A Representative Office in Thailand is the easiest way for a foreign company to establish a business presence in the country. However, it must adhere to the rules and regulations set by the Department of Business Development for company registration and reporting.
It may conduct non-revenue-generating activities but is not allowed to accept purchasing orders or negotiate for carrying out business with juristic persons in the country.
Obtain a Foreign Business License
To establish a Representative Office in Thailand, the foreign company must first obtain a business license from the Department of Business Development. This process is usually completed within four to six weeks after submitting the required documents. The representative office must also transfer a minimum working capital of 3 million baht to be allowed to operate in the country. 25 percent of this amount must be paid in the first year of operations and the remaining 75 percent should be paid annually.
The representative office must also comply with all government regulations regarding company registration, reporting, and corporate compliance issues. Additionally, it must adhere to labor laws by ensuring that all employees are employed under appropriate work permits and visas. Furthermore, the Representative Office cannot develop trading activities or earn income in the country and is restricted to conducting non-income-generating activities. The office may, however, record details of market trends and economic movement in the country on behalf of its parent company.
Conduct a Feasibility Study
A feasibility study is the most important step when opening a representative office in Thailand. It is required to meet legal requirements and ensure that the company can abide by Thai labor laws. It will also allow the company to identify and secure office infrastructure, as well as hire staff. In addition, it will help the company determine whether the office can comply with reporting and compliance obligations in Thailand.
A representative office in Thailand is a non-trading entity that can carry out business research and other non-income-generating activities. It can liaise with clients and vendors, source products, inspect and control product quality, and offer advice to customers and distributors.
The representative office must report its information to its head office. This will enable the head office to decide on business decisions that are economically beneficial to Thailand. It will also help the head office to establish a branch or a subsidiary. It will also be able to reduce the number of foreign employees required to support operations.
Obtain a Letter of Appointment
A representative office is a foreign business entity that conducts service businesses on behalf of its head or affiliated company in other countries. It is limited to non-revenue-generating activities and cannot accept purchase orders; offer sales or negotiate on business deals with any persons or juristic entities in Thailand; or generate income on its own. It must report back information to its head office or affiliate and is not subject to corporate income tax.
A letter of appointment is required for the manager of a Representative Office, along with a passport and proof of residence in Thailand. The Representative Office must also register its equipment in the Thai Commercial Registry and have a registered address, which can either be an apartment, house or shop.
Another important requirement is that the Representative Office must have a minimum capitalization of 3 million baht, or 25% of its estimated expenses for the first three years of operation, whichever is greater. This capital must be brought into Thailand within a prescribed schedule.
Apply for a Representative Office License
Typically, the Department of Business Development will issue a certificate within 2 to 4 weeks following the submission of all required documentation and permit the Representative Office to start operations. However, this process can take longer if the officer in charge has any questions or requests additional documentation.
Representative offices manage service businesses on behalf of their head office, group company, or affiliated companies in other countries. They provide services to their parent companies without receiving income in Thailand and are not allowed to engage in sales or negotiate with natural or legal persons. The minimum capital requirement is Baht 3 million. Moreover, the foreign investor must inject a majority of this capital within six months of obtaining the RO registration number and the rest by the end of the third year. The representative office must also employ a minimum of one manager who has power of attorney to manage the office. The manager should be a Thai national.