Set Up a Representative Office in Thailand

Thailand is a gateway to Southeast Asia, boasting a strategic location, a thriving economy, and strong trade links with regional and global markets. For foreign companies aiming to explore business opportunities without engaging in direct commercial transactions, setting up a Representative Office in Thailand is a smart and cost-effective option. A Representative Office allows a foreign parent company to establish a local presence, conduct non-revenue-generating activities, and gather vital market intelligence—all while staying compliant with Thai regulations.

This article explores the purpose, benefits, legal framework, and step-by-step process of setting up a Representative Office in Thailand.

What is a Representative Office?

A Representative Office in Thailand is a non-trading entity established by a foreign company to support its business operations in Thailand without engaging in profit-making activities. It is not allowed to earn income, issue invoices, or sign commercial contracts on behalf of the parent company. Its main function is to represent the interests of the head office through limited permitted activities.

Permitted Activities of a Representative Office

According to Thailand’s Ministry of Commerce, a Representative Office may engage in the following five non-revenue-generating activities:

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

2. Checking and controlling the quality and quantity of products purchased in Thailand.

3. Providing information about products or services sold by the head office to Thai customers.

4. Reporting on business trends and movements in the Thai market to the head office.

5. Promoting cooperation between the head office and local agents or distributors.

Any activity beyond these may require a different business structure, such as a branch office or a Thai limited company.

Benefits of Setting Up a Representative Office in Thailand

Setting up a Representative Office offers several strategic advantages:

1. Low-Risk Market Entry

It allows foreign companies to test the Thai market and build local networks without the financial and legal complexities of forming a full subsidiary or joint venture.

2. No Corporate Income Tax

Since a Representative Office is not allowed to generate revenue, it is exempt from corporate income tax, except for taxes withheld on payments to employees or service providers.

3. Simplified Operations

The Representative Office has fewer compliance and reporting requirements compared to trading entities. This simplifies administration and reduces operational costs.

4. Brand Visibility and Relationship Building

A Representative Office helps foreign firms maintain a physical presence, enhancing credibility and facilitating relationships with Thai suppliers, agents, or potential partners.

Legal Requirements and Limitations

Foreign companies planning to establish a Representative Office in Thailand must comply with the Foreign Business Act (FBA). Since a Representative Office is considered a “service business,” foreign companies must apply for a Foreign Business License (FBL) from the Department of Business Development (DBD).

Here are some key requirements:

• The head office must be legally registered abroad.

• The Representative Office must not generate income or sign sales contracts.

• At least 2 million THB in capital must be allocated (25% to be paid within the first three months, and the full amount within two years).

• At least one person must be appointed as the representative.

• Only non-commercial activities are permitted.

• The office must report to the DBD on an annual basis.

Steps to Set Up a Representative Office in Thailand

Step 1: Prepare Required Documents

The foreign company must gather and notarize the following documents:

• Company affidavit and certificate of incorporation of the parent company

• Articles of Association of the parent company

• Power of Attorney authorizing the local representative

• Passport or ID of the local representative

• Description of the parent company’s business operations

• Detailed business plan for the Representative Office

• Office lease agreement in Thailand

• Financial statement of the parent company for the last three years

All foreign-language documents must be translated into Thai and notarized.

Step 2: Apply for the Foreign Business License (FBL)

Submit the application to the Department of Business Development (DBD), Ministry of Commerce. The DBD will review whether the activities meet the criteria of a Representative Office.

The review process may take up to 60 business days, depending on document completeness and activity scope. Once approved, the DBD will issue the FBL, allowing the Representative Office to legally operate.

Step 3: Register for Tax and Obtain a Tax ID

Although the Representative Office does not generate income, it is still required to:

• Register for a Tax Identification Number from the Thai Revenue Department within 60 days of beginning operations.

• File annual income and withholding tax returns as applicable.

• Deduct and remit withholding tax for payments made to employees and service providers.

Step 4: Register for Social Security and Hire Staff

If the Representative Office hires employees, it must:

• Register with the Social Security Office within 30 days of hiring its first employee.

• Contribute to employee social security and welfare funds as required under Thai labor law.

Typically, a Representative Office may employ a small team of administrative, technical, or liaison staff.

Step 5: Apply for Visas and Work Permits (if applicable)

If the appointed Representative is a foreign national, the company must apply for a non-immigrant B visa and work permit through the Thai Ministry of Labor. In general:

• One work permit may be issued per 3 million THB of registered capital.

• A local office, tax ID, and social security registration are usually required before the work permit is granted.

Ongoing Compliance Obligations

Even though it operates on a limited scale, a Representative Office must maintain the following:

• Annual report to the DBD detailing activities, staffing, and expenses

• Financial record-keeping and submission of annual audited statements

• Renewal of work permits and visas for foreign staff

• Compliance with Thai labor, tax, and immigration laws

Failure to comply can result in penalties or revocation of the FBL.

Conclusion

Setting up a Representative Office in Thailand is an excellent strategic move for foreign companies looking to explore opportunities, conduct market research, or support operations without engaging in revenue-generating business. It offers a low-risk, cost-effective way to build a local presence while maintaining full foreign ownership.

However, while the process is relatively straightforward, compliance with the Foreign Business Act and other Thai regulations is essential. Working with legal and business consultants familiar with Thai corporate law can ensure a smooth and successful setup.

For companies seeking to test the waters of Southeast Asia’s dynamic economy, a Thai Representative Office is the perfect first step toward long-term success.