Representative office of a foreign corporation
A foreign entity may establish a representative office in Thailand to engage in limited non-revenue-earning activities. These activities are restricted to:
- Searching for local sources of goods or services for its head office.
- Inspecting and controlling the quality and quantity of goods procured by its head office.
- Providing advice in various fields relating to products directly sold by its head office to local distributors or consumers.
- Disseminating information about new products and services of its head office.
- Reporting to its head office on local business developments and activities
Documents required register to a representative office in Thailand
Foreign corporations wishing to do business in Thailand through a representative office must submit the following documents
An affidavit from the manager or corporate officer, stating the following:- name of the corporation, registration member, and date of registration;- address of the registered office; - jurisdiction under which the corporation is registered; - name, address, nationality, age and race of each director, number of shares held by each, and identification of the director (s) with the power to bind the corporation; - authorized capital of the corporation, number of shares and par value of each, and amount of paid-up capital stock, and - total number of shareholders, their nationalities, and number of shares owned or held by each national group. All above documents m ust be notarized by a notary public or certified by the Thai consulate or embassy abroad). These documents must not be more than six months old at the time of submission to the Commercial Registrar.
A power of attorney for the manager in Thailand giving him or her, in addition to the normal powers, the power to register the branch office with the pertinent Thai government authorities, and to act as the manager thereof. Certified photocopies of the passport of the manager of the representative office if he is foreign or the personal I.D. and household registration of the manger if he is Thai must be provided. M ust be notarized by a notary public or certified by the Thai consulate or embassy abroad). This Power of Attorney must not be more than six months old at the time of submission to the Commercial Registrar.
- Brief description of the objectives or details of the business and steps of work. Brochure or profile of the business is required as well.
- Office address in Thailand and map thereof. You must show evidence of your right to use the office space of the representative office (lease, landlord consent, household registration, etc from the Landlord.)
- Reasons why the representative office is necessary
- Positive and negative impacts on the Thai economy and society
- Last three year’s annual financial report of the head office. ( Must be translated into Thai by a licensed Thai translator)
- Details of technology transfer to Thai staff.
- Number and name of staff together with their salaries.
- Well known projects/ clients/ products. (case by case)
- Business forecast plan and amount of expenses for the next three years.
- Type, value and number of machinery/office equipment used in the business.
Alien Business Permit A representative office must obtain an Alien Business Permit under Annex C, Chapter 3(1) of NEC Announcement No. 281 (the Alien Business Law) to start its activities. This Permit, valid for five years, serves as the permission/license to establish a representative office . An application for a permit to establish a representative office together with supporting documents, as well as applications for work permits and visas, must be filed with the Commercial Registration Department of the Ministry of Commerce.
Documentation In order to be registered as a representative office, the foreign company must lodge with the Ministry of Commerce copies of its certificate of incorporation, memorandum and articles of association (or other similar documents) and a power of attorney in favour of the branch manager. The power of attorney must be broad enough in the opinion of the Ministry of Commerce so as to give the manager adequate authority to manage the rep office. The Ministry may request other documentation.
Copies of all documents must be certified to be true copies by a notary public or other official. Signatures on original documents such as the power of attorney should be certified to be true signatures and the authority of the person should also be certified by a notary public. All such notarized or otherwise certified documents must then be authenticated by a Thai Embassy or Consulate.
Work permits . U p to two foreigners who advise or disseminate information about their company’s products or provide reports about the Thai market to their home offices can qualify for a work permit. However up to five foreigners may qualify for a work permit who source goods and services in Thailand for the foreign company or who are responsible for quality control for such goods and services unless the representative office sources at least 100 million Baht in goods and services from Thailand during the preceding year (in which case this limit of work permits may be exceeded ).
Taxation Representative Offices are normally exempt from income tax, since they do not generate income. However, they are liable to register for tax, since they must pay e.g. withholding income tax on wages paid to employees.
Capital Requirements A representative office is required to remit into Thailand for its operating expenditure, a total of Baht 3 million over a period of five years, with Baht 2 million being remitted within the first year. These funds may later be remitted out to the head office if the Thai office is closed. The capital may be used for normal working capital requirements, e.g. to pay operating expenditure such as salaries and rent.
Single Legal Entity The foreign company and the Representative office are considered to be the same single legal entity, with the result that the foreign company is bound to third parties by the acts which its Representative office has conducted within the scope of authority granted to it. If the Representative office commits an act without authority or acts beyond the scope of its authority, that act would not bind the company as a matter of Thai law unless the company has ratified the act.
Government Fees The initial fee is 2,000 Baht. Once the application is approved, the fees are 5 Baht per 1,000 Baht capitalization of the Head Office. The minimum government fee is 20,000 Baht and the maximum government fee is 250,000 Baht.
Annual Report The manager of the representative office must prepare an annual report on activities undertaken for the previous year and file this with the Ministry of Commerce, as a condition to the office being permitted to carry on its activities.