Opening a representative office in Thailand

Setting up a representative office in Thailand can be a cost-effective way to establish a presence in Thailand for market research, brand building, and establishing your local networks without the complexities of starting a limited company or a subsidiary. However, you cannot earn revenue locally and are only allowed to spend capital within the country. 

Despite this drawback, many foreign companies find it advantageous to start a representative office instead of a private limited company. In this article, we will cover advantages of starting this legal entity, what are the requirements, and registration process.

Overview of a Representative Office in Thailand

What is a Representative Office?

A representative office in Thailand is established by a foreign company to conduct specific non-revenue-generating activities on behalf of its head office, affiliated company, or group company. It operates as a service business, offering support to the parent company without directly engaging in sales or commercial activities within Thailand. 

This legal entity can report on business movements, providing advice on goods distributed by the head office, sourcing goods and services, and inspecting the quality and quantity of goods purchased or manufactured in Thailand. 

However, a key characteristic of a representative office in Thailand is that it cannot generate income, accept purchase orders, make sales, or negotiate business with third parties; all expenses are covered by the head office overseas. 

Benefits of Starting a Representative Office in Thailand

Depending on your specific circumstances, setting up a representative office in Thailand can be more advantageous than starting a Private Limited Company or a branch office.. Here are some of the key benefits of setting up a representative office in Thailand: 

• Market Research and Business Development – allows you to conduct market research and assess business opportunities in Thailand, allowing you to gather information, identify potential customers, and establish local contacts. 
• Local Liaison and Support – A representative office serves as a local liaison between your company and your Thai business partners, government agencies, and customers, which facilitates communication, handles inquiries, and provides support services like translation and coordination.
• Cost and Risk Management – Compared to setting up a subsidiary or branch, a representative office typically has lower operational costs and reduced risk exposure, which allows for establishing a presence and assessing market conditions without significant capital investment or legal complexities.
• Relaxed Work Permit Ratio – with a representative office, you are not bound by the standard work permit ratio for hiring foreigners in Thailand. Generally, the standard work permit ratio is four Thai employees for every foreign employee. However, with a representative office, you can hire one Thai employee per foreigner.

Key Requirements for Setting up a Representative Office in Thailand

Capital Requirements for Starting a Representative Office in Thailand

To establish a representative office in Thailand, you must meet a specific capital threshold to demonstrate that you can cover operational expenses. This includes salaries, travel, and office space rental. Here’s the minimum investment amounts you need to set up a representative office: 

1. Minimum Capital: A representative office must have a minimum capital of THB 2 million (approximately USD 56,211).
2. Capital Injection Timeline:
   • If your representative office is expected to operate for less than three years, the entire capital must be injected within the first six months after obtaining the registration number.
   • For operations expected to last more than three years, the capital must be injected in stages:
     • At least THB 500,000 within the first three months,
     • Another THB 500,000 by the end of the first year,
     • An additional THB 500,000 by the end of the second year,
     • The remainder by the end of the third year.
3. Foreign Employee Considerations: To obtain work permits for foreign staff (up to two employees), a higher minimum capital of THB 3 million must be fully paid in. 

Required Documents to Establish a Representative Office

To be eligible to establish a representative office in Thailand, you must appoint a representative or a manager to handle daily operations who can be either a Thai national or a foreigner residing in Thailand with a work permit and visa. Your appointed manager will then submit the following documents to the Department of Business Development (DBD):

1. Application Form: A signed application to establish a representative office.
2. Company Affidavit: A notarized copy of the company affidavit that includes the name, objectives, capital, and details of directors and representatives of the head office.
3. Power of Attorney (PoA): A notarized copy of the power of attorney for the representative who will manage the office.
4. Passport Copy: A copy of your representative’s passport, along with either a Non-Immigrant B visa or entry visa stamp page.
5. Additional Documentation: Depending on specific circumstances, additional documents may include proof of office address, financial statements, and details regarding the company’s operations.

Emerhub can help you gather all the necessary documents to establish a representative office in Thailand. With our team of experts, we can help submit all the needed documents for incorporation to the DBD on your behalf. We can help you connect with local notary public and qualified translators to help process your documents. 

How to Register a Representative Office in Thailand

Under the Foreign Business Act B.E. 2542 (A.D. 1999) and B.E. 2544 (A.D. 2001), a representative office must be registered with the DBD. The registration process involves submitting the required documents to the DBD and acquiring a certificate or registration number before starting operations. Here’s an overview of the process:

1. Document Certification and Translation – as part of the requirements set by the DBD, all documents must be notarized and certified by a local Thai embassy or consulate and should not be more than 6 months old during the time of registration. The required documents should be submitted in Thai, and the correctness should be certified by a translator.
2. Document submission – your appointed representative will submit all your translated and notarized documents to the DBD. This includes the application form, company affidavit, power of attorney, and passport copy of your representative. 
3. Issuance of Certificate/Registration Number – After submission, the DBD will issue a certificate or a registration number approximately 2 to 4 weeks after the completed submission. 
4. Post-Registration Requirements
   1. Opening a Thai bank account – after registration, you must open a Thai bank account for your representative office where remittance from the head office will be received. 
   2. Compliance with tax obligations – although representative offices are prohibited from generating income in Thailand, you still need to apply for a tax ID and comply with reporting requirements. 

Emerhub ensures that you get tailored end-to-end support to establish your representative office in Thailand. We can help determine the best approach for your business and design a strategy that aligns with your business plans. After registration, we can help you open a Thai bank account and ensure compliance with tax obligations, including a tax ID application, and meeting all the reporting requirements. 

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