To carry out specific non-revenue-generating activities, a foreign organization may open a Representative Office in Thailand. Foreigner can carry out only the following activities:
- looking for regional suppliers of goods or services for its headquarters.
- monitoring and regulating the quality and quantity of the products its head office purchases.
- advising local distributors or customers on a variety of topics regarding products that its head office sells.
- providing information on the newest goods and services offered by its headquarters.
- providing updates on local business activities and developments to its head office
Let’s quickly review the requirements to open a representative office in Thailand before we talk about the government fees.
Alien Business Permit
In accordance with Annex C, Chapter 3(1) of NEC Announcement No. 281 (the Foreign Business Law), a representative office must obtain an Alien Business Permit before beginning its operations. The authorization or license required to open a representative office is this five-year permit. Applications for work permits and visas, and requests for permission to open a representative office, must be with the Commercial Registration Department of the Ministry of Commerce.
Documentation
The foreign company must file copies of its certificate of incorporation, memorandum and articles of association (or other similar documents), and a power of attorney in favor of the branch manager with the Ministry of Commerce. The Ministry of Commerce believes that the power of attorney needs to be sufficiently broad to grant the manager the necessary power to oversee the rep office. The Ministry may need some other or additional.
All copies of documents must have a notary public’s or other official’s certification that they are authentic copies. A notary public should certify the authenticity of the signatures on original documents like Powers of Attorney as well as the legitimacy of the signer. Then, a Thai Embassy or Consulate must certify all such notarized or otherwise certified documents.
Work Permits to Open Representative Office
A Work Permit may be granted to a maximum of two foreign nationals who advise their home offices about the products of their company, disseminate information about those products, or provide reports about the Thai market. However, unless the representative office of worth of at least 100 million Baht worth of goods and services from Thailand in the previous year, only five foreigners may be eligible for a work permit who procure goods and services in Thailand for the foreign company or who are in charge of quality control for such goods and services.
Taxation Liability of Representative Office in Thailand
Due to the fact that they don’t produce any income, representative offices are typically exempt from income tax. However, they must register for tax because they must, for instance, withhold income tax from employee wages.
Capital Requirements to Open Representative Office in Thailand
A representative office must send Baht 3 million into Thailand over the course of five years. This amount is for operating expenses, of which Baht 2 million for the first year. If the Thai office closes, these funds may then be transferred to the head office. The capital may be useful for standard working capital needs, such as to cover operating costs like salaries and rent.
Single Legal Entity
The foreign company and a Representative office in Thailand is legally one single legal entity in Thailand. Therefore, the foreign company must oblige to third-parties due to the actions taken by its Representative Office within the jurisdiction. Unless the company has ratified the act, the Representative office cannot bind the company under Thai law. It is applicable even if it acts without authorization or outside the bounds of its authority.
Government Fees to Open a Representative Office in Thailand
It costs 2,000 Baht up front. Following approval of the application, there are fees of 5 Baht for every 1,000 Baht capitalization of the Head Office. The minimum and maximum government fees are 20,000 and 250,000 Baht, respectively.
How Government Fees is calculated?
Fees for a Foreign Business License in Thailand depends on the type of business and the foreigner’s method of operation. The government fee depends on the amount of capital the business available. Additionally, it depends on whether the foreigner will be managing a List Two or List Three business. Ministerial regulation and definition of “capitalization” of a foreign business in the Foreign Business Act is not clear. Therefore, there is some ambiguity regarding the precise amount of government fees for a foreigner to pay.
The fee that applies to a legal entity is always based on its “registered capital”. There is no proper definition of “registered capital” for foreign businesses in the Foreign Business Act, though. Since foreign companies can refer to either foreign legal entities registered outside of Thailand or legal entities registered in Thailand. The problem is that those are primarily owned by foreigners. Additionally, the Foreign Business Act describes “minimum capital”. It is the money that a foreigner brings into Thailand in the form of foreign currency to start a business. Therefore, calculation of the government fee can be on the registered capital of the head office. Or, it may be on the amount of capital the head office transfers to Thailand.
The Bottomline
Thai corporate law is intricate. Therefore, before establishing a Representative Office, foreign investors should seek the advice of competent legal counsel.
Do you want to know why Konrad Legal is the best option? What can we do for you, are you considering? Registration for a representative office is a difficult process. Companies cannot complete it without an expert’s assistance because it is a challenging and complicated task. We have fifteen years of experience in this field and are ready to lend a hand. The entire team at our company is prepared and skilled to assist you. We want you to know that you can rely on us and that you can unwind and be stress-free. All you need to do is to email us your query in details to [email protected].
From this point forward, our representative will aid in your document preparation. These documents are for foreign businesses seeking to open a representative office in Thailand. The local Thai consulate must notarize and certify all of the paperwork. You’ll also get assistance from our representatives at this stage. Our team will prepare all necessary documents while you sit back and relax. Get connected with us!
