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Learn more about Branch Office

When setting up a business, the establishment of a branch office in Thailand is a simple procedure. The formalities require the assistance of an expert specialized in the creation of companies in Thailand to advise you on your possibilities and the type of company adapted to your needs. Its profits are generally transferred to the parent company, and if a bilateral agreement with Thailand exists, the foreign company will not be subject to double taxation. With Themis Partner, our lawyers will advise you on the type of company and the structure to create for your branch in Thailand. Our Thai lawyers are at your disposal to assist you in all your steps.

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What is a branch office in Thailand?

A branch office is a company that registers its presence in Thailand in the form of a branch office. The branch office in Thailand is considered as an extension of its foreign headquarters. Therefore, the branch office should not have different shareholders. However, the activities of the branch office may differ from those of the foreign head office. Foreign companies are not required to register their branches to do business in Thailand. However, most business activities fall under one or more laws or regulations that require special registration (e.g., VAT registration, taxpayer identification card, business registration certificate, foreign business license, etc.) before or after the commencement of business activities.

The branch office is part of the parent company, and therefore the parent company retains legal responsibility for contracts and mistakes made. For tax purposes, a branch office is subject to Thai corporate income tax at the standard rate of 20% on income derived from business activities in Thailand, like any Thai company. A branch office must apply for a tax ID card and a VAT certificate (if applicable) and file an annual corporate tax return with the Revenue Department.

How do you create a branch office?

A branch office of a foreign entity cannot carry out any reserved activity without a foreign business license. It must first apply for a foreign business license from the MOC and can only operate as a private company after the license is issued. If the business activity is unique in the Thai market and does not compete with other Thai businesses or involve affiliate relationships, the chances of approval are greater. Conditions, such as minimum capital, technology transfer and reporting requirements, may be attached to the foreign business license. The minimum investment capital must be more than 25% of the estimated average annual operating costs of the operation, calculated over three years, but not less than 3 million baht. Depending on your type of business, we recommend that you discuss with professionals before applying to open a branch office in Thailand. Themis Partner’s lawyers are, of course, at your disposal to answer all your questions. Below you will find the essential elements concerning the incorporation of a branch office:

Foreign ownership: Up to 100 %
Investment required: Minimum THB 3 million
Limited activities: Only activities mentioned in the application
Recording process: From 3 to 4 months

What are the requirements for opening a branch office?

To open a branch office of a foreign company in Thailand, it is necessary to apply for a Foreign Business License (FBL). The application for a Foreign Business License usually takes 2-4 months from the date of application to receive approval or rejection. After obtaining the Foreign Business License approval, the branch office can be registered. A branch authorized to operate the business must meet the following conditions:

There is no specification to open a branch office in Thailand.

A minimum registered investment as company capital of THB 3 million must be brought to Thailand before the granting of a foreign trade license and brought accordingly:

The minimum money must be returned to Thailand to start business operations as required by law. The details of the minimum capital payment are as follows:

25% of the minimum investment in the first three months;
Additional 25% of the minimum investment in the first year;
an additional 25% of the minimum investment in the second year; and
the final 25% of the minimum investment in the third year.

The total amount of loans used in the authorized business activity shall not exceed seven times the funds disbursed for the authorized business operations; the loans shall constitute the total liabilities of the corporation, notwithstanding obligations arising from any form of transaction, except for business obligations arising from the conduct of the business.

At least one person responsible for the management of the company in Thailand must have a domicile in Thailand; Domicile means the addressable residence in Thailand, which may be the place of business, excluding temporary residences such as hotels.

The document or proof of authorized business activity must be submitted when the official sends the quote or inquiry.

Accounting and financial statements must be prepared for submission to the Business Development Department.

There must be at least one officer in charge of the day-to-day management and business of the branch.

Each fiscal year, taxes must be submitted, including details of business development in a report form and financial reports and taxes to the Revenue Department.

The registration fee (non-refundable) is 2,000 baht. If the application is approved, the government tax will be set at a rate of 5 THB per 1,000 baht or a fraction of the parent company’s capital, with a minimum of 20,000 THB and a maximum of 250,000 THB. A fraction of 1,000 THB in the capital is considered to be 1,000 THB.

What is the procedure for registering a branch?

The application to open a branch office in Thailand is not particularly difficult, but some essential documents are required by the foreign head office. These documents must be certified and translated into the Thai language. A detailed business strategy plan must be provided for operations in the country. The documents required for the application to the Ministry of Commerce are as follows:

A copy of a certificate or proof that the entity is a legal entity with information on the company’s name, registered capital, objectives, official address and a list of all board members.

A letter of appointment of a natural person by the legal representative of the foreign legal entity. This natural person can be either a Thai citizen or a foreigner and act as the agent responsible for all operations of the branch in the Kingdom.

A copy of the nominee’s passport or other identification documents for foreigners or an identity card must be provided. Registration of domicile, certificate of residence or proof that entry into Thailand has been granted for a temporary stay must also be provided.

A statement from the foreign legal entity that the applicant, directors, officers and appointee meet the criteria and do not have the attributes prohibited by Section 16 of the Thai Foreign Enterprise Act, B.E. 2542 (1999).

A map showing the approximate location of the proposed business in Thailand.

A power of attorney in case another person has been authorized to act as the applicant’s representative to establish the branch office in the country.

Other supporting documents or evidence such as recognition by the head office of the agent’s salary for transactions in Thailand, financial information for the last three years from the head office, and other documents if necessary.

A statement containing full details of the activity for which a license is required.

The type of activity that will be carried out with the different stages of actions.

An indication of the expected costs in terms of the estimated amount of funds that the applicant will use in Thailand for the purchase of fixed assets and for the operational costs of the business each year over a period of three years or for the period of actual operation of the business if it has been in operation for less than three years.

The size of the operations performed.

The size of the applicant’s workforce in Thailand with a proposed technology transfer strategy or technology imported from abroad.

A research and development program with an explanation of the research policy. The expected period of operation of the activity. The expected benefits in terms of development of the Thai economy from the planned activity. The estimated sources of income and earnings to be derived from the branch in the Kingdom. Establishing a branch office in Thailand is somewhat more complicated than registering a limited liability company due to the length and cost of registration. Nevertheless, some international companies may choose to do so. It is essential to mention that since the branch is a foreign structure, its activities should not be noted in the list of prohibited activities of the Foreign Activities Act. The capital required to establish the branch office is 3 million Thai baht, and an additional investment of 3 million Thai baht is required for each business the branch will conduct in Thailand.

Once registered, the branch will also receive a foreign business license to operate in Thailand. A branch office can earn income in Thailand, and its legal obligations are the same as for foreign-owned companies.

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