A Representative Office allows the foreign investor who may be considering entering the Thai market to evaluate potential market opportunities without the need to establish a subsidiary in Thailand. The purpose is to provide services to its foreign head office or related businesses. The services it can provide are limited, it is not allowed to accept purchase orders; offer sales; engage in business negotiations, or even generate any profit (not on its own account, nor on behalf of the parent company – it can only sign contracts that are essential for its own operations, such as, lease agreement). The operation of the Representative office must be completely financed by the foreign head office.
- Foreign Ownership – Up to 100%
- Capital Requirements – Minimum 2 million THB paid-up capital
- Tax Rate – No tax obligations because no income is permitted in Thailand
- Foreign Business License – Will be issued upon approval of the registration
- Business Restrictions – Not allowed to earn income and restricted to the business for which the Representative Office is registered
- Registration Duration – 1 week
ACTIVITIES ALLOWED TO BE PERFORMED IN THAILAND
A Representative Office is strictly subject to 5 activities performed on behalf of their foreign head office(s) as follows:
- Sourcing of goods and services in Thailand for the head office
- Checking and controlling the quality and quantity of goods purchased or hired to manufacture in Thailand by the head office
- Giving advice concerning goods of the head office sold to agents or consumers
- Propagation of information concerning new goods or services of the head office
- Report on business trends in Thailand to the head office.
- No more Foreign Business License, since 2017
- Capital Requirements: minimum of THB 2,000,000 in capital or 25% of its estimated expenses for the first three years, whichever is greater.
- DBD Registration: To be registered at the Ministry of Commerce (Department of Business Development) and obtaining a 13-digit registration number
- Representative Officer: Fulfilling the requirements such as qualification, Thai residency, employment arrangements, and supporting documents
- Work Permit: from the usual Thai to foreign employee ratio of 4:1 quota to 1 per 1
- Tax Registration: despite not being subject to it, they still must register and submit returns to RD.
- Accounting- must be monthly and Audit has to be done yearly.
PROCESS OF APPLICATION
The following documents are necessary to process the application with the Department of Business Development:
- Foreign Head Office documents containing name, capital, place, directors, authorized signatories, financial statement of the past three years.
- Number of shareholders – stating nationalities and number of shares held.
- Office Address in Thailand, with map and ownership or possession of the office space (lease agreement)
- Employee details – number, name, salaries
- Reason for establishing a Representative Office in Thailand
- The following explanation needs to be clarified:
- Business forecast for the upcoming 3 years
- The Type, Size and Period intended to operate the Representation Office
- Stages of Operations and functionality
- Machinery / Equipment used
- Impact on Thai economy
- Estimated spending for 3 years forecast
- Plans for importing foreign technology (if any)