Representative & Branch Office

A foreign entity may establish a representative office and branch office in Thailand to engage in limited non-revenue-earning activities.

Let Nothing Stand In the Way of You and Your Business

The unit’s advisory Want to expand your business beyond national boundaries? Let us take the leeway. Our team of professionals has years of experience setting up Foreign Representative Offices and Branch Offices in Thailand. We know about eligibility, protocols to follow, and documents to submit regarding setting up a Representative Office or a Branch Office.

Establish a Representative Office

The unit’s advisory role is limited to offering advice regarding the products sold to customers or distributors. Other responsibilities include controlling & inspecting the quantity & type of items ordered or purchased to be manufactured in Thailand and sourcing products and services in Thailand.

The Office also gives information and reports regarding any new products or services. The Representative Office promotes only the activities mentioned above & can engage in any or all of these. It helps facilitate the import and export of goods by foreign companies.

Its primary role is to report on the business movement in Thailand and carry out orders by the Head Office to optimize the business flow figures. Note that the entity performs all activities on behalf of the Head Office or affiliated companies. It keeps track of and facilitates the imports and exports by foreign companies.

Other Features:

It is not authorized to make sales, receive purchase orders, or negotiate business with third parties.
A Representative Office cannot receive revenue by providing services.
The unit is not subject to Corporate Income Tax besides any interest on the remaining funds sent by the Head Office deposited in its bank account.
It follows all the government regulations concerning a foreign company setting up a unit in Thailand for engaging in the international trading business.
To advise on the goods distributed by the affiliated company or Head Office or the group company to the users or distributors.
To identify the supply source of goods or services in Thailand for the Head Office.

What is a Branch Office?

It is set up in a foreign country & an extension of its foreign Head Office. It does not have different shareholders or bylaws from the Head Office. Its activities may differ from those of the foreign Head Office. Branch offices are generally located in remote geographical locations and connected to the Head Office by Wide Area Network. These entities must comply with the following conditions:

What is the Protocol?

A company that wants to set up a Representative Office in Thailand needs to notify the Department of Business Development of this intention. After approval, the DBD issues a document for it–Certificate of the Identification Number of the Juristic Person established under foreign laws which operates in Thailand.

Branch Office

A Branch Office that is permitted to operate the business must comply with the following conditions:

Account and financial statements

Submit these to the Department of Business Development. So prepare them in advance. These need to be mandatorily submitted. Start the process as soon as you can.

loans utilized

The inward remitted funds for the particular business operation must be at the most, seven times less than the total amount of loans utilized. These loans exclude trade liabilities from general business operations–trade creditors, accrued expenses, etc.

Document

Once the official concerned sends the inquiry or summons, the document (evidence) revealing the carrying out of the permitted business operation needs to be submitted.

MINIMUM CAPITAL

It is remitted to Thailand for commencing business operations as per the law. The details are as follows: first one-fourth of the minimum investment within the first three months, the next one-fourth of the minimum investment within the first 12 months, another one-fourth of the minimum investment within 24 months, and the remaining share of the minimum investment within 36 months..

RESPONSIBLE PERSONS

It is the place of business in Thailand that excludes temporary residences like hotels. Of all the people responsible for business operations in this place, at least one should have a domicile in Thailand..

Branch Office

A Branch Office that is permitted to operate the business must comply with the following conditions:

1. minimum capital

There must be the minimum capital to be remitted to Thailand for the commencement of business operation as stipulated by law

2. loans utilized

The total of loans utilized in the permitted business operation must not exceed seven times the inward remitted funds for the permitted business operation

3. Responsible persons

At least one person of the responsible persons for operating the business in Thailand must have a domicile in Thailand

4. Document

The document or evidence relating to the permitted business operation must be submitted when the official sent the summons or inquiry

5. account and financial statements

There must be the preparation of account and financial statements to be submitted to the Department of Business Development

Representative Office

A Representative Office is permitted for only 5 business activities as follows:

Providing information concerning new goods or services of the head office

Checking and controlling the quality and quantity of goods purchased

Giving advice concerning goods of the head office sold to agents or consumers

Sourcing of goods or services in Thailand for the head office

Reporting on business trends in Thailand to the head office.

Providing information concerning new goods or services of the head office

Checking and controlling the quality and quantity of goods purchased

Giving advice concerning goods of the head office sold to agents or consumers

Sourcing of goods or services in Thailand for the head office

Reporting on business trends in Thailand to the head office.

Types of Foreign Business Which May Require a Foreign Business License in Thailand

Representative Office

Branch Office

Newly Incorporated Company With Majority or Complete Foreign Ownership

BOI-Promoted Company

Limited Liability Company

1. Representative Office

2. Branch Office

3. Newly Incorporated Company With Majority or Complete Foreign Ownership

4. BOI-Promoted Company

5. Limited Liability Company

How to Apply for a Foreign Business License in Thailand?

Foreigners wanting to engage in businesses mentioned in List 2 or List 3 of the Foreign Business Act in Thailand must obtain this license from the relevant authorities before commencing business operations. Apply with the Business Department, following which the Foreign Business Committee or the Cabinet will review it.

Things to Note:

1. At times, the application process can be highly time-consuming. Nevertheless, we highly suggest that you submit the BOI application.
2. Your business license application is more likely to get approved if the authorities identify that the business provides significantly more benefits while protecting and promoting Thai interests.
3. Various criteria are considered to assess the impact of the business operation in question–the advantages and disadvantages to the country's security and safety, size of the firm, social and economic development, local employment, etc.

In any case–whether your application is approved or not–you will be given a reason for rejection within two months. Usually, the Foreign Business License is issued within two weeks.

What are the prohibited activities for getting a Foreign Business License?

The banned activities include radio broadcasting, newspapers, or television station, farming, rice farming, gardening, fabricating wood from natural forests and Forestry, animal farming, fisheries for marine life in Thai waters, and within Thailand’s Specific Economic Zones. Other such activities are auctioning and trading Thai antiques or national historical objects, extracting Thai herbs, land trading, or sculpting images of Buddha and alms bowls of monks.

List One:

The banned activities include radio broadcasting, newspapers, or television station, farming, rice farming, gardening, fabricating wood from natural forests and Forestry, animal farming, fisheries for marine life in Thai waters, and within Thailand’s Specific Economic Zones. Other such activities are auctioning and trading Thai antiques or national historical objects, extracting Thai herbs, land trading, or sculpting images of Buddha and alms bowls of monks.

List Two:

These include businesses related to national security; sale and maintenance of ammunition, firearms, explosives, or gunpowder; armaments, air-crafts, ships, or military vehicles; components or equipment, all types of war material; ammunition, accessories of firearms, & explosives. Even the firms affecting arts and culture, trading Thai antiques or handicrafts, producing carved wood, Thai silk yarn, Thai silk printing, or weaving of Thai silk are prohibited. Further, making Thai musical instruments, goldware, nielloware, silverware, bronzeware, lacquerware, or Thai crockery is forbidden. Further, making Thai musical instruments, goldware, nielloware, silverware, bronzeware, lacquerware, or Thai crockery is prohibited. Moreover, business activities adversely impacting the environment are also banned.

List Three:

List 3 includes all businesses wherein Thai nationals do not yet have the capacity or potential to compete. The industries include flour production from rice and rice milling, fisheries, farm produce, production of lime, veneer board, hardboard, chipboard, or plywood. Then, there is the marine animal culture, service or accounting business, forestry, architecture, engineering, legal service business, and construction. Auction and broker or agent business are the other prohibited fields, but there are certain exceptions within each of these three. Reach out to us, and we will let you know.

Are you thinking of establishing a Representative Office or Branch Office in Thailand? Talk to us.