Comments Off on Board of Investment (BOI) Thailand: what incentives are available?
The BOI was established as a government agency under the office of the Prime Minister carrying out the Investment Promotion Act (B.E. 2520; 1977, as amended) to promote certain types of highly sought-after foreign and domestic investment in Thailand. Today, the BOI can guarantee different incentives to an investor.
The BOI has discretionary authority to grant certain trade, taxation, employment, financial and other benefits.
In this article, we would like to summarize what incentives can be obtained, in an ideal scenario, as a maximum:
Exemption of import duties on
Raw or essential materials imported for use in production for export
Materials for R&D activities
Corporate income tax exemption for up to 13 years
Maximum 50% CIT reduction for up to 10 years (in case of no CIT exemption)
50% CIT reduction for up to five years in the case of investments being located in the designated areas
Deduction of up to 70% of the invested capital from net profits derived within 10 years (ITA- Investment Tax Allowance)
Double deduction of public utilities costs (for investments located in the designated areas
25% additional deduction of infrastructure construction and installation (for investments located in the designated areas)
Non-tax incentives are available at the BOI’s discretion and include such investment privileges as:
Foreign ownership of the Company
Control over Thai corporations
Expedited visas and work permits for foreign executives and technicians (and their families).
If you have any questions regarding the BOI application and its benefits, feel free to contact us at [email protected]
Comments Off on Mercedes-Benz Investment – 100 Million Euros for Battery Production in Thailand
Together with their local partner Thonburi Automotive Assembly Plant Co. Ltd. (“TAAP”), Mercedes-Benz Cars is going to invest over 100 Million Euros in the existing car plant and a new battery production factory in Thailand. The investment shall extend the existing car plant and increase the production portfolio by adding new models. The new battery factory will be established close to the car plant of Mercedes Benz, expand over 48.000 sqm. This project shall be realized until 2020; the production of the batteries shall start in 2019, according to Managing Director of TAAP, Veerachai Chaochankij.
The battery production factory in Thailand will be the sixth Mercedes-Benz battery factory worldwide. As part of the Mercedes-Benz Cars battery production network, it will ensure Mercedes-Benz a strong position in the global electromobility market: the new battery factory in Thailand shall not only cover local demand but also serve the export.
According to Markus Schäfer, Member of the Divisional Board of Management Mercedes-Benz Cars, Production and Supply Chain this strategy will enable Mercedes-Benz Cars to operate in “any region at short notice and the right size”.
As a result of the investment, over 300 additional jobs will be created. Dr. Uttama Savanayana, Thailand’s Minister of Industry, welcomes this development. The currency inflow will facilitate the country’s economy by introducing new technology standards and promoting employment in a new higher technology production.
Over 40 years ago the Mercedes-Benz Cars plant started its first local production with the model W123, counting over 1000 employees nowadays, with increasing tendency.
Comments Off on BOI Investment Incentives for Digital Economy
In order to prepare itself for the new digital economy and maintain the rapid level of startups growth, particularly in Fintech, Food Tech and e-commerce, the Thai government has developed a large scale program. This aims to produce a digital economy framework around four areas of development: digital commerce, digital entrepreneur, digital innovation, and digital content.
Thailand Board of Investment (BOI) offers a wide range of tax and non-tax incentives for projects that meet these national development objectives. Non-tax incentives include permission to bring in expatriates, own land and take or remit foreign currency abroad. Tax-based incentives include exemption of import duties on machinery and raw materials used in manufacturing export products, and corporate income tax exemption of up to eight years. As part of its efforts to help develop the Digital Economy, the Board of Investment (BOI) offers attractive investment promotion incentives to a range of activities involved in activities related to the Digital Economy that are classified as activities of special importance and benefit to the country. A range of projects are granted corporate income tax exemptions, while other projects receive exemptions on import duty.
Comments Off on Overview of the Board of Investment (BOI) privileges
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.
The Board of Investment has set investment promotion policies as follows:
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;
Promote activities that are environment-friendly, save energy or use alternative energy to drive balanced and sustainable growth;
Promote clusters to create investment concentration in accordance with regional potential and strengthen value chains;
Promote investment in border provinces in Southern Thailand to help develop the local economy, which will support efforts to enhance security in the area;
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
Promote Thai overseas investment to enhance the competitiveness of Thai businesses and Thailand’s role in the global economy.
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.
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).
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.
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
Under the current policy, the BOI distinguishes between so-called activity based and merit based incentives.
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.
Comments Off on Extension of Capital Expenditure Corporate Tax Deduction
Under the Royal Decree No. 604 of 2016 (B.E. 2559), tax benefits were given to companies or partnership’s expenses of domestic investment. On 24th January 2017, the cabinet approved a one year extension of this tax measure, that is for the period from 1st January 2017 until 21st December 2017.
It should be noted that the privileges have been amended, in particular the multiple for the calculation of tax expenditure deduction has been reduced from 2 to 1.5.
Accordingly, under this tax measure, expenses can be deductible 1.5 times if they were incurred for the investment in these following assets: –
Machinery, parts, equipment, tools, appliances, decorations and furniture;
Vehicle except less than 10 seater cars; and
Permanent building which lands and housing are included.
Eligible for deduction are the following assets:
New assets which are invested in 2017 and will be ready for use within 31st December 2017 (but not including machinery and permanent buildings which may be ready for use afterwards).
Assets which already obtained the 2 times deduction from the Royal Decree no. 604, ifthe assets’ expenses for investment have not been completed and are still carried on in 2017. The multiple of 1.5 will then apply for the deduction under this tax measure.
Please be informed that the company or partnership which applies for this benefit must prepare investment project and expense plans and present these to the Revenue Department.
The investment visa offers foreigners the right to get a one-year visa to live in Thailand. The most important requirement is to bring 10 Million THB into the country. It should be considered that it is not allowed to earn wages in Thailand.
Specifically, the investment is not only related to buying property. There are three different options to invest the funds:
Buying a condominium unit at a purchase price or rent of at least 10 Million THB.
Holding the funds in a fixed deposit account at a Thai bank whose share capital is majority Thai owned.
Buying or holding Thai government or Thai state enterprise bonds worth at least 10 Million THB.
When the price of the condominium does not reach the amount of the 10 Million THB mark, the possibility of an investment visa is still there. The foreigner has to add one of the other named types of investment to reach the 10 Million THB mark. It must be noted that in general a foreigner is allowed to buy a condominium if he does not own more than 49% of the total floor space of the complex.
Beyond that, if a foreigner wants to apply for a visa from abroad at the Royal Embassy in connection with the purchase of a condominium he needs following documents:
Visa application form
Sale-purchase agreement of a condominium
Evidence of title
Government fee of THB 2,000 for single re-entry with three months visa
Government fee of THB 5,000 for multiple re-entries with one year visa
If a foreigner already has another visa status but would like to change it to an investment visa, there are following other conditions and requirements he has to fulfill:
Must invest not less than 10 Million THB
First grant a three months visa then have to extend to be one year visa
Have to wait 15-30 days for hearing a visa result
The required documents for an application are as follows:
Original and copy of passport
Visa application form
Chanote (must be the first and the only owner of the property)
Copy of sale-purchase agreement between the buyer and the condominium company
Copy of registration of the ownership
Receipt of a government fee from the land office
Copy of bank account booklet
An evidence of payment to buy a condo by foreign currency (or declaration letter if pay by cash)
Copy of house registration
Certification of appraisement (issue by Land Office)
Government fee of THB 2,000
Please feel free to contact us if you have any questions.