As the name says, representative offices are not independent companies but rather the representation of a foreign company in Thailand. Representative offices don’t have shareholders and therefore they don’t have foreign ownership restrictions.
The key restriction of a representative office is that it cannot earn revenue locally. Essentially, you are only allowed to spend money in Thailand.
Requirements to open a representative office in Thailand
Since a representative office cannot generate revenue nor has shareholders, its requirements are smaller than when opening a private limited company. However, there are several requirements you still need to meet:
- Permitted Activities: The representative office is limited to non-revenue-generating activities.
- Capital Requirements: Representative offices are required to have sufficient funds to finance their operations in Thailand. In practice, it usually means a company commits to transferring at least 2 million Thai baht (around US$55,000 at the time of writing) over 1-3 years depending on the planned activities.
- Thai Staff Employment: Representative offices must apply to at least one Thai national if they wish to employ foreign employees.
- Bank Account: The representative office must open a Thai bank account through which the remittance of foreign currency will be made.
- Office Space: The representative office must have a physical office space in Thailand from which it can conduct its permitted activities.
- Tax Obligations: While the representative office is prohibited from generating income, it still has to apply for a tax ID and comply with tax reporting requirements.
Registration process of a representative office in Thailand
The registration of a representative office requires approval from the Department of Business Development (DBD) under the Ministry of Commerce. The application includes:
- Details about the parent company;
- The activities of the representative office
- Evidence of capital remittance
On average, the registration of a representative office takes about 3-4 weeks.
Sample activities of representative offices in Thailand
Finding suppliers in Thailand
Finding Thai manufacturers capable of supplying specific components, such as semiconductor chips or display panels, which meet their head office’s technical and volume requirements.
Quality and quantity inspection
Ensuring local textile producers meet the overseas company standards, which decreases return rates and enhances product satisfaction.
Providing technical guidance to Thai distributors and customers on the head office’s medical devices to ensure proper usage and maintenance, fostering trust and reliability in the products.
Distributing comprehensive information on new product features to Thai dealerships, ensuring a knowledgeable base for sales and a successful market entry for the head office’s products.
Market Intelligence Reporting
Collecting and analyzing data on the Thai market’s response to the company’s products, enabling the head office to develop and successfully introduce a product line that resonates with local preferences.