A Representative Office in Thailand is an extension of a foreign company. It cannot generate revenue or conduct sales activities but it can report to its head office on business movements in Thailand.
Setting up a Representative Office is much simpler than opening a company in Thailand, but it still requires a lot of paperwork.
Representative Office Business Activities
A Representative Office in Thailand is a type of business entity that allows foreign companies to establish their presence in the country without conducting sales activities. It is a good option for companies that are interested in doing market research, establishing partnerships, and gathering other kinds of information. It is also the simplest way for an offshore company to establish a presence in the country, according to our Thailand lawyers.
The Representative Office is allowed to perform non-revenue-generating activities, such as marketing and promoting products and services for its head office or affiliated companies. However, the office is not permitted to accept an order for selling or offer any other kind of service. As a result, the office is not subject to corporate income tax in Thailand, except for the deposit interest of remitted funds from its head office. In addition, the Representative Office must transfer its initial capital in accordance with a predetermined schedule.
Legal Requirements for Representative Office
Companies wishing to establish a presence in Thailand are required to submit an application to the Department of Business Development. The application must include a company affidavit that includes the company name, registration number, date of registration, address, and jurisdiction it is registered under. It also needs to list the machinery and equipment that will be used at the Office as well as provide a plan for the first three years of operations, expenditure estimate, and impact on the Thai economy.
In addition, the Representative Office must also report on trends in the Thai market to the head office. Additionally, a Representative Office will need to transfer a minimum amount of capital into the country according to a schedule set by the Department of Business Development. However, unlike a limited company, the Representative Office is not subject to corporate income tax. This makes the rep-office an appealing alternative to setting up a foreign business entity. Moreover, it is not subject to the quota of 4 Thai employees per 1 foreign employee that is imposed on a limited company.
License Requirements
The Representative Office acts as a liaison between the local market and the company’s headquarters. It can also perform market research and ensure quality control for products sourced in Thailand. However, it cannot earn revenue.
Foreign companies that have headquarters abroad can establish a Representative Office in Thailand. The process can take as little as a week. The Director of the head office must write a letter of appointment for a manager who will run the Representative Office in Thailand. The manager can be a Thai or foreign national.
The Department of Business Development (DBD) will review the documents and issue a certificate within two to four weeks. The certificate permits the Representative Office to start operations. The office must bring in a minimum capital of 3 million baht or 25% of its estimated expenses for the first three years of operation. Depending on the type of business, the Representative Office may have to file personal income tax for employees who work in the country.
Representative Office Taxes
Setting up a Representative Office in Thailand is one of the least expensive options for foreign companies looking to enter the Thai market. It can take as little as a week to get everything in order and start operating.
A Rep Office cannot generate income in Thailand and thus is not subject to corporate income tax. However, it must file its audited financial statements at the Department of Business Development and Revenue Department on an annual basis.
The company’s foreign head office must provide the following documentation to set up a Representative Office: company name, capital, place, directors, authorized signatories, and their nationalities, financial statement of the past three years, business forecast for the first three years, and details of machinery/ equipment that will be imported. Employees of the Rep Office will be subject to personal income tax. A Branch Office, on the other hand, must pay corporate income tax on any income it earns in Thailand.