Thailand cradles the avenues of emerging and endless business opportunities in the region. The Royal Thai Government gives a great emphasis on a free-and-fair trade policy for foreign investors. BOI Thailand encourages these policies by announcing various schemes to promote Foreign Direct Investment in Thailand.
The Board of Investment (BOI) in Thailand is exclusively involved in the process of creating new business opportunities. It is to attract FDI and open pathways for foreign individuals and companies to start a business in Thailand.
The Royal Thai Government and BOI announced a few of their initiatives to widen the scopes of foreign investment in Thailand.
BOI Thailand Announces FBL Exemptions
Thailand’s Cabinet approved the exemption of three types of service businesses from the need for a Foreign Business License (FBL) on May 14, 2019. Foreigners will be able to openly participate in previously prohibited activities under the exemptions.
The categories of service businesses that are exempted according to the new announcement are –
- Provision of loans to affiliates and subsidiary companies;
- Lease of office space to affiliates and subsidiary companies, including public utilities; and
- Provision of advisory services related to management, communications, human resources, and information technology to affiliates and subsidiary companies
Ministry of Commerce Thailand “Draft Regulation”
The Ministry of Commerce, Thailand has finalized the drafted ministerial regulation (the “Draft Regulation”) that will designate any of the following businesses as an Exempted Business:
- Telecommunications Business – Telecommunications operators that run without providing their own network. In addition, they should have a Type 1 telecommunications license under the Telecommunications Business Act of B.E. 2544 (2001).
- Treasury Center – Operation of activities related to the management or exchange of foreign currencies. For your note, this is for affiliated companies under the Exchange Control Act B.E. 2485 (1942); and
- Software Development Business – The operator must be a Thai-registered entity and develop software for –
- Data Management or Data Analytics (including Predictive Analytics);
- Controlling or connecting the operation of advanced technological equipment;
- Information Security and Cyber Security; and
- Supporting Industrial Manufacturing Activities.
BOI Thailand Announces CIT Deduction
On December 21, 2020, BOI Thailand announced an extra 50 per cent CIT deduction to accelerate investment in target sectors. This will be applicable for projects with realized contributions of at least 1 billion baht or USD$33 million. Secondly, this realization must have been done within 12 months from the date of issue of the Promotion Certificate.
It is also noteworthy that the aforesaid deduction would be on top of the normal 5-8 years of CIT exemption for the relevant project. Qualified projects must submit applications from and after January 4, 2021, to or before December 31, 2021.
BOI Thailand Announces Incentives
The Thailand Board of Investment (BOI) approved the implementation of a broad package of incentives covering all major facets of the electric vehicle (EV) supply chain.
For this, firstly, they led emphasis on battery electric vehicles (BEVs), local manufacturing of essential components. Secondly, they implemented the same provision for commercial vehicles of all sizes, as well as ships.
However, the board has approved major investment ventures worth 35.7 billion baht (US$1.1 billion) in a variety of sectors.
Provisions for E&E Industry
- The BOI permitted the addition of four new categories of electric vehicle components to the list of the essential parts. They are high-voltage belt, reduction gear, battery cooling system, and regenerative braking system. These four forms will also be free from corporate taxes for the next eight years.
- The BOI also approved additional incentives for the manufacture of both battery modules and battery cells for the local market. it includes a 90 per cent reduction in import duties for two years on raw or necessary materials not available domestically. This announcement intends to support local EV battery production.
Deadline of BOI Thailand PIM Application
Take a note that the deadline for applying for benefits under the Productivity Improvement Measure (PIM) is extended by two years, until the end of 2022. The bundle of steps in doing so includes a three-year 50% CIT exemption.
For your information, BOI renamed this measure to make it clear that the provisions extend to both the manufacturing and service industries. For this, the term “production” is replaced by “Productivity” from the previous name.
According to BOI, the COVID-19-induced economic hardship. But still, up to 96 per cent of foreign direct investors operating in Thailand are confident in the country’s potential. They have plans to expand or at least maintain their investment, citing attractive investment incentives, a strong supporting industry supply chain.
Therefore, if you have plans to invest in any of the industries discussed in this article, we can surely help you to the fullest. All you have to do is write to us at [email protected] for best legal guidance and solutions. We specialize in company formation, accounting and taxation and ISO Certification for foreign businesses in Thailand.
