Thailand is one of the fast developing countries in Asia today. Therefore, it is no wonder why foreign corporations come to do business in Thailand. A wealth of opportunities abound in the country in almost all aspects of trade.
Since the Thai government gives priority to its citizens, many restrictions are given to foreign investments. This is one of the reasons why only representative offices are commonly established.
A Thailand representative office is essentially a branch of a foreign corporation. It aims to expand the coverage of its business throughout the Kingdom.
The activities that a representative office in Thailand can engage in are limited. It cannot, as a general rule, engage in financial transactions, except for a few activities expressly allowed by law.
The following are the kinds of activities limited to a Thailand representative office:
- It can look for possible sources of products or services for its main office.
- It can inspect and control the quality and quantity of the products procured by its head office.
- It can advertise the new products and services of its main office.
- It can answer queries about the products sold by its head office to local distributors and customers.
- It can send reports to their main office about the development of their business in Thailand.
Capital Requirements
A 5 million Baht remittance to Thailand for its operating expenditure in a period of five (5) years, with an initial 2 million Baht remittance for the first year is required to establish a Thailand representative office.
Process
To establish a representative office in Thailand, the following documents must be submitted:
1. Sworn statement from the manager or corporate officer, consisting of the following:
a. Company’s name, registration number and date of registration
b. Office address
c. Jurisdiction where the office is registered
d. Name, address, citizenship and age of the members of the board of directors, along with the number of shares held and proofs of their power to run the company
e. Financial statements of the corporation
f. Number of shareholders, their nationalities and shares held
i. Note must be taken that these documents are required to be authenticated before submission to the Commercial Registrar. Also, none of these should be more than six (6) months old at the time it is submitted.
2. A special power of attorney authorizing the manager in Thailand to settle all legal requirements the company must comply with. Along with this, the passport of the manager if foreigner or a personal I.D. and household registration number, on the other hand, if a Thai citizen must be presented.
3. The following documents must also be provided:
a. Brochure of the business
b. Brief description of the nature of the business
c. Objectives of the business
d. Office address in Thailand accompanied by a map, together with a written consent of the land owner
e. Justifications why the representative office needs to be established
f. Possible positive and negative effects of the business to the Thai economy and society
g. Financial report of the head office for the last three (3) years in Thai language
h. Information on the transfer of technology to the Thai staff i. Directory of the staff, along with their respective salaries
j. List of projects, clients and products (this requirement depends on the kind of business to be established)
k. Business forecast and possible amount of expenses for three (3) succeeding years
l. Type, value and number of the machines and office equipment to be used in the office
i. Note must be taken that these documents are required to be authenticated before submission to the Commercial Registrar. Also, none of these should be more than six (6) months old at the time it is submitted.
4. Submit copies of the company’s certificate of incorporation, memorandum and articles of association to the Ministry of Commerce.
5. Prior to operation, an Alien Business Permit must be procured from the Commercial Registration Department of the Ministry of Commerce.
6. Make sure that all foreign employees in the Thailand representative office have their work permits, so as to avoid conflicts with the Thai government.
7. Upon the completion of the process, the manager of the representative office must submit an annual report of its activities to the Ministry of Commerce.
Taxes
Since a representative office in Thailand does not generate income, it is not subject to the payment of taxes. Nonetheless, it is still required to register because it serves as a withholding agent for its employee’s wages.
Siam Legal International, Interchange 21 Building, 23rd Floor, 399 Sukhumvit Road, North Klongtoey, Wattana, Bangkok 10110. Tel: 662 259-8100
Note: This article was published on behalf of Siam Legal International, the views and opinions expressed in this article are those of the authors and do not necessarily state or reflect the views of Thailand Business News
