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.

Starting Regional Operating Headquarter in Thailand

 

Are you planning to control your subsidiaries or associated enterprises located worldwide from Thailand? Register a Regional Operating Headquarter or ROH in Thailand to do so and avail the Board of Investment (BOI) promotions in Thailand. To Register your ROH in Thailand, we can help you throughout the process after you check your eligibility to have so from this article.

Conditions: Regional Operating Headquarter (ROH) in Thailand

To register a Regional Operating Headquarter in Thailand, it must comply with the following conditions:

a. No. of Associated Enterprises/Subsidiaries worldwide

To be eligible to obtain recognition as Regional Operating Headquarters in Thailand, the company must have associated companies or subsidiaries in countries outside Thailand in the following order:

• One associated enterprise/subsidiary by the end of the 1st and 2nd Accounting period.
• Two associated enterprises/subsidiaries by the end of the 3rd and 4th Accounting period.
• Five associated enterprises/subsidiaries by the end of the 5th Accounting period onwards.

b. Paid-up Capital and Spending

• The organization must have a paid-up capital of 10 million THB at the end of each accounting period.
• An ROH must have a total business spending of at least 15 million THB per year which must be the total operating costs in Thailand excluding any type of expense made overseas.
• The business must have a total investment spending or actual payment of at least 30 million THB annually.

c. The associated enterprises or subsidiaries must have actual business operations with a physical office, management, and employees working for the same.

d. The overall strength of the skilled staff must be maintained at 75% of the total employees by the end of the 3rd accounting period.

e. Average remuneration for at least 5 employees must be at least 2.5 million THB per annum by the end of the 3rd accounting period.

Benefits of Registering ROH in Thailand

On registering a Regional Operating Headquarter in Thailand, both the business and the expatriate founder benefit individually.

Benefits for the Business

• Exemption from corporate income tax (CIT) on net profits for income. It must be derived from services provided to foreign branches or associated enterprises of the registered operator for 10 years.
• A 10% CIT rate on net profits for income derived. The income should be from services provided to domestic branches or associated enterprises of the registered operator for 10 years.
• A 10% CIT rate on net profits for qualified royalties for 10 years.
• A 10% CIT rate on interest received from foreign branches or associated enterprises of the registered operator for loans granted. Note that such loans must be from other sources and extended to the registered operator’s branches or associated enterprises for 10 years.
• Exemption from CIT for dividends received by the registered operator from associated enterprises incorporated abroad for 10 years.
• Exemption from CIT for dividends paid out of the registered operator’s concessionary profits to its juristic shareholders incorporated abroad and not carrying on business in Thailand for 10 years.

Benefits for the Expatriate

• Expatriates can choose from a tax rate of 15% on their remuneration. It must be derived from the registered operating headquarters (ROH) for eight consecutive years.
• Tax exemption in Thailand on income paid by a foreign company for services rendered abroad. To be eligible for this, there should not be any direct/indirect deduction as an expense of the ROH or its associated enterprises in Thailand. This applies to expatriates planning to work in another country the ROH.

The Bottomline

A company can apply for an extension of the ROH privilege for five more accounting periods. This is possible only if it meets all the required criteria in each accounting period. Furthermore, it must accumulate business spending of more than 150 million THB by the end of the 10th accounting period.

As the name itself, a “Regional Operating Headquarters” provides big benefits for expatriates in Thailand. If you are a foreign investor and planning to set up your business as an ROH in Thailand, feel free to write to us at officer@konradlegal.com and book your round of free consultation with us.

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.

Specific Business Tax Assessment in Thailand

 

Will your business in Thailand need to pay Specific Business Tax in Thailand this month? Yes, SBT filing must be done monthly; if you miss any, you will be subjected to heavy penalties.

Therefore, without worrying about the consequences, read through our guide for complete information on SBT.

What is Specific Business Tax (SBT) in Thailand?

Specific Business Tax is a form of indirect tax that applies to businesses that are not subject to value-added tax (VAT). Businesses with an annual turnover exceeding 1.8 million Thai Baht must pay VAT. Additionally, your business must have a value-addition provision to be liable for VAT.

In 1992, the concept of “business tax” was eliminated. Instead, it was replaced by VAT and SBT or Specific Business Tax. This means, that if your business is not eligible for VAT, you need to pay SBT.

Therefore, after registering your company in Thailand, you must apply for tax registration. Corporate Income Tax registration is the mandatory one. Next, based on your business transaction volume, you should proceed with VAT or SBT registration. To ascertain this aspect, you must seek the support of a reliable accounting and tax firm in Thailand.

Nonetheless, your understanding of the aspects of SBT liability is crucial. Let us help you with some information comprehensively.

Is Your Business Eligible to Pay Specific Business Tax in Thailand?

The basic eligibility to have your tax identity as an SBT-registered business in your annual transaction volume. If your transaction volume is more than 1.8 million THB per annum, you need not worry about SBT. Then you will have to apply for VAT Registration in Thailand.

If not, you need to check the nature of your business. Please note that there are certain forms of businesses that enjoy exemption from the liability to pay SBT in Thailand. Following is the list of businesses that are liable to pay SBT:

• Banking, as defined by the law governing commercial banking or any other specific law.
• Finance, securities, and credit foncier activities, as defined by the governing law.
• Life insurance, as defined by the law governing life insurance.
• Pawnbroking, as defined by the law governing pawnshops.
• Regularly conducted business activities similar to commercial banks, such as the provision of loans, guarantees, currency exchange, issuance, purchase or sale of bills, or money transfers abroad by various means.
• Buying and selling of immovable property commercially or profitably, regardless of the acquisition method, but only by the rules, procedures, and conditions prescribed by a royal decree.
• The sale of securities on the securities market, as stipulated by the law governing the securities exchange of Thailand.
• Any other business as prescribed by a royal decree. You need to keep yourself updated on the regular updates issued by the Department of Business Development or the Thai Revenue Department to track such decrees. If you find this task to be daunting, you should hire a tax firm in Thailand.

Is the nature of your business listed above? If yes, you must go for Specific Business Tax Registration in Thailand. Check the process below.

Specific Business Tax (SBT) Registration in Thailand

Entities and individuals subject to Specific Business Tax (SBT) must register as SBT-registered entities or individuals within 30 days of starting operations. Registration should be done at the Area Revenue Office for businesses located in Bangkok or at the District Revenue Office for businesses located elsewhere.

If a taxpayer has multiple branches or offices, the registration application must be submitted to the Area or District Revenue Office where the headquarters is situated. For foreign operators, an agent designated by the operator is responsible for undertaking SBT registration on behalf of the foreign operator.

Registration Form for Specific Business Tax in Thailand

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Now that you know about the tax registration process, you must also be aware of the SBT tax base and rates. This will help you plan your business finances well!

Specific Business Tax (SBT) Base and Rates in Thailand

Type of Business	SBT Base	SBT Rates
Banking, finance, and similar business	– Interest, discounts, service fees, other fees, gross profits from purchase or sale of, or obtained from, negotiable instruments or other instruments of indebtedness. – Gross profits from currency exchange issue of negotiable instruments or other instruments of indebtedness or remittance of currency to foreign countries.	3%
Finance, securities, and credit foncier business	– Interest, discounts, service fees, other fees, gross profits from purchase or sale of, or obtained from, negotiable instruments or other instruments of indebtedness. – Gross profits from currency exchange issue of negotiable instruments or other instruments of indebtedness or remittance of currency to foreign countries.	3%
Life Insurance	Interest, Service Fees, and other Fees	2.5%
Pawn Brokerage	Interest, fees, remuneration from selling overdue property	2.5%
Businesses with regular transactions similar to commercial banks	– Interest, discounts, service fees, other fees, gross profits from purchase or sale of, or obtained from, negotiable instruments or other instruments of indebtedness. – Gross profits from currency exchange issue of negotiable instruments or other instruments of indebtedness or remittance of currency to foreign countries.	3%
Real Estate	Gross receipts	0.1%
Sale of securities in a securities market	Gross receipts	0.1% (exempted)

**Imposition of Local tax at the rate of 10 % on top of SBT. 

Filing and Paying Specific Business Tax (SBT) in Thailand

The SBT taxable period runs from the first to the last day of each calendar month. Companies must file their SBT return (Form ภธ. 40) monthly, regardless of whether or not they have earned any income during that period.

Specific Business Tax Filing and Return Form in Thailand

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You must submit the SBT return and payment to the District Revenue Office within 15 days of the following month. If a taxpayer has multiple places of business, each business must file its return and make the payment separately. However, an exception may apply if the taxpayer has obtained approval from the Director-General.

After filling up the above form, you must submit the Form ภธ. 40 and pay taxes at the following locations:

Bangkok: Branch Area Revenue Office in which the business is located

• Other locations designated by the Director-General of the Revenue Department as the place for filing and paying tax

Other provinces

• Submit the return at the Branch Area Revenue Office at the location of your business.
• Other locations that the Director-General of the Revenue Department authorizes as the place for filing and paying taxes.

Financial institutions, life insurance, and real estate are examples of businesses that are subject to specific business tax in Thailand as they are not liable to pay VAT.

If you are a foreign investor in Thailand, we recommend engaging with Konrad Legal’s tax services for extra support and guidance when filing and submitting taxes in Thailand. Simply email us your requirements at officer@konradlegal.com and we will ensure that you maintain your tax compliance punctually.