Must People Set Up a Company to Start a Business in Thailand?
Firstly, setting up a company is certainly a must if you want to sign contracts, trade, or receive payment in Thailand. If trade contracts are signed in Taiwan, then it is not necessary to set up a company in Thailand. A regular procedure of international trade will be enough. However, if you want to make your business rooted in a foreign country in the long term, organizing local service, customer service, and technical teams in the country will be beneficial for most clients. Another reason to set up an office in Thailand is that, as one of the 10 ASEAN countries, Thailand provides better export terms and conditions compared to Taiwan, especially when it comes to customs duty if the products are exported to other countries from Thailand.
To set up a point of service in Thailand, here we’d like to share with you three different methods: you can set up a company, a branch office, or a representative office. As the conditions and regulations of setting up a company are very complicated, this article won’t go further for a detailed explanation. Among the three methods, a representative office is the least known by many people but has the lowest requirement for starting a business.
Let’s talk about the representative office first. What can we do when we set up a representative office in foreign country? Briefly speaking, signing contracts and receiving payments are not allowed while providing services are allowed. Penalties may be incurred if transactions or contracts are being proceeded. Then, some might ask: “Is it enough to just set up a representative office?”
The answer to this question is “it depends”. To see whether setting up a representative office is enough, you have to evaluate your products or service, client demand, and business plan in the long term. But if you are new in starting a business in Thailand, setting up a representative office has the lowest requirements. It’s way easier than seeking Thailand stockholders to start a company.
In addition, according to the Department of Business Development (abbreviated as DBD), after setting up a representative office, you don’t have to apply for a foreign business license. But according to the Foreign Business Act, the minimum capital of a representative office shouldn't be lower than 2 million THB. Moreover, other relevant laws and taxes of Thailand, including filing taxes, declaring business areas, and others, will still restrict the activities of representative offices.
Lastly, we’d like to share services of representative office allowed in Thailand, according to the Foreign Business Act:
- Assist head office or relevant enterprises in purchasing products or services in Thailand.
- Assist head office or relevant enterprises in examining and controlling the quality and quantity of products purchased or manufactured in Thailand.
- Assist head office or relevant enterprises in providing consulting services for dealers or consumers in Thailand (e.g. explain the attributes, use, and provide assistance in product problems).
- Assist head office and relevant enterprises in the marketing campaigns of new products and services.
- Provide management reports in Thailand to head office and relevant enterprises.
Regardless of the methods, the competent authority to set up companies is DBD. The official website of DBD is in two languages, Thai and English. They have a Facebook page as well. You can go check the websites and apply if you need the service.
Speaking of administrative affairs or trading services for which people might apply in the future, remember that Thai people tend to do things at a ci-yen-yen (ใจเย็นเย็น; slow) pace. So it will require a lot of patience while consulting and dealing with documents. Never expect things to be done quickly. You should leave some more time in the preparation stage when planning your schedule, in case any delay happens. If you have trouble with the language or have limited time, you can reach out to agencies for their services as well.
We’d like to share with you some other websites related to doing business in Thailand.
The Board of Investment – you can check statistics and regulations about investment in Thailand and info of foreign investors. In addition, you can search for applicable investment subsidies from Thai government.
If your business includes importing and exporting, please check out the following websites for information on customs, tariff, license application, etc.
- Thailand Integrated Tariff Database – Website for information of tariff for international trade / Website for documents and procedures for international trade
- Website by Ministry of Commerce – for information of international trades
- Website for integrated information of tariff and relevant regulations
- Thailand Food and Drug Administration – for information of import licenses and relevant regulations regarding food and medical products
- Department of International Trade Promotion – for information of recommended suppliers of Thailand
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