One of the most significant necessities to get approval for an Alien Business License to set up a branch office of a foreign corporation, is a total working capital of 5 million Baht (in foreign currency). This amount must be brought into Thailand at specified periods in a max of 4 years.

Furthermore, in order to set up Branch in Thailand, it is also required to register for VAT, request for a taxpayer ID and a Commercial Registration Certificate. A company can also operate a branch office of the foreign company in Thailand. In such a case they are not obliged to register a Thai limited company. FBA B.E. 2542 specifies the types of business that are not allowed to be run by foreigners. Some of these businesses will never be allowed, while some are permitted only if at least 40% of the shares are owned by Thai nationals. And, some others can be permitted with majority or 100% of foreign ownership.

Branch office that is into manufacturing industry or export of products from Thailand to foreign countries are not required to obtain the FBL. The other types of business, subject to the FBA, can be operated by a branch office in Thailand after having received the FBL from the Bureau of Foreign Business Administration, Business Development Department, Ministry of Commerce. And, if a branch office in Thailand is into manufactured goods, then it can sell its products in Thailand as well. However, if the same branch office plans to involve in the service business, it needs to get the FBL for the service business. Similarly, if a branch office exports products from Thailand and also plans to sell products inside the country, then the FBL for domestic sale business is needed.

The following documents are to be submitted to Thai’s Ministry of Commerce:

• A copy of the firm’s affidavit or related documents presenting the status of the juristic person along with details such as name, capital, objectives, address, list of directors and signing authority;
• A power of attorney that has been allotted to the authorized person(s) of the juristic person specifying its representative(s) to work in Thailand;
• A copy of the passport of the representative(s) if a foreigner. Alternatively, a copy of the ID card if the representative is a Thai national;
• A copy of the household registration, residence permit or papers that show temporary visa of the representative(s), under the law governing immigration;
• The affidavit of the applicant proving that the applicant, its manager(s), director(s), or representative(s) are qualified as per Section 16 of the FBA;
• A letter summarizing the details of the business activities that are applied for. This should include the information about the applicant’s profile, type of business applied for, particulars of business operation, capital amount, the structure of the business, its size, plan for the transfer of technology and employment-related details;
• A map depicting the location of the applicant’s place for operating his business in Thailand;
• A power of attorney, if any other person is authorized to function on behalf of the applicant (example: a consultant going to submit the application).

Some additional documents are required to be submitted if the applicant is a Government or state enterprise project contractor or subcontractor.

These include:

1. A copy of a contract which has been signed or proof of the project approval (if the contract has not yet been signed)
2. A letter, released by the contracting party and directed to the Director-General of the Business Development Department, that will certify the project.

Granting of this letter must contain:

• Type of the business;
• Name of the contractor (applicant);
• Contract name, number, and date;
• Starting date and date of completion (including warranty period); and
• Value of the project (in Thai Baht).

While a Thailand Branch Office is the same legal entity as the foreign parent company, tax laws in Thailand treat it as a separate legal entity. The tax laws in Thailand treat a Branch Office as a profit-seeking entity, and hence, a Branch Office in Thailand is subject to all the transaction and income taxes which apply to any corporate profit-seeking entities in the country.

Summary of the taxes that the Branch Office in Thailand is subject to is as follows:

• Corporate income tax on the net profits of the branch office
• Withholding tax on payments of income to recipients in Thailand
• Withholding Tax recipients in foreign countries
• Personal withholding tax on payments of income to employees of the branch office
• Specific business tax (instead of value-added tax) on some specific types of business income transactions.
• Withholding tax on remittances of branch office profits to the foreign head office
• Company Value Added Tax on sales of goods and services in Thailand and on imports of goods and services into Thailand
• Stamp duty tax for effecting various instruments

Though it quite easy to set up a branch office in Thailand, yet the entire process is a bit lengthy and rigid.