BOI Thailand Incentives for Existing Businesses in Thailand

 

The Board of Investment (BOI) of Thailand is always keen to facilitate the process of business registration and continuity for investors in the kingdom. Irrespective of nationality, the apex body governing the business ecosystem of Thailand, is always focused on attracting investors, be it foreigners or Thai to contribute to the GDP of Thailand.

Most of our clients or readers believe that BOI facilitates the business registration process in Thailand for foreigners only. This is a myth!

BOI Thailand values business ideas and intentions with equal weightage without discriminating on the grounds of nationality, as long as the business is legal. Furthermore, the Board also prioritizes the launch of innovative projects with special privileges.

Let’s bust another myth! It’s true that BOI Thailand promotes new businesses, but do note that it never overlooks the existing ones. This recent announcement of BOI Thailand proves the point aptly.

On February 7, 2024, the Board of Investment (BOI) of Thailand released various investment incentive measures for companies that are already operating in Thailand. With the motive of social, local, and economic development, BOI Thailand announced certain programs for existing businesses.

Social and Local Development (BOI Announcement No. 1/2567)

To address the PM2.5 problem and encourage social, local, and environmental progress, the BOI offers a corporate income tax (CIT) exemption of up to 200% of the investment capital (excluding land and working capital costs). This measure aims to alleviate PM2.5 pollution and promote sustainable development.

Eligibility Requirements for BOI Incentive:

• The project must make a minimum investment of 5 million THB, excluding land and working capital costs, to support local organizations.
• To boost competitiveness, the project must have a strategy for working together with local organizations.

Retention and Expansion Program (BOI Announcement No. 2/2567)

Within the past 15 years from 2009 to 2023, existing promoted individuals or businesses with at least three promoted investment projects under the same juristic person, with a combined investment value of THB 10 billion (excluding land and working capital costs) at the project approval stage, are eligible for BOI incentives to encourage ongoing investment in Thailand.

Eligible business expansion projects requiring an investment of at least THB 500 million will receive incentives, including an additional three-year CIT exemption for projects in Groups A1+, which can last up to 13 years, and up to eight years for projects in Groups A3, A4, and B.

Relocation Program (BOI Announcement No. 3/2567)

Intending to attract integrated business entities, the Board of Investment (BOI) offers incentives to companies that establish their manufacturing operations, regional headquarters, and research and development facilities all within Thailand.

Incentives for Manufacturing Projects in Thailand

1. Additional three-year Corporate Income Tax (CIT) exemption on the net profit from investment in manufacturing activities for applicants of such projects operating regional headquarters businesses in Thailand. This exemption can be claimed for a total of eight years.

2. Additional five-year CIT exemption on the net profit from investment in manufacturing activities for applicants of such projects that operate regional headquarters businesses and establish an R&D center in Thailand. This exemption can also be claimed for a total of eight years.

Investment Stimulation Measure for Economic Recovery (BOI Announcement No. 4/2567)

To stimulate large-scale investments in specified sectors and accelerate Thailand's economic recovery, the Board of Investment (BOI) offers an additional 50% corporate income tax (CIT) reduction on net profits generated from investments in Groups A1, A2, A3, and A4 for five years after the end of the CIT exemption period.

To qualify, projects must have an actual investment of at least 1 billion Thai baht (excluding land and working capital costs) within 12 months of receiving the investment promotion certificate.

The Bottomline

Although these BOI announcements appear to be focusing only on existing projects, yet, if your new project holds the potential to support the social, local, and economic development of Thailand, it will also be eligible for various BOI incentives. Any business idea that holds the following values will be eligible for BOI Promotions in Thailand:

1. You or your business has a plan to contribute to local employment in Thailand.
2. Your company has the potential to significantly contribute to the Thai economy's growth.
3. Your business deals in or executes innovative and creative projects that can add value to the existing Thai ecosystem.
4. Your project seeks the involvement of highly skilled workers, Thai or foreigners, to generate the expected and elite output.

With time, BOI keeps on enhancing its promotion policies to extend greater support to foreign investors and businesses. However, as of 2024, the following industries assure great return on investment with a strong probability of obtaining BOI Thailand promotion:

• Starting a Manufacturing Company in Thailand
• Incorporate a Food Production Plant in Thailand
• Getting Involved in the Future of the Food Industry in Thailand
• Start a Food Business of any type in Thailand
• Setting up E-commerce Business in Thailand

Please note that BOI Promotions for Foreign Investors in Thailand are not restricted to the above businesses only. You can apply your unique business idea at any time and start your business in Thailand. To apply for BOI Thailand Promotions, you will need local support to have the perfect and accurate answer to the following questions:

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.

What Licenses Are Needed to do Business in Thailand?

 

Rapidly evolving as the business hub of Southeast Asia, Thailand is becoming one of the most preferable destinations to attract foreign direct investment. If you are planning to register your company in Thailand, then you must go through this article. This article will guide you comprehensively on the requirements of respective licenses to do business in Thailand.

We all know that simply registering a company can never serve your purpose of operating the same. To operate you will need relevant permits and licenses. In Thailand, the regulations are pretty stringent and non-adherence can lead to severe penalties. This article will serve well as your guide to knowing about the licenses that may be mandatory for your upcoming business in Thailand.

Do You Need a Business License in Thailand?

First of all, you must know whether the type of company or business you are going to set up in Thailand needs a business license or not. To ascertain these facts, check out the following pointer:

1. Will you set up a company in Thailand or a branch or representative office of your existing business?
2. What will be the “nature of business” and in which industry will you be doing it?
3. Are you going to bring in foreign nationals to Thailand as your employees?
4. Is your business eligible for relaxation under any bilateral treaty between your nation and Thailand?
5. Have you checked about the Board of Investment Promotions in Thailand? Is your business eligible for any BOI Privileges?

Depending on your answers to the above questions, you can ascertain whether you need a business license in Thailand or not. However, it is always wise to consult with a reliable corporate law firm in Thailand to reach this decision. Remember that this is a statutory requirement and you must make an informed decision to prevent any type of penalties or fines in the future.

To make the process simpler, we have answered these questions comprehensively. This will help you have a basic understanding before you speak with any corporate lawyer in Thailand.

License Requirement based on your Business Structure in Thailand

Foreign investors can incorporate 6 types of business structures in Thailand. You should select a business structure that complies well with the nature and purpose of your business in Thailand.

For your information, almost all types of businesses in Thailand need a Foreign Business License. Foreign Investors must apply for a Foreign Business License in Thailand to start their business in Thailand as various business verticals are restricted for foreigners in Thailand.

However, if you are planning to start a representative office in Thailand, you need not apply for a Foreign Business License in Thailand. Furthermore, there are requirements based on the nature and industry of your business in Thailand that ascertain your license requirements.

Your Business Nature and Industry Finalizes Your License Requirements in Thailand

As talked about in the previous section, a Foreign Business License is mandatory for almost 99.9% foreign investors, unless, they plan to start their representative office. However, the nature and industry of your business invoke certain license requirements as follows:

Medical License

Starting a medical company in Thailand necessitates obtaining specific licenses. The type of license needed depends on the activities undertaken in the medical field.

If you plan to operate a service business like a rehabilitation center or nursing home, you must acquire a medical service business license from the Department of Health Service Support.

For medical manufacturing activities, if your factory has machinery totaling 50 or more horses or employs 50 or more people, you’ll need a Factory license from the Department of Industrial Works. If neither of these criteria is met, you should apply for a Business Establishment license from the Local Administration Organization.

Before conducting any clinical research, a Science Laboratory Capacity Certificate from the Department of Medical Science is mandatory.

Moreover, according to the Thai Drug Act Be 2510 (AD 1967), obtaining permission from the Food and Drug Administration (FDA) is essential before marketing medical equipment, pharmaceutical products, or medical food.

E-commerce License in Thailand

In Thailand, businesses that run one or more websites to sell goods or services must obtain an e-commerce license. The application can be submitted once the website is operational and requires the following details from the website owner:

• Name of the website
• Nature of goods or services sold on the website
• The date on which the website started operating (application should be made within 30 days from the start date)
• Method of payment for purchases
• Document evidencing the domain name registration or certification document from the service provider (ISP or web host)

Check out why you should start an e-commerce business in Thailand.

Licenses for Restaurants and Bars in Thailand

In Thailand, the licenses needed by a restaurant depend on the services it offers. However, some obligatory licenses are required by most restaurants.

These licenses include:

• Restaurant license: This license is a must for establishments with premises of at least 200 square meters. Thai eateries smaller than 200 square meters need a certification of notice.
• Liquor license: This license is required for restaurants serving alcoholic drinks on their premises.
• Music license: Restaurants with live music or any music playing on their premises must obtain this license.

All these licenses are granted for one year and must be renewed annually by the restaurant.

License for Financial Services Businesses in Thailand

In Thailand, companies aiming to provide financial services must secure specific licenses from the Bank of Thailand. These services include commercial banks, finance companies, credit finance companies, asset management companies, and e-payment channel services.

Furthermore, specialized financial institutions aligned with governmental policies fostering investment and economic growth within Thailand require additional authorization from the Ministry of Finance.

Import/export Licenses in Thailand

Certain import/export companies in Thailand require specific business permits based on the category of goods being traded. Specialized licenses are mandatory for importing controlled goods like food, medicines, and cosmetics from Thailand’s Food and Drugs Administration.

Additionally, a permit from the National Broadcasting Department is necessary for importing electronic devices like mobile phones. Finally, a customs paperless license from Thailand’s customs department is necessary for import/export companies to facilitate the movement of goods under their name.

License for Travel Agencies in Thailand

In Thailand, running a travel agency necessitates a Tourism Authority of Thailand-issued Tourism license. Without this license, there are prohibitions on arranging and selling tours and packages, booking accommodations, and distributing travel tickets.

The license is divided into three categories: inbound tourism (serving foreign visitors to Thailand), outbound tourism (catering to Thai travelers going abroad), and domestic tourism (serving Thai travelers within Thailand).

A majority of Thai ownership is necessary for travel agencies in Thailand, and a local director’s signature is mandatory to obtain the tourism license. Notably, there may be restrictions to the local director’s signing authority to matters directly related to the tourism license. This structure allows foreign shareholders to maintain control over other aspects of the business’s activities.

Education Business License in Thailand

When registering an education business in Thailand, a license and approval from the Ministry of Education or the Department of Social Welfare are essential prerequisites. The type of education offered by the business determines which authority must grant the approval.

Before starting an education business, you need to consider several key factors, such as the business premises and the legal structure of the company. Any deficiencies in addressing these elements correctly will lead to the rejection of the application for the required license.

Other Factors Confirming Requirements of License to do Businesses in Thailand

To bring in Foreign Workers to work for business in Thailand

Every foreign worker you bring into Thailand must hold a valid work permit to work for your company. It is your responsibility to facilitate the process of work permit issuance for your foreign employees. In the process, a valid commercial and business license is one of the mandatory documents for the same.  

Bilateral Trade Treaty between Thailand and native nation of Investor

The need for a foreign business license is to permit foreign investors to undertake business activities that are normally only for Thais. However, certain bilateral trade treaties expand the scope of availability of business verticals in Thailand to the respective natives. Therefore, it is always advisable to check if your nation holds a bilateral treaty with Thailand and check the permitted business categories.

Eligibility to obtain Board of Investment Promotion in Thailand

Although a Board of Investment promotion never exempts the requirements to obtain any relevant license, yet, there are discounts on licensing fees. Therefore, if your business becomes eligible for BOI Promotion in Thailand, check if you are getting these benefits or not. This will reduce your setup cost significantly.
Business licensing in Thailand covers a wide range of considerations. You must avail the consultation of some reputed corporate lawyer or law firm in Thailand. To set up an appointment with us, email us your license requirements at officer@konradlegal.com.

Business Tax for Foreigners in Thailand

 

Venturing into a foreign market like Thailand presents lucrative avenues for business growth, but it also entails the responsibility of understanding and adhering to local tax regulations. For foreign businesses operating in Thailand, accurate tax filing is crucial to ensure compliance with the law and avert potential penalties. Therefore, tax registration is very crucial for global investors and expats in Thailand to start a business in Thailand.

Here’s a comprehensive guide to help foreign businesses understand their tax obligations in Thailand!

Tax Registration

Foreign businesses operating in Thailand are required to register for taxation purposes. This involves obtaining a Taxpayer Identification Number (TIN) from the Revenue Department. This is a mandatory process for all types of business in Thailand. However, Representative Offices need not apply for this registration process as they cannot perform any commercial activity. The registration process may vary depending on the type of business entity and the nature of its activities in Thailand.

Corporate Income Tax (CIT)

Foreign businesses that generate income in Thailand are subject to Corporate Income Tax. The standard corporate tax rate in Thailand is 20%. However, certain types of businesses may qualify for reduced rates or incentives under various investment promotion schemes. Check if you want to register for corporate income tax in Thailand.

Value Added Tax (VAT)

Businesses selling goods or services in Thailand may have to register for Value Added Tax (VAT) purposes. The current VAT rate in Thailand is 7%. Furthermore, businesses must file periodic VAT returns and remit the tax collected to the Revenue Department.

Withholding Tax

Foreign businesses that derive income from Thailand, such as dividends, interest, royalties, or service fees, may be subject to withholding tax. The withholding tax rates vary depending on the type of income and whether there is an applicable tax treaty between Thailand and the foreign business’s home country. Check to know all about withholding taxes in Thailand.

Transfer Pricing

Compliance with transfer pricing regulations is crucial for foreign businesses with related-party transactions. Thailand follows the arm’s length principle from the Organisation for Economic Co-operation and Development (OECD), requiring transactions between related parties to be conducted at fair market value to prevent tax avoidance.

Annual Financial Statements

Foreign businesses operating in Thailand typically need to prepare and submit annual financial statements by Thai accounting standards. These financial statements must be audited by a licensed auditor and submitted to the Revenue Department along with the tax return.

Tax Filing Deadlines

Foreign businesses need to be aware of the tax filing deadlines in Thailand to avoid late filing penalties. The deadline for filing Corporate Income Tax returns is typically within 150 days from the end of the accounting period. However, there may be extensions under certain circumstances.

Tax Treaties

Thailand has entered into double taxation agreements (DTAs) with numerous countries to prevent double taxation and promote cross-border trade and investment. Foreign businesses should review the provisions of the relevant tax treaty to determine their entitlement to tax benefits and exemptions.

Tax Compliance Services

Given the complexity of Thailand’s tax regulations, many foreign businesses opt to engage the services of tax advisors or professional accounting firms with expertise in Thai tax law. These professionals can guide tax planning, compliance, and dispute resolution.

Penalties for Non-Compliance

Failure to comply with Thailand’s tax filing mandates can result in penalties, fines, and even criminal prosecution. Foreign businesses should prioritize tax compliance to avoid legal and financial repercussions.

In conclusion, foreign businesses operating in Thailand must familiarize themselves with the country’s tax filing mandates to ensure compliance and avoid potential pitfalls. 

By understanding their tax obligations and seeking professional advice when necessary, foreign businesses can navigate the complexities of Thailand’s tax system successfully and focus on achieving their business objectives in the vibrant Southeast Asian market. For complete support on any of these mentioned fields, email us at officer@konradlegal.com.

As a leading tax firm in Thailand, we will be happy to help you with all types of tax registration, accounts audit, and tax filing processes.

Mistakes to avoid before Starting Foreign Business in Thailand

 

Are you a foreign investor with plans of starting a business in Thailand? There are numerous great reasons for foreign investors to start a business in Thailand, due to which the kingdom is growing rapidly as the business hub of Southeast Asia. However, in our practical experience, we have seen global investors committing great mistakes due to which they either fail to incorporate their business or operate it properly in Thailand.

Surprisingly, the mistakes are done mistakenly!

Yes, and the primary reasons behind these mistakes are as follows:

1. Complex Thai Civil and Commercial Code
2. Unclear assumption of the Foreign Business Act of Thailand
3. Inability to adhere to the documentation protocols
4. Complex licensing and tax registration standards
5. Difference in International Financial Revenue Standards (IFRS) and Thai Financial Revenue Standards (TFRS)

Many other uncertain causes compel foreign investors to make mistakes in the process of starting a company in Thailand. These causes depend on the level of knowledge and personal preferences of the investors. Therefore, finding out the accurate cause is pretty difficult.

As a leading corporate law firm in Thailand would like to point out the major mistakes that you must avoid in the process of company registration in Thailand.

Selecting Improper Business Structure

There are 6 prominent business structures for foreigners in Thailand. However, each of these business structures comes with its own set of characteristics and aspects of liabilities for the owner. Therefore, while starting your business in Thailand, you should not make any mistake in selecting the business structure, Following are a few suggestions:

• Never assume that you need a Limited Company on a mandate to start your business in Thailand. You should explore other options like limited partnerships or sole proprietorship options as well.
• If you already have an existing business in your home nation, try to go for a representative or branch office type of business structure in Thailand. This will incur less investment and is easy to incorporate.
• Try to avoid incorporating subsidiaries. The incorporation of subsidiaries follows a complex registration process and has tough compliance standards. Furthermore, it grants limited liabilities to owners.

Ignorance in the Documentation Process

To incorporate any type of business structure in Thailand, documentation and paperwork needs special attention. The complexity of the Thai Civil and Commercial Code,  Foreign Business Act, and TRFS may seem to be a maze to you. Take the help of some reliable corporate law firms in Thailand like Konrad Legal and keep in mind the following aspects:

• Cross-check and ensure that you submit all the documents as necessary for the application.
• You have to consider Thai as the official language. Although English translations are accepted officially, certain document requirements must be in the Thai language.
• You must demonstrate your financial stability. Do so by providing the correct documents as per the mandate of the application of the type of company you are incorporating.

Not Obeying the Timeframe

Many foreign business registration processes get hindered due to the lack of patience. You must remember that every application and statutory registration process in Thailand has a stipulated timeframe. Therefore, for your company registration in Thailand, you should:

• Do not rush to arrange the documents. Keep your calm and arrange for all the necessary documents.
• Avoid expecting instant results as the minimum duration of company registration can be of few weeks. In case your documentation is incomplete or lacks clarity, it may extend to months.

Remember that there won’t be any shortcuts to decrease the timeframe. Therefore, support from a corporate law firm can make the documentation process perfect which will automatically make your process adhere to the natural timeframe.

Mistaking the Compliance Obligations

If you stick to the above guidelines, you will never face any issues in registering your business in Thailand as a foreigner. But, mere registration is not enough. There are various post-registration tasks that you should never neglect.

Corporate Income Tax Registration: Your business will have a valid legal entity only if it is tax compliant. Therefore, your business must have a tax ID for which you have to apply for corporate income tax registration in Thailand.

VAT Registration: If your business anticipates annual revenue of over 1,800,000 Baht must register for Value Added Tax (VAT) with the Thailand Revenue Department. VAT registration is also mandatory for Thai businesses sponsoring foreign workers’ work permits. Additionally, Thai corporations must acquire a business permit by registering for VAT. 

Essential Licenses and Permits: Depending upon the type of business, you must equip your new company with the necessary licenses and permits after incorporation. Examples are travel licenses for tourism businesses, alcohol licenses for bars, etc. 

The Bottomline

The greatest mistake that a majority of foreign investors make while starting their business in Thailand is having an assumption of “I can handle it alone”. It won’t be possible as we have witnessed that even Thai persons make mistakes on regulatory and statutory compliances. 

Therefore, it is always a wise decision to take the support of a local Thai corporate lawyer or corporate law firm. By doing so, you will be free from the following stresses:

1. Understanding and communicating in the Thai language
2. Translation of documents from English or your native language to the Thai language
3. Notarization of documents
4. Maintaining application requirements and error-free documentation
5. Identifying the right authority to put forth your application 

There can be various other grounds on which you may seek help including the post-incorporation license and permit applications. To get a combined service of company incorporation, accounting and taxation, and payroll management, we can help you throughout. All you have to do is go on a free consultation with us. Email us at officer@konradlegal.com to book your appointment with our legal, accounting, and tax experts in Thailand.