Branch office in Thailand
What a branch office can do, what it needs in capital and tax, and how the license application works.
A branch office in Thailand lets an established foreign company do business in Thailand without forming a new company. A branch has no shareholders or directors of its own and is not a separate legal entity: it is an extension of the head office, uses the same name and carries out activities within the head office’s scope.
Benefits of a branch office
The main advantage is a simple structure. You need no Thai shareholders, no separate board and no shareholder meetings, and the head office keeps direct control.
A branch has no registered capital, as it issues no shares. The Foreign Business Act still requires a minimum capital injection, explained below.
A branch can earn revenue and generate profit for the head office. This is the key difference from a representative office, which may only carry out non-revenue activities. For many companies, this makes a branch a practical way to start operating in Thailand.
Day-to-day compliance is familiar: the branch registers for tax, files monthly value added tax (VAT) and withholding tax returns, and files audited financial statements every year.
Drawbacks of a branch office
A branch office does not suit every company. Read the drawbacks before you decide; if a branch is not the right fit, Plizz can compare it with a Thai subsidiary, a representative office or BOI promotion.
First, a branch is not a legal entity, so the head office is fully liable for its debts and obligations. Choose the branch manager carefully, because their acts bind the head office.
The business scope is also limited to the activities approved in the Foreign Business License, within the head office’s own scope. To expand into new activities, you need a new license or a different structure, such as a Thai subsidiary.
Finally, the branch pays corporate income tax on its Thai profits, and profits sent back to the head office are taxed again at 10% (profit remittance tax). A branch can also create a permanent establishment, with tax consequences for the head office.
Legal requirements
Most branch activities are restricted under the Foreign Business Act, so the head office usually needs a Foreign Business License (FBL) before the branch can operate. The application is reviewed by the Department of Business Development (DBD) and the Foreign Business Committee.
There is no registered capital, but the head office must bring at least THB 3 million of capital into Thailand, on a set schedule.
At least 25% of the capital must arrive within three months of opening the branch office, at least 50% in total within the first year, and at least a further 25% in each following year until the full amount is in.
If the branch will operate for less than three years, all the capital must be brought in within six months of opening. If the capital requirement is not met, the authorities can close the branch.
How to set up a branch office
Setting up a branch office on your own is demanding, and an incomplete file is sent back, which means starting again. Plizz prepares the file so it is complete the first time.
The first step is the Foreign Business License application. It describes the business in detail, including its scope, size and employees.
The application also includes documents from the head office, such as its list of directors and its Articles of Association.
The branch needs a manager based in Thailand, appointed by a power of attorney from the head office.
The application gives the manager’s details: a copy of the ID card for a Thai national, or of the passport and visa for a foreigner.
It also gives the address of the branch office, usually with a location map.
After review by the DBD, the application goes to the Foreign Business Committee, which considers five factors before approving or refusing it.
First, whether the business benefits or harms national security.
Second, whether it supports Thailand’s economic and social development.
Third, its fit with Thai art, culture, customs and values.
Fourth, its effect on conservation, consumer protection and employment.
Fifth, its contribution to technology, research and development. A strong application addresses each of these points.
Plizz’s legal team prepares and files the application, answers the authorities’ questions and follows the file until the license is granted.
Get a quote for your branch office and we start preparing your application.
