News and developments
Setting up a Regional Office (RO) in Thailand
Regional Offices are considered the same legal entities as their head offices and perform their businesses in Thailand on behalf of its head office abroad.
Similar to the Representative Office, Regional Offices are also restricted from earning income, purchasing, selling, and negotiating. Under the new Ministerial Regulation of the Ministry of Commerce, a Regional Office is not considered a restricted business under the Foreign Business Act (FBA). Therefore, regional offices do not need to apply for a foreign business license to operate in Thailand. However, a legal entity number is required from the Ministry of commerce.
Regional Offices also have to abide by Capitalization rules under the FBA. It must be at least 25 percent of the average estimated expenses for the first three years but not less than THB 3,000,000.
Permitted scope of activities
- Providing services in consulting and management;
- Operation of branches and affiliated companies which are located in the region;
- Communicating, coordinating, and directing, on behalf of the head office;
- Training and personnel development;
- Financial management;
- Marketing, controlling, and sales promotion planning;
- Product development;
- Research and development services.
Conditions
In contrary to a company limited, Regional Offices must not:- Derive any income from its activities. (Should the company make any profit, such profit must be allocated to the head office);
- Have the authority to accept a purchasing order or to make a sales offer;
- Negotiate / Enter into business arrangements with any natural or juristic person in Thailand.
Requirements
After successful registration, the Regional Office is subject conditions as follows:- The total debt of the Regional Offices must not exceed seven times the amount of the capital owned by shareholders or the business owner.
- Funds used to finance the Regional Office must be remitted abroad. Over a five-year period after successful registration of the Representative Office, at least 5,000,000 THB must be invested into the Regional Office. 2,000,000 THB must be remitted in the first year, and 1,000,000 THB must be remitted in the first six months. After the first year, at least 1,000,000 THB must be transferred to the Regional Office each year until the full amount of 5,000,000 THB has been transferred.
- At least one person responsible for the operation and management of the Regional Office must reside in Thailand.