Setting up a Representative Office in Thailand is an ideal way for foreign companies to explore business opportunities and to get to know the Thai market. However, the set up of a representative office in Thailand can be a complicated and time-consuming process, especially for companies with limited knowledge of Thai law.
There are several requirements that must be met to establish a representative office in Thailand. A complete set of documents must be submitted to the Department of Business Development at the Ministry of Commerce and a certificate/registration number is usually issued approximately 2 to 4 weeks following submission, allowing the representative office to begin operations.
The Representative Office must have at least one authorize person who is responsible for all activities of the business. The authorized person must submit a report on the business to a government agency and tax bureau each year, as well as an audit report.
The representative office of a foreign company is required to have a minimum registered capital of 3 million baht or 25% of the estimated expenses for the first three years, whichever is higher. This capital must be remitted from the company's head office into Thailand.
Moreover, the head office must ensure that its employees in Thailand are not subject to any form of discrimination and that they receive all the necessary employment benefits. If the head office is unable to meet its obligations, it must seek legal action from the Ministry of Labour and Social Welfare.
In order to obtain approval for a representative office, the foreign company must submit the following documents:
A notarized power of attorney for the principal manager or agent who will handle day-to-day operations and oversee the representatives. This person can either be a foreigner or a Thai national, depending on the requirements of the representative office.
If the agent is a foreigner, they must have a valid visa and must be in good health before they can start working for the representative office. They must also have a copy of their passport and be able to provide evidence that they have permission to work in Thailand.
The agent must also be a licensed lawyer in Thailand and have a valid license from the Thai Attorney General. This is because of the representative office's reliance on the legal expertise of the head office to carry out its duties and activities in Thailand.
Normally, the head office pays the representative office's remuneration for the services it provides to the company's head office, and the representative office is not subjected to corporate income tax in Thailand for these services.
However, if the representative office provides services to another company that does not pay remuneration for those services, then the representative office will be subjected to corporate income tax in Thailand.
This is a very sensitive issue, which requires special expertise to handle on a case-by-case basis. As a result, the applicant should consult with a professional business law firm that has experience in assisting with the establishment of a representative office in Thailand.