If you are seeking Thailand BOI registration for your business, you must know about the Competitiveness Enhancement Act. Announced on February 12, 2017, this Act is officially known as “National Competitiveness Enhancement for Targeted Industries Act, B.E. 2560 (2017)”. The purpose of this act is to waive off Corporate Income Tax (CIT) for eligible businesses and subsidize research, development and innovation investment costs.
New programs were developed in accordance with the Competitiveness Enhancement Act which originated from the original Investment Promotion Law. BOI Thailand made the offers attractive to high-value investors in industrial sectors who are willing to put their money into innovation, research and development. Moreover, investors can receive offers from the BOI who are intending to use advanced technologies in their business process and operations.
Who Are Eligible?
The incentives announced under the Competitiveness Enhancement Act is applicable for all companies incorporated under Thai Law. To be more particular, it can be applicable for your business as well if you are planning to invest in any of the following sectors:
- Biotechnology
- Nanotechnology
- Advanced Materials Technology
- Digital Technology in the Automotive
- Electronics
- Petrochemical
- Agriculture and Food Industries
What Are Other Eligible Facilities for BOI Registration?
Investment in the targeted sectors to facilitate the following facilities are also eligible for the privileges:
- Facilitation or Supporting Programmes
- Research and Development
- Technical Training Centres
- Electronic Design
- Engineering Design
- Scientific Laboratories
- Calibration Services
In addition, you must know that the Investors must be willing to transfer technology to and work with academic institutions. Note that It is the Board of Investment (BOI) Thailand announcement.
Deliverables of the Act
The new Acts specifically aimed at improving Thailand’s competitiveness in specific sectors. The major deliverables of this Act are as follows:
- CIT exemption for a period of 13 years for business in targeted core technologies and services
- Also, CIT exemption for a period of 15 years for strategic investments in the target segments
- 10 billion baht subsidy allotment for strategic investments in research and development, innovation and human resource development
- Businesses in the Eastern Economic Corridor are eligible for 50% CIT reduction
- Exemptions in import duties for materials for research and development
- Import duties on machinery and raw materials for export goods are exempted or reduced
- Permission to own property and bring in foreign experts to operate a company under a majority-owned structure
Investment Promotion Act Amendment for BOI Registration
In addition to these new initiatives, amendments in the Investment Promotion Act applies conditions to existing incentives and include additional incentives for currently eligible activities. Furthermore, the amendments are the following:
- Non-tax, Activity-based incentives are the qualifying activities for additional rewards.
- CIT reduction of up to 50% for a period of a maximum of 10 years
- In addition to the usual depreciation, there is a deduction of up to 70% of net profit over a ten-year period. Additionally, the Act does not consider the cost of land and working capital of the project as the investment amount.
- Importantly, you must follow the Revenue Code when calculating profit and loss.
- And finally, the withholding tax should not include dividend payments from net income.
Merit-based Incentives on Competitiveness Enhancement
Additionally, BOI Thailand classifies merit-based incentives as additional incentives to encourage foreign investment or expenditure. As a result, the board establishes additional rewards depending on the project’s merits.
However, the following are investment capital and expenditure under the competitiveness enhancement act:
- In-house, outsourced in Thailand, or joint R&D with overseas institutes would be eligible for 300 per cent of additional capital in R&D, technology growth, and innovation
- 100% of the additional capital in Donations to technology and human resource development funds, education institutes, specialized training centres, R&D institutes or governmental agencies in the S&T field in Thailand
- 200% of additional capital in IP acquisition/licensing fees commercializing technology
- For advanced technology training, 200% of additional capital invested.
- 200% of additional capital in the development of local suppliers with at least 51% Thai shareholding in advanced technology training and technical assistance
Therefore, if you are planning to invest in Thailand, you must know about the Competitiveness Enhancement Act to check whether your investment is eligible for reductions or deductions. You may feel confused as the Act is linked with various other regulations like the Eastern Economic Corridor Act and Investment Promotion Act. For your assistance or guidance, feel free to mail us at [email protected].
