How to Set Up a Representative Office in Thailand

A Representative Office is a service business that is owned by a foreign head office or an affiliated company. It is only permitted to conduct non-revenue-generating activities and must report back to its foreign head office.

Representative offices are not subject to corporate income tax, but they must register for other taxes such as work permit fees and withholding income tax. Tila Legal can assist with all of the required documentation.

Minimum Investment Requirements

The minimum capital requirement for a Representative Office in Thailand is 2 million baht, of which 50 percent should be invested within the first year after the Foreign Business License is obtained and 25 percent should be paid each year until it has been fully paid. This capital must be transferred from the head office.

Representative offices are not permitted to generate income and, therefore, they are exempt from corporate income tax in Thailand. However, they are required to report their activities to the government.

It is important for companies considering setting up a Representative Office in Thailand to consult with a legal professional or specialized agency to ensure compliance with all applicable laws and regulations. This includes registering employees, adhering to minimum wage requirements and filing reports with the appropriate agencies.

Requirements for a Manager

A representative office is the ideal entity for foreign companies that want to explore the Thai market but are not ready to invest in a full-fledged business. This is because this type of entity doesn’t require a FBL, which is regulated under the Foreign Business Act and restricts what activities a company can engage in.

Its activities are limited to non-revenue generating operations such as research and market exploration. It is also prohibited from accepting purchase orders or making offers for sale and it can’t negotiate business with any person or juristic person in Thailand. Its expenditures are borne by its head office.

The manager must provide a certified photocopy of their passport (or personal ID and household registration) as well as a power of attorney granting them the authority to register the representative office with Thai authorities.

Requirements for a Letter of Appointment

Representative offices are a great option for foreign investors looking to explore the Thai market. They can be 100 percent foreign-owned and do not require a Foreign Business License.

However, they are only allowed to perform non-revenue generating activities. They cannot accept purchasing orders and are not subject to corporate income tax.

The company must submit a letter of appointment signed by the Director of the parent company appointing the local manager to manage the office. The letter must also include certified copies of the passport and household registration of the manager (if he or she is a foreign national). It can take up to one week to set up a representative office. Plizz can handle the entire process on your behalf. We will provide you with a detailed checklist and prepare all of the necessary paperwork.

Requirements for a Foreign Business License

The Department of Business Development usually issues a certificate within 2 to 4 weeks following submission of the complete set of documents, which permits the representative office to start operations. A representative office can conduct a range of activities, including market research, finding new partners, and providing information about the company’s products or services to customers.

A representative office cannot earn income as a business enterprise in Thailand, accept purchasing orders from companies outside of its head office or affiliated company, carry out manufacturing and construction, or engage in any other activities not specified in the letter of appointment. The foreign head office must also send a stipulated amount of money to Thailand to fund the representative office, with 25% being transferred in the first three months of operation, and the rest over the course of the next two years.

Requirements for a Work Permit

Representative offices operate service businesses on behalf of a foreign company’s head office, group companies, or affiliates in other countries. They are permitted to perform only non-revenue generating activities. They cannot accept purchasing orders or make offers for selling, nor negotiate business with a person or juristic person established in Thailand.

The manager of a Representative Office must be appointed by the Director of the parent company through a Letter of Appointment. The Representative Office must also file an annual report with the government.

Rep Offices do not need to adhere to the normal quota of four Thai employees per foreign employee, which makes it an attractive option for a foreign corporation to explore the local market. However, the Representative Office must inject at least 2 million baht into its capital within the first three years of operation.

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