Regional Office vs Representative Office vs Branch Office

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Regional Office vs RO vs Branch Office

There are various types of legal entities which foreign investors can use to conduct business in Thailand other than a limited company or partnership. Such entities include a regional office (RO), representative office (Rep Office) and branch office (Branch).

Keywords: Mazars, Thailand, Regional Office, Representative Office, Branch Office, Foreign Entity, Legal

25 October 2017

Below is a table comparing certain key areas for each type of entity:

Key area

RO

Rep Office

Branch

Legal status

  • Must be a legal entity registered under the law of a foreign country.
  • Once it is established, an RO is considered to be the same legal entity as its head office.
  • Must be a legal entity registered under the law of a foreign country, and is considered to be the same legal entity as its head office.
  • Must be a legal entity established under the law of a foreign country, and is considered to be the same legal entity as its head office.

Nature of activity

 

  • Provides support services to its affiliates in the same region in at least one country.
  • Non-profit business
  • Can conduct only 5 activities (*) without generating any income.
  • A Rep Office’s activities must be provided to its head office and/or subsidiaries/affiliates.
  • Able to conduct various activities regardless of whether or not they generate any income.

Licence to operate business

  • Under the new Ministerial Regulation of the Ministry of Commerce, an RO is not considered a restricted business under the Foreign Business Act. Therefore, it does not necessary to apply for a foreign business licence to operate an RO in Thailand (**). However, a legal entity number is required to apply from the Ministry of commerce.

 

  • A foreign business licence is not required according to the Ministerial Regulation Prescribing Service Businesses Not Subject to Application for a Foreign Business Licence (No. 3), 2560 B.E.
  • A legal entity number is required from the Ministry of Commerce.
  • If the business to be operated is considered as a restricted business under the Foreign Business Act, 2542 B.E., a foreign business licence must be obtained from the Ministry of Commerce.
  • If the business to be operated is not restricted under the Foreign Business Act, 2542 B.E., a commercial registration certificate must be obtained from the Ministry of Commerce.

Capital requirement

 

  • At least 2 million baht is required, according to the Foreign Business Act, 2542 B.E.

 

  • At least 2 million baht is required according to the Foreign Business Act, 2542 B.E. (***)

 

  • At least 3 million baht is required if the business is a restricted business.
  • At least 2 million baht is required if the business is not restricted under the Foreign Business Act, 2542 B.E.

Notes:

(*)   Five activities are the following:

1)      Reporting on business trends in Thailand to the head office or its affiliate.

2)      Providing advice concerning goods of the head office sold to agents or customers.

3)      Sourcing of goods or services in Thailand for the head office or its affiliate.

4)      Checking and controlling the quality and quantity of goods purchased or hired for manufacture in Thailand by the head office or its affiliate.

5)      Preparing information concerning new goods or services of the head office or its affiliate. Any other services as stipulated by the Director-General of the Revenue Department

(**) Ministerial Regulation Prescribing Service Businesses Not Subject to Application for a Foreign Business Licence (No. 3), 2560 B.E.

(***) Three million baht is required to issue a visa and work permit for an expatriate, and an additional 3 million baht is required for each additional expatriate employee.

The support services that an RO can provide are as follows:

  • Training and development;
  • Technical assistance;
  • Financial management;
  • Control of marketing and sales promotion planning;
  • Product development; and
  • Research and development. 

For more information, please visit Royal Decree No. 586 (2015), ROH (Regional Operating Headquarters) vs. RO (Regional Office), and  Ministerial Regulation Prescribing Service Businesses Not Subject to Application for a Foreign Business Licence (No. 3), 2560 B.E..

 

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