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Thailand Company Registration: Branch Office Setup

Transcript of the above video:

In this video today, we are going to be discussing branch offices in Thailand. Before we get started into sort of getting deep with respect to offshore branch offices, I want to make a clear delineation at the beginning of this video with respect to different kinds of branch offices. So there are companies here in Thailand that may be located only in Thailand that have branch offices. There are various types of entities that are going to have numerous branch offices throughout the Kingdom and they may have nothing to do with doing business offshore.  Well there’s one kind of branch office set up which involves having an offshore entity that has a branch office in Thailand. Actually, quite a bit more common, although not quite as exotic, quite a bit more common, more commonly what’s seen with respect to branch offices in Thailand is a Thai corporate headquarters that has multiple branch offices of that Thai company throughout the Kingdom. That’s not uncommon at all but for most foreign nationals, and I am presuming those are most of the people that are going to be watching this video because I am not a Thai attorney, as stated I am an American attorney. I simply am the Managing Director in our firm; we have Thai attorneys who work on these cases hands on, deal with clients hands on, especially in matters pertaining to the US – Thai Treaty of Amity, I have a role in that to some extent, with respect to especially Amity certification, but as far as it goes, the Thai attorneys on our staff are going to be dealing with the actual registration, the actual legal work pertaining to the incorporation of a branch office here in Thailand. This is more an overview but to start this overview, I wanted to provide a delineation as to the 2 kinds of branch offices we would be talking about. For foreign nationals, there seems to be more interest in the kind of branch office which I will now get into at this point. 

A branch office, you can have a branch office of a foreign company, a company outside of Thailand, registered here in Thailand and a couple of things that should be noted. A branch office is different than just a Thai company which is formed and set up and is its own entity here in the Kingdom; just corporate registration if you will, a basic Thai limited company. And then there is also what is called a representative office, a rep office. We go into detail about rep offices in another video on this channel. I urge those who are interested in rep offices to check that out. Rep offices have certain tax benefits in a way, but their scope of activity is highly, highly circumscribed when compared to the Thailand branch office.  A branch office can do a lot more things but in my opinion, there’s pros and cons to it. In my opinion, in a lot of cases, the pros might not be overcome by the cons. Some things to keep in mind with respect to the branch office. A branch office in Thailand IS the same legal entity as the foreign corporation. This I guess could be said about a rep office in its own way, it is exactly what it is. It’s a representative office so there’s flow through to the home office but that being said, the scope of activity of a rep office as such that that’s not usually a big issue especially with respect to things like liability. Branch office is an entirely different thing. A branch office is the same legal entity as the foreign entity so what that branch does here in Thailand, it can impact the foreign entity sort of directly, sort of a flow through impact, if you are looking at it that way. This is very different than setting up an independent limited liability company here in Thailand. 

That being said, for tax purposes, it is treated as if it were a different legal entity, so again,  and there are exceptions to this, there’s nuances, especially under double tax treaties, that I am not going to get into specifically because it is rather outside my bailiwick, and we don’t really have time on this video, but understand that remittances back to the foreign home company, the headquarters and  things, those are going to be subject to the same sort of withholding taxes and things as if it were just a regular limited  liability company here in Thailand just like any other stand alone company if you will. Furthermore, a branch office in Thailand is presupposed to be a profit seeking entity, so again very different from the representative office which is presupposed to not be a profit seeking entity and for that reason is not subject to the same tax liability. It is very important. Representative offices in many ways have certain tax benefits for those wishing to set one up here in the Kingdom but again, there are a lot of cons with respect to that sort of set up because the scope of activity is extremely narrow. Not so much so with branch offices but it’s presupposed, it’s sort of assumed that the Thailand branch office is going to be operating for profit. That’s important because they are liable for taxes or possibly liable for taxes. Again, a result of this presumption being they are subject to virtually all taxes that pertain to entities operating in Thailand.  And again as noted previously, there may be some specific exceptions, under certain double tax agreements with Thailand and certain other jurisdictions outside of Thailand that don’t pertain, that may allow certain mitigation of tax liability for branch offices here in Thailand but that being said let’s go ahead and assume, from a legal standpoint, from a limited liability standpoint, the branch office’s activities flow directly back to, or the liability flows directly back to the Headquarters’ office. Moreover, notwithstanding that, their treated from a tax standpoint as if they were NOT the same entity; and this is a separate entity. In a way, I don’t want to call it the worst of both worlds because that is not necessarily the case. There are some circumstances where branch offices are not only warranted necessary, they are also tax efficient and they may also prove to be efficient within the overall context of the given corporate set up, but that being said, on most routine matters, you are going to see circumstances where probably a rep office is more warranted or where just a simple, I shouldn’t say simple, but a stand alone limited liability Thai company may be more warranted under the circumstances.