For market expansion and growth, multinational corporations seek to establish a presence in several economic jurisdictions. For Thai representative offices that demand a foreign business license, specific requirements apply. These businesses may decide to open a branch, regional, or official representative to increase their presence in Thailand if they want to enter the Thai market. Since it helps to expedite the import and export of commodities by foreign enterprises, the docket is a significant type of business organization in Thailand. The qualities of a representative office are as follows:
- It doesn’t make any money by offering services.
- It is unable to process sales or engage in business negotiations with other parties.
- All of its costs are covered by the corporate station.
- Except for interest on any residual funds it receives, it’s not liable to corporate income tax.
In addition, according to government laws, a Representative Office is an office that a foreign corporation establishes in Thailand to do “international trading operations”.
Representative office restrictions
The following commercial pursuits are not within the purview of a Representative Office:
- Making any payments, purchases, or other connected business transactions on corporate headquarters’ behalf or affiliated businesses.
- Exporting any goods that have been ordered by the headquarters or connected businesses.
- Carrying out the quantity and quality control for businesses that are not connected.
- Providing post-purchase services like installation or maintenance.
- Giving recommendations for goods made by unrelated companies.
- Taking receipt of purchase orders on the corporate station’s behalf or related businesses.
- Coordinating product sales on the corporate station’s behalf or connected businesses.
- Promoting items or services that are currently offered in Thailand.
- Serving as a middleman or distributor between the corporate headquarters and connected.
- Assisting the main station or related enterprises with any planning or coordination with external parties.
- Acting in any negotiations or business dealings on behalf of the headquarters or related firms.
- Submitting business reports to unrelated businesses.
In the piece that follows, we’ll examine how government employees weigh the requirements for establishing liaison stations and their potential tax ramifications.
Registering process
The rules for registering a liaison office are as follows:
Submitting supporting evidence
The Department of Business Development (DBD) of the Ministry of Commerce must receive the following papers from the foreign juristic person to form a Representative Office in compliance with the revised procedure:
The representative’s signature on the application to open a representative office
A copy of the corporate affidavit indicating the company’s name, capital, goals, location, directors, and head office representatives
Authority document from the Thai representative office
a copy of the representative’s passport and the entry visa or non-immigrant visa stamp.
The Thai embassy or consulate in your area should have notarized and validated all of the aforementioned documents, and they shouldn’t be more than half a year during the registration period.
A certificate or registration number is issued
Following receipt of the full set of required papers, the Department of Business Development (DBD) typically issues a certificate or registration number that enables the liaison office to begin operations in about 2 to 4 weeks.
Capitalization
In general, the liaison office needs to have at least 3,000,000 baht/business activity in capitalization, or 25% of its anticipated expenses for the first three years, whichever is higher. According to a predetermined schedule, this capitalization is to be brought into Thailand or transferred there. The first quarter of the required registered capital is to be paid up within the first three months of operation, and the second quarter is to be paid within the first year of operation. The remaining 75% is due within the third year of operation, with the remaining 25% due within the second year of operation.
Duration of the application
An application’s approval by the officer may take up to two weeks or one month after it has been submitted. The approval will depend on the minister’s judgment. If the applicant satisfies the standard requirements for a representative office, the application will be carefully examined by an officer.
