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A Representative Office allows a foreign company to carry out limited, non-revenue-generating activities in Thailand, primarily to support the parent company’s business interests abroad. It serves as a legal entity under Thai law, providing a platform to research the local market, coordinate business activities, and liaise with local clients or partners—without engaging in direct trade or profit-making.
This article explores the purpose, legal framework, registration procedures, requirements, and advantages of setting up a Representative Office in Thailand.
A Representative Office in Thailand is a form of legal presence established by a foreign parent company to engage in non-trading activities. It is not allowed to earn income, sign contracts on behalf of the parent company, or engage in commercial transactions within Thailand. Instead, it acts as a liaison between the head office abroad and local businesses, providing services that facilitate communication, research, and quality control.
The operations of a Representative Office are regulated under the Foreign Business Act B.E. 2542 (1999), which classifies foreign entities operating in Thailand into three categories:
Foreign companies conducting business in Thailand.
Branch offices of foreign companies.
Representative offices of foreign companies.
Unlike a branch office, a Representative Office is restricted from generating revenue and must receive funding exclusively from its parent company abroad.
The Thai government allows Representative Offices to engage in a limited range of activities, specifically designed to support their parent company’s operations without competing with local businesses. The five permitted activities are:
Sourcing of Goods and Services
Conducting research and identifying potential suppliers or service providers in Thailand for the parent company.
Quality Control and Inspection
Ensuring that goods purchased or manufactured in Thailand meet the parent company’s quality standards before export.
Market Research and Business Information
Gathering information on the Thai market and reporting findings to the parent company to support business planning.
Promoting the Parent Company’s Products
Promoting and disseminating information about the parent company’s goods or services to potential Thai customers or distributors (without direct sales).
Acting as a Communication Center
Facilitating communication and coordination between the parent company and its business partners or affiliates in Thailand.
Any activity beyond these five categories would require a different type of business entity, such as a branch office or Thai limited company, which allows commercial operations and revenue generation.
Setting up a Representative Office in Thailand offers several advantages for foreign businesses, including:
No Corporate Income Tax: Since the office does not generate income in Thailand, it is exempt from corporate income tax, except for interest earned on bank deposits.
Simple Operations: The structure is relatively simple compared to a branch or subsidiary, as it focuses only on research, communication, and support functions.
Brand Presence: Establishes a visible presence for the foreign company, enhancing its credibility and relationships with Thai partners.
Market Familiarization: Enables companies to study the Thai market, consumer behavior, and industry trends before committing to full-scale investment.
Ease of Transition: The Representative Office can later be upgraded to a branch or limited company if the parent company decides to begin commercial operations.
The Department of Business Development (DBD) under the Ministry of Commerce oversees the registration and supervision of Representative Offices in Thailand.
Previously, a Foreign Business License (FBL) was required for all Representative Offices, but in recent years, the process has been simplified. If a Representative Office engages only in the permitted non-trading activities, it can operate under a notification system with the DBD, provided it complies with the Foreign Business Act.
To establish a Representative Office in Thailand, the following key conditions must be met:
Parent Company Qualification:
The parent company must be a legally registered foreign entity that has been in operation for at least one year prior to the application.
Capital Requirement:
A minimum capital of THB 3 million (approximately USD 85,000) must be injected into Thailand. The capital can be remitted in phases:
25% within the first three months after approval.
25% within the first year.
25% within the second year.
25% within the third year.
Business Scope:
Activities must fall within the five permitted categories. Any revenue-generating or trading activities are strictly prohibited.
Local Office Address:
A physical office location in Thailand is required for registration and correspondence.
Personnel:
At least one Thai resident must be appointed as a manager or staff member. Foreign employees must obtain work permits and comply with immigration requirements.
The following documents are required for registration:
Application form for establishment.
Certificate of incorporation and company affidavit of the parent company.
Parent company’s financial statements from the last three years.
Power of Attorney appointing a local representative or manager.
Details of office location in Thailand.
Passport or ID of the local manager.
All foreign-language documents must be translated into Thai and certified by a Thai embassy or consulate.
The application is submitted to the Department of Business Development (DBD), Ministry of Commerce. The DBD reviews the documents to ensure compliance with the Foreign Business Act.
Upon approval, the DBD issues a Certificate of Registration for the Representative Office, allowing it to commence operations.
After registration, the Representative Office must:
Register for tax identification with the Revenue Department (for withholding tax and employer obligations).
Register employees with the Social Security Office.
Open a corporate bank account in Thailand.
The Representative Office must maintain annual compliance by:
Submitting annual reports to the DBD.
Maintaining accounting records (even though it does not earn income).
Filing withholding tax and social security contributions for employees.
Foreign employees working in a Representative Office must obtain valid Non-Immigrant “B” visas and work permits under Thai labor regulations. The ratio of local to foreign employees is generally one Thai employee for every foreign employee, although exemptions may apply.
The head of the Representative Office is typically authorized to sign documents, manage day-to-day operations, and liaise with government authorities.
Although Representative Offices do not generate revenue, they must still comply with basic tax obligations, such as:
Withholding Tax: Deducted from employee salaries and payments to Thai service providers.
Value-Added Tax (VAT): If the office imports goods or provides services subject to VAT.
Corporate Income Tax: Not applicable, except for interest on deposits or unapproved income-generating activities.
While Representative Offices are advantageous for research and coordination, they come with certain limitations:
Cannot engage in profit-making or trading activities.
Cannot issue invoices, receive payments, or sign sales contracts.
Must rely entirely on funding from the parent company.
Subject to close monitoring to ensure compliance with permitted activities.
If a foreign company plans to sell products or services in Thailand, it should consider establishing a branch office or a Thai limited company instead.
Setting up a Representative Office in Thailand is an excellent strategy for foreign companies seeking to explore the Thai market, build relationships, and gather valuable business intelligence—without the commitment and complexity of a full trading entity. It provides a cost-effective, legally recognized platform for conducting non-commercial operations such as research, promotion, and liaison activities.
Although the process involves specific documentation and compliance requirements, the overall setup is straightforward when guided by experienced legal and business professionals. Proper registration ensures that the office operates within the scope of the Foreign Business Act, maintains transparency, and avoids potential legal pitfalls.
