Expert guidance for expats willing to set up a representative office in Thailand

When your business is developing, you look out for an extension opportunity which is essential for the organization to decide the ideal business advancement structure. And what’s better than establishing an organization’s branch with relatively free leadership and transaction powers? Foreign investors and organizations who are keen on setting up a company (100% foreign owned) in Thailand may resort to establishing a Thai representative office with reference to its fundamental office somewhere else outside Thailand.

But what exactly is a Representative Office (RO)?

An office established by the parent company to conduct marketing and other non-transactional operations, generally in a foreign country where a branch office or subsidiary is not allowed.

Why set up a Representative Office?

It involves some distinct advantages like – it is easier to establish than a branch or subsidiary not used for actual “business” (e.g. sales), there is less incentive for them to be regulated, your RO is liable to pay only withholding tax, you can expand easily at a low cost, etc.

Procedure:

To set up a representative office in Thailand, the following steps are ought to be followed:

1. License: First and foremost, the applicant needs to reserve a trade name and apply for and obtain a foreign business license prior to setting up a Thai representative Office.
2. Gather all the required documents (not be more than six months old at the time of submission) for setting up a representative office in Thailand. Also, you need to get it certified by the local Thai consulate or embassy and finally submit it to the Ministry of Commerce.
3. Work permit is required to be obtained by the applicant. It is granted to up to five foreigners although it varies based on its characteristics and scope of your office’s operations in Thailand. Also remember, the manager of the representative office must be a Thai citizen.
4. Tax Registration: Although representative offices are not subject to corporate tax, obtaining a corporate tax identification number; submitting income tax returns and audited financial statements to the revenue department is a must.
5. Capital Requirements: The applicant should pay a total of 3 million Baht over a period of five years, with 2 million Baht being remitted within the first year. These funds may later be remitted out to the head office if the Thai representative office is closed.

Expats doing business in their home country but will to set up a representative office in Thailand should be prepared to face certain barriers such as dialect and bureaucratic practice. So, to fully understand the conditions which pertain to a Representative Office in Thailand, contact any Thai legal firm to provide you with guidance when considering opening a representative office in Thailand.