Thailand’s Board of Investment (BOI) announced the merging of its list of promoted digital activities into a single new category for software development, digital services platforms, or digital content (5.10) to support software development platform, digital services, digital content, and development of Thailand personnel in information technology.
Promotion terms and conditions
According to the BOI announcement, category 5.10 Development of Software, Digital Platform, or Digital Content has the following conditions:
1. To be eligible for investment promotion, projects must involve activities to develop whole new software, digital platforms, or digital content in Thailand
2. Where a project has a developed product before applying for promotion, further developments or improvements in Thailand of the product are required and must not be on the list appended to this explanatory note. In these cases, the applicant must provide comparison information between the developed product before applying for promotion and the further developments or improvements after applying for promotion.
The comparison information must contain the following details at a minimum:
3. The minimum investment capital of each project must not be less than Baht 1,500,000 per year calculated based on the expenditure on salaries for Thai information technology personnel additionally employed after applying for investment promotion.
4. Projects must have software, digital platform, or digital content development process in Thailand as stipulated by the Office.
5. Projects are allowed to utilize the existing or used machinery.
6. The investment promotion of this activity does not include the retail and wholesale of all types of products.
7. The revenue eligible for corporate income tax exemption must be derived from sales or services directly related to the promoted development of software, digital platform, or digital content as stipulated by the Office.
9. The projects cannot apply for additional incentives for competitiveness enhancement and the incentives according to Investment Promotion Measure for Small and Medium Enterprises (SMEs).
10. Should the projects want to apply for the incentives according to the Investment Promotion Measure in the Eastern Economic Corridor (EEC) for human resource development, they must inform about their request when applying for investment promotion. They are not allowed to change their request after investment promotion approval.
The rights and benefits of corporate income exemption
The revenue applicable to corporate income tax exemption must come from selling and providing services directly related to software development, digital platform, or digital content in the promoted activities. The types of the prescribed incomes based on our experience are:
However, the revenues applicable to a request for exercising rights and benefits of corporate income tax exemption do not include revenue earned in the form of commission, expenses, and other services fees which are not directly related to the software or digital platform of the promoted projects and earnings from data distribution or data analysis reports without software development in the project, or any other incomes that the Office considers not relevant to the specified criteria. The Office will primarily consider the revenue types or intents acquired.
Because of the high volume of applications related to the digital industry, The Board of Investment (BOI) decided to combine the above categories into one category, 5.10 (Development of Software, Digital Platform, or Digital Content), including adding new conditions to attract investors. Furthermore, it should be highlighted that the development process in the project is a key element for BOI promotion under new category 5.10.
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Fabian, a founding partner of FRANK Legal & Tax, is a German-trained lawyer with expertise in corporate/commercial and real estate law, and litigation, and has been living and working in Thailand since 2005.