Newsletter No. 118 (EN)

Establishment of a Regional Operating Headquarters in Thailand

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I. Introduction


The Regional Operating Headquarters (“ROH”) was originally introduced by the Thai Govern­ment on 16 August 2002 (herein­after referred to as “original scheme”). After a long time of no improve­ments within the law of taxation on ROH, on 5 Novem­ber 2010 new leg­isla­tion was ap­proved by the Crown and was pub­lished in Royal De­cree Volume 127 Section 67 Gor on 5 Novem­ber 2010 and published in the Royal Gazette on 8 Novem­ber 2010 (hereinaf­ter referred to as “new scheme”).

The new scheme was intended to boost investments temporarily and was only available until 14 November 2015. The original scheme still remains in force.


II. Definition of a Regional Oper­ating Headquarters (ROH)


An ROH can either be an independent company incorporated under Thai law or an organiza­tional unit of such a company. The busi­ness of an ROH is limited to the pro­vi­sion of services to their respective associated enter­prises or branches in Thailand or abroad.


III. Services provided by ROH to its associated enterprises or branches that qualify for tax privi­leges


Services that an ROH provides to its associated enterprises or branches that qualify for tax privileges are managerial and administrative services, technical services, and supporting ser­vices. Supporting services include:

  • General administration, business planning and coordination
  • Procurement of raw materials and components
  • Research and development of products
  • Technical support
  • Marketing and sales promotion planning
  • Personnel management and re­gional training
  • Financial advisory services
  • Economic or investment re­search and analysis
  • Credit control and administra­tion
  • Any other activity stipulated by the Director-General of the Reve­nue Department

As to the definition of associated enter­prises, the Revenue Department has two crite­ria in determining whether or not a com­pany can be considered as an ROH’s associ­ated enterprise:

  • Shareholding basis. A company shall be regarded as ROH’s associated enter­prise if:
    • The ROH holds at least 25 percent of that company’s issued capital; or
    • The company holds at least 25 percent of the ROH’s issued capital; or
    • The company holds at least 25 percent of the ROH’s and other com­pany’s issued capital. In this case, the ROH and the other company are regarded as associated enter­prises.
      • Control basis. A company shall be re­garded as an ROH’s associated enterprise if:
    • The ROH has control over that com­pany; or
    • The company has control over the ROH; or
    • The company, for example a holding company, has control over the ROH and the other com­pany. If so, the ROH and the other com­pany are regarded as associ­ated enterprises.

IV. Regional Operating Headquar­ters under the legislation of 2002 (“Original Scheme”)


A company that wishes to operate as ROH under the original scheme can still register with the Revenue Department without any deadline as the original scheme is not timely limited.


1. Registration Requirements

The registra­tion as ROH is possible for already existing and active Thai companies as well as newly founded Thai companies.

An already operating Thai company which is willing to obtain the ROH status and the advantages from it can apply for acknowl­edgement as ROH at the Large Taxpayer Of­fice (“LTO”), the responsible tax author­ity. If the company meets certain require­ments, the LTO will grant tax advan­tages automatically from the next tax pe­riod on­wards.

If a Thai company wants to qualify as ROH, it has to apply for the acknowledge­ment as ROH together with the application for a tax number (Tax Identification Num­ber = TIN) and the registration for Value Added Tax (“VAT”) at the Revenue Depart­ment.


2. Qualifying criteria for ROH (“Original Scheme”)

In order for an ROH to be eligible for tax bene­fits under the original scheme, it must fulfil the following con­ditions:

  • The paid-in capital on the last day of the accounting period of the com­pany amounts to a minimum of THB 10 million;
  • The company has to provide its ser­vices and technical services to its branches or associated enterprises in at least three countries;
  • Half of the company’s total income is derived from administrative, techni­cal and other supporting ser­vices provided to its branches or asso­ciated enterprises in other coun­tries and royalties received from out­side of Thailand for the use of the ROH’s Research & Develop­ment (R & D). This criterion can be mitigated to one-third of the total reve­nue in the first three accounting pe­riods of its operation as ROH. In case of force majeure, the Direc­tor-General of the Revenue Depart­ment may lower the income threshold for one accounting period;
  • Notification of the Revenue Depart­ment of its incorporation as ROH. The benefits will be given starting from the notified accounting period onwards.

3. Tax privileges for ROH (“Origi­nal Scheme”)

ROH companies incorporated in Thai­land under the original scheme enjoy the follow­ing privileges:

  • Corporate income tax at the rate of 10 percent of net profits for in­come derived from services pro­vided to the ROH’s foreign branches or associated enterprises;
  • Corporate income tax at the rate of 10 percent of net profits for use of R & D done in Thailand by the ROH. This benefit is also ex­tended to royalties received from a third party providing services to the ROH’s branches or associated enter­prises using the ROH’s R & D;
  • Corporate income tax at the rate of 10 percent of net profits on inter­est received from the ROH’s for­eign branches or associated enter­prises for loans granted, provided that such loans are made from other sources and extended to the ROH’s branches or associated enter­prises;
  • Tax exemption for dividends re­ceived from the ROH’s associated en­terprises;
  • Tax exemption for dividends paid out of the 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.

4. Tax privileges for expatriates working for an ROH company (“Original Scheme”)

Expatriates may choose to be taxed at the rate of 15 percent. By doing so, the income received must not be calculated together with other income. This privilege is available only to expatriates em­ployed by the ROH and is limited to four consecutive years of employ­ment in Thailand, regardless of how exten­sively the beneficiaries have to travel abroad during the em­ployment period. To be enti­tled for the benefits once again, expatri­ates have to discontinue em­ployment with any ROH com­pany in Thailand for more than 365 days.


V. Regional Operating Headquar­ters under the legislation of 2010 (“New Scheme”)


A registration as ROH under the new scheme is no longer available since the new scheme expired on 15 November 2015.


VI. Practical notes


When calculating Corporate Income Tax, the ROH company has to separate non-quali­fied income from qualified income and its related expenses. If the expenses cannot be separated, the ROH company must appor­tion non-qualified and qualified ex­penses by the ratio of the received income. However, if such method of apportion does not reflect the reality of business, the ROH company may request approval of the Direc­tor-General of the Revenue Department to use other, more accurate and realistic ways of calculation.

Foreign companies that wish to be granted non-tax privileges given under the Investment Promotion Act in addi­tion to the abovementioned tax privileges must apply for investment promotion privi­leges from the Board of Investment (BOI) BE­FORE notifying the Revenue Department of their intention to register as ROH in order to be able to hold the majority of the shares in the ROH company. The BOI promotion provides additional tax and non-tax benefits such as[1]:

  • Exemption of import duty on machinery for R&D and training activities
  • Exemption of import duty on raw materials used in manufacturing export products for 1 year which can be extended as deemed appropriate by the BOI
  • Land ownership
  • Majority of foreign ownership
  • Eased requirements for hiring of expatriates

[1] The new BOI catalogue, effective  from 1 January 2015, uses the term “International Headquarters” (Category 7.5).


VII. Conclusion/Recommendation


From our experience, particularly the require­ment of five expats with THB 2.5 million salary or above is difficult to meet.

Com­pared to Singapore or Hong Kong, the legislation is still far more complicated with­out offering substantial additional benefits. Nevertheless, considering applying for an ROH does make sense if the main activities of the Company are in Thailand anyway and the regional function of the Thai organisa­tion is to be increased.

[1] The new BOI catalogue, effective  from 1 January 2015, uses the term “International Headquarters” (Category 7.5).

Annex I:  ROH – Overview of Benefits and Requirements under the Original Scheme



We hope that we have been able to assist you with this information.
If you have any further questions, please contact us:

Lorenz & Partners Co., Ltd.

27th Floor, Bangkok City Tower, 179, S Sathorn Rd,

Thung Maha Mek, Sathon, Bangkok 10120

Email: [email protected]
+66 (0) 2 287 1882

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