Representative Office in Thailand

A Representative Office in Thailand is a legally recognized form of foreign business presence that allows international companies to engage in non-revenue-generating activities. It is used primarily to coordinate, support, or report on business activities in Thailand on behalf of the foreign parent company. Unlike a branch or subsidiary, a representative office is prohibited from generating income, issuing invoices, or entering into commercial contracts in Thailand.

This article provides a comprehensive overview of the legal and operational framework for setting up and maintaining a representative office in Thailand under the current laws and regulations.

I. Legal Basis and Oversight

Representative offices are governed by the:

• Foreign Business Act B.E. 2542 (1999)

• Ministerial Regulations on Representative Offices

• Notifications from the Department of Business Development (DBD)

Because representative offices fall under List 3 of the Foreign Business Act (activities in which Thais are not yet ready to compete), foreigners may only establish a rep office with permission from the Director-General of the DBD, rather than requiring a full Foreign Business License.

II. Permissible Activities

A representative office is limited to five specific functions that must benefit the foreign parent company:

1. Sourcing of goods or services in Thailand for the head office.

2. Inspection and control of the quality and quantity of products purchased or manufactured in Thailand.

3. Provision of advice concerning goods sold to distributors or customers in Thailand.

4. Dissemination of information regarding new products and services of the head office.

5. Reporting business trends and movements in Thailand to the head office.

All other activities—especially commercial transactions, invoice issuance, or service delivery—are prohibited.

III. Key Legal Characteristics

IV. Capital and Financial Requirements

Representative offices must inject capital according to the following schedule:

• At least THB 2 million total is required.

• THB 500,000 must be remitted within the first 3 months of operation.

• The balance must be injected according to a plan based on the office’s operational period:

  • Year 1: 25%

  • Year 2: 25%

  • Remaining balance by end of operation or renewal

Although the office is not subject to corporate tax (since it cannot generate revenue), it must keep proper books and file audited financial statements annually.

V. Registration and Establishment Procedure

The registration process takes approximately 2 to 4 weeks, assuming complete documentation.

Step 1: Document Preparation

The foreign parent company must prepare:

• Company affidavit (not older than 6 months)

• Articles of Incorporation and Memorandum of Association

• Annual financial statements

• Details of the representative office’s scope and functions

• Power of attorney for authorized person in Thailand

All foreign documents must be:

• Notarized and legalized by the Thai Embassy/Consulate

• Translated into Thai and certified

Step 2: Application Submission

Applications must be submitted to the Department of Business Development (DBD). The DBD may request clarification or additional documents. Once approved, the DBD issues a Certificate of Establishment for the Representative Office.

VI. Office and Employment Considerations

Registered Office Address

The representative office must have a physical office address in Thailand. This cannot be a virtual office. Lease agreements or ownership documents must be submitted as proof of address.

Employment of Staff

The representative office may hire both Thai and foreign staff. Foreign employees must obtain:

• A Non-Immigrant “B” Visa

• A Work Permit, issued under the name of the rep office

The employer-to-foreign employee ratio is less strict than in other types of entities. However, in practice, the office should show real operations and not be used as a vehicle for visa procurement alone.

VII. Taxation and Reporting Obligations

Although rep offices are not subject to corporate income tax, they must:

• File audited financial statements annually

• Register with the Revenue Department for employer obligations (e.g., withholding tax on salaries)

• Pay Social Security contributions for employees

• Maintain VAT registration only if applicable (e.g., for import activities)

The head office must fund the rep office through overseas wire transfers, which are not taxable but must be properly accounted for.

VIII. Practical Limitations and Common Compliance Issues

1. Prohibited Revenue Activity

Any commercial activity—such as issuing invoices, collecting payments, or entering into sales contracts—is strictly prohibited. Violations may lead to:

• Revocation of the rep office status

• Penalties under the Foreign Business Act

• Deportation of foreign personnel in serious cases

2. Scope Drift

Many rep offices inadvertently drift into quasi-commercial activities, such as “pre-sales coordination” or soft promotion. While the dissemination of product information is allowed, soliciting orders or negotiations is not.

3. Regulatory Inspections

The DBD or the Revenue Department may conduct audits or inspections to verify the office is not violating the permitted activity scope.

4. Confusion with Branch Offices

Unlike a branch, which is a taxable, revenue-generating extension of a foreign company, a rep office cannot conduct business. Businesses that need to invoice customers or sign contracts should consider registering a branch office or private limited company.

IX. Advantages and Strategic Uses

Despite its limitations, a representative office may be useful for:

• Market research and feasibility studies

• Coordinating with Thai suppliers or partners

• Managing regional sourcing and quality control

• Establishing a long-term presence before investing in a Thai subsidiary

• Supporting marketing teams without crossing into commercial activity

Rep offices are often used in pre-investment stages or to comply with group-level compliance protocols, particularly in regulated industries like healthcare, aviation, and manufacturing.

X. Closure and Dissolution

To close a representative office, the parent company must:

• Notify the DBD

• Pay all outstanding tax liabilities and employee benefits

• De-register from the Revenue Department and Social Security Office

• Submit final audited accounts

Remaining capital may be repatriated to the head office, provided all compliance obligations have been fulfilled.

Conclusion

Establishing a Representative Office in Thailand provides foreign companies with a legally recognized and strategically flexible means of conducting non-commercial activities such as sourcing, inspection, and market intelligence. However, strict legal limitations on revenue generation and contractual capacity must be respected to avoid non-compliance under the Foreign Business Act.

For companies exploring market entry or regional coordination, a representative office can serve as a low-risk, cost-effective first step—provided the operation remains within the narrowly defined activity scope and complies with licensing and reporting rules.