branches of foreign companies

Foreign companies are generally required to register their branches in Thailand. However, most business activities are subject to laws and regulations that mandate registration before or after commencing operations. Foreign companies must therefore adhere to the generally accepted procedures. It is crucial to clarify in advance which income is subject to Thai taxation, as the Thai tax authorities may classify income generated directly from Thai sources, even from a foreign headquarters, as taxable in Thailand.

As a prerequisite for obtaining a foreign business license for a branch of a foreign company, working capital totaling five million baht in foreign currency must be brought into Thailand within certain timeframes over a period of four years.

The branch can operate for a period of five years, unless a shorter term is specified in the application due to a contract to be performed in Thailand. An extension of the initial operating license is possible provided the necessary working capital for Thailand is made available.

A representative office of a foreign company can also be established to carry out limited "non-commercial" activities, such as procuring goods or services in Thailand for the head office or quality control of goods purchased by the head office in Thailand. Other activities may include disseminating information about new products and services of the head office and reporting to it on local business developments and activities.

The above-mentioned contributions to working capital apply to the branches.

Regional offices

On December 28, 2001, the Thai Board of Investment (BOI), chaired by Deputy Prime Minister and Minister of Finance Somkid Jatusripitak, met and approved changes to the investment promotion conditions for regional headquarters (Category 7.9) with the aim of increasing employment, promoting the transfer of management technology and improving human resource practices.

The changes brought the BOI's support for regional headquarters into line with the Ministry of Finance's measures to support the establishment of regional operational headquarters (ROH), which were announced on 11 December 2001.

Projects approved in this category (7.9) are eligible for non-tax incentives from the BOI, such as permission to acquire land and permission to recruit foreign experts and technicians, as well as an attractive range of tax measures granted by the tax authority in the Ministry of Finance.

Licensing requirements have been relaxed to make Thailand a more attractive location for regional offices. The previous requirement that a company monitor its activities in at least five countries has been reduced to three, and the requirement that companies invest at least 40 million baht in real estate has been eliminated.

Projects eligible for funding must have a minimum paid-in share capital of 10 million baht, and foreign income must constitute at least half of the project's annual revenue. A brief description of the ROH is provided below. Detailed information is available from the Ministry of Finance.

A regional office of a multinational corporation may also be established to coordinate and manage, on behalf of the headquarters, the business activities of the headquarters' branches and subsidiaries in the region.

A regional branch is authorized, on behalf of the head office, to coordinate and supervise the company's branches and affiliated companies within the region. The regional branch may provide the following to these branches and affiliated companies:

  • Consulting and management services
  • Financial management services
  • Training and personnel development services
  • Marketing and sales promotion plans
  • Research and development services

    • Advantages of setting up a regional office

    Companies opening regional offices can take advantage of tax incentives offered by the BOI, such as permits for land acquisition and the recruitment of foreign experts and technicians. They also benefit from attractive tax breaks from the tax authority within the Ministry of Finance. Contact the Ministry of Finance for more information.

    These companies are not required to register or be incorporated as legal entities in Thailand and are not obligated to submit financial reports to the Commercial Registry Office. The Commercial Registry Office assists seconded foreign employees with customs clearance of their personal belongings and with applications to extend their temporary stay in the Kingdom or to change their visa type.

    Work permits for foreigners working at the regional office are granted on a case-by-case basis for up to 5 people, depending on need and scope of work.

    Requirements for approval to establish a regional office:

    The regional office is not allowed to:

  • All income from their activities is to be generated by the head office. The expenses of the regional office are covered by the head office.
  • The authority to accept an order or to make a sales offer.
  • Negotiate or conclude business agreements with natural or legal persons within the Kingdom.

    • A permit to establish a regional branch, valid for five years, can be granted upon application to the Foreign Enterprises Department of the Commercial Registry at the Ministry of Commerce. The fee is five baht per 1,000 baht of share capital, up to a maximum of 5,000 baht.

    If approval is granted to establish a regional office, it may be subject to the following conditions:

  • The total debt financing of the company may not exceed seven times the proportion of the capital owned by the shareholders or the owner of the company.
  • The funds used by the regional office must be transferred from abroad and amount to at least 5,000,000 Baht. At least 2,000,000 Baht of the total amount must be transferred in the first year, with at least half of this amount due within the first six months. Subsequently, at least 1,000,000 Baht must be transferred annually until the full 5,000,000 Baht has been transferred. The corresponding transfer receipts must be submitted to the Commercial Registry.
  • At least one person responsible for the operation of the regional office must be resident in the Kingdom.

    • The Director General of the Commercial Register Department is also authorized to establish conditions for a business license issued in accordance with the regulations.

    Regional trade and investment promotion offices

    In April 1996, the Board of Investment (BOI) announced that the establishment of trade and investment promotion offices would constitute a new category of activity eligible for investment incentives. Projects in this category are eligible for BOI incentives (excluding tax breaks), including:

  • Permit to acquire land for an office building.
  • Authorization to obtain foreign nationals to conduct investment feasibility studies.
  • Permission to include as many foreign technicians and experts as required.
  • Authorization to take or transfer foreign currency abroad.
  • There is no limit to the number of shares held by foreigners.
  • The range of activities eligible for funding is:
  • Control and consulting of affiliated companies.
  • All types of consulting services, with the exception of the following:
  • Buying and selling securities
  • Foreign exchange trading

    • Contact our corporate lawyer in Thailand to learn more about the appropriate corporate structure for your business. Our expert team will ensure a smooth and efficient company registration process in Thailand.

    For information and support in setting up your business in Thailand, please fill out the form below and send it to us.