A Representative Office Thailand allows a foreign company to conduct non-revenue generating activities in Thailand. It also offers a simplified compliance process.
In order to set up a Representative Office, the foreign parent company must submit a number of documents. These include a letter of appointment signed by the director, details about the foreign company and a declaration that the directors, applicant, managers or appointed representative satisfy certain requirements.
Legal Requirements
A representative office is a legal entity incorporated under the foreign business law. It is allowed to perform strictly non-revenue-generating activities and cannot accept purchase orders or make sales offers. It can also not negotiate business matters with natural persons or juristic persons established in Thailand. As representative offices do not generate income, they are not subject to corporate tax with the exception of remitted funds from the head office.
The first step in establishing a rep office in Thailand is to select the right location for the office and confirm ownership or occupancy. Once the paperwork is filed, a certificate of authorization will be issued by the Department of Business Development. It is important to keep in mind that it can take up to eight weeks to obtain the approval.
Once the rep office is authorized to operate, it must assemble a list of documents that the authorities require, including financial statements, a letter of introduction, and an operations outline signed by the parent company’s leadership. Lastly, it must hire staff and sponsor their visas and work permits according to employment laws.
Although rep offices have fewer regulatory requirements than branch offices, they must adhere to local employment laws and periodic reporting requirements. They should also avoid activities that exceed the scope of their permitted operations, as doing so could result in penalties or even the revocation of the Foreign Business License.
Taxes
As a non-profitable legal entity, representative offices are exempt from taxes in Thailand. However, they must comply with local employment laws and submit regular financial statements and reports to the Department of Business Development.
It is a good idea to seek the advice of an experienced corporate lawyer when setting up a representative office in Thailand. They will be able to guide you through the complex process and ensure that all requirements are met.
Representative offices in Thailand are allowed to engage in a number of activities, including market research, sourcing products and services, and acting as a liaison. However, they cannot receive purchase orders or make sales. They are also not permitted to issue invoices to clients.
While the tax exemptions and reduced compliance requirements for representative offices are attractive, there are a few things to keep in mind. First, it is important to choose a location that is convenient and easy to access. Second, the representative office must be adequately funded to cover its initial expenses. Third, it is a good idea to hire a manager who has experience working in the local market.
In addition, the representative office must file annual financial statements and pay wage taxes for its employees. In order to avoid penalties, it is crucial to stay within the scope of its permitted activities and to maintain compliance with Thai law.
Employees
A Representative Office is a type of legal entity for foreign companies to operate in Thailand. This office can study commercial information and report it back to the head office overseas. It can also carry out market research and promote goods at trade fairs. However, this office cannot accept purchase orders or conduct business negotiations with third parties. In addition, it is not allowed to generate any income locally.
To set up a Representative Office, the foreign parent company must submit several documents to the Department of Business Development. These documents include an affidavit that lists the company’s directors and gives them power of attorney. The office must also have a local manager to manage the day-to-day operations of the office. In addition, the office must have a Thai bank account for remittance of funds from the head office.
Representative offices are a great way for foreign companies to establish themselves in the Thailand market without having to register as a branch or company limited. Moreover, they are less expensive than a fully fledged subsidiary. Furthermore, they are exempt from corporate taxes in Thailand as they do not generate revenue. However, the scope of activities is limited and it’s best to seek professional assistance from an experienced company such as Plizz to ensure that the setup process goes smoothly.
Location
A representative office (RO) in Thailand is an excellent option for foreign investors seeking to explore the local business market. This type of non-trading entity can be 100 percent foreign owned and can only engage in specific non-profit activities like conducting research, finding new partners, and collecting information. A RO can also employ up to two foreign employees with work permits, but it cannot earn income in the country.
The process of setting up a RO is relatively straightforward, and it takes about six to eight weeks from the time the application is submitted to receiving approval. Once approved, the company will receive a certificate from the Department of Business Development, which will allow it to operate as a representative office in Thailand.
Some of the key requirements that must be met by the foreign head office include submitting a letter of appointment, a copy of the board resolution authorizing the opening of the office, and a list of directors, authorized signatories, and the company name and address. The representative office must also submit a statement declaring that it will comply with the Foreign Investment Act and the Minimum Capital requirement.
A representative office can perform a number of different functions in the country, including promoting and marketing goods or services of the parent company. The office can also inspect and control the quality and quantity of products purchased for distribution in Thailand, and it can search for local suppliers. Moreover, the representative office can also report to the head office on the market conditions in the country.