Establishing a Regional Office in Thailand

Business Services

What is a Regional Office in Thailand ?

A regional office in Thailand serves as an extension of a multinational corporation’s overseas head office, facilitating specified activities on their behalf. Unlike separate legal entities, regional offices operate solely under the authority of their head offices, performing tasks outlined in List Three of the Foreign Business Act 1999 (FBA). To establish a regional office, a transnational corporation must already have at least one branch office or affiliate in the Asian region.

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Key things to consider

Navigating the complexities of setting up a branch office in Thailand demands meticulous planning, strict adherence to legal requirements, and thorough financial scrutiny to ensure seamless integration into the Thai business landscape. HLG Thailand can provide expert guidance and support throughout this process, assisting you every step of the way to ensure a successful establishment of your branch office in Thailand.

Additional Information:

  1. Regional offices are limited to seven specific activities, including coordinating operations, providing consulting services, and managing personnel and finances.
  2. A transnational corporation must already have at least one branch office or affiliate in the Asian region.
  3. Regional offices are restricted from engaging in revenue-generating activities such as earning income, purchasing, selling, or negotiating.
  4. Capitalization follows FBA regulations, requiring a minimum investment of 25 percent of estimated expenses for the first three years, not less than THB 3,000,000.
  5. Regional offices are exempt from corporate income tax, profit remittance tax, specific business tax, and value-added tax if they exclusively engage in permitted non-commercial activities. However, they remain liable for domestic and international withholding tax, personal withholding tax, and stamp duty tax.

FAQ

What distinguishes a Regional Office (RO) from other business entities in Thailand?

Unlike other business structures, a Regional Office in Thailand serves as an extension of its foreign head office, focusing on coordinating and directing operations within the region. It’s a strategic hub for management, training, and development activities, contributing to the overall growth and efficiency of the parent company’s operations.

 No, a Regional Office in Thailand is prohibited from generating income from its activities. Any profits made must be allocated to the head office abroad. This restriction ensures that the RO functions solely as a support center for the parent company’s regional operations without engaging in commercial transactions within Thailand.

The application process for an RO involves obtaining a permit from the Department of Commercial Registration at the Ministry of Commerce. This permit is valid for five years and is subject to specific conditions and registration fees. Unlike other business structures, the RO application process typically takes about 2-4 weeks, offering a relatively quick turnaround time for companies seeking to establish a regional presence in Thailand.

While Regional Offices in Thailand offer various advantages for companies expanding their regional footprint, they must comply with strict regulations, including maintaining a 1 to 1 ratio of Thai-to-foreign employees and adhering to capitalization rules. Additionally, ROs must focus solely on serving the main office’s branches and subsidiary companies, limiting their scope of operations within the country. These factors require careful planning and management to ensure the effective and compliant operation of the RO in Thailand.

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