As the second-largest economy in Southeast Asia, Thailand presents a wealth of opportunities for businesses worldwide. One way for foreign companies to explore these opportunities without investing in a fully-fledged business operation is by establishing a Representative Office. This article demystifies the process, eligibility criteria, and requirements for setting up a Representative Office in Thailand.
A Representative Office in Thailand acts as a non-trading entity that carries out non-income-generating activities on behalf of the parent company. It can conduct market research, source for goods, inspect and control products, and offer advice regarding products sold to customers and distributors.
Eligibility for Setting Up a Representative Office
The Thai Foreign Business Act outlines that a foreign company seeking to set up a Representative Office must have been established for a minimum of three years and must possess a minimum paid-up capital of THB 5 million or its foreign currency equivalent.
Key Requirements for a Representative Office
- Physical Office: The Representative Office must have a physical location in Thailand. This can be either rented or purchased.
- Head of Office: The Representative Office should appoint a manager who lives in Thailand to handle the office's operations.
- Non-Revenue Activities: The Representative Office should strictly engage in non-income generating activities and not provide services to third parties.
Steps to Establish a Representative Office
- Apply for Establishment: Submit an application to the Department of Business Development (DBD) under the Ministry of Commerce. The application should detail the parent company's information, the proposed office's business scope, the proposed head of office, and a power of attorney if applying through a representative.
- Submission of Documents: The application should be accompanied by the required documents, including an affidavit and certificate of incorporation from the parent company, balance sheets for the previous three years, a letter of intent to set up the office, and the proposed head of office's passport and resume.
- Application Review: The DBD reviews the application, which may take up to 60 days. If approved, the DBD issues a Certificate of Establishment of the Representative Office.
- Notification of Establishment: Once the certificate is received, you must inform the DBD about your Representative Office's establishment within 30 days.
- Tax Registration: Despite not being allowed to engage in revenue-generating activities, the Representative Office needs to obtain a tax ID card and VAT certificate from the Revenue Department within 60 days of establishment.
- Social Security Registration: If you have employees, you need to register your Representative Office with the Social Security Office within 30 days of the first employee's start date.
While the process of establishing a Representative Office in Thailand may seem complex, it is a feasible and strategic way for foreign companies to tap into the Thai market. Due to the intricate nature of the process, it is recommended to engage with a local legal or consulting firm to facilitate the application and ensure compliance with Thai laws.
Remember, the laws and regulations can change, so always stay updated and consult with the DBD and other relevant Thai government agencies for accurate information.
Venturing into the Thai market can be a rewarding experience, and with the correct knowledge and assistance, setting up a Representative Office in Thailand can be a seamless process.