The Industrial Estate Authority of Thailand (IEAT) is part of the Ministry of Industry aims to expand the industry sector by the Industrial Estate Authority of Thailand Act (‘the IEAT Act’). The IEAT’s aim is to improve industrial estate and industrial port management so that they can function as ideal strategic production and service bases with the appropriate infrastructure and facilities. The IEAT aims to help entrepreneurs gain a competitive advantage while balancing economic growth, social prosperity, environmental concerns, and community life quality.
Industrial Estates
A general industry zone or a free zone are the two types of industrial estates (‘IE’). It’s a plot of land set aside specifically for industrial factories. Moreover, it allows them to be clustered in a methodical and proportional manner. All of the required industrial facilities and utilities, such as roads, sewers, and central wastewater treatment plants, are often present in the locations.
The General Industrial Zone
The General Industrial Zone (‘GIZ’) is designated for the operation of industrial, service, or other companies that benefit or are related to the operation of industrial or service activities.
The IEAT provides operators with services such as transportation and training centers, as well as a license to possess the land required for the business. The GIZ allows investors to run service firms from within the zone.
The IEAT Free Zone
Operators in the Industrial Estate Authority of Thailand Free Zone (‘Free Zone’) are free to import goods or raw materials and export finished goods. Moreover, supplies to the Free zone are subject to tax and duty advantages, which include tax relief for:
- Products made for domestic use taken out of the Free Zone; and
- Raw material components produced domestically.
Operators can also import items and raw materials without any limits for production, commerce, or service provision. Furthermore, supplies or raw materials transported into the zone by export goods makers do not require import permits, seals, or symbols, and are immune from all regulations except customs law’s standard and quality control requirements.
How to Set Up a Business in an Industrial Zone?
A person must have been granted a permission by the Governor or a person authorized by the Governor to run a business in an industrial estate.
The IEAT is the authority in charge of approving industrial activity within IEs as well as providing the necessary privileges, incentives, and facilitation. Accordingly, the IEAT assists private individuals in establishing IEs and offers important services to support the IE’s functioning. Additionally, it ensures that the space has all necessary public utilities and facilities systems.
The One Stop Service Center (OSS) also assists enterprises wishing to establish operations in an IE. Additionally, it assists them in purchasing or renting land and proposing suitable sites to build or establish a factory.
IEAT Incentives
The IEAT provides both tax and non-tax incentives.
Tax Incentives:
- Exemption from import duties and excise tax.
- VAT Exemption on machinery and raw materials.
- Exemption or refund of duty from the import of local goods into the export processing zone for production of goods for export.
- Exemption from export duties, excise tax and VAT on export goods.
Non-tax Incentives
- Incentives to own and carry out industrial activities.
- Permission for foreign technicians, experts and spouse or dependents to stay in the country.
- Can bring in foreign technicians and experts to work under industrial activities.
- Permission to take or remit foreign currency abroad.
Privileges Afforded by the IEAT Notifications
Notification 1 (N1): Number and Period of Stay for Foreigners
This notification states that a foreigner’s spouse and dependents are allowed to stay in Thailand for the same amount of time as the foreigner. However, the relationship between the spouse and the dependent must be proven through evidence.
The IEAT will consider approving employment posts on industrial estates for foreigners who stay in Thailand. Director, president, and finance, administrative, or general affairs, executive assistant and factory assistant, and marketing, export, and sales are among the jobs that can be accepted, subject to criteria. Moreover, the approval of any additional people brought in by the business owner must first be given.
Notification 2 (N2): Permissions to bring in materials to IEAT
Anyone wishing to bring materials into the IEAT Free Zone must fill out an application and submit it to the IEAT. However, the permit shall state the exact purposes for which it receives approval. It can be for export, use, or distribution in Thailand, transfer to a business operator with tax and duty advantages, or destruction. Nonetheless, permission approval is on a temporary or general basis for any other purpose.
One can carry in materials into an IEAT Free Zone as long as their application and details are correct and appropriate. This permit is for a period of two years. However, outside of the IEAT Free Zone, the Governor will need to discover items suitable for destruction. Foreigners must get permission from the Governor for any other purpose or general purpose.
Notifications 3 & 4 (N3 & N4): Permission of Ownership of Land
In order to hold land ownership in an industrial estate for commercial operations, business operators must submit an application to the IEAT in the authorized form. Moreover, on getting the permission to operate in the industrial estate, the business operator must prepare for specific regions to make up parts of the land, that are –
- Areas for the construction of a factory or office building,
- Areas for suitable security and environmental protection preparations (water treatment system, accident prevention system, etc.), and
- Area for landscape architecture.
The plan must also contain any essential and appropriate locations for commercial activities as well as vacant land for future expansion. Additionally, it can be parking and storage spaces.
There are restrictions in land ownership in an industrial estate for residential use unless specifically any rule allows it. However, applicant can secure some land in the industrial estate for allocation for housing for staff and workers and their families. Applicant and the project must meet certain parameters in this situation. This includes the area of the land and the number of condominiums permitted on the property.
Notification 5 & 6 (N5 & N6): Exemption from Special Fees
Materials exempt from special fees under the Law on Investment Promotion (LIP). Moreover, exemptions under import duty, value added tax, and excise tax, as well as materials eligible for tax exemption or refund, are in Notification 5 with revision by Notification No. 6.
- Machinery, equipment, tools, and supplies including parts essential for production of goods or for commercial purpose must have the following purposes:
- direct production;
- production support;
- production management or service;
- quality control or inspection of products or raw materials;
- product quality improvement or development;
- rectification or mitigation of environmental impact;
- enhancement of production efficiency or staff training;
- production control or safety measures for certain industries;
- accident and risk prevention; and
- any other related purposes.
- Materials for factory or building construction, assembly, or installation in the IEAT Free Zone for:
- building or factory construction;
- installation of electrical, lighting and power systems;
- install water supply system;
- installation of indoor transport system;
- other parts of factory building; or
- any other related purposes.
If you wish to bring materials to Thailand, apply for duty, tax, and fee exemptions under the IEAT Act. You will get a certificate on approval of your application. However, on approval of the application, the applicant receives a certification. Additionally, the items will not be exempt from special fees if the Board does not approve the application.
The LIP, import duty, VAT, and excise tax include consumables, automobiles, motor vehicles, and motorcycles.
Within fifteen days of the end of each month, industrial or commercial operators must submit a report on materials brought into the IEAT Free Zone.
Notification 7 (N7): Exemption from Special Fees in IEAT Free Zone
The IEAT Act exempts materials used in the manufacturing of goods from special fees imposed by the law on investment. Moreover, it also exempts goods for commercial purposes from import duty, value added tax, and excise tax.
Materials for commercial purpose are the ones which are:
- Imported;
- Of Industrial or commercial operators in the same or different IEAT Free Zone;
- Of the producers which have been granted investment promotion under the LIP;
- From bonded warehouses under the law on customs;
- Under the rights and privileges;
- From the free zone under the law on customs; and
- In the Kingdom which are legally eligible for tax exemption or refund what they are exported.
Industrial or commercial operators must fill out Form IEAT-I-01 with the Company Affidavit from the Department of Business Development. Note that, one must do this within 6 months from the date of issuance to apply for exemption from special fees. The special fees includes the LIP, import duty, VAT, and excise tax for materials. However, the operator must complete Form IEAT-I-02R or Form IEAT-1-07R and submit it to the IEAT to bring in any material.
Someone who is not an industrial or commercial operator in the IEAT Free Zone can complete Form IEAT-I-07. Additionally, it is mandatory to bring materials into the IEAT Free Zone on behalf of others.
The Bottomline
As a Foreigner you can avail higher benefits from the Industrial Estate Authority of Thailand Regulations. Moreover, the only things you need are proper legal support and a business channel. As one of the leading law firms in Thailand, we assure you of success in incorporation of 100% foreign owned companies in Thailand. That too under the IEAT guidelines and maintaining the eligibility slabs. Simply book a free round of consultation with our specialists or email us your business plan in Thailand at [email protected].
