A Representative Office in Thailand
Note a representative office of a foreign business in Thailand is not allowed to operate a profit making business and is not allowed to earn income in Thailand. Activities of representative office are service business under List (21) of the Foreign Business Act B.E. 2542 (1999). In the past, the definition of the representative office, in accordance with the Regulations of the Office of the Prime Minister governing application for Establishment of Representative Office of foreign juristic persons respecting international trading business B.E. 2529 (1986). Subsequent the mentioned regulations together wit Announcement No 281 of the National Executive Council were abolished. In the present, definition of representative office, in accordance with the regulations of the Office of the Prime Minister in Establishment of Work permit and Visa Center (No.3) B.E. 2544 (2001).
Under the above regulation, the business activities that representative office may carry out are limited to 5 business activities:
- Sourcing of goods or services in Thailand for the head office.
- Checking and controlling the quality and quantity of goods purchased or hired to manufacture in Thailand by the head office
- Giving advice concerning goods of the head office sold to agents or consumers
- Propagation of information concerning new goods or services of the head office
- Report on business trends in Thailand to the head office.
General characteristics of the representative office:
- Non revenue generating activities
- No authority to accept purchasing order or to make an offer for selling or to negotiate for carrying out of business with persons or juristic persons in the country which it is established
- All expenditures incurred by the representative office must be borne by the head off
- It is not subject to corporate income tax, in accordance with the revenue code except deposit interest of remitted funds from the head office has to pay tax.
Out of scope activities of the representative office:
- Purchasing order of payment of goods on behalf of the head office or its affiliated companies or any activities concerning the purchasing
- Shipment the goods to the head office or its affiliated companies already purchased
- Checking and controlling the quality and quantity of the goods for any companies that are not the head office or its affiliated companies
- Giving after sale service concerning goods that do not produce or sell by the head office or its affiliated companies
- Giving advice concerning goods that do not produce or sell by the head office or its affiliated companies
- Coordinating in purchasing or service on behalf of the head office or it affiliated companies
- Propagation of information concerning previous goods or services that already sold in Thailand
- Carrying out activities as middleman or agent between customer in Thailand and head office or its affiliated companies
- Planning and coordinating with any organization in term of business on behalf of the head office or its affiliated companies
- Being representative in making any contract or activities on behalf of the head office or its affiliated companies
- Report information to any companies that are not the head office or its affiliated companies
A representative office is defined as an office in Thailand of a foreign company engaged in the business of international trading. A representative office of overseas companies may engage only in the following activities.
If granted approval by the authority you may engage in the following activities:
- finding suppliers of goods or services in Thailand for the head office abroad;
- checking and controlling the quality and quantity of goods purchased or hired by the head office for manufacturing purposes in Thailand;
- providing advice on various aspects of goods sold by its head office to agents, distributors and/or customers in Thailand;
- providing information to interested persons in Thailand concerning goods or services of the head office; and
- reporting to the head office on business movements in Thailand.
The activities of a representative office are restricted. A fundamental premise is that the office cannot earn income as a business enterprise in Thailand, buy or sell goods on behalf of the head office, or render any service to any person or juristic person in Thailand. Such a representative office is deemed to receive a subsidy from the head office to meet its expenses in Thailand.
