Today, we discuss the similarities and differences between a “Regional Office” and a “Representative Office” in Thailand. The levels of comparison are as follows:
Both Representative Office and Regional Office are permitted to carry out business under Section 17, List 3 (21) other business services of the Foreign Business Act B.E. 2542.
At least 3 million Baht is required for minimum capital in order to obtain a Foreign Business License before operating both offices in Thailand.
Types of permitted business activities
A Representative Office can only operate any of 5 business activities in Thailand as follows:
- To report the business movements in Thailand to the head office or affiliated company or the group company;
- To inspect and control the quality and quantity of the goods that the head office or affiliated company or the group company purchased or hired to manufacture in Thailand;
- To give advice on various aspects pertaining to the goods distributed by the head office or affiliated company or the group company to the distributors or the users;
- To seek for the supply source of goods or services in Thailand for the head office or affiliated company or the group company;
- To disseminate the information in relation to the new goods or services of the head office or affiliated company or the group company.
On the other hand, a Regional Office can only operate any of 7 business activities in Thailand as follows:
- Coordinating, communicating and directing the operations of branch offices or subsidiary companies situated in the same region on behalf of the head office;
- Consultation and management services;
- Training and personnel development;
- Financial management;
- Control of marketing and sales promotion planning;
- Product development;
- Research and development service.
As a legal entity
A Regional Office and a Representative Office are both defined as juristic person established under the law of a foreign country. They have the same characteristics although a Regional Office must already have at least one established branch office or subsidiary situated in the Asian region
Both offices cannot generate income from their business activities and services because they are not permitted to accept purchase orders or make sales offers, or engage in business negotiations with any persons or juristic persons in the country where both offices are established. That means the head office will be the only source of funds for office expenses.
Hence, for establishment of either a Regional Office or Representative Office in Thailand, it is required to apply for a Foreign Business License at the Ministry of Commerce before carrying out any business activities.
ThaiLawyers have years of experience in establishing Regional Offices and Representative Offices in Thailand. Contact us now for further consultation.