Thailand Business Vehicles: Limited Company vs Branch Office vs Rep Office vs BOI / IBC

Legal structure comes before incentives

A Thai subsidiary contracts in its own name, while a branch directly engages the foreign company. Debt and dispute exposure therefore differ. A representative office is unsuitable for a plan requiring invoices, service charges or acceptance of orders. Having the parent invoice does not cure prohibited activity actually undertaken by the Thai office.

Permitted representative functions can include sourcing for headquarters, quality checks, advice concerning head-office goods, dissemination of new-product information and business-trend reporting. Maintain the non-revenue boundary. An FBL exemption for qualifying activities does not abolish registration, accounting or employment duties.

Funding is not revenue; profit disposal is not every transfer

Map equity funding, loans, service charges, dividends and branch profits separately. Each has a different taxpayer and tax base. A foreign-company branch generally pays tax on Thai-business net profits and may incur additional section 70 bis profit-disposal tax. A Thai company follows the tax base applicable to Thai-incorporated entities.

Illustrative statutory-tax example, not a professional fee: THB 1 million of ordinarily taxable branch profit incurs 20% CIT, leaving THB 800,000. If all of that is disposed abroad without applicable relief, 10% profit-disposal tax is THB 80,000. It is not 10% of sales or every bank transfer. Assess profit-like transactions and any relevant treaty provisions.

Dividends from a Thai company to a foreign corporate shareholder generally carry 10% withholding, subject to applicable relief or exemption. That is not branch tax. Loan principal, interest and intercompany service charges can raise separate VAT, withholding and transfer-pricing issues. The bank transfer label cannot determine the tax character.

Separate BOI promotion from IBC tax approval

BOI approves projects. Read the certificate for activity, privileges, capital and timing. Not every promoted company receives a CIT exemption, and not every receipt is promoted income. Establish account codes for project revenue, direct costs and shared expenditure at commencement.

For the RD IBC tax regime, the general tests include at least THB 10 million paid-up capital, 10 qualifying personnel or five for treasury-only operations, and at least THB 60 million annual qualifying expenditure paid to Thai recipients. Specific transitional provisions need separate review. Meeting BOI conditions is not the same as obtaining RD tax approval.

The RD briefing provides 8%, 5% and 3% CIT on qualifying IBC net profits at expenditure thresholds of THB 60 million, 300 million and 600 million respectively. These are statutory tax rates, not our service charges. International-trading income is outside those reduced rates and must be separated from qualifying associated-enterprise services. Approval and annual conditions must be maintained; an IBC is not a revenue-enabled representative office.

Assessment scope and evidence

This guide is an editorial explanation of the cited official materials, not individual professional sign-off or an agency ruling. The desk assesses accounting and tax against your facts. Legal entitlement and applications should be confirmed with qualified counsel and the relevant authority.