Thailand BOI benefits

Thailand BOI benefits which took effect on 1 January 2015 are summarized below. These incentives announced by the Board of Investment are classified as activity based and merit based, which apply to Thailand BOI application submitted from 1 January 2015 onwards.

1. Activity-based incentives: New Thailand BOI incentives which are activity-based are classified into the following groups based on the importance of activities as follows:

Group A: consists of activities that will be given corporate income tax incentives, machinery and raw materials import duty incentives and other non-tax incentives.

A1. Thailand BOI incentives of this group are:

• 8 year corporate income tax exemption without cap
• Exemption of import duty on machinery
• Exemption of import duty on raw or essential materials used in manufacturing export products for 1 year, which can be extended as deemed appropriate by the Board of Investment
• Other non-tax incentives

A2. Thailand BOI incentives of this group are:

• 8 year corporate income tax exemption, not more than 100% of investment (excluding cost of land and working capital)
• Exemption of import duty on machinery
• Exemption of import duty on raw or essential materials used in manufacturing export products for 1 year, which can be extended as deemed appropriate by the Board of Investment
• Other non-tax incentiveS

A3. Thailand BOI incentives of this group are:

• 5 year corporate income tax exemption, not more than 100% of investment (excluding cost of land and working capital) unless specified in the list of activities eligible for investment promotion that the activity shall be granted corporate income tax exemption without being subject to a corporate income tax exemption cap
• Exemption of import duty on machinery
• Exemption of import duty on raw or essential materials used in manufacturing export products for 1 year which can be extended as deemed it appropriate by the Board f Investment.
• Other non-tax incentives

A4. Thailand BOI incentives of this group are:

• 3 year corporate income tax exemption, not more than 100% of investment (excluding cost of land and working capital)
• Exemption of import duty on machinery
• Exemption of import duty on raw or essential materials used in manufacturing export products for 1 year, which can be extended as deemed appropriate by the Board of Investment
• Other non-tax incentives

Group B: consists of activities that receive only machinery and raw materials import duty incentives and other non-tax incentives.

B1. Thailand BOI incentives of this group are:

• Exemption of import duty on machinery
• Exemption of import duty on raw or essential materials used in manufacturing export products for 1 year which can be extended as deemed appropriate by the Board of Investment
• Other non-tax incentives

B2. Thailand BOI incentives of this group are:

• Exemption of import duty on raw or essential materials used in manufacturing export products for 1 year which can be extended as deemed appropriate by the Board of Investment
• Other non-tax incentives

2. Merit-based incentives: Additional Thailand BOI incentives which are classified into the following groups based on the merits of the projects as follows:

2.1 Merit on competitiveness enhancement

In case the projects have the following investments or expenditures:

(1) Research and development in technology and innovation including in-house R&D, outsourcing R&D in Thailand or joint R&D with overseas institutes.

(2) 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, as approved by the Board of Investment

(3) IP acquisition/licensing fees for commercializing technology developed in Thailand

(4) Advanced technology training

(5) Development of local suppliers with at least 51% Thai shareholding in advanced technology training and technical assistance or

(6) Product & Packaging Design; either in-house or outsourcing in Thailand, as approved by the Board of Investment

Details shall be in accordance with criteria set by the Office of the Board of Investment.

Additional Thailand BOI incentives shall be granted as follows:

(1) One additional year of corporate income tax exemption will be granted if the above qualified investments or expenditures are not less than 1% of the project’s total revenue of the first 3 years combined, or not less than 200 million baht, whichever is less. However, the total period of corporate income tax exemption shall not exceed 8 years.

(2) Two additional years of corporate income tax exemption will be granted if the above qualified investments or expenditures are not less than 2% of the project’s total revenue of the first 3 years combined, or not less than 400 million baht, whichever is less. However, the total period of corporate income tax exemption shall not exceed 8 years.

(3) Three additional years of corporate income tax exemption will be granted if the above qualified investments or expenditures are not less than 3% of the project’s total revenue of the first 3 years combined, or not less than 600 million baht, whichever is less. However, the total period of corporate income tax exemption shall not exceed 8 years.

The cap on the additional corporate income tax exemption accounts for 200% of the investments and expenditures specified in No. 2.1(1) and 100% of the investments and expenditures specified in No. 2.1(2) – (6).

2.2 Merit on decentralization

Projects located in Twenty investment promotion provinces (provinces with low per capita 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:

(1) Three additional years of corporate income tax exemption shall be granted. However, the total period of corporate income tax exemption shall not exceed 8 years. Projects with activities in Group A1 or A2 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.

(2) Double deduction for transportation, electricity and water costs for 10 years from the date of first revenue derived from the promoted activity shall be granted.

(3) Deduction from net profit of 25 percent of the project’s infrastructure installation or construction costs shall be granted in addition to normal depreciation. Such deduction can be made from the net profit of one or several years within 10 years from the date of first revenue derived from the promoted activity.

2.3 Merit on industrial area development

Projects located within industrial estates or promoted industrial zones shall be granted one additional year of corporate income tax exemption. However, the total period of corporate income tax exemption shall not exceed 8 years. 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.

Read here for the criteria for Thailand BOI approval.

Contact ThaiLawyers for questions about the new Thailand BOI incentives.