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Setting Up a Branch Office in Thailand: A Comprehensive Guide
03/07/2023
Thailand has become an attractive destination for foreign businesses looking to expand their presence in Southeast Asia. A preferred business structure for foreign business owners in Thailand is setting up a branch office.
With relatively lesser investment and a quicker registration process than a Thai Limited Company, a branch office is an attractive option for foreign business owners.
This article is a comprehensive guide to help you navigate establishing a branch office in Thailand. We will address common questions, requirements, tax obligations, hiring employees, and the timeline for establishing a branch office.
Key points
- Branch Offices can be 100% foreign-owned.
- A branch office in Thailand is considered an extension of the foreign company, and the head office is liable for its actions.
- The minimum capital requirements for a branch office are 3 million Thai Baht for restricted businesses and 2 million Thai Baht for non-restricted businesses.
- A branch office can undertake any “income-related activity” on behalf of its head office, but if it involves a restricted business, a Foreign Business License is required.
- A branch office is subject to Thai corporate income tax, currently at a rate of 20%, and may also be liable for other taxes such as VAT and withholding tax.
- Branch offices can hire both foreign employees, with a Thai to Foreign Worker Ratio of 1:1, which is more favorable than a Thai limited company.
Can Foreigners Establish a Branch Office in Thailand?
Under Thai law, a Branch Office is essentially a foreign company registering its presence in Thailand as a branch.
The Branch Office is not considered a separate entity from the foreign company, therefore, is treated as the same entity as its parent. The head office is liable for any actions taken by the Branch Office in Thailand.
What are the requirements for setting up a Branch Office?
To establish a branch office in Thailand, you must provide certain documents. While the specific requirements may vary depending on your circumstances, the following are typically required:
Certified copy of the parent company’s incorporation documents: You must provide a certified copy of the parent company’s incorporation documents, such as the certificate of incorporation.
Certified copy of the parent company’s financial statements: It is necessary to provide certified copies of its financial statements, including balance sheets, income statements, and cash flow statements.
Letter of appointment for the authorized director(s) of the branch office: You must submit a letter of appointment that designates the authorized director(s) responsible for managing the branch office’s operations in Thailand.
Power of attorney empowering the authorized director(s): A power of attorney is required to empower the branch office’s authorized director(s) to act on behalf of the parent company.
Does a Branch Office require Thai Partners?
Unlike other business structures, setting up a branch office in Thailand does not require a Thai partner or shareholder. However, it is mandatory to appoint at least one authorized director who is ordinarily a resident of Thailand.
What are the minimum Capital Requirements?
The required minimum capital amount for a Branch Office is 3 million Thai Baht for restricted businesses and 2 million Thai Baht for non-restricted businesses.
What Business Activities can a branch office undertake in Thailand?
A Branch Office can perform any “income-related activity” in Thailand on behalf of its head office. It is important to note that the activities of the Branch Office are restricted to the business for which it is registered.
If the business activities are considered a ‘restricted business’ under the Foreign Business Act, which in most cases it will be, a Foreign Business License must be obtained from the Ministry of Commerce. A Foreign Business License is not required if the business is not considered a restricted business, but a Commercial Registration Certificate from the Ministry of Commerce would be needed.
What are Tax Obligations for a Branch Office?
A branch office in Thailand is subject to Thai corporate income tax on its net profits. The current corporate income tax rate in Thailand is 20%. Additionally, the branch office may also be subject to other taxes, such as value-added tax (VAT) and withholding tax, depending on its activities.
Hiring Employees for a Branch Office
A branch office in Thailand is allowed to hire both foreign and local employees. For branch offices to hire foreigners, they must satisfy the Thai to Foreign Worker Ratio of 1:1. This ratio is significantly lower than that of a Thai limited company (4:1) and is a very attractive advantage.
What is the timeline for Setting Up a Branch Office?
The timeframe for setting up a branch office in Thailand can vary. However, on average, it takes a few weeks to complete the registration process and obtain all the necessary approvals and permits. It is advisable to engage the services of a reliable corporate law firm in Thailand to ensure a smooth and efficient registration process.
How can Belaws help?
For more information about branch offices in Thailand, why not talk to one of our experts now?
Please note that this article is for information purposes only and does not constitute legal advice.
Our consultations last for a period of up to 1 hour and are conducted by expert Lawyers who are fluent in English, French and Thai.
Consultations can be hosted via WhatsApp or Video Conferencing software for your convenience. A consultation with one of our legal experts is undoubtedly the best way to get all the information you need and answer any questions you may have about your new business or project.
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Frequently asked questions
Can I open a branch office in Thailand?
Yes, you can open a branch office in Thailand as a foreign business owner.
What is the difference between a representative office and a branch in Thailand?
A representative office is a non-income-generating entity that serves as a liaison for the parent company, while a branch office can undertake income-related activities on behalf of the parent company.
What is the difference between a branch and a subsidiary in Thailand?
A branch office is an extension of the foreign company and is not considered a separate legal entity, while a subsidiary is a separate legal entity with its own shareholders and directors.
How do I set up a branch in Thailand?
To set up a branch office in Thailand, you need to provide certified copies of the parent company’s incorporation documents, financial statements, a letter of appointment for the authorized director(s), and a power of attorney empowering the authorized director(s). You do not need a Thai partner or shareholder, but at least one authorized director must be a resident of Thailand.
Can a foreigner open a shop in Thailand?
Yes, foreigners can open a shop in Thailand. However, specific regulations and restrictions may apply depending on the type of business.
Can a foreigner buy a franchise in Thailand?
Yes, foreigners can buy a franchise in Thailand. Franchising in Thailand is regulated by the Thai Franchise Act, and certain requirements must be met.
Can foreigners make a bank account in Thailand?
Yes, foreigners can open a bank account in Thailand. However, certain documentation and requirements may be necessary, such as a valid passport and proof of residence.
Can I open a bank account in Thailand without a work permit?
Yes, it is possible to open a bank account in Thailand without a work permit. However, the requirements may vary depending on the bank and the type of account.
How can a foreigner set up a company in Thailand?
Foreigners can set up a company in Thailand by following the legal procedures and requirements, which include registering the company, obtaining necessary licenses or permits, and complying with Thai corporate laws. It is advisable to seek guidance from a corporate law firm to ensure compliance with the regulations.
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