Are you seeking to promote your business in Thailand? If you are having a corporate base in your native country, you can do so by setting up a representative office in Thailand. For your information, the function of a representative office is very similar to its name. It can only represent you and your business in Thailand, but cannot generate revenue for you.
Confused?
Let us take a closer look at the concept of a representative office in Thailand.
What is a Representative Office in Thailand?
A representative office is a non-trading entity, which means it does not earn revenue. It’s a non-profit organisation whose financial assistance comes from a headquarters in another country.
For its head office, an associate company, or a group corporation in another nation, it maintains a service business in Thailand.
A Representative Office in Thailand has the following characteristics:
- Cannot receive any compensation by offering services.
- Receiving purchase orders, negotiating business with outside parties, and making sales are restricted.
- Except for interest on any remaining cash that the head office must pay, is not subject to corporate income tax.
- The head office is responsible for all costs.
So, here the question arises as to what can you do with a representative office in Thailand? Therefore, below is the answer!
Scope of Activities of Representative Office
A representative office assists a foreign-domiciled head office with non-revenue-generating tasks such as-
- Sourcing local goods or services in Thailand.
- Inspecting and regulating the quality and quantity of items purchased by the head office in Thailand.
- Disseminating information regarding the head office’s new products and services.
- Local company development and activities are reported to the corporate office.
- Providing guidance to distributors and consumers on a variety of topics connected to items distributed by the head office.
- Can only sign contracts that are necessary for the company’s activities, such as a lease.
- Exporting products that are ordered by the company’s headquarters or connected companies.
Advantages of Representative Office
One of the advantages of the representative office is that it is not subject to the one foreign employee for every four Thai employees work permit ratio.
However, representative offices may support two to five work permits, depending on the nature and scope of the activity. Furthermore, if a representative office has sourced more than THB 100 million from Thailand in the previous year, it may be eligible for further work permits.
How to Register Representative Office?
Primarily, the Department of Business Development (DBD) in Bangkok, or the Provincial Office of Business Development in other provinces, should receive the following documents:
- An official document mentioning the company’s name, capital, objects, location of operation, list of directors and authorised signatories, and financial records for the previous three years.
- The total number of shareholders, their countries and the number of shares they own.
- Office location in Thailand, as well as confirmation of ownership or occupancy of the representative office’s office space.
- Employees’ number, names, and salaries
- Why is it vital to have a representative office?
- A detailed description of the necessary actions, including:
- The future projection for the next three years.
- The business’s type, size, and expected lifespan.
- Stages of business operation.
- Machinery and/or office equipment required.
- The economic effects on Thailand.
- Import and transfer of foreign technology, as well as research and development, are all part of the goal.
- A declaration that the applicant, directors, managers, or appointed representative meet the requirements and do not have a forbidden characteristic under section 16 of the Foreign Business Act.
- A representative can be the authorised signatory in charge of the business activities in Thailand. In that case, you must have a certificate of appointment, a copy of the chosen representative’s passport, and proof of his or her Thai residence (or evidence of permission to enter Thailand).
- A power of attorney to the person representing the applicant during the process (along with a copy of his or her passport, if appropriate). Moreover, if the power of attorney was signed outside of Thailand, the embassy should notarize or certify it.
A certificate/registration number is issued roughly 2 to 4 weeks after the documents are submitted to the Department of Business Development. Henceforth, this allows the representative office to begin operations.
Your Take!
A representative office in Thailand offers a number of business benefits. This includes 100% foreign-owned company and exemption from corporate taxes. We recommend you set up a representative office in Thailand to explore the Thai market for business opportunities.
Please do not hesitate to contact Konrad Legal. We specialise in business registration for foreign enterprises looking to establish a presence in Thailand. Simply mail us your query at [email protected].
