A Representative Office is the ideal business entity for a foreign company that’s exploring the market in Thailand. It can be 100 percent foreign-owned and is not taxable under the Foreign Business Act.
However, it is only allowed to perform non-revenue-generating activities and cannot accept purchase orders or offer sales, or negotiate for carrying out business with individuals or juristic persons in Thailand.
Getting a Foreign Business License
If you are a foreign company that intends to expand its presence in Thailand, it can be a good idea to establish a representative office. It is the simplest way for an overseas firm to establish its physical presence in the country, and is also the fastest option.
To get a representative office, you must submit a number of documents to the Department of Business Development. This includes a company affidavit, the office address in Thailand, a map of the office location and the lease agreement, the purpose for setting up the Representative Office, an estimate of expenses for the first three years, the size of the company, and machinery/ equipment that will be used.
A representative office cannot engage in trading activities or earn income in the country, but it can study business information in the local market and report back to the head office. It is also not subject to corporate income tax, except for interest on funds it receives from its head office.
Getting a Business License
A representative office (rep-office) is an ideal business entity for foreign companies exploring the Thai market. The rep-office can be 100 percent foreign-owned and can provide up to two work permits for foreign employees. However, the representative office cannot earn income in Thailand and must cover all expenses through remittances from the head office.
Obtaining a business license: Representative offices must submit an application with the Department of Business Development and provide detailed documents about their parent company, including an affidavit stating the amount of capital and the date it was established. The rep-office must also register its address, authorized personnel, and scope of activities.
Local staff recruitment and training: Representative offices must hire a minimum number of local employees who are required to comply with labor laws. Additionally, the rep-office must open a bank account to manage its expenses. Enhanced credibility: An established presence in Thailand will make it easier for the parent company to attract local partners and clients.
Getting a Work Permit
Representative offices are allowed to carry out certain non-revenue generating activities in Thailand for their head office or affiliated company. They cannot, however, accept purchase orders or make sales offers, nor can they negotiate business with any person or juristic entity established in Thailand. Also, they cannot be subject to corporate income tax unless they receive a subsidy from the head office.
Foreign companies can establish a representative office in Thailand by submitting the following documents to DBD:
The foreign parent company’s letter of appointment with the person who will manage the office. The appointment must be signed by the director of the parent company. A declaration that the directors, applicants, or appointed managers satisfy the requirements stipulated in Section 16 of the Foreign Business Act. Proof that the office has a minimum investment of 2 million baht. The company must also submit financial statements for the last three years. Previously, it took up to six months for a rep office to be approved by DBD. Now, it takes only five working days.
Getting a Tax Identification Number
A Representative Office is an entity that allows a foreign company to conduct marketing activities and other non-expenditure activities in Thailand. This type of business does not generate income and is therefore not subject to corporate tax in Thailand. However, the Representative Office must still register with the Department of Business Development and submit an audited financial statement each year.
Other responsibilities of the Representative Office include reporting information about new products and services that the head office may introduce to the Thai market. It also helps facilitate the import and export of goods by foreign companies in the country.
Setting up a Representative Office is usually a shorter process than establishing a branch or regional office in the country. However, the process is not without its challenges. It is important to hire a firm with experience in the area to assist you in navigating the complexities of the Thai legal system and registration process.