Establishing a Representative Office in Thailand is an attractive option for foreign companies seeking to explore business opportunities, conduct market research, or support their overseas operations without engaging in direct commercial activities. As one of Southeast Asia’s leading economies, Thailand provides a strategic location, a strong consumer market, and favorable infrastructure that makes it a preferred destination for foreign investors. Although a Representative Office cannot earn income or engage in trading, it plays an essential role in helping foreign corporations gather information, promote products, manage quality control, and support regional operations.
This detailed guide covers the purpose, legal structure, requirements, permitted activities, application process, and benefits of establishing a Representative Office in Thailand.
1. What Is a Representative Office in Thailand?
A Representative Office is a non-trading business entity established by a foreign company for non-revenue-generating activities. It serves primarily as a liaison and support office, offering administrative and coordination services for its head office overseas.
A Representative Office cannot:
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Generate income
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Issue invoices or receipts
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Engage in buying or selling activities in Thailand
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Store inventory for commercial purposes
Because it is not designed for profit-making, it is exempt from corporate income tax, except for interest earned from bank deposits.
2. Permitted Activities of a Representative Office
Under Thai law, a Representative Office may engage in five main activities. These activities are regulated to ensure the RO functions solely as an extension of the foreign head office.
2.1. Sourcing of Goods or Services
The RO can search for local suppliers, gather information about products, and communicate requirements to its head office.
2.2. Quality Control and Inspection
The RO can check the quality, quantity, and standards of goods purchased by the foreign headquarters in Thailand.
2.3. Market Research and Reporting
The RO may conduct studies on:
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Local markets
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Consumer trends
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Competitors
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Industry conditions
Reports are submitted directly to the head office.
2.4. Support for Overseas Customers or Distributors
The RO can provide after-sales services, customer assistance, and coordination with local partners, as long as it does not charge fees.
2.5. Dissemination of Information
The RO can distribute information about new products or services from the head office but cannot engage in sales or promotions that result in revenue.
These limitations ensure the RO remains non-commercial.
3. Legal Framework and Governing Laws
Representative Offices in Thailand operate under several key regulations:
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Foreign Business Act (FBA) B.E. 2542 (1999)
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Department of Business Development (DBD) regulations
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Revenue Code
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Labor and immigration laws
Under the FBA, foreign businesses must obtain a Foreign Business License (FBL) to operate an RO. However, since an RO does not earn income, the licensing process is usually less complex than for a full trading business.
4. Capital Requirements
Although a Representative Office does not engage in revenue-generating activities, it must still bring in minimum capital to operate legally in Thailand.
Minimum Capital Requirement:
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THB 3 million (approximately USD 85,000)
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Can be brought in installments:
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25% within the first 3 months
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Another 25% within the first year
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Remaining 50% over two years
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This capital is used for operating expenses such as office rental, staff salaries, and administrative costs.
5. Key Personnel and Staffing Requirements
A Representative Office must appoint:
5.1. Chief Representative
This individual manages the RO and ensures compliance with Thai laws. The chief representative may be a foreigner or Thai staff.
5.2. Foreign Workforce
Representative Offices are allowed to hire foreign employees, provided they comply with:
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Work permit requirements
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Non-immigrant B visa rules
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Ratio of Thai to foreign employees (usually 1:1 for ROs)
The RO must register with the Social Security Office if it hires staff.
6. Step-by-Step Process for Establishing a Representative Office
Setting up an RO in Thailand requires careful planning and proper documentation.
Step 1: Prepare Required Documents
The foreign head office must provide:
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Company registration documents
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Financial statements (latest financial year)
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Board resolution approving the establishment of the RO
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Power of attorney for authorized persons
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Details of business activities
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Passport and personal information of directors
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Organizational chart
All foreign language documents must be translated into Thai and notarized.
Step 2: Submit an Application for a Foreign Business License (FBL)
The application is filed with the Department of Business Development (DBD) under the Ministry of Commerce.
The DBD evaluates:
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Nature of the business
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Benefits to Thailand
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Compliance with FBA regulations
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Proposed activities of the RO
Approval typically takes 2–3 months, depending on the accuracy of documentation.
Step 3: Register the RO with Relevant Agencies
Once the FBL is approved, the RO must register with:
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Revenue Department (for tax ID)
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Social Security Office (if hiring employees)
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Local district office (for building registration)
Although ROs are tax-exempt, they still must file annual reports with the Revenue Department.
Step 4: Open a Corporate Bank Account
The RO must open a bank account in Thailand for receiving operational funds. The head office should transfer the required minimum capital accordingly.
Step 5: Obtain Work Permits for Foreign Staff
If the RO hires foreign employees, they must obtain:
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Non-Immigrant B Visa
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Work Permit
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Re-entry permits
The RO must maintain proper employee records and comply with labor laws.
7. Operational Requirements for Representative Offices
A Representative Office must adhere to specific ongoing obligations.
7.1. Annual Reports
The RO must file:
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Annual audited financial statements
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Income tax returns (even if zero income)
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Social security submissions
7.2. Bookkeeping
Maintaining proper accounting records is mandatory.
7.3. Operational Limitations
The RO must avoid:
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Generating revenue
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Signing contracts that involve sale or purchase
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Engaging in commercial transactions
Failure to comply may result in license revocation.
8. Advantages of Establishing a Representative Office in Thailand
8.1. Low-Risk Market Entry
An RO allows foreign companies to understand the Thai market before making larger investments.
8.2. No Corporate Income Tax
ROs do not earn income, so they are not subject to corporate taxes except for bank interest.
8.3. Full Control of Operations
The foreign head office maintains 100% control over the RO’s structure and decisions.
8.4. Ability to Hire Foreign Staff
ROs can legally employ expatriates with proper visas and work permits.
8.5. Strategic Business Expansion
ROs help companies:
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Monitor competitors
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Support local partners
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Build brand presence
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Gather regulatory information
This is essential for long-term business planning.
9. Challenges of Setting Up a Representative Office
9.1. Inability to Earn Income
The RO cannot generate revenue, which limits commercial operations.
9.2. Strict Activity Restrictions
Exceeding the allowed activities can result in penalties.
9.3. Capital Requirements
The THB 3 million minimum capital may be a burden for smaller companies.
9.4. Administrative Burden
The licensing process and ongoing filing requirements require careful compliance.
Conclusion
Establishing a Representative Office in Thailand is an excellent option for foreign companies that want to explore the market, support local partners, or conduct research without engaging in profit-driven activities. With relatively simple capital requirements, strong strategic benefits, and an internationally friendly legal framework, Thailand offers an attractive environment for establishing such entities. However, proper planning, legal advice, and compliance with regulations under the Foreign Business Act are essential for smooth and successful operations.
A Representative Office often serves as the first step for companies considering future expansion into Thailand through joint ventures, branch offices, or Thai limited companies. With the right guidance, a Representative Office can provide valuable insights, operational support, and a low-risk entry point into one of Asia’s most dynamic economies.
