Representative Office in Thailand

A Representative Office (RO) is a form of foreign business presence in Thailand designed for non-revenue-generating activities. It allows a foreign company to engage in specific, limited operations to support its head office abroad, without directly conducting sales or earning income in Thailand.

The concept is regulated under the Foreign Business Act B.E. 2542 (1999) (“FBA”) and related Ministry of Commerce (MOC) regulations.

1. Legal Basis and Regulatory Authority

  • Primary Law: Foreign Business Act B.E. 2542 (Sections 4, 7, 14–17).

  • Responsible Authority: Department of Business Development (DBD), Ministry of Commerce.

  • Relevant Ministerial Regulations: Prescribing types of permitted RO activities and application procedures.

Under the FBA, foreign entities may not engage in restricted businesses without a Foreign Business License (FBL). A Representative Office is considered a restricted form of “service business” but can obtain an FBL for its permitted activities more easily than a revenue-generating branch.

2. Definition and Purpose

A Representative Office is an office established in Thailand by a foreign company to conduct non-commercial support activities. It acts purely as an extension of the head office, collecting information, coordinating with local entities, and protecting company interests without engaging in profit-making.

3. Permitted Activities

The FBA limits an RO to five specific activities (Ministerial Regulation No. 11 B.E. 2546):

  1. Sourcing of goods or services in Thailand for the head office.

  2. Checking and controlling the quality and quantity of goods purchased or manufactured in Thailand for the head office.

  3. Providing advice to the head office’s customers or agents in Thailand.

  4. Disseminating information about new goods or services of the head office.

  5. Reporting on business trends and movements in Thailand to the head office.

4. Prohibited Activities

To maintain RO status, the office cannot:

  • Generate income from sales or services in Thailand.

  • Negotiate or conclude contracts on behalf of the head office.

  • Issue invoices to Thai customers.

  • Receive payment in Thailand for goods or services.

Engaging in prohibited activities may result in license revocation and penalties under the FBA.

5. Licensing Process

5.1 Eligibility

  • Only a juristic person incorporated outside Thailand can apply.

  • The head office must have existed for at least one year before applying.

5.2 Application Requirements

Submit to the DBD:

  • Application form for FBL.

  • Corporate documents of the head office (certificate of incorporation, company affidavit, list of directors, financial statements for the last 3 years).

  • Power of attorney appointing the RO’s chief representative.

  • Description of intended activities and compliance with permitted purposes.

  • Office lease agreement in Thailand.

Foreign documents must be notarized and legalized.

5.3 Minimum Capital

  • At least 3 million THB in capital funds.

  • 25% of capital must be remitted within the first 3 months after approval, another 25% within the first year, and the remainder within 3 years.

5.4 Processing Time

  • Typically 2–4 months, depending on completeness of documentation.

6. Operational Requirements

  • Chief Representative: Must be appointed and authorized to manage daily operations.

  • No Trading: All expenses are funded by remittances from the head office.

  • Tax Obligations: ROs are exempt from corporate income tax on non-revenue activities but must withhold personal income tax for employees and remit VAT on certain services received from abroad.

  • Accounting: Maintain books of accounts and submit annual audited financial statements to the DBD.

7. Employment and Work Permits

  • An RO may hire both Thai and foreign staff.

  • Foreign employees must obtain a non-immigrant “B” visa and a work permit.

  • There is no strict Thai-to-foreign employee ratio for ROs, but work permit applications must be justified based on business needs.

8. Renewal and Closure

While the FBL for an RO is generally valid indefinitely (as long as the RO remains compliant), an RO must:

  • File annual financial statements.

  • Notify the DBD of changes to the head office, activities, or chief representative.

  • Apply for formal closure if operations cease.

9. Tax and Accounting Considerations

Although an RO is not subject to corporate income tax on its own account:

  • It must register for a Tax Identification Number within 60 days of commencing operations.

  • It must file personal income tax returns for employees.

  • VAT registration is required if importing services subject to VAT.

  • Annual audited financial statements are mandatory, even for a non-revenue office.

10. Real-World Case Examples

Case 1 — Quality Control for Export Products
A Japanese electronics company set up an RO in Bangkok to monitor quality control of circuit boards manufactured by Thai subcontractors. The RO’s engineers inspected products before shipment and reported to Japan, without engaging in sales. The RO complied fully with the permitted activity list.

Case 2 — Overstepping Authority
A European furniture brand’s RO began negotiating prices with Thai suppliers and signing contracts locally. Upon investigation, the DBD determined that these were profit-generating activities beyond RO scope, resulting in license revocation.

Case 3 — Market Research and Trend Reporting
A U.S.-based fashion brand used its RO to gather consumer trend data and share marketing insights with headquarters. No orders or sales were made in Thailand, keeping the operation fully compliant.

11. Advantages of a Representative Office

  • No Corporate Income Tax — Provided the RO does not generate income in Thailand.

  • Simplified Licensing — Compared to a branch office, the process is more straightforward.

  • Market Presence Without Sales Risk — Ideal for research, sourcing, and brand promotion without local trading.

12. Limitations of a Representative Office

  • No Revenue Generation — All operational costs must be funded from abroad.

  • Strict Activity Scope — Any deviation can result in penalties.

  • Capital Commitment — The 3 million THB minimum capital requirement must be maintained.

13. Key Legal References

  • Foreign Business Act B.E. 2542 (1999) — Sections 4, 7, 14–17.

  • Ministerial Regulation No. 11 B.E. 2546 — Permitted activities of an RO.

  • Revenue Code of Thailand — Tax compliance for non-revenue offices.

Conclusion

A Representative Office in Thailand offers a strategic foothold for foreign companies seeking to monitor the market, oversee product quality, and liaise with Thai partners — all without engaging in revenue-generating business. While its restrictions are strict, careful compliance with the permitted activity list ensures smooth operations and long-term viability.


Visit our website for more information: https://www.siam-legal.com/Business-in-Thailand/thailand-representative-office.php

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