Set up a Branch Office in Thailand
A branch office is an ideal choice for multinational companies that want to develop a presence in Thailand’s business market but do not want to open a new company in Thailand.
- Easy incorporation: the branch is easier to set up compared to a local company, an advantage for foreign businesses.
- Limited independence: in terms of independence, the branch is only partially independent in relation to the foreign company.
- Liability: the foreign company is liable for the debts and obligations of the Thai branch; this also extends to lawsuits brought against the branch.
- Tax: the branch is taxed at the usual corporate income tax rate but only on the profits derived from the country.
Characteristics of branches in Thailand
Branch offices in Thailand are treated similar to limited companies, only there are no shareholders or directors, as it is not a registered company, but a local branch of a foreign Head Office. This type of business form has its advantages: there are no special conditions for foreign companies to register a branch office and there is no requirement to have a local shareholder. Our Thai company formation experts can give you more details on the particular characteristics of a branch office.
Although foreign companies usually consider opening a branch office to be effective and low-cost, it is still required to comply with the requirements imposed by the Foreign Business Act according to the Thai laws before they can open a company in Thailand. At least one representative or appointed individual who will be in charge of the branch operations must have his domicile in Thailand.
Requirements for Thai branches
One condition that may apply to branches operating on the Thai market, and to which investors are advised to pay attention, is that they bring a clear economic benefit and they do not compete with Thai companies. The approval of the branch, for its functioning on the market, lies with the Ministry of Commerce. If approved, the Thai branch will be required to comply not only with the requirements for the capital but also a set of other yearly requirements, such as submitting a technology transfer report and an annual operation report to the authorities.
The taxation rate for branches in Thailand is the same one as for resident companies although this corporate income tax only applies to the Thai-sourced income. A branch remittance tax is imposed on the value of the profits paid to a head office after the tax has been imposed on these. The standard corporate income tax in Thailand is 20%. One of our Thai company formation agents can give you more details about the taxation system in the country.
The branch compared to other business forms
Opening a branch in Thailand is not the only option for a foreign company to get started on the Thai market. Two other notable possibilities include opening a representative office or a subsidiary.
When choosing the appropriate type of legal structure to enter the Thai market, it is advisable to seek specialized counseling from a business consultant or a team of company registration agents. Our experts are able to answer your questions about the differences between the branch, the representative office, and the subsidiary. Once you have decided which business form suits your needs for running a business in the country, we can also assist you with the registration procedure. The language barrier can be significant for many foreign investors and our agents will handle the process on your behalf with diligence and consideration.
If you need comprehensive information regarding the whole process of setting up a branch office, please contact our company registration consultants in Thailand for support.