There is a Thailand Board of Investment (BOI) incentive package as a follow-up to its new five-year strategy, which was unveiled in November 2022. These packages include BOI Thailand Incentives for the Expansion and Relocation of businesses in Thailand. Similar incentives compel foreign investors to apply for the Board of Investment Thailand promotions.
These incentive packages include a set of special privileges to support expansion by long-standing investors. Additionally, it has a comprehensive relocation program covering headquarters as well as research and manufacturing facilities. Furthermore, it grants a first package for investment in sustainable activities like the production of hydrogen vehicles and the development of biofuels.
The incentives represent the country’s first significant policy change since the new Five-Year Investment Promotion Plan was unveiled in October 2022. The strategy, which will be in effect from 2023 to 2027, aims to change Thailand’s economic landscape. Furthermore, it aims to encourage investment in progressive, high-tech, and environmentally friendly sectors.
These new incentives are already active since January 2023 and many investors are already enjoying the benefits. If you are left behind, read through this article to know more about the BOI Thailand Incentive plan in detail.
BOI Thailand Investor Retention and Expansion Program
Tax breaks are included in the incentive package to reward established investors who are currently engaged in business in Thailand. The Thai government has never before offered incentives for this kind of investment.
Companies that have received investment benefits from the Thai government for at least three projects totaling at least 10 billion baht (US$265 million) over the past 15 years and are requesting approval for a fourth project or an expansion project worth at least THB 500 million are eligible for special incentives. Depending on the nature of the operation, they can range from a corporate income tax (CIT) exemption for up to three years to a 50% CIT reduction for up to five years.
Benefits of the Program:
- Corporate income tax (CIT) exemptions for A+ category businesses are available for up to 13 years, with an extra 3 years of exemption possible after the original 10–13 years.
- The program offers 8 years of CIT exemption for A1 and A2 business categories, followed by a 50% reduction for the next 5 years.
- Businesses in the A3, A4, and B categories might be qualified for up to 5 years of CIT exemption, with an additional 3 years of exemption possibly available.
The length of the CIT exemption period varies by category and can range from 0 to 13 years for authorized projects, depending on their classification.
BOI Thailand Incentives for Relocation of Businesses
The incentive package creates a new relocation scheme to reward businesses with CIT exemptions for relocating their operations to Thailand. This package is applicable for regional corporate offices, R&D facilities, and production plants. However, the CIT exemption only covers earnings from the relocated manufacturing operations.
Businesses that move all three of these facilities to Thailand will be eligible for a five-year CIT exemption. Additionally, A three-year CIT exemption grant is applicable on the transfer of regional headquarters and manufacturing facilities. Depending on the industry, companies will receive a CIT exemption for one to five years if they just relocate their manufacturing and research and development facilities.
This BOI Program includes two sub-programs which are as follows:
- New applications for investment promotion in production projects,
- Investment projects in ongoing productions already get A-category advantages.
To be eligible under these two sub-programs, the following are the criteria:
a. New investment applications in production projects
- Companies must have applied for both a production project and an International Business Center (IBC).
- Companies must apply for the benefits by the end of 2023.
b. Investment applications in existing production projects
- Companies must have applied for an International Business Center (IBC).
- Companies must apply for the benefits by the end of 2023
Projects receiving approval will be eligible for various non-tax benefits as well.
The standard benefits under the production component as well as an additional 3 years of corporate income tax (CIT) exemption. Additionally, there will be non-tax benefits for projects involving production and an International Business Center (IBC).
Comparable incentives will be provided for projects that comprise manufacturing, an IBC, and an R&D center, as well as an additional 5 years of CIT exemption (for a total exemption period that does not exceed 8 years) and other non-tax benefits.
The Bottomline
The BOI’s incentive program places a lot of focus on luring capital to high-tech and environmentally friendly sectors. It continues the “Thailand 4.0” initiative, which aims to transition Thailand away from an export-driven economy relying on cheap labor and natural resources.
An innovation plan called “Thailand 4.0” is at the core of the Thai government’s economic planning. Thailand is to be transformed into a cutting-edge, high-tech economy through the development of specific sectors and geographic areas.
However, to cut through the stringent protocols and application processes, it will be wise to have a reliable Thai corporate law firm by your side. This will help you to clear the documentation and application phase with ease. For your requirement, email us at [email protected] and our team will get back to you within one Thai working day! Reach out to us and enjoy the BOI Thailand Incentives for the Expansion and Relocation of your business in Thailand.
