A branch office is a foreign company that establishes its presence in Thailand. Branch offices are allowed to engage in trading activities and are allowed to earn income in Thailand. Under the Thai law, the Foreign Business Act B.E. 2542 governs the Branch Offices (FBA). Subsequently the Branch Office that carries out activities under one of the categories of the FBA is required to apply for a Foreign Business License. The chance of approval increases if the business is unique, does not compete with Thai businesses, or involves dealings among members of an affiliated company. Since the branch office is considered an extension of its head office it does not have shareholders or directors. The parent company must appoint a branch office manager to lead operations in Thailand.

Therefore, the parent company retains legal liability for contracts, and for tortious acts done. A branch is subject to Thai corporate income tax at the regular 30% on profit derived from its business operations in Thailand. It is important to clarify beforehand that Thai Tax Authorities may consider taxable income also the income earned in Thailand by the foreign Head office. The paid-up capital requirement is set at a minimum of 3 Million Baht.

Outline of a Branch office

  • 100% Foreign ownership.
  • Business restrictions.
  • Capital requirements of 3 Million.
  • Foreign business license is required.
  • 3 million THB investment required for every business activity which the Branch Office will operate in Thailand.

Timeframe

4 months

The Process to register a Brand Office

  • The application for registering a Branch Office in Thailand is submitted to the Ministry of Commerce. All documents must be notarized and translated in Thai.
  • A copy of the firm’s affidavit or related documents presenting the status of the juristic person along with details such as name, capital, objectives, address, list of directors and signing authority.
  • A letter of appointment of the Branch Manager in Thailand (foreigner or Thai national). The authorized signatory of the foreign juristic person shall issue the letter for appointment as the agent to lead operations of the branch in Thailand on behalf of the juristic person.
  • A copy of the appointed individual’s passport  if foreigner national or identification card as well as house registration or certificate of residence in Thailand, or evidence of permission to enter Thailand for temporary stay under the immigration laws.

Branch Office in Thailand: other steps to be prepared for:

  • The foreign juristic person certifies that the applicant, directors, managers, and appointed individual satisfy the qualifications and do not possess any prohibited characteristics under section 16 of the Foreign Business Act, B.E. 2542 (1999).
  • Registered office address and map indicating the location in Thailand.
  • A power of attorney in the case where another person has been authorized to act on the applicants behalf for establishment of the Branch Office in Thailand.

Furthermore, confirmation from the parent company of the salary and other remuneration of the person in charge of the operations in Thailand, the head office’s annual audited financial report for the last three years.

Be prepared for a declaration specifying the type of business, to which the license application is associated:

  • A declaration detailing the type of business for which a license application is made to establish the branch.
  • The type of business for which the application is made, including the stages of operations.
  • An estimate of the expenditure amount of funds which the applicant will expend in Thailand. Such expenditure shall be for the acquisition of fixed assets and for the operational expenses of the business in each year over a period of three years.
  • The size of the operations.
  • The size of workforce in Thailand employed by the applicant. A plan for the import of foreign technology and the transfer of technology.
  • A Business plan for research and development, with an explanation of the working plan for the proposed research and development.
  • The intended period of business operation.
  • The overall benefit to the economy which Thailand is expected to receive from the business operation.
  • The source of income and estimated revenue to be derived from the project of the Branch Office in Thailand.

If you are interested in registering your foreign subsidiary, LCS will be your ideal legal and business partner. Ready to support you in all business procedures and contracts.