Setting Up a Branch Office vs a Subsidiary in Thailand
Expanding your business to Thailand opens new opportunities in a thriving ASEAN market. However, choosing the right legal structure is a critical decision that impacts your tax obligations, compliance requirements, and operational control. Two popular options for foreign companies are branch offices and subsidiaries—but which one is the right fit for your goals?
In this article, we’ll walk you through the key differences between a branch office and a subsidiary in Thailand to help you make an informed decision.
Table of Contents
What is a Branch Office in Thailand?
A branch office is an extension of a foreign parent company. It is not a separate legal entity but is allowed to engage in revenue-generating activities in Thailand, provided it obtains proper licenses.
Key features:
Not a separate legal entity
Profits are taxable in Thailand
The parent company remains liable for all obligations
Requires approval from the Ministry of Commerce
Must appoint a branch manager and register with the DBD
A branch must restrict its activities to those approved by Thai authorities and can only engage in business under specific conditions, such as those permitted under the Foreign Business Act.
What is a Subsidiary in Thailand?
A subsidiary is a locally registered Thai company, typically set up as a private limited company. It is a separate legal entity from the foreign parent, even if 100% owned.
Key features:
Separate legal entity from the parent company
Must have at least three shareholders and one director
Eligible for tax benefits and BOI incentives
Liabilities are limited to the subsidiary itself
Must follow standard Thai corporate governance rules
Subsidiaries offer greater flexibility and are often the preferred vehicle for long-term investment in Thailand.
Legal & Tax Implications
| Aspect | Branch Office | Subsidiary |
|---|---|---|
| Legal Status | Not separate | Separate Thai entity |
| Parent Liability | Full liability | Limited to investment |
| Corporate Tax | 20% on profits in Thailand | 20% on local profits |
| VAT Registration | Required if income generated | Required if business operates |
| BOI Eligibility | Usually not eligible | Eligible for BOI promotion |
Control vs Compliance
A branch office gives direct control to the head office, but it comes with tighter restrictions on business scope and foreign ownership. A subsidiary, while requiring more setup, allows for greater operational flexibility and is seen more favorably by local authorities and clients.
At ACCOUNTINFIRM, we help international businesses make the right start in Thailand. Whether you’re looking to establish a branch or a subsidiary, we offer end-to-end support—from entity setup and BOI consultation to accounting, payroll, and tax compliance.
We ensure your expansion is structured for maximum efficiency, minimal risk, and full regulatory compliance.
Maximize Your Company’s Potential with our Team’s Support.
Our team delivers efficient, professional, and proactive support to help your business operate with confidence and control. Let’s discuss how we can add real value to your operations.
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