The Board of Investment may grant BOI incentives to companies to encourage them to contribute to Thailand’s progress, provide new jobs, and stimulate the local economy.
The following BOI incentives may be granted to successful applicants:
Tax incentives
The BOI normally grants to investors the following tax incentives:
• Exemption or reduction on import duty on materials and machinery for Research &Development purposes and related testing
• Reduction of import duties for raw or essential materials
• Exemption of import duty on raw or essential materials imported for use in production for export
• Reduction on import duty on raw materials for domestic consumption for up to 90%
• Exemption of corporate income tax on the net profit and dividends derived from the promoted activities for up to 15 years
• 15% personal income tax rate for foreign executives working for International Business Centers and regional R&D centers
• 50% reduction of Corporate Income Tax for import duty on raw or essential materials imported for use in production for export, not exceeding 10 years
• Double deduction from the costs of transportation, electricity, and water supply
• Additional 25% deduction of the cost of installation or construction of facilities
Non-tax incentives
The following incentives are provided for promoted investments regardless of location:
• Permit for foreign nationals to enter the Kingdom for the purpose of studying investment opportunities
• Permit to bring skilled workers and experts to work in investment promoted activities
• Permit to own land
• Right to state’s land lease for 50 years and, upon approval, renewal for a further 49 years
• Permit to take out or remit money abroad in foreign currency
Merit-based incentives
If the project has merits pertaining to enhanced competitiveness, industrial area development and decentralization, additional merit-based BOI incentives may be granted, which are classified into the following groups:
1. Merit on competitiveness enhancement by investing in the following:
• R&D: in-house, outsourced in Thailand or joint R&D with overseas institutes
• Donations to Technology and Human Resources Development Funds, educational institutes, specialized training centers, research institutes, or governmental agencies in the science and technology field in Thailand
• IP acquisition/licensing fees for commercializing technology developed in Thailand
• Advanced technology training
• Development of local suppliers with at least 51% Thai shareholding in advanced technology training and technical assistance
• Product and packaging design, in-house or outsourced in Thailand
Additional qualified investment or expenditures of 1%, 2%, and 3% of the project’s total revenue during the first 3 years of operation or 200, 400, 600 million Baht, depending on whichever is the lesser value, will be entitled to additional CIT exemption for 1 to 3 years, without exceeding 8 years in total, and an increase in the CIT exemption cap.
2. Merit on decentralization
Projects located in 20 provinces with low per capital income (Kalasin, Chaiyaphum, Nakhon Phanom, Nan, Bueng Kan, Buri Ram, Phrae, Maha Sarakham, Mukdahan, Mae Hong Son, Yasothon, Roi Et, Si Sa Ket, Sakhon Nakhon, Sa Kaew, Sukhothai, Surin, Nong Bua Lamphu, Ubon Ratchatani, and Amnatcharoen) shall receive additional incentives as follows:
• An additional 3-year CIT exemption, without exceeding 8 years. Projects which are already granted 8-year corporate income tax exemption shall instead receive a 50% reduction of corporate income tax on net profit derived from the promoted activity for 5 years after the corporate income tax exemption period expires.
• Double deduction for transportation, electricity, and water costs for 10 years from the date of first revenue derived from the promoted activity
• Deduction from net profit of 25% of the project’s infrastructure installation or construction costs
3. Merit on industrial area development
Projects located within industrial estates or promoted industrial zones shall be granted 1 additional year of corporate income tax exemption. However, the total period of corporate income tax exemption shall not exceed 8 years, therefore requests for extension are not possible under any circumstances.
This merit-based incentive shall not be granted to activities with conditions specifying that projects must be located within industrial estates or promoted industrial zones.
The amended Investment Promotion Act empowers the BOI to grant also CIT rate reduction privilege (50% reduction for up to 10 years), allowing businesses that do not qualify for CIT exemption to obtain tax reduction benefits.
Furthermore, businesses that are neither eligible for CIT exemption nor CIT reduction, may be allowed to deduct in calculating the CIT no more than 70% of the total investment capital from the net profits derived from the promoted business for a period of up to 10 years.
The exemption of tax for dividends derived from the promoted business extends to dividends that are declared within the exemption period and must be paid within six months from the expiration of such exemption period.
These BOI incentives are specified in the BOI certificate granted to successful applicants. If the applicant fails to meet the conditions (and remain in compliance therewith) the BOI certificate is subject to revocation.