BOI Thailand Promotions for IT Companies - Annoucement 2024

 

This article is for both business owners and aspirants planning to register their business in Thailand, particularly in the Information Technology industry. Board of Investment (BOI) Thailand has made certain replacements in benefit schemes in the existing eligible service categories to boost the Information Technology industry.

On March 15, 2024, Thailand's Board of Investment (BOI) implemented a new set of investment incentives for software development and data centers. This regulation replaces the previous categories of software or platforms for digital services or content (category 8.1) and data centers (category 8.2.1).

Software and Platform Development

The BOI's new promotion policy distinguishes between "development" and "improvement" of software or platforms by creating separate subcategories with unique incentives for each. The forthcoming announcement from the BOI is expected to provide further clarification regarding the specifics of these two activities. Notably, qualifying development efforts are eligible for a corporate income tax (CIT) exemption for a limited duration of eight years, whereas improvement activities do not qualify for any CIT exemption.

Several changes have been made to the eligibility requirements for creating digital services or content platforms and software. Specifically, these include:

• Effective immediately, salary expenditures for Thai IT personnel hired temporarily after applying for investment promotion can be included when calculating the total salary expenditures for Thai IT personnel hired after applying for investment promotion.
• For calculating actual expenditures, the project can include salary expenses related to the temporary hiring of Thai IT personnel in the year it intends to avail of the CIT exemption.
• The promotion certificate's issuance starts a 12-month clock for projects to begin operations. Extensions are not an option.
• The period of machinery importation has now been discontinued for projects.

The eligibility requirements for the development of software, platforms, and content for digital services remain consistent.

Projects related to the enhancement of software and platforms for digital services or content within the new BOI subcategory are not entitled to CIT exemption. However, they are eligible for alternative incentives. To qualify for these incentives, projects must adhere to specific criteria.

• Expenditures on salaries for Thai IT personnel hired (including temporarily) after applying for investment promotion must be at least THB 1.5 million per year.
• Projects must propose a plan for improvement of the software, digital platform, or digital content to be sold or provided, as stipulated by the BOI.
• Projects may not amend the category in which they benefit from investment promotion.
• Projects must commence operations within 12 months of the promotion certificate being issued. No extensions are allowed.
• Projects may not extend the machinery importation period.
• Projects may not own land.

Furthermore, projects within this subcategory are uniquely permitted to utilize previously owned machinery or leverage existing machinery associated with the project, deviating from the typical BOI prohibition against such practices.

Data Centers

Qualifying data centers are still eligible for CIT exemption (no cap) for eight years, but there are minor updates to the eligibility criteria:

• Projects must install an electrical system of at least two megawatts to support the power consumption of computer equipment.
• Projects no longer require an area of at least 3,000 square meters.
• Projects must still obtain ISO/IEC 27001 certification before they can receive CIT exemption. Still, there is no longer an explicit requirement that they get the certification before the full operation deadline.

In addition, projects in the data center category are exempt from the general BOI requirement that projects benefiting from investment promotion obtain ISO 9000, ISO 14000, or other equivalent international certifications.

If you are already running a software development company or data center in Thailand, in addition, to being eligible for the general BOI Benefits, the ones mentioned in this article also add to the list. If you still haven’t applied for the Board of Investment of Thailand promotions for your existing company in Thailand, we can help. Furthermore, we can also help you in the process of starting a BOI company in Thailand.

Email us at officer@konradlegal.com to get in touch with our team specializing in supporting companies to avail of the Board of Investment privileges in Thailand.

BOI Thailand Benefits to Realtors for Affordable Housing

 

The Board of Investment of Thailand has now focused on the housing options for low-income Thais. This approach is to enable and encourage housing developers or agencies to deliver housing facilities at affordable rates in the market.

Announced on March 15, 2024, the key points of this scheme are as follows:

• Developers seeking tax privileges from the Board of Investment (BOI) must have plans to build townhouses, single-detached houses, and condominiums worth 1.5 million THB or less.

• Each townhouse or detached property must have a floor area of at least 70 square meters, while condominium units must have a minimum floor space of 24 square meters.

• To qualify for the tax privileges, property developers must also obtain endorsement from the Government Housing Bank (GHB).

• Developers interested in this promotion must submit their applications to the BOI before the end of the following year (2025).

What are the Benefits?

To stimulate the creation of affordable housing for low-income households, the Board of Investment (BOI) provides lucrative tax incentives to qualified real estate development projects.

These projects are exempt from corporate tax for up to three years, covering 100% of investment costs excluding working capital and land acquisition. These exemptions apply to investments in roads, public amenities, and public use spaces within the development's scope.

In response to the demand for affordable housing options, the Bank of Thailand's (BOI) tax incentives for developing housing for low-income Thai citizens, coupled with the government's measures to expand the price range eligible for reduced transfer and mortgage fees, aim to address this critical need. These initiatives not only benefit homebuyers and real estate developers but also have broader economic implications. By stimulating various sectors and promoting economic growth, they contribute to the overall well-being of the Thai economy.

With the government's commitment to providing accessible housing solutions, the Thai real estate market is poised for positive growth. These measures create opportunities for low-income individuals to secure affordable housing, while simultaneously supporting property developers in addressing this crucial societal need.

Not all Projects are eligible for this BOI Promotion!

To qualify for the BOI Thailand promotion, at least 80% of the project's residences must comply with the usable area and price criteria. The minimum usable area is 24 square meters for condominium units and 70 square meters for townhouses and detached houses. Furthermore, the residences can be sold solely to private individuals, and the sale price for each condominium unit or house (inclusive of land price) should not exceed THB 1.5 million.

Additionally, the projects must comply with the following:

• Have a car park, CCTV throughout the project, a 24-hour security guard, cleaning staff, a common area, and other facilities in appropriate proportions.
• Obtain BOI approval of the building plan and layout.
• Hold a permit for the construction of a building under building control laws and other relevant regulations.
• Obtain approval from the Government Housing Bank before applying the BOI.

Companies must submit applications for promotion to the BOI by the end of 2025, as per the official notification. New low-income residential projects promoted by the BOI will receive a corporate income tax exemption for the same duration as A4-promoted activities (usually three years).

Only the construction costs associated with roads, other facilities, or public utilities commonly used within the project will be considered when calculating corporate income tax exemptions. Construction costs for residences, houses, buildings, or commercial structures, regardless of whether they are intended for lease or sale, are not included.

How can we help?

The BOI formulates the schemes and we help individuals and businesses adhere to the eligibility and process parameters flawlessly. In this effort, we can help you with:

• Company Registration in Thailand - you need a company before applying for BOI Promotions
• Project Feasibility Study for BOI Promotions
• Documentation Support for BOI Application
• Setting up your Accounting and Tax Systems

All you need to do is email us your requirements at officer@konradlegal.com for our team to know you and your project. Henceforth, it is on us to enable your business to avail of BOI Promotions in Thailand.

BOI Thailand Benefits for Regional Operating Headquarters in Thailand

Talking about Board of Investment privileges, it is known to most of us that almost all types of business structures, be it LLPs, LLCs, Sole Proprietorships (only Thai ownership), etc. can be eligible for the same provided their business deals with the BOI eligible activities. But what if you are planning to expand your business in Thailand - you can register your Regional Operating Headquarters in Thailand and enjoy seamless BOI privileges.

To boost business activity in Thailand, the Thai government has introduced the Regional Operating Headquarters (ROH) scheme. This instrument offers incentives to investors who set up a regional headquarters in the country and provide "qualifying services" to branches or affiliated companies both within and beyond Thailand's borders.

Regional Operating Headquarters (ROH)

In 2002, the Revenue Department introduced the first set of ROH incentives, which included both tax and non-tax incentives, with the primary goal of attracting more investment in Thailand. Some of the tax incentives offered by the Revenue Department include:

• Corporate income tax reduction from 30% to 10% is offered on net profit stemming from offshore branches and associated companies.
• Dividends received from both domestic and foreign subsidiaries of ROH are exempt from taxation.
• Withholding tax exemption is granted for dividends paid out from ROH to foreign companies that do not conduct business in Thailand.
• A reduced personal income tax rate of 15% applies to the salaries of expatriates working with ROH, instead of the progressive tax rate ranging from 5% to 37%.
• An initial allowance of 25% on buildings is provided upon acquisition.

Board of Investment Option

Investors who seek non-tax incentives should apply directly to the Board of Investment (BOI). Here are the incentives that applicants may receive from BOI:

• Permission for foreign investors to own land.
• Permission to bring in foreign specialists and technicians.
• Facilitation of work permits and visas

In 2010, the Thai government revisited strategies to enhance Thailand's competitiveness in the regional market. The government aimed to provide fresh incentives to attract foreign investment and create a more favorable environment for businesses

Incentives from the Board of Investment

For a Regional Operating Headquarters (ROH) to qualify for BOI incentives, it must meet the following criteria:

• The Thai Revenue Department must confirm the business entity as ROH.
• It must be a juristic company or partnership incorporated under Thai law.
• It must have a paid-up capitalization of not less than 10 million baht.
• It must provide services to its branches or companies in at least 3 countries.
• It must earn half of its income from qualifying services provided to its branches or associated companies outside Thailand.

Definition of Services

“Qualifying Services” are the services that must be in line with the business of the ROHs to be eligible for the BOI Incentives in Thailand. The list of such activities that make these ROH eligible under the Investment Promotion Act of BOI Thailand is as follows:

• Organizational administration and management business planning
• Sourcing of raw materials, parts, and finished products
• Research and development activities
• Technical support
• Marketing and sales promotion
• Regional human resources training and development
• Business advisory services ( financial management, marketing, accounting, etc.)
• Investment feasibility studies and economic and investment analysis
• Credit management and control
• Other services shall be approved by the BOI on a case-by-case basis.

For any inquiries you may have, don't hesitate to contact our dedicated corporate Thai lawyers. Our legal experts are always ready to assist you and provide valuable legal guidance. Email us at officer@konradlegal.com to book a session of free email consultation.

BOI Thailand Promotions for Green Investment Projects

 

Thailand has a well-established history of enforcing environmental protection policies. The country's development strategies prioritize green growth, and it has set consistent climate change mitigation targets. To foster green initiatives and industries, Thailand offers investment incentives as well.

Nevertheless, this time the Board of Investment of Thailand devised a plan and proposal to mitigate environmental threats. The Board of Directors of BOI Thailand has taken steps to encourage investments that reduce PM2.5 particulate pollution, as announced by BOI Secretary-General Narit Therdsteerasukdi.

Image Source: Board of Investment (BOI) Thailand

To address the current smog situation, BOI collaborates with the Ministry of Natural Resources and Environment to empower local organizations and farmer groups through various environmental management methods that lead to sustained PM2.5 pollution reduction.

Scope of Investment

The announced measures expand the scope of investment promotion support to include community and social development. They involve supporting local organizations and farmers to improve environmental standards within communities.

Specific focus areas include forest management in areas like community forests, conservation forests, and national forest reserves, aiming to alleviate the nationwide issue of PM2.5 pollution.

In addition, BOI prioritizes promoting investments in projects with minimal harmful effects environmentally and reducing pollution across various sectors such as industry, energy, transportation, and agriculture. Past efforts include supporting alternative energy production and use, upgrading industries with energy-efficient machinery and environmentally friendly technologies, and promoting electric vehicle industries.

Eligible Activities and Promotion

Activities eligible for benefits under these investment promotion measures include constructing firebreaks in wet-forest areas, building moisture-retaining ridges, providing firefighting tools and equipment, and offering training on forest fire prevention and control.

Operators involved in forest management and PM2.5 pollution reduction activities that meet the Ministry of Natural Resources and Environment criteria can receive a corporate income tax exemption for three years, not exceeding 200% of the actual investment in supporting local organizations and farmer groups.

The investment promotion measures have been extended for an additional year beyond the original end date, encompassing three measures: investment stimulation for economic recovery, a retention and expansion program, and a relocation program.

The deadline for submitting investment promotion applications has been extended to the final business day of 2024.

Already Promoted Projects

In other news, BOI's board of directors approved investment promotion privileges for two projects worth a combined 18.67 billion baht. The first is a biofuel production project using used vegetable oil, with an investment value of 10 billion baht. The second is a Smart Distribution Centre project, focusing on warehouse management and digital technology for product distribution across various industries.

Do you have a plan to start a Green Project in Thailand? Then be assured that it will be eligible for BOI Promotion in Thailand granting you all the benefits as announced.

As a leading corporate law firm in Thailand, Konrad Legal can help you in obtaining BOI Promotion in Thailand.

Are these benefits applicable to all global investors and are you eligible to apply for BOI Thailand promotions?

1. What are the steps of getting a BOI Thailand Promotions Certificate?
2. What to do before and after registering your BOI Company in Thailand?

To get answers to such or more complicated questions, you must consult with a leading corporate law firm in Thailand with experience in BOI Company Registration.

For direct support, feel free to email us at officer@konradlegal.com.