Government Fees for Representative Office in Thailand
The Thai government charges a fee for the issuance of a Foreign Business License (a permit required for foreigners to operate restricted businesses in Thailand) which vary depending on the type of business and on how the foreigner operates businesses. The government fee depends on the type of business that the foreigner will be engaging in (whether a List Two or List Three business) and depending on the capitalization of the business. The actual amount of government fees that a foreigner is required to pay has caused some confusion partly due to the way that the relevant ministerial regulation is worded and partly due to the way the “capitalization” of a foreign business is defined in the Foreign Business Act of 1999.
The ministerial regulation that defines government fees for Foreign Business Licenses divides the fees into those applicable to List Two businesses and List Three businesses and then between those applicable to natural persons and juristic persons. In all cases, the fee applicable to a juristic person depends on its “registered capital”. However, the Foreign Business Act does not precisely define the meaning of “registered capital” as it applies to foreign companies registered overseas. This is problematic since foreign companies may mean either foreign juristic persons registered outside of Thailand or juristic persons registered in Thailand that are primarily owned by foreigners. Furthermore, the Foreign Business Act defines “minimum capital” as the amount of capital in the form of foreign currency that a foreigner brings into Thailand in order to begin business operations. Therefore, in the case of a foreign company seeking to register a Representative Office in Thailand, there is uncertainty as to whether the government fee should be calculated based on the registered capital of the head office or the amount of capital that will be transferred to Thailand in order to operate the Representative Office.
In April 2015, the Department of Business Development (DBD) issued an advisory opinion which clarified the matter as:
- “In the case that the foreign company is not registered in Thailand and has received permission to operate as a Representative Office, which is a business according to List Three (21), the calculation of the government fees must be calculated from the registered capital of the company (the registered capital in the foreign country).”
The DBD advisory opinion clarifies that in the case that a company registered in a foreign country establishes a branch office or representative office in Thailand, which does not require the registration of a Thai juristic person, then in such a case, the government fee is to be calculated based on the registered capital of the head office (the foreign-registered company) and not the amount of capital that the foreign company is bringing into Thailand.
Thai business laws are complex. Foreign investors in Thailand should consult competent legal counsel before engaging in business operations especially setting up a Representative Office in Thailand.
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