Foreign companies that intend to conduct marketing or business support in Thailand can set up a Representative Office. The office cannot earn revenue but provides important support to the head office. The Representative Office completely relies on the head office for capital and cannot receive money from invoices or bills.
Foreign companies that intend to conduct marketing or business support in Thailand can set up a Representative Office. The office cannot earn revenue but provides important support to the head office. The Representative Office completely relies on the head office for capital and cannot receive money from invoices or bills. A Representative Office is limited to five activities.
- A company can set up a Representative Office to report on business movements occurring in Thailand. Then the head office can use this information to grow its own business.
- It can provide information about the products the company sells to customers and distributors. It cannot sell these products directly, but it can explain the products.
- It can source goods and services to send to the company’s main headquarters. Many businesses use this to save money on products and services.
- A Representative Office can perform inspections and quality and quantity control for goods the headquarters manufactures or purchases from Thailand. This helps companies provide the best products and manage their inventory more efficiently.
- The Representative Office can introduce or market information about new services and products. This is critical if the company is going to introduce new products or services to the Thai market.
These are the only activities a Representative Office is legally allowed to perform. Carrying out activities outside of these parameters could cause the office to lose its license.
Benefit of Representative Office
Many companies aim to reach the Thai market or ensure quality control of products sourced from Thailand but do not want to go through the trouble of setting up a Thai business which requires a 51% Thai ownership. This is the biggest benefit of a Representative Office. It provides companies with established headquarters elsewhere an easy way to make roots in Thailand. These companies can conduct various non-revenue earning activities once they have an office in Thailand.
Unlike a limited company, a Representative Office is not required to follow the same rule to hire 4 Thai nationals for each foreigner employee.
A Representative Office is not subject to corporate income tax since not generating revenue.
Drawbacks of a Representative Office
While a Representative Office is a good fit for many companies, it does have its drawbacks. The biggest drawback is the limited business activities. Companies cannot use a Representative Office to earn revenue. Once they enter Thailand, they might discover revenue-making opportunities and will have to start another company to take advantage of them.
Second, a Representative Office can be difficult for foreigners to set up. Filling out the paperwork and getting it to the right departments can prove too much for some business owners. Fortunately, this problem has an easy solution. Companies can hire Plizz to do the work for them.
Thailand has legal requirements in place for setting up a Representative Office. The office cannot engage in any revenue-generating activities.
Also, the office needs a local manager (representative) and must fill out the necessary paperwork to get approved.
Timeline for Setting up a Representative Office in Thailand – Meeting the Requirements
It can take as little as one week to set up a Representative Office in Thailand. The Director of the main business must create a Letter of Appointment to appoint a local representative for the office. Then the local representative will sign and submit the documents for the application. The documents will be in Thai, and the representative will sign them in person. Once the documents are submitted, the office will receive its license within a few days.
Some companies choose to close the office after setting it up. This is a relatively simple process that can be completed in as little as 60 days. A Representative Office does not have to go through the same closure process as other Thailand businesses do.
Do you want to set up a Representative Office in Thailand? Plizz will take care of everything for you!
Requirements to register a Representative office
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