Haris & Associates Phuket Thailand Legal Blog

Thailand’s economy has proven too hard to resist by foreign investors. This is why there are a lot of foreign businesses in the country. However, Phuket Lawyers advise that it is more practical to set up a branch office in the Thailand, instead of setting up a new corporation. This is because the tax implications of establishing a satellite office are more convenient for businesses, especially for smaller companies.

What does a foreign company need to do to set up a branch office?

The first thing they need to do is to apply for a tax identification number from the Revenue Department. The application must be submitted within 60 days from date of registration or operation to the Area Revenue Officer in Thailand. This must be accompanied by the necessary documents, including a copy of the company’s registration license.

What are the implications of running a branch office?

A branch office, unlike the representative and regional offices, branch offices in Thailand are not limited to non-trading activities. This means that a branch office may earn income. Moreover, any liability that arises from the action of the business in the country will not be limited within Thailand, but extends its head office in another country.

The capitalization of a branch office in Thailand will be calculated from at least 25 percent of its average estimated expenses within the first three years of operation, but must not be lower than three million baht.

Under Thai Law, a branch office of a foreign company is also governed by the Foreign Business Act B.E. 2542 (FBA). This means that the branch office must furnish a Foreign Business License (FBL), if the activities of the branch office fall into any of the categories under the FBA.

 

What are the documents needed to establish a branch office in Thailand?

 

1. Affidavit of the Manager indicating the following:
   • Name of the corporation
   • Date of Registration and Registration number
   • Registered office address of the corporation
   • Name, address, nationality, age of the director, as well as the number of shares held by them
   • Number of shares and its par value
   • Authorized capital stock of the corporation
   • Total number of shareholders and their respective number of shares, as well as their nationalities
   • Amount of paid up capital stock
2. Articles of Association
3. Articles/Memorandum of Incorporation

 

These documents must be notarized and certified by the local Thai Embassy or Consulate. These will then be submitted to the Commercial Registrar.

In order to ensure proper procedures are followed, the company must speak with a Thai business attorney. The lawyer will help facilitate the submission, saving them time and effort.

Once all the necessary documents are submitted, the foreign business must now be registered with the Revenue Department.