One of the reasons why you should consider locating your operations in Thailand is the country's liberal investment policies. The Thai Government has supported and will continue to support foreign investment. There are no restrictions on foreign currency remittances, no export requirements, no foreign equity restrictions in manufacturing sectors, and no local content requirements.

What can the BOI offer?
BOI provides tax and non-tax incentives for investors to help alleviate the costs of an international expansion and enhance their global competitiveness, which generally include the following:

Tax incentives

• Corporate income tax (CIT) exemption up to 8 years
• Additional 50 percent reduction of the corporate income tax for another 5 years
• Exemption or reduction of import duties on machinery and raw materials
• Double deduction of transportation, electricity, and water supply costs
• Additional 25 percent deduction of infrastructure construction / installation costs

Non-tax incentives

• Permit to bring in foreign skilled workers and experts to work
• Permit to own land
• Permit to take out or remit money abroad in foreign currency

• Agriculture and agricultural products
• Mining, ceramics, and basic metals
• Light industry
• Metal products, machinery and transport equipment
• Electronics and electrical appliances
• Chemicals, paper and plastics
• Services and public utilities

For further information on activities in each category, please refer to List of Activities Eligible for Promotion

How are tax incentives granted?
The Thailand Board of Investment has approved its new investment promotion policy, which will enter into effect beginning on 1 January 2015. Thailand, long a country able to attract investment with its low wage high productivity manufacturing sector, has advanced to become an upper middle income country; a country facing increased wage competition from less developed economies in the region. The strategic shift was therefore adopted for the country to follow the economic evolution taken previously by such economies as Japan, South Korea and Taiwan, with the ultimate goal of economic growth through a knowledge economy that relies more on the production of value-added goods than raw material exports, and on research and development than cheap labor.

The new policy is in accordance with the direction set by Thailand's National Economic and Social Development Plan. It aims to promote both foreign and domestic investment in Thailand to enhance national competitiveness and to overcome the so-called middle income trap; thereby achieving sustainable growth in accordance with the philosophy of sufficiency economy.

While investors should consult the official announcement made on 3 December 2014 for a complete view of all changes made, TIR would like to offer the following overview to provide a sense of the new direction being taken and what incentives are on the table. The official document can be found online at here.

The new policy will also maintain a category of activities that are classified as being of special importance and benefit to the country. These activities will continue to be granted corporate income tax exemption (CIT) without being subject to a cap, and include:

Category 1.3: Economic forest plantations (except for Eucalyptus)
Category 3.9: Creative product design and development centers.
Category 4.11.1: Manufacture of airframes, airframe parts, and major aircraft appliances, e.g. engines, aircraft parts, propellers and avionics.
Category 5.6: Electronic design.
Category 5.7: Software 
Category 7.1.1.1: Production of electricity or steam power from waste or refuse- derived fuel.
Category 7.8: Energy Service Companies (ESCO):
Category 7.9.2: Industrial zones or technology industrial estates or industrial zones.
Category 7.10: Cloud services.
Category 7.11: Research and development.
Category 7.12: Biotechnology.
Category 7.13: Engineering design.
Category 7.14: Scientific laboratories.
Category 7.15: Calibration services.
Category 7.19: Vocational training centers.

One change is that the Board will now consider promoted activities as either being activity-based incentives, Group A or Group B, or merit based activities.

Group A consists of activities that shall receive corporate income tax incentives, machinery and raw materials import duty incentives and other non-tax incentives and is divided into four4 subgroups, as follows:

A1 activities can receive an 8-year 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, and other non-tax incentives.
A2 activities can receive an 8-year corporate income tax exemption, accounting for 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 and other non-tax incentives.
A3 activities can receive a 5-year corporate income tax exemption, accounting for 100% of investment (excluding cost of land and working capital) unless it is 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 cap; exemption of import duty on machinery; exemption of import duty on raw or essential materials used in manufacturing export products and other non-tax incentives.
A4 activities can receive a 3-year corporate income tax exemption, accounting for 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 and other non-tax incentives

Group B consists of activities that can only receive machinery and raw materials import duty incentives and other non-tax incentives. This group consists of 2 subgroups, as follows:

B1 activities can receive exemption of import duty on machinery; exemption of import duty on raw or essential materials used in manufacturing export products, and other non-tax incentives.
B2 activities can receive exemption of import duty on raw or essential materials used in manufacturing export products, and non-tax incentives only.

The merit based category is new to the promotion policy with incentives based on the merits of the project, such as competitive enhancement. This would include projects that have investments or expenditures on:

1. research and development in technology and innovation including in-house R&D, outsourcing research 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;
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 and packaging design, either in-house or outsourced in Thailand, as approved by the Board.

Benefits under the merit based incentives include one additional year of CIT exemption if 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, with the total CIT exemption period not exceeding eight years; two additional years of CIT exemption if 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, with the total CIT exemption not exceeding 8 years; or three additional years of CIT exemption if 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, with the total CIT exemption not exceeding 8 years. It should be noted that for Group B activities only certain activities are eligible for merit-based incentives and to receive these investors need to submit the plan at the same time as the project submission is made. Also, those projects receiving incentives in Group A1 and A2 which already have an 8-year corporate income tax exemption and which also qualify for merit incentives for decentralization, will receive merit incentives in the form of a 50 percent reduction of corporate income tax on net profit derived from the promoted activity for 5 years after the initial exemption expires.

There is a cap on additional CIT exemption set at 200% for investments and expenditures specified in No.1 above, and at 100% for investments and expenditures specified in Nos. 2-6 above.

Another change to the policy includes a revision of the BOI Zoning, which has become only Investment Promotion Zones that now include 20 low income provinces, down from the previous count at 58 provinces: 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.

Projects located in the above areas are eligible to receive 3 additional years of CIT exemption, but the total period of the exemption cannot exceed 8 years. If a project with activities in Group A1 or A2 already receives an 8-year CIT exemption it will instead receive a 50% reduction of CIT on net profit derived from the promoted activity for 5 years after the CIT exemption period expires. All projects in the above areas are eligible for double deduction for transportation, electricity and water costs for ten years from the first date that revenue is derived from the promoted activity; and a deduction from net profit of 25% of the project's infrastructure installation or construction costs, in addition to normal depreciation. This deduction can be made from the net profit of one or several years within 10 years from the first date such revenue is derived.

What are the BOI application procedures?
All related application forms can be downloaded online through Office of the Board of Investment's website Click here

All application forms and related publications can be submitted to our Headquarters or through one of our overseas offices. For the flow diagram of procedures of applying for BOI promotion Click here