Thai Company vs Branch Office: Choosing the Right Structure for Your Thailand Plan

Introduction

If you are a foreign SME entering Thailand, choosing the wrong structure can create avoidable problems. These include licensing delays, tax mismatches, or the inability to legally operate as your business model requires. This is why the question of “Thai company vs branch office” is not just a corporate issue. It is a compliance decision that links to the Foreign Business Act (FBA), DBD processes, and your operational plan.

This guide compares Thai company vs branch office vs representative office with a practical lens. We will explore what each can do, where restrictions apply, and how to choose based on your actual activities in Thailand.

Legal disclaimer: This article is general information only and not legal advice for your specific case. Requirements can vary based on your nationality, activities, ownership, and agency practice. Always confirm your facts with qualified counsel before acting.

Understanding Your Business Activities

Before you decide between a Thai company and a branch office, it is crucial to outline what you will actually do in Thailand. Consider these questions:

• Will you sell goods or services in Thailand?

• Will you invoice Thai customers?

• Will staff in Thailand perform revenue-generating work?

• Will you only engage in liaison, sourcing, quality control, or market research?

  
  

These details matter because the FBA restricts certain business activities for foreigners. It requires permissions for businesses in the annexed Lists. In other words, the decision of “Thai company vs branch office” must be evaluated alongside what your business will do on a day-to-day basis.

Thai Company vs Branch Office: The Core Differences That Matter

Option 1: Thai Limited Company

A Thai limited company is registered as a juristic person under Thailand’s Civil and Commercial Code framework. This registration is evidenced in DBD certification formats. In practice, most foreign SMEs choose this route when they need a local contracting entity that can operate commercially in Thailand.

When a Thai limited company is typically a fit:

• You need a long-term operating base in Thailand.

• You need local contracts, invoicing, hiring, and vendor onboarding.

• You want a structure that integrates more smoothly with operational compliance, such as annual filings.

  
  

Practical compliance note for 2026 operations: DBD has moved corporate registration processes into digital channels. The older e-registration channel has been replaced by DBD Biz Regist.

Option 2: Branch Office of a Foreign Company

A branch office is commonly used when a foreign head office wants to operate in Thailand without incorporating a separate Thai limited company. The key legal issue is not the label “branch.” The issue is whether the foreign entity is operating a business in Thailand that is restricted or requires permission under the FBA.

DBD’s Bureau of Foreign Business Administration has published an application preparation handbook for permissions under the FBA. This includes documentation requirements for juristic persons registered under foreign law operating in Thailand through a representative in charge of business operations.

When a branch office is typically considered:

• The head office wants to keep operations under one corporate umbrella.

• The business model and licensing pathway under the FBA is clear and manageable.

• The organization can support the compliance and reporting needs linked to foreign business permissions.

  
  

Why “Thai company vs branch office” often turns into an FBA planning issue: The FBA sets the framework that foreigners may not operate certain businesses unless permitted. This includes businesses in List Three unless licensed by the Director-General, with approval processes described in the Act. Therefore, the branch decision usually depends on whether your planned activities trigger FBA permissions and how quickly you need to operate.

Option 3: Representative Office

A representative office is designed for limited, non-revenue activities. DBD materials describe representative offices as having typical permitted activities such as sourcing goods or services in Thailand for the head office, quality control, providing advice about the head office’s goods, disseminating information about new goods or services, and reporting business movements in Thailand to the head office.

DBD materials also describe general characteristics such as no service income, restrictions on accepting orders or negotiating business in the host country, and funding from the head office only. Corporate income tax is generally not applicable except in specific interest income scenarios.

When a representative office is typically a fit:

• You want a Thailand presence for market research, sourcing, quality control, or liaison.

• You do not need to invoice or generate revenue locally.

• You need a controlled footprint before deciding on a full operating structure.

  
  

Critical warning for foreign SMEs: If you set up a representative office but operate beyond the permitted scope, you can create compliance and enforcement risks under the FBA framework.

Key Takeaways

• The decision of “Thai company vs branch office” is primarily about commercial operation and FBA permission exposure, not just paperwork.

• A representative office is built for limited functions and is described by DBD as having no service income and being funded by the head office, with specific permitted activities.

• If your Thailand plan includes invoicing, contracts, hiring, and local revenue, a Thai limited company is often the cleanest operational fit. This is subject to foreign ownership and licensing analysis under the FBA.

  
  

Common Misconceptions

Misconception 1: “A representative office can test the market and also sell a little.”

A representative office is described by DBD as having no service income and limitations on accepting orders or negotiating business. If you need local sales, you should not rely on a representative office model.

Misconception 2: “A branch office avoids the Foreign Business Act.”

Branch operations can still fall under the FBA restrictions and permissions framework, depending on the business activity. The FBA is the controlling legal framework for restricted categories and licensing pathways.

Misconception 3: “Thai company vs branch office is mainly about tax only.”

Tax matters, but the higher-risk issue is whether your activities require permissions under the FBA and whether your structure matches your actual operations.

Worked Scenarios (Illustrative and Conditional)

Scenario A: Foreign SME providing paid consulting services to Thai clients

If services are delivered and invoiced in Thailand, this is commercial activity that must be checked against FBA restrictions and licensing requirements. In many cases, a Thai limited company becomes the practical operating structure. However, the correct answer depends on the exact scope of services and ownership.

Scenario B: Foreign manufacturer setting up Thailand sourcing and quality control only

A representative office may fit if the Thailand team is limited to sourcing, quality control, information dissemination, and reporting to the head office, without local revenue. If local sales, invoicing, or negotiations are needed, reassess. A representative office may no longer be suitable.

FAQ

1. Which is better: Thai company vs branch office?

It depends on your activities. If you need a local commercial operating vehicle, a Thai company is often more practical. If you need head-office continuity and have a clear FBA permission path, a branch may fit.

1. Can a representative office invoice customers in Thailand?

Generally no. DBD materials describe representative offices as having no service income and limitations on accepting orders or negotiating business locally.

1. Does the Foreign Business Act apply to foreign SMEs?

Yes. The FBA sets restricted business categories and permission requirements for foreigners operating certain businesses in Thailand.

1. Do branch offices need permissions under the FBA?

Sometimes. If the branch’s activities fall within restricted categories, permission or licensing may be required under the FBA.

1. What can a representative office do in Thailand?

DBD materials list typical activities such as sourcing, quality control, advice about head office goods, disseminating information, and reporting business movements to the head office.

1. Is a Thai limited company registration done online now?

DBD information indicates the older e-registration channel has been replaced by DBD Biz Regist for digital juristic person registration.

1. What is the first step before choosing Thai company vs branch office?

Write an activity map and test it against FBA restrictions. This prevents selecting a structure that cannot legally do what you need in Thailand.

1. Can I change from a representative office to a Thai company later?

Often yes, but the steps, timing, and compliance implications depend on your contracts, staff, and licensing position. Plan the transition early so you do not create gaps in permissions.

Glossary

• DBD: Department of Business Development, Ministry of Commerce.

• FBA: Foreign Business Act B.E. 2542 (1999).

• Thai limited company: A juristic person registered under Thai law, evidenced in DBD certification formats referencing the Civil and Commercial Code.

• Branch office: A foreign juristic person operating in Thailand through a representative in charge of business operations, with FBA permission analysis often required depending on activities.

• Representative office: A limited-function presence described by DBD with typical permitted activities and non-revenue characteristics.

• DBD Biz Regist: Digital juristic person registration system referenced by DBD as replacing e-registration.

  
  

Decision Checklist Artifact: Choose the Right Structure in Thailand

Use this checklist before you commit to leases, hiring, or customer contracts.

Step 1: Activity and Revenue Test

• Will you invoice Thai customers from Thailand?

• Will you sign commercial contracts in Thailand?

• Will staff in Thailand perform revenue-generating work?

  
  

If yes, “Thai company vs branch office” becomes a commercial operations decision requiring FBA analysis.

Step 2: Representative Office Suitability

• Your Thailand activities are limited to sourcing, quality control, product advice, information dissemination, and reporting to the head office.

• You will not accept orders or negotiate business locally.

• All Thailand expenses are funded by the head office.

  
  

If all are true, a representative office may fit.

Step 3: FBA Permission Exposure

• Map your activity to the FBA restricted lists and permission requirements.

• If operating as a foreign juristic person in Thailand, review DBD FBA application documentation expectations.

  
  

Step 4: Operational Readiness

• If choosing a Thai limited company, align your process with DBD digital registration channels (DBD Biz Regist).

• Establish document controls for resolutions, signatories, and contracts.

  
  

Call to Action (GENTLE LAW IBL)

If you want a clear recommendation between Thai company vs branch office based on your exact activities and risk profile, GENTLE LAW IBL can run a structured assessment. We will map FBA exposure and propose the most compliant setup sequence for your Thailand launch.