ROH (Regional Operating Headquarters) vs. RO (Regional Office)

Even though the “Regional Operating Headquarters” (‘ROH’) and “Regional Office” (‘RO’) have the same business activities*, there are differences in certain areas as follows:

Keywords: Mazars, Thailand, ROH, RO, Legal

Regional Operating Headquarters

Regional Office

1. Legal entity

Must be a company incorporated under  Thai law.

1. Legal entity

Must be a juristic person established under the law of a foreign country.

A Foreign Business License is required from the Ministry of Commerce to operate its business in Thailand.

2. Services

Provide services to its affiliates at least three countries.

2. Services

Provide services to its affiliates in the same region.

3. Can earn business profits.

3. Non-profit business.

4. Can apply for BOI promotions in order to enjoy non-tax incentives.

4. Cannot apply for BOI promotions.

5. Tax incentives

Corporate income tax rate of 10% for service income, royalties, and interest.

Corporate income tax exemption on service income received from associated offshore enterprises or branches of the ROH.

Corporate income tax exemption on dividend income received from associated enterprises of the ROH.

5. Tax incentives

Cannot enjoy tax incentives because the RO must not derive any revenue from its services.

6. Minimum capital

No requirement unless the company applies for BOI promotion which requires at least 10 million Baht paid up capital according to Royal Decree (No. 508) and the Revenue Code B.E. 2481.

6. Minimum capital

At least 3 million Baht is required according to the Foreign Business Act B.E. 2542.

*The “Business Activities” that an ROH and RO can engage in include:

  • Personnel training and development;
  • Financial management;
  • Control of marketing and sales promotion planning;
  • Product development; and
  • Research and development.

Therefore, when determining whether to set up either an ROH or RO, the factors to be considered will include the planned activities of the business, whether it will be income earning and the desired investment incentives.