Multinational companies who want to extend their reach into Thailand without creating a separate legal entity. The have two options for entering the Thai market. They can form a branch office or a representative office. Both are governed by the Foreign Business Act but they serve two different functions.

Branch Office

Branch offices can operate in a broader range of activities than representative offices. The Foreign Business Act treats a branch office as a mere extension of the head office. They are considered as part of the same legal entity as its head office and can engage in any and all activities within the head office’s scope of business.

A branch offices is not a separate legal entity but will have to obtain a foreign business license to legally operate and earn profit in Thailand. Branch offices have to obtain a taxpayer ID and register for VAT. In addition, the liabilities of the branch office is not limited to the branch office but also extends to the head office. Branch offices are treated the same as a limited company in the application of work permits for foreign employees.

A foreign branch office is considered like a foreigner and is subject to the Foreign Business Act. The branch is also subject to restrictions placed on foreigners under the Foreign Business Act. A branch office may be required to obtain a Foreign Business License depending on the type of business activities.

The decision of whether the foreign multinational company should open a branch office should be made after careful consultation with an experienced professional. Contact us at info@virasin.com.

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