I have seen this story play out many times. A smart, ambitious person in Thailand spots a great product from abroad. It might be Australian software or a professional service delivered remotely. The overseas principal is excited. There is no distributor here yet. A handshake is exchanged. Our person becomes the local face of the business, quoting Thai customers, negotiating deals, and taking orders on commission.
It looks like a dream setup. It is also one of the most legally exposed positions in Thai commercial practice. The person taking on this role almost never understands what they have just accepted.
Thai Law Does Not See a Bystander
Thai law does not treat someone who arranges sales for a foreign company as a casual helper. Two legal mechanisms convert that informal role into personal liability.
The first is Section 76 bis of the Thai Revenue Code. This provision provides that when a foreign company has an employee, agent, or go-between in Thailand who carries on business for that foreign entity and generates income here, the foreign company is deemed to be carrying on business in Thailand. The local person is deemed to be the representative of that foreign company. They have the duty to file tax returns and pay Thai corporate income tax on the income derived. If the foreign company does not or cannot pay, the exposure falls squarely on the person on the ground.
The second mechanism is permanent establishment under Thailand’s double tax treaties. Almost every Thai treaty, including the one with Australia, provides that a foreign enterprise creates a permanent establishment in Thailand when a person acting on its behalf habitually concludes contracts or secures orders. An informal salesperson who negotiates prices, closes deals, and takes orders on behalf of an Australian principal is a textbook example of a dependent-agent permanent establishment. Once that occurs, the Australian company owes Thai corporate income tax on the profits attributable to that presence. Under Section 76 bis, the local person is the one the Revenue Department can reach first.
The Liability Iceberg
Income tax is only the most visible layer. Other liabilities follow the same person.
VAT does not disappear simply because invoices are routed through the Australian entity. Once the Revenue Department treats the Australian company as carrying on business in Thailand through its agent, the Australian entity becomes a Thai VAT operator. Section 82/1 of the Revenue Code makes the local agent liable for that VAT. The agent’s own commission stream is also a VAT-registrable service supply once it exceeds the 1.8 million baht annual threshold. The monthly PP.30 compliance burden rests with the go-between.
Withholding tax on payments back to the Australian principal for royalties and service fees generally applies at 15%. The person remitting the funds is legally required to withhold and remit the tax. If the Revenue Department treats the go-between as the deemed representative, that outstanding withholding tax becomes personally painful.
As the importer of record, the individual bears customs duty exposure, potential valuation disputes, and potentially criminal liability for misdeclaration. The goods being imported may require specific licences. The agent often handles this to expedite the process. The liability remains with them.
Thailand’s Product Liability Act and Consumer Protection Act make importers, sellers, and anyone holding themselves out under a trademark strictly liable for defective products. A Thai consumer injured by an Australian device will not pursue the Australian entity in Australia. They will look for the local face of the operation. That is the go-between, particularly where the agent has been the importer of record or has presented themselves as the local arm of the foreign company.
Regulatory registration adds another layer. Food, cosmetics, medical devices, drugs, and many other categories require Thai FDA registration. Machinery may require TISI approval. Electrical goods, cross-border data services, and financial products each have their own regulators. Selling without those approvals is an offence when done in the agent’s own name.
Every Thai customer’s personal data collected during sales arrangements creates data controller obligations under the Personal Data Protection Act. Without a company, there is no shielding entity to hold controller status.
Warranty claims, delivery disputes, and cancellation demands are litigated against the entity named on the invoice. With only one person answerable in Thailand, this again becomes the go-between.
None of these liabilities can be waived by a private agreement with the foreign principal. A “we will indemnify you” clause is only as strong as the Australian company’s willingness and ability to pay when the Thai Revenue Department, a customs officer, or an injured consumer comes knocking. In practice, that clause is worth very little.
Three Structural Options
The correct response is to put an entity between the individual and these liabilities. There are three routes.
Branch Office
A branch office of the foreign company is not a separate legal entity. It is the foreign company itself, registered to carry on business in Thailand. For most sales activities, the branch needs a Foreign Business Licence under the Foreign Business Act because these activities fall within List 3 of the Act’s restricted categories. The FBL process is discretionary and takes months. It requires bringing in minimum capital, generally 3 million baht per restricted activity, and no less than 25% of the estimated average annual expenditure for the first three years. A branch is fully taxable on its Thai-source profits. It does not create a liability firewall between the foreign parent and Thai claims. If the branch is sued, the head office’s assets are also at risk. This is the right answer for a foreign principal committed to a long, transparent, direct presence in Thailand. For a salesperson trying to protect themselves, it is usually not the tool.
Representative Office
A representative office used to be a flexible way to test the Thai market. Since the 2017 Ministerial Regulations, representative offices no longer require a Foreign Business Licence, but they are strictly confined to five non-revenue-generating activities: sourcing goods or services in Thailand for the head office, checking the quality and quantity of goods purchased or manufactured for the head office, providing advice to Thai customers on goods already sold by the head office, disseminating information about new products and services, and reporting to the head office on business movements. A representative office cannot invoice Thai customers. It cannot be the vehicle through which the informal agent’s activity is legitimised. It is not a solution. It is a distraction.
Thai Company / Promoted Company
A Thai limited company is almost always the right instrument. There are two flavours. A Thai-majority company, with Thai nationals holding at least 51% of the shares, is not subject to the Foreign Business Act’s restrictions and can engage freely in sales and distribution. Where the foreign investor is content with a genuine Thai partner, this is the fastest route. A word of caution: the arrangement must be a genuine Thai shareholding. Nominee structures are a criminal offence under the FBA. They are exactly the kind of shortcut that turns a manageable problem into an unmanageable one.
A foreign-majority company needs a Foreign Business Licence for restricted activities, or it must qualify for an exemption. The most common exemptions are BOI promotion, where the activity is on the promoted list, or the US-Thai Treaty of Amity for US nationals, which still requires a foreign business certificate.
Distributor Versus Agent
A Thai company that buys Australian goods and resells them in its own name is a distributor. It takes title, bears inventory risk, and the Australian principal is not selling into Thailand at all. It sells to a Thai counterparty at the border. The Australian company’s permanent establishment risk evaporates. Section 76 bis loses its grip. The Thai company simply pays Thai corporate income tax on its own margin.
A Thai company that arranges sales in the name of the Australian principal and takes a commission is still an agent. That is a permissible structure, but it retains permanent establishment exposure unless drafted and operated with care. It re-imports many of the questions the informal arrangement raised.
For most situations, the distributor structure is the cleaner approach. A Thai limited company signs an exclusive or non-exclusive distribution agreement with the Australian principal, imports the goods or licences the service, sells to Thai customers in its own name, registers for VAT, deducts and remits withholding tax on payments to Australia at the treaty rate, and issues Thai tax invoices. The individual behind the company is a director and shareholder. The corporate veil limits their exposure to the company’s obligations, which, subject to competent management, holds.
What This Changes in Practice
Once a Thai company is in place, the previously anxiety-inducing picture becomes ordinary. The Australian software is licensed to the Thai company under a written agreement. Thai customers contract with the Thai company. Invoices are issued by the Thai company. Payments are received into a Thai bank account under a Thai VAT registration. Corporate income tax is paid on the Thai company’s margin. Withholding tax on royalties or fees flowing to Australia is applied and can be credited against Australian tax under the treaty. Product complaints, warranty claims, and consumer protection actions are directed at the Thai company, whose limited liability is the point of its existence.
In this new configuration, the former informal agent is an employee or director of the Thai company, drawing a salary and, where structured well, dividends. They are no longer personally on the hook for the Revenue Department’s assessments, unpaid customs valuation, or a Product Liability Act claim from a Thai end-user.
Timing Matters More Than You Think
The most avoidable failure are people who start and plan to formalise later. Exposure begins with the first quoted price and the first invoice. Section 76 bis does not require a turnover threshold to apply. The permanent establishment tests do not wait for a level of activity to be reached. Consumer protection liability attaches to the very first sale. Restructuring six or twelve months later means dealing with prior-period tax exposure, VAT that should have been charged, customs entries made in the wrong name, and personal data collected under the wrong controller. You can resolve all of this, but at a materially higher cost than doing it right at the outset.
If you are considering acting as the Thai face of a foreign product or service, or are already doing so, the practical sequence is straightforward. Map the activities and cash flows honestly. Confirm the applicable Foreign Business Act category and treaty position. Choose the vehicle, in most cases a Thai limited company operating as a distributor. Paper the arrangement with the foreign principal properly. Register for VAT and any sector approvals before opening the pipeline.
