Establishing a Representative Office in Thailand

A representative office (RO) provides a strategic way for a foreign company to set up a presence in Thailand without engaging in full commercial operations. For businesses that want to conduct market research, quality control, or liaison work rather than generate revenue locally, an RO is often an optimal first step.

Our service include:

Representative office setup and compliance
Foreign Business Act guidance
Capital remittance and reporting support
Manager appointment and registration assistance
Tax ID and annual filings
Scope-of-activity legal advisory

What a Representative Office Can and Cannot Do

Permitted Activities
Under Thai regulations, a representative office is limited to specific non-revenue generating functions, including:

Sourcing goods or services in Thailand for the parent company.
Inspecting quality and quantities of goods procured or manufactured in Thailand.
Providing advisory services about products to the parent company’s agents or clients.
Distributing information on new products or services developed by the parent company abroad.
Reporting on market trends, business opportunities, and local conditions to the head office.

Activities beyond these five are strictly prohibited (for example, the office may not issue invoices, negotiate sales contracts, or trade domestic goods).

Legal & Compliance Requirements

To set up a representative office in Thailand, several regulatory and administrative steps must be met:

Approval Process
- The foreign parent company must apply to the Department of Business Development (DBD) under the Ministry of Commerce.
- Under the Foreign Business Act (FBA), the RO is typically classified as a “service business” and must comply with FBA regulations.
Capital Requirements
- A minimum working capital of THB 3 million (or 25% of the estimated three-year expenses) must be remitted from the head office.
- The capital is paid in stages: 25% within the first 3 months, another 25% by the end of year one, another 25% in year two, and the remainder in year three.
Local Representation
- Appoint at least one manager or representative in Thailand. This person may be Thai or foreign, but must be officially registered.
- Provide a Thai address for the office, supported by a lease or similar documentation.
Capital Injection & Use
- All funds remitted to Thailand must only be used to support the office’s permitted non-revenue functions.
- Loans into the RO must not exceed a certain multiple of the capital, depending on the regulations.

Tax, Reporting & Ongoing Obligations

Even though a representative office does not generate local profits, it must still meet compliance obligations:

Tax Registration: The RO must obtain a Corporate Tax ID, even if it’s not subject to ordinary corporate income tax.
Annual Reporting: Submit audited financial statements and expense records to relevant authorities, such as the DBD.
Payroll Compliance: Withholding tax may apply on salaries paid locally, and social security should be handled for Thai employees.
Work Permits: If the RO hires foreign staff, it must comply with Thai labor laws and visa/work-permit requirements.

Advantages & Strategic Value

Setting up a representative office in Thailand offers several important benefits:

100% Foreign Ownership: No requirement for Thai shareholder participation.
Lower Tax Burden: Since the RO cannot earn revenue, it generally avoids corporate income tax, making it a cost-effective way to enter the market.
Market Insight: Ideal for market research, quality monitoring, and liaison work before committing to a full Thai company.
Simpler Compliance: Compared to a limited company, an RO involves less administrative complexity and lower setup costs.

Key Risks & Limitations

While a representative office can be very useful, it comes with important caveats:

No Revenue Generation: Because the RO may not conduct sales or earn income, it cannot be used for commercial operations.
Liability: The parent company is fully liable for the actions and obligations of the RO.
Capital Commitment: Injecting the required capital requires planning, and the staggered payment schedule may affect cash flow.
Strict Activity Scope: The limited permitted activities may not suit companies that want to do more than liaison and research.