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Learn more about Representative Office

The representative office is a foreign company in Thailand. It makes it possible to test the Thai market beforehand in view of a possible installation. It is a legal structure intended to represent and promote an image and to facilitate its establishment in Thailand. A representation office is an ideal observation post before attacking a foreign market and committing capital. However, a representative office in Thailand cannot be used for any revenue generating operation. Themis Partner can help you with company registration in Thailand. We have an excellent team of professional lawyers ready to assist you in all the necessary steps to open your liaison bureau for an attractive fee and within a reasonable time frame.

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Table of contents

  1. What is a representative office?
  2. Why create a representative office?
  3. What are the characteristics of a representative office?
  4. How to create a representative office?
  5. What is the minimum capital required?
  6. Does the liaison office have to pay taxes?

What is a representative office?

A representation office is an extension of the exporting company’s activities allowing to ensure a permanent or temporary presence on a foreign market. It is often used in an expansion phase to carry out market research or communication activities. If a foreign company wishes to operate such a business in this case, it must have permission from the Director General of the Department of Business Development (DBD), with the approval of the Foreign Affairs Commission. Previously, foreign legal entities were required to obtain a FBL Foreign Business License to operate a representative office. As of June 9, 2017, this is no longer required. The procedure has been significantly simplified, and the timeframe has been significantly reduced from about 6 months (previously required) to about 1 week now.

Why create a representative office?

A representative office can only conduct the following transactions on behalf of the head office:

➤ Purchase of products and other services in the Thai market for its head office
➤ Checking and controlling the quality and quantity of the products purchased and services provided by the head office
➤ Advise Thai customers or representatives about the products and services provided by its head office in the country
➤ Inform potential customers about new products or services of its head office in the Kingdom
➤ Prepare reports on the market and business sectors in Thailand

During the operation of the representative office, no income can be generated, and the liaison bureau can only authorize two business visas and work permits for foreigners for a given period. Contact our Thailand visa service if you need any help with foreign workers. The company is responsible for certain non-expense related activities that representation office may conduct:

➤ Collecting information related to goods or services in Thailand for the benefit of the head office
➤ Conduct verification and control of the quality and quantity of goods purchased or leased for the benefit of the head office manufacturing in Thailand
➤ Provide advice and support of the head office on goods to be sold to customers, sales agents or partners
➤ Provide information on relevant goods to the head office
➤ Conducting trend report in Thailand to the head office. The application fee for a liaison office is THB 2,000. However, this may change, please check in advance
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What are the characteristics of a representative office?

Ownership for foreigners: 100% foreign ownership possible
Registered capital requirements: The minimum investment capital shall not be less than 25% of the estimated average annual operating costs of the operation, calculated over 3 years, but not less than 3 million Baht
Taxes: No taxes to be paid due to no income in the Kingdom
Foreign business license: Will be granted after acceptance of the application for registration
Limitations for businesses: Not allowed to generate income and limited to the activity for which the company is established
Registration period: 1 week

The representation office must have the following three characteristics:

➤ Be the legal entity established in accordance with foreign law and have established an office in Thailand to operate the business of providing services to the head office or affiliate or group company in a foreign country only
➤ Providing services to the head office, affiliate or group company without receiving any income from such services, except for funds to cover the expenses of the representative office received from the head office
➤ The liaison bureau is not authorized to receive purchase orders or to offer to sell or trade with any person or entity

How to create a representative office?

To set up a liaison office, it is important to follow the following steps:

1. Submit the required documents

According to the revised procedure, the foreign legal entity has to provide the necessary documents to the Department of Business Development (DBD), to open a liaison office, namely:

➤ liaison office Establishment Form to be signed by the representative
➤ Copy of the company's declaration with the company's name, registered capital, objectives, directors and officers of the registered office, which must be legalized or notarized
➤ Power of Attorney of the representative
➤ A copy of the representative's passport, with: A copy of his/her signed and legalized non-immigrant B visa if the representative signed the copy before coming to Thailand. A copy of the entry stamp page with a signature card if it was signed in Thailand
➤ A power of attorney from the person making the application. This is usually an overseas lawyer. This document must also be signed and notarized

ℹ️  All documents must be translated into Thai. However, it is not necessary to use an official translator, and not all translation work needs to be certified.

2. Obtain the certificate and registration number

The Business Development Department provides a certificate or registration number once all documents have been submitted. At this stage, the liaison office can start operating. There is no cost for this certificate or registration number or for submitting the documents.

3. Register the representative office

After obtaining the certificate number, you can incorporate your liaison office in Thailand and hire staff for your regular office.

What is the minimum capital required?

A representative office must have a capital of at least Baht 3 million.

If the representation office is intended to operate for less than three years, the entire capital must be provided within the first six months of obtaining the registration number.

If the liaison office is intended to operate for more than three years, the capital must be transferred as follows:

➤ THB 500,000 or more first within the first 3 months after obtaining the registration number
➤ THB 500,000 or more at the end of the first year
➤ THB 500,000 or more at the end of the second year
➤ The balance at the end of the third year

ℹ️  This capital can be used to pay for all operating expenses of the representation office (i.e. salaries, travel, rent, etc.).

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Does the liaison office have to pay taxes?

The liaison bureau is generally exempt from corporate income tax, as they do not generate income. However, they have to register with the tax authorities as they have to pay, for example, withholding tax on salaries paid to employees. Only the employees of the liaison office are subject to personal income tax. The liaison office is subject to the following requirements:

➤ Submission of detailed financial accounts as of the date of commencement of business operations in Thailand
➤ Provide certified financial statements to the DBD within five months of the end of the fiscal year
➤ Provide certified financial statements to the DBD within five months of the end of the fiscal year
➤ The DBD must be informed of the location of the financial records

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