Most multinational companies keen on operating their businesses in Thailand prefer to open a branch office in Thailand instead of establishing a Limited Company. These multinationals see the merit establishing a branch office in Thailand as an effectual and cost-effective way of overseeing their business, and selling their products or services in a foreign land.
Under Thai law, Branch Offices are not limited to engaging in non-trading activities only. Unlike Regional Offices and Representative Offices, Branch Offices are permitted to earn income. However, the liabilities assumed by a Branch Office in Thailand extend to the head office located abroad.
The Foreign Business Act B.E. 2542 or FBA is the governing body when it comes to putting up a branch office. If the activities of a branch office fall under the categories listed under the FBA, a Foreign Business License or FBL will be required. The foreign company is required to meet all the requirements imposed by the FBA before it is issued an FBL. The process may take up to 60 working days from the date of application with no guarantee of a grant. Setting up a Branch Office is often less tedious than establishing a new foreign-owned business in Thailand. Once a Branch Office is issued an FBL, it is registered and may start operations.
Requirements in Opening a Branch Office in Thailand
Generally, there are no set limitations or specifics to Thai or foreign shareholding when it comes to setting up a branch office. However, the required minimum capital is 3 million Baht and must be brought into Thailand before an FBL is issued.
An initial 25% of the 3 million capitals is to be brought into Thailand within 90 days approval. Then another 50% of the minimum capital must be remitted in the first year. The remaining 25 % of the 3 million Baht capital must be brought in the second year of the Branch Office operation. Taxes, including a financial report and business development details are to be submitted to the Revenue Department each fiscal year
The following documents must be submitted to the Commercial Registrar. All documents must be duly certified and notarized by the local Thai Consulate or Embassy before submission.
- Articles of Association
- Articles of Incorporation
- Manager’s affidavit with the following information:
- Name of Company or corporation
- Registration date and registration number
- Registered Company address
- Official capital stock of the company
- Paid up capital stock amount
- Number and value of shares
- Name, age, nationality, address of directors, and number of shares
- Number of shareholders, their nationalities, and number of shares
After the submission of these documents, the foreign corporation may not register with the Revenue Department. Since a Branch Office is a permanent establishment of a foreign company, a local representative should be appointed to take care of taxes and other pertinent local duties. A Branch Office may initially operate for 5 years. This can be extended if the Branch Office meets the required minimum capital.