Situation guide
Representative Office vs Foreign Branch in Thailand: FBA Compliance, Capital Rules & Taxation
Foreign corporations entering Thailand without forming a Thai subsidiary.
Quick answer
A Representative Office is limited to non-revenue activities such as sourcing, market research, quality control and reporting to head office, so it normally has no taxable profit. It must still bring in capital under its licence conditions (statutory floors of THB 2-3 million). A Foreign Branch may trade within its Foreign Business License (FBL), paying 20% corporate income tax on Thai profits and 10% tax on profits remitted abroad under section 70 bis.
The PDF button opens a print-ready sheet — choose “Save as PDF” in the browser dialog. It contains the key facts, the document checklist and the timeline.
Detailed guidance
1. Scope: coordination versus trading
Under the Foreign Business Act B.E. 2542, a representative office falls within the List 3 services that require a licence. Its permitted scope is limited to prescribed activities such as sourcing goods, inspecting and controlling the quality of goods purchased by head office, advising on head-office products, disseminating information on new products and reporting Thai business developments. Everything is done for head office: it takes no orders, issues no tax invoices and collects nothing from Thai customers.
A foreign branch is the overseas company itself carrying on business in Thailand. It may sign sales contracts, render services and earn revenue within its FBL or FBC scope. That flexibility comes with full taxpayer status: corporate income tax, VAT where applicable, withholding duties and an annual audit by a Thai licensed auditor.
2. Capital and remittance schedule
The Act sets a foreign minimum capital of THB 2 million where no licence is needed and at least THB 3 million per licensed activity. Licences usually require phased remittance, evidenced to the Department of Business Development with bank foreign-currency inflow documents (a Foreign Exchange Transaction form or transfer certificate) on the prescribed schedule. Missing the schedule can affect the licence and dependent permissions.
Funds sent by head office to a representative office are operating funding, not income; the books must separate funding from expenses. For a branch, remitted capital sits in a head-office account rather than share capital. Lending from head office instead of remitting capital may not satisfy the licence condition, and interest between a branch and its own head office has deduction restrictions.
3. How each structure is taxed
A representative office operating within scope normally has no taxable net profit, yet it still needs a tax ID, withholds employee salary tax on P.N.D.1, registers for social security, keeps books and files audited financial statements with P.N.D.50 as required. If it begins charging fees or selling in Thailand it exceeds its licence, and that income may be assessed with surcharges and penalties.
A branch pays 20% CIT on net profit from its Thai operations, and a further 10% under section 70 bis when profits are taken out of Thailand, filed on P.N.D.54 within seven days after the month of remittance. Allocations of head-office overhead need evidence and a reasonable allocation key; costs unrelated to Thai operations should not be deducted. By comparison, a Thai subsidiary paying dividends to a foreign shareholder withholds 10%, which a DTA may reduce.
4. Choose the structure from the revenue plan
If the first eighteen months involve no Thai revenue, a representative office tests the market at low tax cost but forbids actual selling. If Thai customer contracts are needed from day one, a branch or Thai subsidiary fits better. A subsidiary ring-fences liability within its own capital, whereas a branch and a representative office are part of the foreign legal entity, so contractual and tax liabilities reach head office.
Each option still needs an entitlement check, such as BOI promotion or a Treaty of Amity FBC for US investors, which change capital and licensing conditions. Contact staff for a quotation with the revenue plan, headcount and head-office jurisdiction. This guide is source-based editorial guidance, not a case-specific legal opinion.
Business vehicle comparison
| Vehicle | Representative office | Foreign branch |
|---|---|---|
| Thai revenue | Prohibited | Permitted within FBL scope |
| Corporate income tax | Normally no taxable profit | 20% of Thai profit |
| Tax on remitted profit | Not applicable | 10% section 70 bis |
| Liability | Reaches head office | Reaches head office |
Key facts
| Minimum capital | THB 2,000,000-3,000,000, remitted in instalments under licence conditions (commonly over about three years) |
|---|---|
| Branch profit remittance tax | 10% under section 70 bis |
| Branch CIT | 20% of Thai-source net profit |
| Representative office revenue | Revenue from sales or services is prohibited |
Practical summary
If you only read one block, start with these five lines and return to the detail afterwards.
- 1.2-4 weeks — Legalise parent-company documents abroad.
- 2.About 30-45 days — File and await DBD licence review within the application timeframe.
- 3.About 15 days after licensing — Obtain the tax ID and register for social security.
- 4.Parent certificate of incorporation, notarised and legalised
- 5.Parent board resolution
Document checklist
Parent certificate of incorporation, notarised and legalised
DBD requires authenticated foreign documents.
Parent board resolution
Approves the office and appoints the manager.
Power of attorney to the Thai manager
Defines the manager's authority.
Bank foreign-currency inflow certificate
Evidences each capital instalment.
Office lease agreement
Supports the registered and tax address.
Timeline
2-4 weeks
Legalise parent-company documents abroad.
About 30-45 days
File and await DBD licence review within the application timeframe.
About 15 days after licensing
Obtain the tax ID and register for social security.
Common mistakes
- A representative office signing sales contracts or issuing commercial invoices, triggering back-taxes and penalties.
- Missing the licence's capital remittance schedule.
- Allocating head-office overhead to the Thai branch without support.
Repeat questions
Yes, where each employee holds valid stay permission and work authorisation. Immigration relief for qualifying offices uses one permanent Thai employee per foreign employee, not zero Thai staff.
Yes. Neither is a separate legal person from the parent, so contractual, tax and debt liabilities reach head office, unlike a Thai subsidiary whose liability is limited to its own assets.
Verifiable sources
These original sources address the issues described under each reference; they do not certify every statement or a service outcome. Check amendments and the conditions applicable to the entity's actual circumstances.
1. Act
BOI: official-hosted Foreign Business Act translationBoard of Investment
Sections 4, 11–12, 14 and 17 cover definitions, certification, capital and licensing; applicable Thai text and regulations govern.
2. Official system or form
DBD foreign-business application and technology-transfer planDepartment of Business Development
Application scope, supporting papers and training-plan fields; not an automatic assignment of intellectual property.
3. Guidance
BOI Business Guide to Thailand: entities and foreign officesBoard of Investment
Entity, branch, representative-office and incentive distinctions; later legislation and actual approvals take precedence.
4. Code
Revenue Code sections 66 and 70 bis: foreign companies doing business in Thailand and profit remitted abroadThe Revenue Department
Section 66 taxes net profit from Thai activity; section 70 bis withholds tax on profit remitted abroad, payable within 7 days.
5. Code
Revenue Code corporate income tax rate schedule: rate attached to section 70 bisThe Revenue Department
Shows the 15% section 70 rate (other than 10% for section 40(4)(b) dividends) and the 10% rate attached to section 70 bis, with royal decree notes; check the version in force on the payment date.
6. Notification
Immigration Order 12/2568: clause 2.1 business stay extensionsImmigration Bureau
23 January 2025 order separates paid-up capital, staffing and listed office relief from work permits; the official host may restrict automated access.
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