What is a Regional Operating Headquarters (ROH)?
It is a limited company with a special structure that permits a foreign company to conduct business in Thailand while having a very competitive edge with a lot of tax and non tax benefits.
What can I do with an Regional Operation Headquarters (ROH)?
- Organizational administration and management business planning
- Sourcing of raw materials, parts and finished products
- Research and development activities
- Technical support
- Marketing and sales promotion
- Regional human resources training and development
- Business advisory services (financial management, marketing, accounting etc.)
- Investment feasibility studies and economic and investment analysis
- Credit management and control
- Other services shall be as approved by the BOI on a case by case basis.
What are the benefits?
There are a lot of benefits with a ROH.
- Corporate income tax at the rate of 10 percent on net profits for income derived from services provided to ROH’s foreign branches or associated enterprises.
- Corporate income tax at the rate of 10 percent on net profits for royalties derived from ROH’s foreign branches or associated enterprises for the use of Research and Development (R&D) done by ROH in Thailand. This benefit is also extended to royalties received from a third party providing services to ROH’s branches or associated enterprises using ROH’s R&D.
- Corporate income tax at the rate of 10 percent on net profits and interest received from ROH’s foreign branches or associated enterprises for loans granted, provided that such loans are made from other sources and extended to ROH’s branches or associated enterprises;
- Tax exemption for dividends received by ROHs from associated enterprises.
- Tax exemption for dividends paid out of ROH’s concessionary profits to its shareholders not carrying on business in Thailand;
- Accelerated depreciation for buildings at the rate of 25 percent on the date of acquisition. The residual value can be depreciated within 20 years.
It is in addition and advised to apply ROH under the additional cover of the BOI which grants even more benefits which include
- Permission to hold the 100% foreign ownership in Thai company.
- Permission to own land by foreign investors.
- Permission to bring in foreign experts and technicians.
- Work permit and visa facilitation.
What are the downsides?
- ROH must have a paid-up capitalization of not less than 10 million Baht.
- ROH must provide services to its branches or companies in at least 3 countries within the first 3 years.
- ROH must earn half of its income from qualifying services provided to their branches or associated companies outside Thailand.
It is possible for the ROH to apply for a BOI license to gain additional benefits which we definitely do recommend!
There BOI does have certain conditions that must be met in order to obtain ROH under BOI.
- The applicant must provide services to associated enterprises in foreign countries or its foreign branches in at least three countries within 3 years of incorporation.
- Must have registered capital of at least 10 million baht and fully paid up.
- May be majority or wholly foreign-owned
- Must obtain operating licenses from relevant government agencies
Must have business plan and scope of business as approved by the Board as follows:
- Organizational administration and management business planning
- Sourcing of raw materials, parts and finished products and other sourcing-related services
- Research and Development activities that do not apply for investment promotion under BOI activity 7.20
- Technical Support
- Marketing and sales promotion
- Regional Human resources training and development
- Business Advisory services e.g. financial management, marketing, accounting system etc.
- Conducting investment feasibility studies and economic and investment analysis
- Loan management
- Other services as approved by the BOI on a case by case basis
Rights and benefits
1. Exemption of import duty on machinery for R&D and training activities
2. Other non-tax incentives only
Common work permit question for this setup
Do I have to hire Thai staff for my work permit?
Ultimately one of the goals of the BOI is to have a more skilled Thai labor force. Yet for the initial application of visa and work permits under BOI it is not a requirement. Later on it will depend on your initial BOI application and approval.
How much registered capital do I need for a work permit?
With the BOI it starts with 1 million Baht but in this particular case the minimum registered capital of 10 million Thai Baht have to be fully paid up.
Is there something else to consider?
In general a ROH is considered of special interest to the Revenue Department and will therefore be audited more often than other legal setups.
It is quite common that a foreign investor forgets the requirement of having a registered address and to maintain it. This is as well important as the Ministry of Labour does require an actual physical working space.
We are looking forward to help you grow your business and as well to receive your inquiry soon.
ROH under BOI
Legal Disclaimer: All information displayed on this site are compiled with the most amount of care. As law and life is bound to changes we cannot warrant that all information is accurate at all time and intended to be a guideline. In order to provide you a correct and up to scratch information please do contact our experienced business lawyers and accountants.