Thailand, with its strategic location and robust economy, offers a conducive environment for global businesses looking to expand their reach in Southeast Asia. One viable way for foreign companies to establish their presence in Thailand is by setting up a Representative Office. This article provides an in-depth guide on the requirements, eligibility, and steps for setting up a Representative Office in Thailand.
A Representative Office in Thailand is a non-trading entity set up by foreign companies to engage in non-revenue-generating activities like sourcing of goods, inspecting and controlling products ordered from Thai suppliers, and providing advice related to products sold to customers and distributors. Essentially, it acts as a liaison office and is not permitted to conduct business or earn income in Thailand.
The Foreign Business Act in Thailand stipulates that the parent company must have been established for at least three years and have a minimum paid-up capital of THB 5 million, or its equivalent in foreign currency.
- Office Location: A physical location in Thailand is necessary to set up the Representative Office.
- Head of Office: The Representative Office must appoint a manager who resides in Thailand to be responsible for the office’s operations.
- Non-Income Generating Activities: The Representative Office must not engage in any revenue-generating activities or provide services to any third parties.
Steps to Set Up a Representative Office
- Application for Establishment: Submit an application to the Department of Business Development (DBD) under the Ministry of Commerce. The application must include detailed information on the parent company, the proposed Representative Office’s scope of business, the proposed head of office, and a power of attorney if applying through a representative.
- Documentation Submission: The application must be accompanied by several documents, including an affidavit and certificate of incorporation from the parent company, balance sheets for the past three years, a letter of intent to establish the office, and the proposed head of office’s passport and resume.
- Application Review: The DBD reviews the application, which can take up to 60 days. If the DBD approves the application, it issues a Certificate of Establishment of the Representative Office.
- Notification of Establishment: Once you receive the certificate, you must notify the DBD of your Representative Office’s establishment within 30 days.
- Tax Registration: Although the Representative Office cannot engage in revenue-generating activities, it still needs to obtain a tax ID card and VAT certificate from the Revenue Department within 60 days of establishment.
- Registration for Social Security: If you employ staff, you must register the Representative Office with the Social Security Office within 30 days of the first employee’s start date.
Establishing a Representative Office is an excellent way for foreign companies to conduct market research, liaise with customers, and maintain business relationships without setting up a fully incorporated company in Thailand. However, navigating the legal landscape and understanding the regulatory obligations can be challenging.
It’s highly recommended to engage with a local legal or business consulting firm to assist with the application process and ensure compliance with local laws. Remember, laws and regulations can change, so always stay updated and refer to the DBD and other relevant Thai government agencies for the most accurate information.
By following the guidelines above, your journey toward establishing a Representative Office in Thailand can be a seamless one. Best of luck in your business venture!