One of the most interesting ways to start a business presence in Thailand for a foreign investor is the “Representative Office”. The Representative Office is not a distinct legal entity or “juristic person” under Thai law. Therefore, there is no requirement that it have partners or shareholders of any kind.

The law limits the functions of the Representative Office to supporting roles such as:

• Searching for local sources of goods or services in Thailand for the offshore head office or affiliates or subsidiaries of the offshore head office;

• Checking and controlling the quality and quantity of goods purchased or manufactured in Thailand by the off-shore head office or affiliates or subsidiaries of the off-shore head office;

• Giving advice and assistance concerning goods of the offshore head office or affiliates or subsidiaries of the offshore head office sold to agents or consumers in Thailand;

• Disseminating information concerning goods or new services of the offshore head office or affiliates or subsidiaries of the offshore head office; and/or

• Reporting on business developments in Thailand to the offshore head office or affiliates/subsidiaries of that office.

The Representative Office is allowed to have foreign employees. And these employees are granted significant income tax relief. However, a Representative Office itself is not allowed to receive any income from its activities in Thailand. Thus, the operations of the Representative Office must be financed in their entirety by the offshore head office. Even so, a Representative Office is still required to file annual audited financial statements to the Thai Revenue Department.

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The third form of partnership under Thai law is the limited partnership. The limited partnership is – as the registered ordinary partnership – a juristic person.

The limited partnership has two different kind of partners. These different partners are subject to different liabilities:

1. One or more partners are liable only to the amount they contributed to the partnership;  and

2. One or more partners are jointly and unlimited liable for all obligations of the partnership.

The difference between the partners is not only in relation to their respective liability. The different partners are also subject to different restrictions:

• the firm name cannot contain any of the names of the partners with limited liability;

• partners with limited liability cannot contribute services to the partnership. Their contribution is restricted to money and other properties;

• partners with limited liability are entitled to transfer their shares without consent of the other partners; and

• creditors of a limited partnership have no action against the partners with limited liability prior to dissolution of the partnership.

The partners with unlimited liability manage the limited partnership. In case a partner with limited liability interferes in the management of the Limited Partnership, he we will become jointly and unlimited liable for all obligations of the partnership.

A limited partnership, as a juristic person, is subject to corporate income tax. The partners of such limited partnership are subject to personal income tax on the share of profits received from such limited partnership.

Thai law distinguishes between unregistered partnerships and partnerships which are registered with the government. The relevant difference is the legal status of those partnerships. Whereas an unregistered partnership does not have the status as a “juristic person”/an entity that the law gives most of the same rights and obligations as a natural person, a registered partnership does (but note, an unregistered partnership is considered a juristic person for tax law purposes—see below). In both an unregistered and a registered partnership:

• the individual partners are jointly and unlimitedly liable for the obligations of the partnership;

• the partnership is established through a contribution of money, other properties or service to the partnership by the partners; and

• the share of each partner in the profit and losses is determined by the amount of such contribution

Since an unregistered partnership is not considered to be a juristic person, all partners are jointly and unlimitedly liable for the performance of the obligation incurred. However, an unregistered partnership is taxed as if it were a “person”/personal taxpayer and separately from its partners. In other words, the partners of an unregistered partnership are not then further taxed on the profit that they receive from it.

On the other hand, a registered partnership is considered a juristic person, similar to a company. Thus, a creditor of a registered partnership is required to initially pursue his claim against the registered partnership itself. Only upon default of the registered partnership has such creditor the right to claim settlement from any one partner for any debts incurred on behalf of the entire registered partnership. And the liability of a partner in a registered partnership continues for two years after such ceasing to be a partner, with respect to debts incurred by the registered partnership.

A registered partnership is also treated like a company with respect to tax and as such is subject to Thai corporate income tax. And the partners of such registered partnership are subject to personal income tax on the share of profits received from such registered partnership.