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The Board of Investment (BOI) was established pursuant to the Investment Promotion Act (B.E. 2520; 1977, as amended) for purposes of promoting certain foreign and domestic investment that are seen as welcome in Thailand.
1. BOI Policies
The Board of Investment has set investment promotion policies as follows:
1. Promote investment that helps enhance national competitiveness by encouraging R&D, innovation, value creation in the agricultural, industrial and services sectors, SMEs, fair competition and inclusive growth;
2. Promote activities that are environment-friendly, save energy or use alternative energy to drive balanced and sustainable growth;
3. Promote clusters to create investment concentration in accordance with regional potential and strengthen value chains;
4. Promote investment in border provinces in Southern Thailand to help develop the local economy, which will support efforts to enhance security in the area;
5. Promote special economic development zones, especially in border areas, both inside and outside industrial estates, to create economic connectivity with neighboring countries and to prepare for entry into the ASEAN Economic Community (AEC); and
6. Promote Thai overseas investment to enhance the competitiveness of Thai businesses and Thailand’s role in the global economy.
2. BOI Incentives
In addition to authorizing foreign majority ownership and control over Thai corporations, the BOI has discretionary authority to grant certain trade, taxation, employment, financial and other benefits.
BOI incentives are divided into two categories (tax incentives and non-tax incentives) and specified in the BOI certificate granted to successful applicants.
The BOI certificate is accompanied by a list of conditions. If the applicant fails to meet the conditions (and remain in compliance therewith) the BOI certificate is subject to revocation.
a. Non-Tax Incentives
Non tax incentives are available at BOI’s discretion and include such investment privileges as majority foreign ownership, land ownership and expedited visas and work permits for foreign executives and technicians (and their families).
b. Tax Incentives
BOI’s basic package of tax incentives includes the following (subject to modification by the BOI on a case-by-case basis):
- Exemption or reduction of import duties on imported machinery;
- Exemption or reduction of import duties on imported materials and components;
- Exemption of corporate income taxes for three (3) to eight (8) years, with permission to carry forward losses as deductible expenses for up to five (5) years;
- Exclusion of dividends derived from promoted projects from taxable income during corporate income tax holiday.
BOI tax incentives vary in accordance with the specific product or service under the promoted project, and the geographic location of the promoted project.
3. Promotion Criteria
BOI bases its determination on promotion privileges upon the following factors:
- Total capital investment;
- Debt to equity ratio (3:1 for newly established projects)
- Projected number of Thai employees;
- Foreign technology transfer, technical assistance, and training;
- Environmental impact of projects; and
- Project location.
Under the current policy, the BOI distinguishes between so-called activity based and merit based incentives.
4. Application procedure
After submission of the complete application, the process of approval will require 40 days. Upon such approval, the business may start to operate. However, in the following there will be an additional process required for obtaining the BOI certificate.
The BOI officers in charge usually speak English well and they make themselves available to clarify any questions regarding the application requirements.
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