Income Tax Exemptions in Thailand: 2023 Updates

 

There is an announcement of a Royal Decree (“RD”) giving income tax exemptions in Thailand. This is applicable to all investments in target businesses. Noteworthily, this RD is part of ongoing government efforts to encourage social and scientific growth. The Revenue Decree Governing Exemption of Taxes and Duties (No. 750) B.E. 2565 (2022) went into force on June 15, 2022, and will be effective until June 30, 2032. This decree is applicable for both Personal and Corporate Income Tax in Thailand.

The main purpose of this RD is to exclude gains made by individuals, businesses, and legal partnerships. These exclusions are for investments in the target industries leading to the formation of “Target Companies“. The exemption also applies to investments made in eligible Thai Venture Capital Trusts (“VCT”) and Private Equity (“PE”) companies.

• Which Businesses are Eligible for Income Tax Exemption in Thailand?
• Case-specific Income Tax Exemptions in Thailand
  • Direct Investments
  • Investment through Private Equities (PEs)
    • Share Transfer Gains
    • Dissolution Gains
  • Investment through Venture Capital Trusts (VCTs)
    • Unit Transfer Gains
    • Dissolution Gains
• How can we help with Tax Exemption in Thailand?

Which Businesses are Eligible for Income Tax Exemption in Thailand?

A firm or legal partnership conducting business in one or more of the following “Target Industries” is a Target Company. The Committee on Policy for National Competitiveness Enhancement for Target Industries has chosen the following industries as targets:

• Next generation automotive
• Intelligent electronics
• Advanced agriculture and biotechnology
• Food for the future
• High-value and medical tourism
• Automation robotics
• Aviation and logistics
• Medical and comprehensive healthcare
• Biofuels and biochemicals
• Digital development
• Defense
• Education and human resource development

Case-specific Income Tax Exemptions in Thailand

Direct Investments

Gains from the sale of shares in a Target Company will not be subject to personal or corporate income taxes. Conditions that are crucial include:

1. Before the capital gain is realized, the investor must have owned the shares for at least twenty-four (24) months.
2. In each of the two (2) consecutive accounting periods prior to realizing gains from the transfer of shares, at least 80% of the operating revenue of the Target Company must have come from business operations in the Target Industries.

Investment through Private Equities (PEs)

Share Transfer Gains

Gains from the transfer (disposal) of PE shares that invest in a target company are free from PIT and CIT if the investor-owned the PE shares for at least twenty-four (24) months prior to the capital gain’s occurrence. Furthermore:

1. The capital gain exemption is only proportionate to the PE’s participation in the Target Companies if the PE has no retained earnings. Additionally, in each of the two (2) prior accounting periods to the day gains are generated from the transfer of shares, at least 80% of the Target Company’s operational revenue had to have come from business operations in the Target Industries. The Director General (“DG”) of the Revenue Department shall establish the required percentage of investments by the PE into Target Companies.
2. The entire gain earned by the investor in the PE will be exempt from PIT or CIT if the PE has retained earnings and at least 80% of those retained earnings were derived from gains as described above, in each of the two (2) accounting periods prior to the date on which the investor in the PE receives income from the transfer of shares (of the PE).
3. Legal reserves cannot be included in the calculations of retained earnings in clauses 1. and 2. above.

Dissolution Gains

According to RC, Section 40(f), a shareholder’s excess return on investment upon dissolution comes under the taxable income slab. However, under RD, the PE investor need not recognize the excess return of capital from the dissolution of a PE. Because it can only be used in proportion to the PE’s interest in the Target Companies, the exemption is restricted. Additionally, for the two consecutive accounting periods prior to the dissolution of the PE, at least 80% of the Target Company’s operating revenue had to come from Target Industries.

Investment through Venture Capital Trusts (VCTs)

Unit Transfer Gains

If the investor held the shares for at least twenty-four (24) months prior to the gain occurring, gains from the transfer (disposal) of VCT units that were invested in a target company will be exempt from PIT and CIT. Furthermore:

1. The capital gain exemption only applies in proportion to the VCT’s investment in Target Companies if it had no retained earnings. In addition, in the two (2) consecutive accounting periods prior to the gain from the transfer of units, at least 80% of the operating revenue of the Target Company is in each of the Target Industries. The Director General (“DG”) of the Revenue Department shall establish the required percentage of investment in Target Companies by the VCT.
2. The entire gain from the transfer of units will be exempt from PIT or CIT if the VCT has retained earnings, and it did so in each of the two (2) accounting periods prior to the unit transfer, which resulted from investment in a Target Company that derives at least 80% of its total income from operations in target industries.

Dissolution Gains

When a VCT dissolves, a unit holder’s income is free from income recognition. However, it is only to the extent of VCT investment in Target Companies. In addition, during the two (2) consecutive accounting months prior to the VCT’s dissolution, at least 80% of the operating revenue of the Target Company must come from Target Industries.

How can we help with Tax Exemption in Thailand?

Although this article is an attempt to explain to you the new announcement of the Royal Decree for Income Tax exemption, yet, is not enough to cover the entire concept. Therefore, you will need a reliable Accounting and Taxation firm in Thailand by your side to guide you throughout. When that firm is Konrad Legal, we assure you of the following benefits:

• Dedicated Accounting team to track the books and accounts of your business in Thailand
• Planned, Requested, or Statutory, get professional Internal & External Audit Services
• Complete support for Personal and Corporate Income Tax Payment & Return Filing

So, if you want to manage your accounting, audit, and taxation requirements from a single point of contact, then do count on us. Email us your requirements at officer@konradlegal.com 

How do Law Firms help a Franchisee Business in Thailand?

 

Are you planning to start a Franchisee Business in Thailand? It is a good idea indeed for both Thai and Foreign Investors. With the growth of the eCommerce industry in Thailand, your franchisee business will surely be able to address online orders and yield profit. Additionally, International Procurement Offices in Thailand are now Board of Investment eligible activities. So, international franchising won’t be an issue related to this. 

To help you plan your business more effectively, let us help you with some facts about Franchisee Business in Thailand.

• What are the Specific Laws for Franchisees in Thailand?
• How do Law Firms help Franchisee Businesses in Thailand?
  • Drafting or Reviewing Master Franchise Agreements
  • Due Diligence for Franchisors/ Franchisees
• Get the Pitfalls Covered

What are the Specific Laws for Franchisees in Thailand?

The establishment and operation of a franchise, or more particularly, the operating system, are governed by distinct laws because Thailand lacks its own comprehensive franchising legislation. Depending on the sort of business, a typical franchise in Thailand could need to review more than 10 different Acts and rules. The Civil and Commercial Code, numerous Trademark Acts, the Trade Secrets Act B.E. 2545, and the Unfair Contract Terms Act B.E. 2540 are among the most significant.

Because of this, franchising in Thailand may seem to be a very difficult structure to pursue. Additionally, violations and breaches of Intellectual property rights are other concerns. Generally speaking, contract freedom is king in Thailand. However, to ensure the protection of both the franchisor and franchisees, a foolproof contract is very crucial. Therefore, a skilled franchise attorney must comprehend the various concerns that each party must take into account in order to strike a fair balance. Here is where you need a reliable law firm in Thailand!

How do Law Firms help Franchisee Businesses in Thailand?

If you are going to start a franchise business in Thailand, you will need a seasoned law firm or professional to undertake those activities that you may not be apt or comfortable with. These activities can be related to tax regulations, statutory compliances, or legal grounds. Continue reading to know them all.

Drafting or Reviewing Master Franchise Agreements

Thai law is relatively liberal since it is a civil law country, allowing the courts to evaluate the regulation’s meaning rather than its specific terms of operation. Due to this, other general rules governing contracts and commercial operations govern franchisee relationships in the absence of an express law of franchise.

Therefore, to review or draft a franchise agreement in Thailand, you will typically need to be conversant with the following legal sources:

• Civil and Commercial Code 
• Thailand Trade Mark Act B.E. 2534 (1991), as amended by the Trade Mark Act (Number 2) B.E. 2543 (2000) 
• Thailand Patent Act B.E. 2522 (1979), as amended by the Patent Act (Number 2) B.E. 2535 (1992) and Patent Act (Number 3) B.E. 2542 (1999)
• Thailand Copyright Act B.E. 2537 (1994)
• Trade Secrets Act B.E. 2545 (2002)
• Unfair Contract Terms Act B.E. 2540 (1997)
• Trade Competition Act B.E. 2542 (1999)
• Act Relating to Price of Merchandise and Service B.E. 2542 (1999)
• Revenue Code B.E. 2481 (1938)
• Direct Sales and Direct Marketing Act B.E. 2545 (2002)
• Product Liability Act B.E. 2551 (2008)

When creating and reviewing franchise agreements and franchise development agreements, it is also important to take into account the different Ministerial Regulations that implement and further develop these Acts.

Due Diligence for Franchisors/ Franchisees

Due diligence on a possible franchisee is crucial, not only to ensure that they are reliable and will properly establish a business in Thailand but also to ensure that they have the necessary skills and experience to operate the company as the franchisor would instruct. Additionally, some essential due diligence measures include:

• To verify directors, shareholding, and company debt, the Ministry of Commerce conducts searches on the corporate organization.
• Court searches in the relevant areas to find litigation or other disputes that note the parties involved, the nature of the conflict, the court’s jurisdiction, the cause or causes of action, and the stage at which any actual, threatened, or pending litigation, administrative action, or settlements are in.
• The list of all necessary regulatory approvals for food, drink, pharmaceuticals, nutrition, medical devices, and cosmetics, together with documents of these approvals.
• Knowledge of takeover procedures and any necessary transitional plans.

Get the Pitfalls Covered

So, to reassure you that you need a law firm to set up your franchisee business in Thailand, let us cover the common pitfalls that can trap you anytime during the course of the business.

There are prohibitions in some clauses in franchise agreements by Thai law, notwithstanding the propensity of some franchise agreement drafters to overdo it in an effort to offer the franchisor significant protection.

For instance, it is against the law for an agreement to be struck in advance that absolves a debtor of his own deception or egregious carelessness. Additionally, other terms that can violate the Thai Unfair Contract Terms Act include:

• a clause that limits or excludes liability for contract breach.
• any clause that permits contract termination without cause or without the opposing party has committed a substantial breach.
• a clause that permits one party to postpone or refuse to carry out its duties under a contract without providing justification.
• a clause that permits one party to impose additional duties on the other party beyond those reached at the time the contract was executed.

Don’t you think that these pitfalls can turn grave for your franchisee business in Thailand? Therefore, instead of running the horses of your brain, consult with Konrad Legal today. Email us at officer@konradlegal.com to meet all your legal requirements for your Franchisee Business in Thailand.

International Procurement Offices for BOI Promotions in Thailand

 

International Procurement Offices have consistently ranked high on the promotional categories list of the Board of Investment Thailand. The BOI wants to develop Thailand’s supply chains and promote Thailand as a top global hub for industrial component sourcing and distribution through this category. BOI Promotions in Thailand for eligible activities facilitate this intent of the kingdom.

It also intends to improve the technical skills of the Thai labor force by utilizing experts from other countries, as well as to introduce technological innovation and industry best practices to Thailand.

The International Headquarters and International Trading Centers categories initially took the place of this promotional category, but the BOI reintroduced it on November 4, 2020, in an effort to promote foreign investment and commerce in the face of the COVID-19 epidemic. However, it was not finally included in the list of eligible activities. But now the Board of Investment in Thailand declares that IPOs are eligible for BOI Promotions.

Therefore, if you are a foreign investor and want to start your business in Thailand, an IPO can be a good form of business institution. But would your venture support the IPO form of business structure? Read to know more!

• What is an International Procurement Office?
• What is the International Procurement Office in Thailand?
• Classification of an IPO in Thailand
• How Should an International Procurement Office Function for BOI Promotions in Thailand?
• New BOI Announcements for IPOs in Thailand
• What are the Board of Investment Privileges for IPOs in Thailand?
  • Tax Incentives
  • Non-Tax Incentives
• Permitted Activities for an International Procurement Office in Thailand

What is an International Procurement Office?

International Procurement is the process that allows businesses from all over the world to submit bids for contracts for goods and services. The idea has become more well-known as shipping and transportation expenses have fallen as a result of an abundance of inexpensive, easily accessible fuel. Large firms now enjoy lower labor and material costs while maintaining the same level of quality and output. This is because of globalization. 

International procurement offers three main advantages: lower costs, increased consumer base, and encouragement of the global economy. In a free market, as more goods and services are imported from other nations, their economies become richer. As a result, more money can be spent, enabling both consumers and businesses to buy goods and services.

What is the International Procurement Office in Thailand?

In the previous section, you read about the International Procurement Office in a general sense. If you are planning to set up an International Procurement Office in Thailand, you must know how the Board of Investment of Thailand takes an IPO to be. This section will guide you throughout the BOI Conception.

Classification of an IPO according to BOI Thailand

Board of Investment, Thailand identifies an organization to be an IPO when it carries out the following activities in Thailand – 

• The organization procures raw materials, parts, and components used in manufacturing industries and does not deal with finished products. For example, it can deal in blots, nuts, and spare parts for the automobile industry, but cannot sell cars or automobiles.
• It must own or rent a warehouse and manage inventory with an IT-based system exclusive for warehouse management. The process flow must follow the In-In, In-Out, Out-In, Out-In-Out sequence. It cannot go with an Out-Out sequence.
• It must have appropriate activities of merchandise procurement and management like trained and qualified staff for Quality Inspection and Packaging or repackaging of goods.
• The organization must have several procurement resources, at least including a domestic resource. 
• It can only engage in domestic wholesale and export of goods. By no means, the firm should carry on direct selling to end-users.
• The organization must have at least 10 million paid-up capital before the issuance of the BOI Certificate.

So, if you qualify for the above conditions, you will be eligible for BOI Promotions as an International Procurement Office in Thailand.

How Should an International Procurement Office in Thailand Function?

A Thai-incorporated business that exclusively purchases and distributes raw materials, parts, and components for manufacture must be an International Procurement Office. They should effectively serve as a middleman between Thai and foreign suppliers and manufacturers.

However, the BOI distinguishes between sourcing agencies and international procurement offices. An International Procurement Office must carry out tasks beyond those of an agent in order to be eligible for BOI advancement, including purchasing, reselling, and storing raw materials, parts, and components.

The BOI also makes it clear that an International Procurement Office may only acquire raw materials or components required to manufacture completed goods under its conditions for a promotion. They must include components made in Thailand as part of their procurement offerings rather than buying full goods.

The role of an International Procurement Office is illustrated below:

New BOI Announcements for IPOs in Thailand

The “IPO” (international procurement office) will once more be an acceptable activity. The IPO’s duties include sourcing components, semi-finished items, and raw materials from both Thailand and beyond.

Along with other non-tax advantages, a company operating in the promoted activity under the IPO will primarily benefit from import duty exemptions on machinery and raw materials used in export manufacturing.

Please note that the applicant must own or lease warehouse space as one of the most crucial requirements of the IPO in the past (s). Therefore, to meet this requirement in the past, the majority of trading enterprises had to buy or rent the warehouse from logistic providers, which could not be very convenient. Recent International Commerce Center (IBC) technology, however, enables a trading organization to conduct wholesale business without the need for a warehouse (although there are other specific restrictions in addition to the IPO). On the basis of the available data, this point isn’t yet clear. As soon as the official BOI notification is out, we’ll let you know.

What are the Board of Investment Privileges for IPOs in Thailand?

A business is eligible for B1 privileges if it engages in activities that fall under the purview of purchasing and selling raw materials, parts, and components to and from manufacturers or distributors in Thailand and overseas, under the Announcement of the Board of Investment No. Sor. 1/2564. Several non-tax benefits are also included in these privileges, such as exemptions from import duties.

Tax Incentives 

• Exemption of import duties on machinery 
• Import tax exemption on raw materials used in the production of goods for export.

Non-Tax Incentives

• 100% Foreign Ownership 
• Permission to own land 
• Permission to bring skilled workers and professionals to work in Thailand
• Easy process in the issuance of Visa and Work Permit

Permitted Activities for an International Procurement Office in Thailand

• Now you are well aware of the fact that it is easier to get a BOI Promotion for an IPO than other business structures. Therefore, let us rewind you well with the activities that your IPO in Thailand can perform. 
• Coordinating the procurement of raw materials, parts, and components between suppliers, manufacturers, and distributors. 
• Overseeing the logistics of acquiring and delivering the manufacturing components. Inspecting the quality of raw materials, parts, and components to be sold to manufacturers. 
• Packaging or repackaging of raw materials, parts, and components. 
• Storing or turning over an inventory of raw materials, parts, or components. 
• Developing innovative IT systems used in warehouse/inventory management and goods fulfillment.

Therefore, now as you know all about the IPO business category in Thailand, you can align your business idea with this type of formation. Ideation is completely your task, but when it comes to implementation, you will need legal help. There is nothing better than a local Thai Law firm with more than a decade of experience in forming IPOs to take up your case. Starting from Company Registration in Thailand to regular Accounting and Taxation tasks, Konrad Legal leads the league in Bangkok. Write to us at officer@konradlegal.com.

Doing Business in Thailand in 2023: BOI Updates

Doing business in Thailand in 2023 is now having a broader horizon in Thailand. It is because the Board of Investment of Thailand has included some more lines of business activities to be eligible for the promotion. This is great news for foreign investors willing to start their business in Thailand. 

Now, what makes the Board of Investment (BOI) of Thailand so crucial for investors? If you are already knowing about BOI Thailand, then it is needless to explain. You can straight jump to the section of the article that explains the “New Eligible Activities for BOI Thailand Promotion in 2023”. But if you are not aware, this article will guide you through the benefits of getting BOI Promotion for doing business in Thailand in 2023.

• What is the Board of Investment of Thailand?
• What are the Investment Promotion Policies of BOI Thailand?
• Which Incentives are covered by the BOI Promotions?
  • Tax Incentives of BOI Thailand
  • Non-tax Incentives of BOI Thailand
• How BOI Thailand helps Investors?
• What are the new eligible activities for BOI Thailand Promotions in 2023?
  • New BOI Eligible Activities
    • Senior Care Hospitals and Services
    • Clinical Research
  • Inclusion of Previously Delisted BOI Eligible Activities
    • Manufacture of Electric Vehicles
    • International Procurement Office (IPOs)
  • Extension and Amendment of Productivity Improvement Measure
• The Bottomline

What is the Board of Investment of Thailand?

A government organization within the Office of the Prime Minister is the Office of the Board of Investment. Promoting worthwhile investment, both in Thailand and abroad, is one of its primary functions and responsibilities.

In order to increase Thailand’s competitiveness, escape the “Middle Income Trap,” and achieve sustainable growth in line with the sufficiency economic theory, it is important to encourage worthwhile investment, both domestically and internationally. With this vision, the BOI keeps on formulating strategies to help foreign investors with various tax and non-tax benefits. 

What are the Investment Promotion Policies of BOI Thailand?

BOI Thailand operates on multiple grounds when it comes to the promotion of investments. The organization keeps a balance between the trades of national strategic importance along with that of the incoming FDI intent. All the schemes and policies that the Board of Investment announces primarily revolve around the following strategic points:

• Encourage investment that increases national competitiveness by fostering R&D, innovation, value creation in the industrial, commercial, and service sectors, SMEs, fair competition, and reducing social and economic inequality.

• To encourage balanced and sustainable growth, encourage eco-friendly, energy-saving, or alternative energy activities.

• Encourage the formation of clusters to focus investment in accordance with regional potential and to bolster value chains.

• To encourage investment in border provinces in Southern Thailand to promote local economic growth and initiatives to improve local security.

• Encourage the establishment of special economic zones, particularly in border regions, both inside and outside of industrial estates, in order to foster economic ties with other nations and to get ready for joining the ASEAN Economic Community (AEC).

• Encourage foreign direct investments in Thailand to boost the nation’s economy and the competitiveness of Thai companies.

What are the Incentives covered by the BOI Promotions?

BOI Thailand helps with both tax and non-tax incentives for eligible projects and investors. The classification is as follows:

Tax Incentives of BOI Thailand

• Up to 13 years of corporate income tax exemption (According to activity & conditions).
• 50% cut in corporate income tax for five years (only in special investment promotion zones).
• machinery imports are exempt from duties.
• duty-free imports of raw materials or components utilized in export-oriented manufacture.
• Import taxes on raw or necessary goods used for research and development are exempt.

Non-tax Incentives of BOI Thailand

• 100% foreign ownership (except activities under List One annexed to the Foreign Business Act B.E 2542 (1999) or stated in other laws).
• Permission to own land
• Permission to bring professionals and skilled laborers into the Kingdom.

How BOI will help Investors Doing Business in Thailand in 2023?

• Offer guidance and details on the BOI investment promotion laws and regulations as well as investment opportunities.
• To make commercial operations easier, like company formation and work permit application processes, connect investors with government organizations and the private sector.
• Support the sourcing of local suppliers and establishing industrial ties.
• support for locating possible investors is provided.
• BOI Strategic Talent Center to assist in locating and recognizing international experts or researchers in science and technology (STC).
• Give Thai investors advice on investing abroad and offer them training courses in doing so.

New BOI-eligible activities for Doing Business in Thailand in 2023

Updates on the BOI measures can be divided into three (3) different categories as follows:

• Newly-listed BOI Eligible Activities
• Relisting of Previously Excluded BOI Eligible Activities
• Extension and Amendment of Productivity Improvement Measures

New BOI Eligible Activities

The following businesses will be added to the list of those that qualify for BOI incentives:

Senior Care Hospitals and Services

According to predictions in 2021, there will be at least 13 million people in Thailand over the age of 60 or 20% of the country’s whole population. The following two (2) businesses will be introduced as qualifying businesses, with the specific incentives noted, in order to prepare for the upcoming aging society:

• Senior care hospitals: entitled to a five (5) year CIT exemption; and
• Senior or dependent care services: entitled to a three (3) year CIT exemption.

Clinical Research

The BOI wants to persuade top medical researchers to conduct their medical research in Thailand, creating the opportunity for medical institutions or personnel in Thailand to obtain expertise and knowledge therefrom. This is part of the plan to increase Thailand’s competitiveness in the medical industry and to promote Thailand as an international medical hub. Thereby, it is a goal of priority and a great opportunity for investors in the Medical Industry of Thailand. The two (2) additional companies listed below will be made eligible for the BOI program offering an unlimited eight-year CIT exemption incentive:

• Contract Research Organizations; and
• Clinical Research Centers.

However, please note that to be eligible for the promotions the following relevant requirements must be fulfilled:

1. A total annual salary of not less than 1,500,000 THB for newly hired researchers who are Thai nationals; or
2. Investment capital of not less than 1,000,000 THB (excluding the cost of land, working capital, and vehicles).

Inclusion of Previously Delisted BOI Eligible Activities

Due to various strategic and regulatory issues, some of the eligible activities were delisted from the list earlier. As the BOI plays a crucial role in maintaining the foreign direct investment volume as well as the GDP of Thailand, it keeps on amending policies. That may include the inclusion or exclusion of eligible activities whenever applicable. Following is the list of some of the re-included activities:

Manufacture of Electric Vehicles

Following the exclusion of the former packages in 2018, the BOI re-welcomes applications for new incentive packages for the business of manufacturing electric vehicles (“EVs”). The investment packages will cover all kinds of EVs, i.e. four-wheelers, motorcycles, three-wheelers, buses, trucks, and ships (the former investment package covered only EV cars and EV buses).

Various requirements and incentives will apply to each form of EV, and they can be summed up as follows:

Additionally, the BOI approved incentives for four (4) more categories in respect of the manufacture of EV parts, namely: 

i) high voltage harnesses; 

ii) reduction gear; 

iii) battery cooling systems; and 

iv) regenerative braking systems.

Additionally, the BOI also granted an additional incentive for the production of battery modules and battery cells in order to support local EV battery manufacturing. This incentive entails offering a 90% decrease in import duties for a period of two (2) years on raw materials or necessities.

International Procurement Office (IPOs)

The “IPO” (international procurement office) will once more be an acceptable activity. The IPO’s duties include sourcing components, semi-finished items, and raw materials from both Thailand and abroad.

In addition to additional non-tax benefits, a company operating in the encouraged business under the IPO will primarily benefit from exemptions on import duty on machinery and raw materials to be used in manufacturing for exports.

Please be aware that the applicant must own or lease warehouse space as one of the most crucial requirements of the IPO in the past (s). Therefore, to meet this requirement in the past, the majority of trading enterprises had to buy or rent the warehouse from logistic providers, which could not be very convenient. 

However, recent International Commerce Center (IBC) technology enables a trading organization to conduct wholesale business without the need for a warehouse (although there are other specific restrictions in addition to the IPO). On the basis of the available data, this point isn’t yet clear. As soon as the official BOI notification is out, you will get updates in our periodicals.

Extension and Amendment of Productivity Improvement Measure – a Great Privilege for Doing Business in Thailand in 2023

The BOI will extend the application deadline for investors who intend to pursue the advantages of what was once known as the Production Improvement Measure and is now referred to as the “Productivity Improvement Measure” until the end of 2022. (“Measure”). However, the advantages of the Measure—a 50% CIT exemption for three (3) years and an exemption from import duty for machinery—remain the same.

The Production Improvement Measure in Thailand was started to encourage involvement in R&D and advanced engineering design in order to increase production efficiency, as well as to promote and upgrade technology and machinery for energy conservation, alternative energy utilization, or reduction of environmental impacts. For both of the above, the Productivity Improvement Measure is applicable:

Any existing businesses (whether or not they are currently involved in a promoted project); however, if they are not, they must at the very least be eligible for BOI promotions; and Promoted Projects for which the CIT exemption or reduction privilege has already expired or for which the specific Promoted Project is not eligible for the CIT exemption.

The Measure includes the following four (4) sub-measures:

1. Energy conservation and alternative energy utilization;
2. Production efficiency improvement through the upgrading of machinery for manufacturing;
3. R&D and advanced engineering designs for efficiency improvement; and
4. Sustainable development for agriculture.

According to this Measure, you must:

1. A minimum investment capital of not less than 1,000,000 THB (excluding the cost of land and working capital); and
2. Submission of the application by the end of 2022 and implementation of the BOI-promoted project within three (3) years from the date of issue of the BOI certificate.

The Bottomline

So, there is already an active list of activities that are eligible for BOI Promotions. Additionally, some new activities are flashing in the list along with the inclusion of previously delisted activities. It will be commendable if you can identify whether your is eligible for BOI promotions or not. However, if you cannot, go through the following steps:

• Identify the particular industry that your business belongs to.
• Check the verticals of the industry that your business will probably tap upon.
• Cross-check whether your business is going to be useful for the Thai Market.
• Go to the BOI Website and check the list of eligible activities.
• Check the list of eligible businesses and see if your business matches any of the criteria.

If you are able to judge your eligibility for the BOI promotion for doing business in Thailand in 2023, then it is great. If not, we are here to help you. Book your free round of consultation with us by emailing us at officer@konradlegal.com. The most efficient and professional team will be there to assist you in the complete process of BOI-promoted business registration in Thailand.