Are you aware of Thailand’s latest Investment Incentive programs?

This BOI Announcement is now effective and applicable for all applications from 3 January 2023 onwards. This new strategy emphasizes on three key concepts (1) Innovation, technology, and creativity, (2) Competitiveness, and (3) Inclusiveness to stimulate investments in Thailand.

For example, for the first time, the BOI introduced a comprehensive set of special incentives to support business expansions by encouraging Long Standing Investors. These companies could receive additional Corporate Income Tax (“CIT”) exemption for up to 3 years or a 50% CIT reduction for up to 5 years (depending on the type of activity).

The BOI also introduced new promoted industry sectors, specifically sustainable activities which will be granted special incentives. The new promoted categories include the set up of Electric Vehicle (“EV”) battery swapping stations, manufacturing of hydrogen vehicles, novel food, etc. The BOI also aims to promote the utilization of renewable energy. New types of promoted activity include production of hydrogen and related businesses, i.e. green ammonia and power steam generation from hydrogen.

Investments in upstream industries which involve high technology and innovation, including Biotech, Nanotech, and advanced materials entailing technology transfer may be granted CIT exemption without the limitation on the amount of investment for a period of 10 to 13 years, depending on the activity of the proposed project.

Another new measure is the ‘Relocation Program’ under which the BOI aims to incentivize foreign investors to relocate their businesses to Thailand. Under this relocation program, companies would be able to get an additional of 5-year CIT exemption if they relocate certain activities to Thailand, including their regional headquarters and research and development (“R&D”) center. 

For companies that relocate their manufacturing facilities and regional headquarters to Thailand, these companies will be granted additional 3-year CIT exemption. Those relocating their manufacturing facilities and R&D center will additionally be granted 1 to 5 years of CIT exemption (depending on the industry of the manufacturing business).  The CIT exemption will however only apply to the revenues resulting from the relocated manufacturing activities.

This relocation program would be a worthwhile opportunity for foreign investors who already have promoted manufacturing projects and are planning to expand their footprints in Thailand through a regional headquarters or an R&D center.  Also, companies those who have investment plans on setting up new manufacturing facilities together with potential International Business Center activities (e.g., providing services to its associated companies overseas and/or in Thailand) or R&D centers to support the operation of the main manufacturing projects.

What’s Next?

Since the BOI’s new 5-year strategies offer a variety of new incentives and investment promotion measures for a wide range of industries, it is recommended for both foreign and domestic investors to review the new list of eligible activities and measures and assess them that against their current or future business activities.  

Identifying the right incentive can sometimes be a difficult task as certain activities could fall under one or more potential incentive schemes.  Also obtaining the investment promotion with the BOI is not always a straightforward exercise as the proposed project would have to meet both the general and specific conditions for each of the activity and measure.  

Nonetheless, not availing of these new Investment Incentive programs would be missed opportunities for companies doing or considering doing business in Thailand.

By Nont Nijanantra | Manager, Tax & Legal, Thanittha Deeying | Associate, Tax & Legal
Deloitte Thailand