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Company Registration / Representation Office
 
Application for establishment of a representative office of a foreign juristic person respecting international trading business

Activities of representative office are service businesses under List three (21) of Foreign Business Act B.E. 2542 (A.D. 1999). In the past, 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 person respecting international trading business B.E. 2529 (A.D. 1986). Subsequent the mentioned regulations together with Announcement No. 281 of the National Executive Council were abolished. In the present, definition of the representative office, in accordance with the Regulation of the Office of the Prime Minister in Establishment of Work Permit and Visa Center (No.3) B.E. 2544 (A.D. 2001).

 
Under the above regulation, the business activities that representative office can carry out are limited to 5 business activities:
  1. Source of goods or services in Thailand for the head office.
  2. Checking and controlling the quality and quantity of goods purchased or hired to manufacture in Thailand by the head office.
  3. Giving advice concerning goods of the head office sold to agents or consumers.
  4. Propagation of information concerning new goods or services of the head office.
  5. Report on business trends in Thailand to the head office.
General characteristics of the representative office
  1. Non revenue-generating activities.
  2. No authority to accept purchasing order or to make offer for selling or to negotiate for carrying out of business with person or juristic person in the country in which it is established.
  3. All expenditures incurred by the representative office must be borne by the head office.
  4. It is not subject to corporate income tax. In accordance with revenue code except deposit interest of remitted funds from the head office has to pay tax.
Out of scope activities of the representative office
  1. Purchasing order or payment of goods on behalf of the head office or its affiliated companies or any activities concerning the purchasing.
  2. Shipment the goods of the head office or its affiliated companies already purchased.
  3. Checking and controlling the quality and quantity of goods for any companies that are not the head office or its affiliated companies.
  4. Giving after sale service concerning installation and maintenance.
  5. Giving advice concerning goods that do not produce or sell by the head office or its affiliated companies.
  6. Receiving purchasing order or service on behalf of the head office or its affiliated companies.
  7. Coordinating in purchasing and selling on behalf of the head office or its affiliated companies.
  8. Propagation of information concerning previous goods or services that already sold in Thailand.
  9. Carrying out activities as middleman or agent between customer in Thailand and head office or its affiliated companies.
  10.  Planning and coordinating with any organization in term of business on behalf of the head office or its affiliated companies.
  11. Being representative in making any contract or activities on behalf of the head office or its affiliated companies.
  12. Report information to any companies that are not the head office or its affiliated companies.
Documents required register to a representative office in Thailand
Foreign corporations wishing to do business in Thailand through a representative office must submit the following documents:
1. An affidavit from the manager or corporate officer, stating the following:
 
1.1 Name of the corporation, registration member, and date of registration
1.2 Address of the registered office
 
1.2.1 Jurisdiction under which the corporation is registered;
1.2.2
Name, address, nationality, age and race of each director, number of shares held by each, and identification of the director (s) with the power to bind the corporation;
1.2.3
Authorized capital of the corporation, number of shares and par value of each, and amount of paid-up capital stock, and
1.2.4
Total number of shareholders, their nationalities, and number of shares owned or held by each national group.
   
  Remark: All above documents must be notarized by a notary public or certified by the Thai consulate or embassy abroad). These documents must not be more than six months old at the time of submission to the Commercial Registrar.
   
2.
- A power of attorney for the manager in Thailand giving him or her, in addition to the normal powers, the power to register the branch office with the pertinent Thai government authorities, and to act as the manager thereof.
 
- Certified photocopies of the passport of the manager of the representative office if he is foreign or the personal I.D. and household registration of the manger if he is Thai must be provided.
   
 
Remark: Must be notarized by a notary public or certified by the Thai consulate or embassy abroad). This Power of Attorney must not be more than six months old at the time of submission to the Commercial Registrar.
   
3. - Brief description of the objectives or details of the business and steps of work.
  - Brochure or profile of the business is required as well.
 
- Office address in Thailand and map thereof. You must show evidence of your right to use the    office space of the representative office (lease, landlord consent, household registration, etc    from the Landlord.
  - Reasons why the representative office is necessary
  - Positive and negative impacts on the Thai economy and society
   
4.
- Last three year's annual financial report of the head office. (Must be translated into Thai by a licensed Thai translator)
  - Details of technology transfer to Thai staff.
  - Number and name of staff together with their salaries.
  - Well known projects/ clients/ products. (Case by case)
  - Business forecast plan and amount of expenses for the next three years.
  - Type, value and number of machinery/office equipment used in the business.
 
- Alien Business Permit A representative office must obtain an Alien Business Permit under    Annex C, Chapter 3(1) of NEC Announcement No. 281 (the Alien Business Law) to start its    activities. This Permit, valid for five years, serves as the permission/license to establish a    representative office. An application for a permit to establish a representative office together    with supporting documents, as well as applications for work permits and visas, must be filed    with the Commercial Registration Department of the Ministry of Commerce.
 
 
Remark:
1. Documentation In order to be registered as a representative office
The foreign company must lodge with the Ministry of Commerce copies of its certificate of incorporation, memorandum and articles of association (or other similar documents) and a power of attorney in favor of the branch manager. The power of attorney must be broad enough in the opinion of the Ministry of Commerce so as to give the manager adequate authority to manage the rep office. The Ministry may request other documentation.
 
2. Copies of all documents
Copies of all documents must be certified to be true copies by a notary public or other official. Signatures on original documents such as the power of attorney should be certified to be true signatures and the authority of the person should also be certified by a notary public. All such notarized or otherwise certified documents must then be authenticated by a Thai Embassy or Consulate.
 
3. Work permits
Up to two foreigners who advise or disseminate information about their company's products or provide reports about the Thai market to their home offices can qualify for a work permit. However up to five foreigners may qualify for a work permit who source goods and services in Thailand for the foreign company or who are responsible for quality control for such goods and services unless the representative office sources at least 100 million Baht in goods and services from Thailand during the preceding year (in which case this limit of work permits may be exceeded).
 
4. Taxation
Representative Offices are normally exempt from income tax, since they do not generate income. However, they are liable to register for tax, since they must pay e.g. withholding income tax on wages paid to employees.
 
5. Capital requirements
A representative office is required to remit into Thailand for its operating expenditure, a total of Baht 5 million over a period of five years, with Baht 2 million being remitted within the first year. These funds may not later be remitted out. The capital may be used for normal working capital requirements, e.g. to pay operating expenditure such as salaries and rent.
 
6. Single Legal Entity
The foreign company and the Representative office are considered to be the same single legal entity, with the result that the foreign company is bound to third parties by the acts which its Representative office has conducted within the scope of authority granted to it. If the Representative office commits an act without authority or acts beyond the scope of its authority, that act would not bind the company as a matter of Thai law unless the company has ratified the act.
 
7. Government Fees
The initial fee is 2,000 Baht. Once the application is approved, the fees are 5 Baht per 1,000 Baht capitalization of the Head Office. The minimum government fee is 20,000 Baht and the maximum government fee is 250,000 Baht.
 
8. Annual Report
The manager of the representative office must prepare an annual report on activities undertaken for the previous year and file this with the Ministry of Commerce, as a condition to the office being permitted to carry on its activities.
 
Advantages and Disadvantages
 
Advantages

A foreign business operating in Thailand as a representative office has some advantages over other forms of organization. They include:

- Ease of registration-- normally no more than 22 working days after submission of application with supporting documents.
- Ease of obtaining work permit/ visas for alien workers.
- No Thai corporate income tax-- any income is derived offshore, so no corporate income tax accrues. Note: a representative office must,
  nevertheless, register and file returns with the Thai Revenue Department.
- Opportunity to become familiar with doing business in Thailand.

 
Disadvantages
A representative office is definitely not for everyone. Notable disadvantages include: 

- Restrictions on scope of business activities (see above)
- Operating capital requirements-- a representative office is required by Thai law to import a minimum of Baht 2 million in operating capital
  during the first year of operation and must import a minimum of Baht 5 million during its first five years of operation.
- Perception-- potential customers or partners of the foreign company may perceive that the representative office status indicates a lack
  of commitment to Thailand on the part of the foreign company.
 

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