There are several business structures in which corporate entities can choose to adopt when establishing their presence in Thailand and the Representative Office is one of them. However, when such structure is considered by a company, its operations are restricted to several activities only:
- To provide its head office abroad with reports regarding the movements of businesses in the Kingdom.
- To introduce the head office’s products and services to the Thai market.
- To inspect and or control the goods purchased or ordered and to check their quality and quantity. These goods will be used for manufacturing by the head office in Thailand.
- To source out goods and services in the country.
- To provide advice with regards to the goods and services that the head office is selling to consumers and distributors in the Kingdom.
Even if the representative office plays a crucial albeit restricted role for its head office, it is not required to pay corporate tax. Nonetheless, it is still ought to do the following:
- Secure a Corporate Tax Identification Number
- Furnish the rightful government agency with Income Tax Returns
- It is also required to submit Audited Financial Statements
The above mentioned must be obtained or submitted to the Thai government’s Revenue Department and the Ministry of Commerce’s Department of Business Development. The authorized manager of the Representative Office must prepare and file a document fully detailing the activities done by the said office. This must be submitted annually at the Ministry of Commerce. Also, the Representative Office must make sure to operate within its restricted scope of functions otherwise it will be taxed accordingly by the Thai government.
Capitalization requirements is also in effect with the head office expected to infused not less than 5 million THB of working capital on its Representative Office but it shall be transferred in tranche, that is, 2 million THB will be transferred within the Representative Office’s first year of operation and 1 million THB to be transferred every year starting on the second year of operation.
