Expanding into the Thai market doesn’t always require establishing a full-scale business operation. For many foreign companies looking to explore the market, gather data, or support local customers, setting up a Representative Office in Thailand is an ideal and cost-effective solution. Unlike a limited company, a Representative Office is not allowed to generate income but can legally perform certain non-revenue-generating activities on behalf of its parent company.
This article provides a comprehensive guide to understanding the function, requirements, and steps to establish a Representative Office in Thailand.
What is a Representative Office?
A Representative Office (RO) is a type of business entity that represents a foreign company in Thailand for specific non-commercial purposes. It is not a separate legal entity and operates as an extension of its parent company.
The main characteristics of an RO include:
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100% foreign ownership is allowed
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Cannot engage in profit-making activities
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No income tax (except for withholding tax on employee salaries)
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Cannot issue invoices or engage in trade
Permitted Activities of a Representative Office
Thai law strictly limits the functions of a Representative Office to five specific activities, which must be performed solely for the benefit of the head office:
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Sourcing goods or services in Thailand for the head office
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Checking and controlling the quality and quantity of goods purchased or manufactured in Thailand
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Providing advice on goods sold by the head office to local distributors or customers
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Propagating information about new products or services of the head office
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Reporting on market conditions in Thailand to the head office
Engaging in activities outside these categories, such as buying and selling goods, entering into contracts, or providing services for a fee, is strictly prohibited.
Benefits of a Representative Office
Setting up a Representative Office in Thailand comes with several advantages, particularly for companies testing the market or supporting existing business operations:
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Full foreign ownership without needing a Thai partner
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No corporate income tax on business operations
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Lower setup cost compared to other entities
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Ability to employ foreign and local staff
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Good vehicle for market research and customer support
Key Requirements
Before starting the setup process, ensure your company meets the following criteria:
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The parent company must be legally registered abroad for at least 1 year.
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The RO must engage only in the 5 permitted activities.
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Minimum 2 million THB capital (not required to be paid upfront in full).
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Must appoint a Chief Representative to manage the office in Thailand.
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Must employ at least 1 foreign and 1 Thai staff, depending on visa/work permit needs.
Step-by-Step Process to Set Up a Representative Office
Step 1: Prepare Required Documents
The following documents are needed from the parent company:
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Copy of company’s certificate of incorporation
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Company affidavit detailing business activities and directors
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Financial statements (latest year)
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Power of Attorney to appoint the Chief Representative
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A letter of intent to establish the RO
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Copies of directors’ and shareholders’ passports or IDs
All foreign documents must be certified and notarized in the country of origin, then translated into Thai and legalized at the Thai Ministry of Foreign Affairs.
Step 2: Apply for the Foreign Business License (FBL)
Because an RO is considered a foreign business, it must obtain permission from the Department of Business Development (DBD) by applying for a Foreign Business License (FBL) under the Foreign Business Act.
Key steps include:
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Submit the application to the DBD
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Provide a detailed business plan, including the 5 allowed activities
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Describe the relationship with the head office
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Appoint a Chief Representative and provide their resume
Processing time: 4–6 weeks if documentation is complete and compliant.
Step 3: Register for Tax Identification
Even though an RO does not pay corporate income tax, it must still register with the Revenue Department for a Tax ID within 60 days of starting operations or hiring staff.
If the office employs staff or leases property, it must also:
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Register for Social Security
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Withhold personal income tax from salaries
Step 4: Open a Corporate Bank Account
After receiving approval, the RO can open a corporate bank account in Thailand using:
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FBL approval letter
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Office lease agreement
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Company affidavit (from DBD)
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Passport of the Chief Representative
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Board resolution from the parent company authorizing the account
Funds transferred from the head office must be documented as operational support, not income.
Step 5: Apply for Visa and Work Permits
The Representative Office can support work permits for foreign staff, including the Chief Representative. To apply:
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Register with the Department of Employment
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Apply for a Business Visa (Non-B) for foreign staff
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Apply for a Work Permit once the visa is approved
Generally, for each foreign employee, the office must employ at least one Thai national and provide capital of 3 million THB per foreign employee (cumulative with the required 2 million THB).
Ongoing Compliance and Reporting
After setup, a Representative Office must comply with local laws and maintain records:
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Annual reports must be submitted to the DBD
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Maintain bookkeeping and accounting records, even if no income is generated
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Renew work permits and visas annually
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Ensure business activities remain within the approved scope
Non-compliance can result in fines or revocation of the Foreign Business License.
Limitations of a Representative Office
While an RO is easy to maintain, it is not suitable for businesses seeking to generate revenue. Key limitations include:
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No commercial contracts with Thai customers
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Cannot generate income or issue tax invoices
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All expenses must be funded by the head office
If your business needs to engage in commercial trade or services in Thailand, setting up a Thai limited company or applying for a BOI promotion may be more appropriate.
Conclusion
Setting up a Representative Office in Thailand is a strategic choice for foreign companies wishing to establish a presence without the complexity of running a revenue-generating business. It allows for essential activities such as market research, customer support, and quality control while maintaining full foreign ownership.
By understanding the regulatory framework and ensuring compliance with Thailand’s Foreign Business Act, foreign companies can effectively operate a Representative Office and lay the groundwork for future expansion in Southeast Asia.
Working with a local legal consultant or business advisor can streamline the setup process and help navigate licensing, documentation, and compliance requirements smoothly.