Representative office in Thailand.

This ultimate guide highlights key information you should know about a representative office in Thailand.

Foreign investors who want to explore the Thai market may consider establishing a representative office in Thailand.

Let’s learn more about representative offices.

What is a representative office in Thailand?

A representative office is a non-trading entity, meaning that it cannot generate any income. It is a type of non-profit organisation that is financially supported by the head office in another country.

It operates a service business in Thailand for its head office, an affiliated company or a group company in another country.

Characteristics of a representative office

Characteristics of a representative office in Thailand include:

• Does not receive any income from providing services
• Cannot receive purchase orders, negotiate business with third-parties or make sales
• Is not subject to pay corporate income tax, except for interest on any remaining funds that the head office has to pay
• All expenses are paid by the head office

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Scope of activities of a representative office

A representative office renders non-revenue-raising services to a foreign-domiciled head office through engaging in a limited range of activities, such as:

• Sourcing of local goods or services in Thailand
• Inspecting and controlling quality and volume of goods which the head office purchases in Thailand
• Disseminating information about new products and services of the head office
• Reporting to the head office on local business development and activities
• Providing advice in various fields relating to goods distributed by the head office to the distributors or consumers
• Can only sign contracts that are essential for its operations, eg lease of the premises
• Exporting products which are ordered by its head office or its affiliated companies

Benefits of a representative office in Thailand

One of the benefits of the representative office is that it is not subject to the work permit ratio of one foreign employee for every four Thai employees.

Depending on the nature and scale of activities being undertaken, representative offices may support from two to five work permits. A representative office that has sourced more than THB 100 million from Thailand during the preceding year may be eligible for even more work permits.

Representative office registration

The following documents should be submitted to the Department of Business Development (Bangkok) or the Provincial Office of Business Development (other provinces):

• Foreign head office: an official document showing the name, capital, objects, place of business, list of directors and authorised signatories, as well as the financial statements of the past three years
• The total amount of shareholders, as well as an overview of their nationalities and the number of shares that they hold
• Office address in Thailand and map, including proof of ownership or possession of the office space of the representative office (eg lease agreement)
• Number, names and salaries of the employees
• Reason why the representative office is necessary (eg to support well-known projects or clients in Thailand)
• Detailed explanation of the envisaged activities, including:
  • A business forecast for the following three years
  • The type, size and intended period of the business
  • The stages of operations
  • The used machinery and/or office equipment
  • The impact on the Thai economy
  • As estimation of the spending on fixed assets and operational expenses in Thailand for the first three years, as well as an estimation of the benefits of the Thai economy
  • A plan for the import and transfer of foreign technology, and for research and development (if any)
• Declaration that the applicant, directors, managers or appointed representative satisfy the qualifications and do not possess a prohibited characteristic under section 16 of the Foreign Business Act
• With regard to the representative that has to be appointed by the authorised signatory in charge of the business operations in Thailand: proof of his/her appointment, copy of the appointed representative’s passport and proof of his/her address in Thailand (or evidence of permission to enter Thailand)
• If applicable, a power of attorney to the person representing the applicant during the process (including a copy of his/her passport). If this power of attorney was signed outside of Thailand, it should be notarised or certified by the embassy.

The documents should be submitted in Thai and the correctness should be certified by the applicant (and translator).

Once the documents are submitted to the Department of Business Development, a certificate/registration number will be issued approximately 2 to 4 weeks following the submission, allowing the representative office to start its operations.

Conclusion

A representative office in Thailand provides various advantages including being 100% foreign-owned and not subject to corporate taxes. If you are interested in exploring the Thai market, setting up a representative office in Thailand is recommended.

Do not hesitate to contact Acclime, we specialise in registering businesses for foreign companies to establish a presence in Thailand.