigations into unlawful nominee shareholdings have seen a significant surge since 2015, with authorities indicating no immediate signs of abatement. A multi-agency task force, led by the Commerce Ministry, prosecuted 820 illegal nominee businesses between September 2024 and January 2025, with estimated damages totalling B12.5 billion. By May 2025, this figure had escalated to 857 entities, with reported damages reaching B15.288bn (approximately US$468 million).
Phuket, along with other southern tourism hotspots like Koh Samui, has been a primary focus of this intensified enforcement. Large-scale illicit foreign investment, particularly from Russian buyers in luxury properties, has been identified in these regions. The Department of Special Investigation (DSI) is collaborating with the DBD to investigate 59 suspected nominee companies in Phuket alone. Furthermore, the Provincial Police Region 8 has launched extensive operations across southern Thailand, targeting foreign nationals involved in illegal nominee businesses, with damages in Phuket alone believed to exceed B1bn.
The crackdown is comprehensive, extending beyond mere shareholding structures. Authorities are probing tens of thousands of companies, including those with foreign stakes as low as 0.01% up to 49.99%, to ascertain genuine Thai participation and investment.
New enforcement mechanisms are being deployed, such as a Memorandum of Understanding (MoU) between the Ministry of Commerce and the Ministry of Interior, designed to prevent foreigners from unlawfully securing land via proxies and to allow for real-time tracking of ownership changes.
The DBD also plans to inspect nearly 47,000 business entities, with a concentrated focus on tourism, real estate, e-commerce, and hospitality sectors. An “Intelligence Business Analytic System” is under development to enhance the detection of nominee risks.
This systemic and politically prioritised crackdown is evident in the involvement of multiple high-level agencies, including the Commerce Ministry, DSI, Land Department, Anti-Money Laundering Office (AMLO), Provincial Police Region 8, and the Ombudsman’s Office. The issue has been elevated to a “national agenda with top priority”, signalling a long-term commitment to eradicating nominee structures. This is not merely a series of sporadic raids but a coordinated, high-level government initiative aimed at a permanent shift in the regulatory environment.
The crackdown is also driven by concerns that foreigners are using nominees to “buy up entire housing projects and whole floors of condominiums”, sparking economic and national security fears. There are specific concerns about foreign-owned condos and villas being run as illegal daily rentals, which creates unfair competition for licensed hotels.
The government views these activities as causing “significant economic losses” and exploiting Thai resources with “minimal tax revenue”. This indicates that the enforcement targets specific economic harms and security risks associated with unregulated foreign operations, which often use nominee structures as a cover, rather than being solely a measure against foreign presence.
Severe Consequences of Non-Compliance
The penalties for breaching the FBA’s anti-avoidance provisions are severe, applying to both the Thai nominee and the foreign investor. These include up to three years’ imprisonment, fines of up to B1mn, and daily fines of up to B50,000 for continued violations. Businesses found in violation can also face forced dissolution.
A significant escalation in the government’s approach is the proposal to amend the Anti-Money Laundering Act, making FBA anti-avoidance provisions a predicate offence. This would allow authorities to seize assets of violating companies. This move signifies that the government views nominee activities as more than just regulatory breaches, framing them as serious financial crimes that undermine national security and economic stability. This greatly increases the stakes and risks for expats involved in such arrangements.
Furthermore, the Land Code imposes restrictions on foreign land ownership, and nominee arrangements used to circumvent these laws are under investigation. Foreigners found to own land unlawfully through nominee structures face the risk of forced sale of the land within 180 days to a year, potentially at below fair market value.
This article is the first in a series that is in whole titled ‘Thailand’s Shifting Sands: Navigating the Nominee Clampdown and Leasehold Uncertainty for Expats’.
Simon Causton is a long-time Phuket resident, founder of Citadel Phuket and author of ‘The Phuket Periodical’ newsletter. X (Twitter): @SimonCauston