Doing business in Thailand in 2023 is now having a broader horizon in Thailand. It is because the Board of Investment of Thailand has included some more lines of business activities to be eligible for the promotion. This is great news for foreign investors willing to start their business in Thailand.
Now, what makes the Board of Investment (BOI) of Thailand so crucial for investors? If you are already knowing about BOI Thailand, then it is needless to explain. You can straight jump to the section of the article that explains the “New Eligible Activities for BOI Thailand Promotion in 2023”. But if you are not aware, this article will guide you through the benefits of getting BOI Promotion for doing business in Thailand in 2023.
- What is the Board of Investment of Thailand?
- What are the Investment Promotion Policies of BOI Thailand?
- Which Incentives are covered by the BOI Promotions?
- How BOI Thailand helps Investors?
- What are the new eligible activities for BOI Thailand Promotions in 2023?
- The Bottomline
What is the Board of Investment of Thailand?
A government organization within the Office of the Prime Minister is the Office of the Board of Investment. Promoting worthwhile investment, both in Thailand and abroad, is one of its primary functions and responsibilities.
In order to increase Thailand’s competitiveness, escape the “Middle Income Trap,” and achieve sustainable growth in line with the sufficiency economic theory, it is important to encourage worthwhile investment, both domestically and internationally. With this vision, the BOI keeps on formulating strategies to help foreign investors with various tax and non-tax benefits.
What are the Investment Promotion Policies of BOI Thailand?
BOI Thailand operates on multiple grounds when it comes to the promotion of investments. The organization keeps a balance between the trades of national strategic importance along with that of the incoming FDI intent. All the schemes and policies that the Board of Investment announces primarily revolve around the following strategic points:
- Encourage investment that increases national competitiveness by fostering R&D, innovation, value creation in the industrial, commercial, and service sectors, SMEs, fair competition, and reducing social and economic inequality.
- To encourage balanced and sustainable growth, encourage eco-friendly, energy-saving, or alternative energy activities.
- Encourage the formation of clusters to focus investment in accordance with regional potential and to bolster value chains.
- To encourage investment in border provinces in Southern Thailand to promote local economic growth and initiatives to improve local security.
- Encourage the establishment of special economic zones, particularly in border regions, both inside and outside of industrial estates, in order to foster economic ties with other nations and to get ready for joining the ASEAN Economic Community (AEC).
- Encourage foreign direct investments in Thailand to boost the nation’s economy and the competitiveness of Thai companies.
What are the Incentives covered by the BOI Promotions?
BOI Thailand helps with both tax and non-tax incentives for eligible projects and investors. The classification is as follows:
Tax Incentives of BOI Thailand
- Up to 13 years of corporate income tax exemption (According to activity & conditions).
- 50% cut in corporate income tax for five years (only in special investment promotion zones).
- machinery imports are exempt from duties.
- duty-free imports of raw materials or components utilized in export-oriented manufacture.
- Import taxes on raw or necessary goods used for research and development are exempt.
Non-tax Incentives of BOI Thailand
- 100% foreign ownership (except activities under List One annexed to the Foreign Business Act B.E 2542 (1999) or stated in other laws).
- Permission to own land
- Permission to bring professionals and skilled laborers into the Kingdom.
How BOI will help Investors Doing Business in Thailand in 2023?
- Offer guidance and details on the BOI investment promotion laws and regulations as well as investment opportunities.
- To make commercial operations easier, like company formation and work permit application processes, connect investors with government organizations and the private sector.
- Support the sourcing of local suppliers and establishing industrial ties.
- support for locating possible investors is provided.
- BOI Strategic Talent Center to assist in locating and recognizing international experts or researchers in science and technology (STC).
- Give Thai investors advice on investing abroad and offer them training courses in doing so.
New BOI-eligible activities for Doing Business in Thailand in 2023
Updates on the BOI measures can be divided into three (3) different categories as follows:
- Newly-listed BOI Eligible Activities
- Relisting of Previously Excluded BOI Eligible Activities
- Extension and Amendment of Productivity Improvement Measures
New BOI Eligible Activities
The following businesses will be added to the list of those that qualify for BOI incentives:
Senior Care Hospitals and Services
According to predictions in 2021, there will be at least 13 million people in Thailand over the age of 60 or 20% of the country’s whole population. The following two (2) businesses will be introduced as qualifying businesses, with the specific incentives noted, in order to prepare for the upcoming aging society:
- Senior care hospitals: entitled to a five (5) year CIT exemption; and
- Senior or dependent care services: entitled to a three (3) year CIT exemption.
Clinical Research
The BOI wants to persuade top medical researchers to conduct their medical research in Thailand, creating the opportunity for medical institutions or personnel in Thailand to obtain expertise and knowledge therefrom. This is part of the plan to increase Thailand’s competitiveness in the medical industry and to promote Thailand as an international medical hub. Thereby, it is a goal of priority and a great opportunity for investors in the Medical Industry of Thailand. The two (2) additional companies listed below will be made eligible for the BOI program offering an unlimited eight-year CIT exemption incentive:
- Contract Research Organizations; and
- Clinical Research Centers.
However, please note that to be eligible for the promotions the following relevant requirements must be fulfilled:
- A total annual salary of not less than 1,500,000 THB for newly hired researchers who are Thai nationals; or
- Investment capital of not less than 1,000,000 THB (excluding the cost of land, working capital, and vehicles).
Inclusion of Previously Delisted BOI Eligible Activities
Due to various strategic and regulatory issues, some of the eligible activities were delisted from the list earlier. As the BOI plays a crucial role in maintaining the foreign direct investment volume as well as the GDP of Thailand, it keeps on amending policies. That may include the inclusion or exclusion of eligible activities whenever applicable. Following is the list of some of the re-included activities:
Manufacture of Electric Vehicles
Following the exclusion of the former packages in 2018, the BOI re-welcomes applications for new incentive packages for the business of manufacturing electric vehicles (“EVs”). The investment packages will cover all kinds of EVs, i.e. four-wheelers, motorcycles, three-wheelers, buses, trucks, and ships (the former investment package covered only EV cars and EV buses).
Various requirements and incentives will apply to each form of EV, and they can be summed up as follows:
Additionally, the BOI approved incentives for four (4) more categories in respect of the manufacture of EV parts, namely:
i) high voltage harnesses;
ii) reduction gear;
iii) battery cooling systems; and
iv) regenerative braking systems.
Additionally, the BOI also granted an additional incentive for the production of battery modules and battery cells in order to support local EV battery manufacturing. This incentive entails offering a 90% decrease in import duties for a period of two (2) years on raw materials or necessities.
International Procurement Office (IPOs)
The “IPO” (international procurement office) will once more be an acceptable activity. The IPO’s duties include sourcing components, semi-finished items, and raw materials from both Thailand and abroad.
In addition to additional non-tax benefits, a company operating in the encouraged business under the IPO will primarily benefit from exemptions on import duty on machinery and raw materials to be used in manufacturing for exports.
Please be aware that the applicant must own or lease warehouse space as one of the most crucial requirements of the IPO in the past (s). Therefore, to meet this requirement in the past, the majority of trading enterprises had to buy or rent the warehouse from logistic providers, which could not be very convenient.
However, recent International Commerce Center (IBC) technology enables a trading organization to conduct wholesale business without the need for a warehouse (although there are other specific restrictions in addition to the IPO). On the basis of the available data, this point isn’t yet clear. As soon as the official BOI notification is out, you will get updates in our periodicals.
Extension and Amendment of Productivity Improvement Measure – a Great Privilege for Doing Business in Thailand in 2023
The BOI will extend the application deadline for investors who intend to pursue the advantages of what was once known as the Production Improvement Measure and is now referred to as the “Productivity Improvement Measure” until the end of 2022. (“Measure”). However, the advantages of the Measure—a 50% CIT exemption for three (3) years and an exemption from import duty for machinery—remain the same.
The Production Improvement Measure in Thailand was started to encourage involvement in R&D and advanced engineering design in order to increase production efficiency, as well as to promote and upgrade technology and machinery for energy conservation, alternative energy utilization, or reduction of environmental impacts. For both of the above, the Productivity Improvement Measure is applicable:
Any existing businesses (whether or not they are currently involved in a promoted project); however, if they are not, they must at the very least be eligible for BOI promotions; and Promoted Projects for which the CIT exemption or reduction privilege has already expired or for which the specific Promoted Project is not eligible for the CIT exemption.
The Measure includes the following four (4) sub-measures:
- Energy conservation and alternative energy utilization;
- Production efficiency improvement through the upgrading of machinery for manufacturing;
- R&D and advanced engineering designs for efficiency improvement; and
- Sustainable development for agriculture.
According to this Measure, you must:
- A minimum investment capital of not less than 1,000,000 THB (excluding the cost of land and working capital); and
- Submission of the application by the end of 2022 and implementation of the BOI-promoted project within three (3) years from the date of issue of the BOI certificate.
The Bottomline
So, there is already an active list of activities that are eligible for BOI Promotions. Additionally, some new activities are flashing in the list along with the inclusion of previously delisted activities. It will be commendable if you can identify whether your is eligible for BOI promotions or not. However, if you cannot, go through the following steps:
- Identify the particular industry that your business belongs to.
- Check the verticals of the industry that your business will probably tap upon.
- Cross-check whether your business is going to be useful for the Thai Market.
- Go to the BOI Website and check the list of eligible activities.
- Check the list of eligible businesses and see if your business matches any of the criteria.
If you are able to judge your eligibility for the BOI promotion for doing business in Thailand in 2023, then it is great. If not, we are here to help you. Book your free round of consultation with us by emailing us at [email protected]. The most efficient and professional team will be there to assist you in the complete process of BOI-promoted business registration in Thailand.
