Representative Offices are controlled activity and it requires Foreign Business license to be obtained by the foreign applicant. While the process is cumbrous and requires a lot of time, in general, it is easier for obtaining a foreign business license in case of a Representative Office as compared to a normal company.
The process is now streamlined with the announcement by the Foreign Business Committee on new guidelines and rules for services businesses in 5 categories which includes Representative Offices. However, it is to be noted that the newer guidelines don’t address the issue related to limitations on the activities of the Representative Offices.
Conditions to be met for applying for Representative Office:
For obtaining the Representative Office Foreign Business License the parent company should oblige to transfer a minimum of 5 million baht into Thailand in terms of working capital for their Representative Office.
At least 2 million baht should be remitted in the initial (1st) year of operation, and hereinafter a minimum of 1 million baht per year should be remitted into Thailand by the H.O.
The representative office’s manager should promise to develop the annual report on the activities commenced and file the report with the Ministry of Commerce. In case they fail to do this, the office might not be allowed for carrying on its activities.
Some of the Representative Offices would need to obtain additional permits or licenses such as:
- Security, Finance, and credit financier offices
- International business offices
- Foreign bank offices
Documentation required for a Representative Office in Thailand:
For setting up a representative office in Thailand, the foreign applicant firstly is required for applying for a Foreign Business license. After obtaining the Foreign Business license, it is needed to provide several documents from the parent company:
- Foreign Business license;
- Parent company’s affidavit which includes:
– Name of the company;
– Registration number;
– Date of registration;
– Address of the company;
– The jurisdiction in which the company is registered.
- Memorandum of Association or Articles of Incorporation;
- Name, nationality, age, race, and address of every director and the number of shares each owned by each of them;
- Total number of shareholders, their nationalities and the number of shares owned by each of the national group;
- A report containing the information with respect to the company’s total capital, the amount of capital stock and a number of shares.
- Reasons as to why the representative office is required.
- Impacts on the Thai society and Thailand Market economy – both positive and negative due to their presence
Last 3 year’s annual financial report of the H.O translated in Thai by the accredited Thai translator
- Details pertaining to the technology transfer to the Thai staff.
- Names of staff along with the salaries.
Any well-known clients/ projects/ products or past track record
- Business plan or forecast and a number of expenses for the next 3 years.
- Number, type, and value of the machinery or office equipment which is to be used for business.
- A Power of attorney for the manager in Thailand which gives him the power to register the representative office with Thai authorities.
- All the documents mentioned above should be notarized and certified by a local Thai embassy or consulate and they should not be more than 6 months old during the time of addressing to Commercial Registrar. For preparing your documents and completing all the legal processes of registering the representative office in Thailand and applying for a Foreign Business license, you would require the help of the consulting firms in Thailand.
Work Permit for Foreigners
A work permit is allowed up to 2 foreigners in case the business involves disseminating information or advising about the company’s products or services or providing reports about the Thai market to the home offices. And up to 5 foreigners in case the business is involved in the sourcing of goods and services in Thailand for a foreign company or who is responsible for quality control for such goods and services.
Representative Office is exempt from income-tax but they are required to register themselves for other tax purposes such as withholding tax on the employee’s salaries, etc. Moreover, all the employees living in Thailand are required to pay the income tax in Thailand.