Do you have a wonderful business idea and want to know if Thailand is the ideal spot to start it? Do you own a business in Thailand and want to take advantage of tax breaks and other benefits? Fortunately, you can register your business with the Board of Investment (BOI) Thailand and own 100% of it while receiving several benefits.
Thailand’s Board of Investment, or BOI, is a government organization that:
- Promotes investment opportunities in Thailand and overseas
- Brings innovation and technology into Thailand
- Increases economic growth in Thailand
The BOI’s role is to assist you in investing in and opening businesses in Thailand while also providing you with benefits such as up to 13 years of tax exemption, 100% foreign ownership, and assistance with work permits and visas.
BOI Thailand Promotion Advantages
If your business gets a BOI promotion, your company gets both tax and non-tax benefits.
The tax benefits include, although not limited to, yet includes –
- Reductions or exemptions on corporate taxes
- Exemptions import duties on machinery and raw materials in research and development businesses
- Exemptions on production for export
The non-tax benefits include:
- Complete Foreign Ownership
- Facilitation of Visas and Work Permits
- Ownership of Land and Property
You should keep three things in mind when considering BOI promotion benefits.
First, investment promotion benefits don’t apply to your whole company but only to a section of your business.
For example, if your company deals with software and food, and you get the investment promotion for your software business, you can’t apply the BOI benefits to your food business.
Secondly, benefits start when you get your investment promotion certificate, which the BOI gives you after they approve your case.
Thirdly, the BOI must approve each benefit in writing.
BOI Thailand Tax Incentives
Your company doesn’t have to pay corporate income taxes and import duties or gets reduced corporate income tax rates or import duties.
Your company in Thailand must pay an annual corporate income tax rate on net profits based on your company’s size and the industry you do business in. Check the Revenue Department of Thailand’s website for more information.
When your company is promoted by the BOI it doesn’t have to pay corporate income tax for up to 13 years. The number of years depends on your company’s location and line of business.
Some companies can get a three-year exemption on corporate income taxes while some businesses might not get any exemption.
You usually get a corporate income tax exemption of 50% of the total amount invested in your company. The limit can be more or less depending on your business category.
Even with a tax exemption cap of 50% your company benefits from the lower cost of doing business in Thailand.
“A1” groups and “Section 8” can get 100% corporate income tax exemption status. More information about these groups can be found in the Incentive Group section.
To start getting the full corporate income tax exemption benefit, you must have approval from both certified audits and the BOI within 120 days after the end of your accounting period.
If your company can’t get full corporate income tax exemption status you can get up to a 70% deduction on corporate income taxes for five years if you do business in a key investment area listed by the BOI.
For your manufacturing company that exports raw products or does research and development, your company doesn’t have to pay import duties on manufacturing machines and raw goods.
BOI Thailand Non-Tax Incentives
Your company gets three non-tax incentives if it’s promoted by the BOI.
They are:
- Complete foreign ownership
- Visas and work permits
- Land ownership
Complete Foreign Ownership
Only 49% of a company’s total shares can be owned if it is registered in Thailand. When your firm is promoted by the BOI, however, you can own 100% of it.
You’ll need to recruit two more shareholders because a company’s registration requires at least three shareholders. Shareholders can be friends or family members.
Issuance of Visas and Work Permits
You and your employees can obtain visas and work permits without having to visit the Chaengwattana Immigration Center.
Instead, you go to the One-Stop Service Center in Chamchuri Square Building in Bangkok—just a few minutes walk from the MRT Sam Yarn station—where they help you with your visas and work permits.
When applying for, extending, or renewing visas and work permits, you and your employees don’t have to go back and forth between the Immigration Center and the Ministry of Labour. These activities can be completed in the same location, on the same day, and at the same time.
Your spouse and children are also eligible for visas if you are married or have children. The BOI will provide you with the appropriate documentation to apply for Non-O visas for your relatives so that they can stay in Thailand while you work.
Ownership of Land and Properties
You can’t own land as a foreigner in Thailand under Thai law. But your company can own land in Thailand if it has a BOI promotion.
According to the Investment Promotion Act, the Year 1977 Section 27, BOI promoted companies are allowed to own land to run promoted businesses deemed necessary by the BOI.
You can use this land for building factories, offices, or living spaces for workers. If you close your company, you must sell the land within one year.
Is Your Company Eligible for Promotion?
Your company is eligible for BOI promotion if it:
- is one of the eight business categories as approved by BOI
- performs eligible activities deemed to be of strategic importance by BOI
- meets the minimum capital investment requirement
- has the right debt-to-equity ratio
- meets the business-type specific requirements
- is a new or existing company
Your company might also be responsible for technology transfers, minimum salaries, and more. Moreover, you can read about these in the Applying for Your Investment Promotion section.
These requirements could change based on Thailand’s needs in the future.
List of Business Categories eligible for BOI Promotion in Thailand
To get a BOI promotion you must first check if the type of business you do or plan to do is listed as one of the eight business categories.
These eight business categories are:
- Agriculture and Agricultural Products
- Light Industry
- Electronics and Electronic Appliances
- Services and Public Utilities
- Mining, Ceramics, and Basic Metals
- Metal Products, Machinery, and Transport Equipment
- Chemicals, Paper, and Plastics
- Technology and Innovation Development
List of Eligible Activities for BOI Promotion in Thailand
If your company does business in one of the eight categories above, you next have to check if the activities your company does are listed as eligible on the BOI’s website.
For your company doing business in the Technology and Innovative Development business category, for example, your eligible activities are:
- Innovation and Development in Biotechnology
- Innovative Projects for Nanotechnology Development
- Advanced Material Technology Development
- Digital Technology Development
If your company performs one of the eligible activities it’s one step closer to BOI promotion.
BOI promotion is not possible if your business falls under one of the eight business categories but doesn’t perform any of the eligible activities.
You can read through the 70+ eligible activities within the eight business categories to find out if the activities your company performs makes it eligible for BOI promotion.
The noteworthy eligible activities are logistics service, digital technology development, digital park, and manufacture of garments, jewellery, metals, papers, or plastic products.
However, if your company is eligible for one of the BOI’s activities, get in touch with a lawyer who can set up your company with a BOI promotion.
Build Capital Investment
Capital investment is the funds you or other people invest in your company to further its business goals.
Firstly, your company must have at least one million baht in the capital when you apply for a BOI promotion.
Secondly, you must have at least ten million baht in capital if you run a logistics company or international trading centre.
Finally, you don’t have to show the capital in cash. The capital can include the cost of construction and machinery, company assets, a rental contract, and other business expenses.
But you can’t apply land value and money used for payroll, to produce goods, and to perform daily operations toward the capital.
Balance Debt-to-Equity Ratio
The debt-to-equity ratio is a calculation that shows how much financial leverage your company has.
Your company’s debt-to-equity ratio can be a maximum of three to one. Hereby it implies that your company’s debt can’t be three times higher than its capital.
The BOI wants to be sure you don’t take out a loan to run your company, which increases the chance of bankruptcy later on.
If your company’s debt-to-equity ratio is higher than three to one, you must increase your company’s equity or decrease your company’s debt.
However, this three-to-one ratio rule only applies to new companies. Therefore, if you run an existing company, the BOI considers applicants on a case-by-case basis.
Meet Business-Type Conditions
Primarily, your company must adhere to conditions specific to each business category. Below are a few examples of specific conditions for a few business categories.
You can find all the business-type conditions listed on the BOI’s website.
Two universal conditions are:
- When your company is prone to damage the environment you must have solid standards in place to minimize environmental damage.
- If you run a company that produces value-added products, you must meet a minimum percentage.
By now you must have understood that BOI registration can help you in getting maximized ROI and up to 100% foreign ownership in a Thai business. Therefore, write to us at [email protected] or a free consultation session. We can help you throughout the process of BOI Registration.
