Establishing a Representative Office in Thailand: A Detailed Guide

Establishing a Representative Office in Thailand: A Detailed Guide

Setting up a Representative Office in Thailand can be an effective way for foreign companies to establish a presence in the country without engaging in direct commercial activities. This guide provides a comprehensive overview of the process, regulations, and considerations for establishing a Representative Office in Thailand, with a particular focus on the requirements outlined in Thai law.

What is a Representative Office?

A Representative Office in Thailand is a legal entity that serves as a liaison between the parent company abroad and its business partners in Thailand. It is not allowed to earn revenue, engage in trade, or sign contracts on behalf of the parent company. The primary role of a Representative Office is to carry out specific non-revenue generating activities that support the interests of the parent company.

Permitted Activities for a Representative Office

According to the guidelines provided by the Foreign Business Act B.E. 2542, a Representative Office in Thailand is allowed to engage in the following five types of activities:

1. Reporting Business Movements in Thailand:
   • The office can gather information about local markets, economic conditions, and business opportunities to report back to the parent company. This is particularly useful for companies considering future investments in Thailand.
2. Providing Advice on Products:
   • The Representative Office can offer advice on the goods or services distributed by the parent company. This includes providing information on product usage, technical specifications, and troubleshooting.
3. Sourcing Goods and Services:
   • It can search for local suppliers of goods or services required by the parent company, acting as an intermediary to facilitate procurement.
4. Inspecting and Controlling Product Quality:
   • The office can inspect and control the quality and quantity of goods purchased by the parent company from Thai suppliers. This ensures that products meet the required standards before being exported.
5. Disseminating Information About New Products:
   • The office can promote new products or services launched by the parent company to potential customers or partners in Thailand, without directly selling or distributing them.

Legal Requirements for Establishing a Representative Office

To establish a Representative Office in Thailand, the foreign company must adhere to the following legal requirements:

1. Capital Requirements:
   • The company must remit at least 3 million THB as the minimum capital required to start the business operations in Thailand. This capital must be transferred in stages: 25% within the first three months, 50% within the first year, and the full amount within three years.
2. No Revenue Generation:
   • The Representative Office must not engage in any profit-making activities. The only funds it may receive are those required to cover its operational costs, provided by the parent company.
3. Loan Restrictions:
   • The total loans used in the business operations must not exceed seven times the amount of capital remitted to Thailand.
4. Domicile Requirement:
   • At least one of the office’s responsible persons must have a domicile in Thailand. This can be either a permanent residence or a business address, but not a temporary one like a hotel.
5. Reporting and Compliance:
   • The Representative Office must maintain accurate records and submit annual financial statements to the Department of Business Development. Additionally, the office must be prepared to provide documents or evidence related to its operations when requested by Thai authorities.

Steps to Establish a Representative Office

1. Prepare and Submit the Application:
   • The application, along with necessary supporting documents (e.g., parent company’s registration certificate, financial statements, and a detailed plan of intended activities), must be submitted to the Department of Business Development.
2. Obtain Approval:
   • The Foreign Business Committee will review the application. If the office’s intended activities align with the permitted activities, and all legal requirements are met, approval will be granted.
3. Register with the Revenue Department:
   • Even though the Representative Office cannot generate revenue, it must still register with the Thai Revenue Department for tax identification purposes.
4. Set Up the Office:
   • After receiving approval, the office can be set up at the designated location. The office should be adequately staffed and equipped to carry out its permitted activities.

Siam Trade Development’s Expertise

At Siam Trade Development, we specialize in assisting foreign companies with the incorporation and establishment of Representative Offices in Thailand. With our extensive experience and deep understanding of Thai regulations, we offer end-to-end services, including application preparation, legal compliance, and ongoing support.

Pricing and Timelines:

• Our services are competitively priced, with transparent fees tailored to the scope of work required.
• The process typically takes 6 to 8 weeks from the submission of the application to receiving approval.

Conclusion

Setting up a Representative Office in Thailand is a strategic move for foreign companies looking to explore and monitor the Thai market without engaging in direct commercial activities. By following the legal guidelines and leveraging the expertise of firms like Siam Trade Development, companies can ensure a smooth and compliant establishment process.

For more information and to get started, contact Siam Trade Development today. Our team is ready to guide you through every step of the process, ensuring that your Representative Office is set up quickly and efficiently, allowing you to focus on your core business objectives.

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Note: A Representative Office in Thailand is restricted in its activities and cannot engage in profit-making activities, purchase orders, or negotiations. It is limited to supporting the parent company’s operations abroad through specific, non-commercial functions.