BOI Board of Investment ThailandUpdated November 2010 The stated goals of in creating the BOI are “To relieve the fiscal burden of the government and to respond to current and future economic situations, the Board of Investment BOI) prescribes policies for investment promotion as follows: | 1. | The efficiency and effectiveness of tax privileges given will be enhanced. Privileges will be granted to projects that actually benefit the economy and good governance will be used to manager and supervise the application of tax and duty privileges. Promoted entities will report the operating results of their promoted projects to the BOI for review prior to the application of tax and duty privileges for that year. | | 2. | To promote development of quality and production standards to enhance competitiveness in the world market, every promoted project that has an investment capital of 10 million bath or more(excluding cost of land and working capital) must obtain ISO 9000 certification or similar international certification. | | 3. | Previous conditions on exports and use of local materials are repealed so that the criteria for promotion will be in line with international trade and investment agreements. | | 4. | Special investment promotion will be given to regions or areas with low income and inadequate investment facilities. Maximum tax and duty privileges will be given to these regions or areas. | | 5. | Priority is given to small and medium industries by applying a minimum level of investment capital of 500,000 bath (excluding cost of land and working capital) for activities as per the announcement of the BOI no. 1/2553 and of not less than one million baht(excluding cost of land and working capital) for other activities. | | 6. | Priority is given to agricultural activities and agricultural products, projects related to technological and human resource development, public utilities, infrastructure and basic services, environmental protection and conservation and targeted industries.” (See http://www.boi.go.th/english/about/boi_policies.asp ) |
Through the Board of Investment, the government offers a range of tax incentives, support services and import duty exemptions or reductions to an extensive list of promoted activities, most notably the BOI has the authority to grant a foreign owned companies the right to own land on which to conduct a promoted activity. Most often that would apply to a manufacturing facility, but the BOI has also authorized foreign ownership of land for resorts being developed in Thailand. The use of the land is limited to the approved promoted activity and if the business is later dissolved the land must be sold within one year. The BOI exception to the prohibition against foreigners owning land is primarily limited to the ownership of land and factories for an approved promoted manufacturing activity..
For the comprehensive list of BOI promoted activities in: Agriculture; Mining; Light Industry; Metals, Machinery and Transport; Electronics; Chemicals, Paper, Plastics; Services and Public Utilities, see http://www.boi.go.th/english/about/eligible_activities.asp .
Companies receiving investment promotion privileges from the Board of Investment are not subject to foreign equity restrictions in the manufacturing sector, and there are no local content requirements nor export requirements, as Thailand's investment regime is in total compliance with WTO regulations.
The BOI has the power to grant some or all of the following privileges depending on the promoted activity and investment zone: - Exemption from rules restricting foreign ownership of companies;
- Exemption from corporate income tax for up to 8 years;
- Exemption of import duties on machinery and raw materials;
- Exemption from rules restricting foreign ownership of land;
- Exemption from work permit and visa rules; and
- Exemption from rules restricting overseas remittances.
The Board of Investment also coordinates the activity of the One-Stop Service Center for Visas and Work Permits, which enables foreign staff of BOI-promoted companies to obtain work permits and long-term visas within three hours or less.
The criteria for Project Approval, Foreign Shareholding, Granting Tax and Duty Privileges as Investment Zones, the Criteria for Factory Relocation, if the business will be considered a “Priority Activity” or of “Special Importance and Benefits to the Country”, or approved for Investment Promotion Policy for Sustainable Developmentcan be found at http://www.boi.go.th/english/about/boi_policies.asp. Additionally the procedure for obtaining BOI privileges can be found at http://www.boi.go.th/english/about/boi_promotion_procedure.asp 
As of June 2010 the following promotions were in effect: Projects in Zone 1 shall be granted: 50 per cent reduction of import duty on machinery that is subject to import duty of not less than 10 per cent
Corporate income tax exemption for 3 years for projects located within industrial estates or promoted industrial zones, provided that such a project with capital investment of 10 million baht or more (excluding cost of land and working capital) obtains ISO 9000 or similar international standard certification within 2 years from its start-up date, otherwise the corporate income tax exemption will be reduced by 1 year.
Exemption of import duty on raw or essential materials used in the manufacturing of export products for 1 year. Projects in Zone 2 shall be granted: 50 per cent reduction of import duty on machinery that is subject to import duty of not less than 10 per cent
Corporate income tax exemption for 3 years, increased to 5 years for projects located within industrial estates or promoted industrial zones, provided that such a project with capital investment of 10 million baht or more (excluding cost of land and working capital) obtains ISO 9000 or similar international standard certification within 2 years from its start-up date, otherwise the corporate income tax exemption will be reduced by 1 year.
Exemption of import duty on raw or essential materials used in the manufacturing of export products for 1 year Projects in Zone 3 shall be granted: Exemption of import duty on machinery
Corporate income tax exemption for 8 years provided that a project with capital investment of 10 million baht or more (excluding cost of land and working capital) obtains ISO 9000 or similar international standard certification within 2 years from its start-up-date, otherwise the corporate income tax exemption will be reduced by 1 year
Exemption of import duty exemption on raw or essential materials used in the manufacturing of export products for 5 years
Projects located in one of the following 36 provinces of Zone 3: Chai Nat, Chanthaburi, Chiang Mai, Chiang Rai, Chumphon, Kamphaeng Phet, Khon Kaen, Krabi, Lamphang, Lamphun, Loei, Lop Buri, Mae Hong Son, Mukdahan, Nakhon Ratchasima, Nakhon Sawan, Nakhon Si Thammarat, Phangnga, Phattalung, Phetchabun, Phetchaburi, Phitsanulok, Pichit, Prachin Buri, Prachuab Khiri Khan, Ranong, Sa Kaew, Sing Buri, Songkhla, Sukhothai, Surat Thani, Tak, Trang, Trat, Uthai Thani, and Uttaradit, shall be granted Zone 3 tax and duty privileges and further privileges, as follows: … see map of Thailand
(1) A project located within industrial estates or promoted industrial zones is entitled to the following privileges:
(1.1) 50 per cent reduction of corporate income tax for 5 years after the exemption period;
(1.2) Double deduction from taxable income of transportation, electricity and water costs for 10 years from the date of first revenue derived from promoted activity;
(2) For a project located outside industrial estates or promoted industrial zones, a deduction can be made from net profit of 25 per cent of the project’s infrastructure installation or construction cost for 10 years from the date of first sales, and net profit for one or more years of any year can be chosen for such deduction. The deduction is additional to normal depreciation.
Projects located in one of the following 22 provinces: Amnat Charoen, Buri Ram,Chaiyaphum, Kalasin, Maha Sarakham, Nakhon Phanom, Nan, Narathiwat, Nong Bualamphu, Nong Khai, Pattani, Phayao, Phrae, Roi Et, Sakhon Nakhon, Sathun, Si Sa Ket, Surin, Udon Thani, Ubon Ratchathani, Yasothon, and Yala shall be granted Zone 3 tax and duty privileges and further privileges as follows: … see map of Thailand
(1) 50 per cent reduction of corporate income tax for 5 years after the exemption period;
(2) Double deduction from taxable income of transportation, electricity and water costs for 10 years from the date of first revenue derived from promoted activities;
(3) Deduction can be made from net profit of 25 per cent of the project’s infrastructure installation or construction cost for 10 years from the date of first sales, and net profit for one or more years of any year can be chosen for such deduction. The deduction is additional to normal depreciation.
We at Sunbelt have had many successful submissions to the BOI. As the process is somewhat complicated and can prove to be frustrating and time-consuming it is a good idea to speak with attorneys that have a history of success in handing these matters. For more information please go to http://www.sunbeltlegaladvisors.com/Thailand-BOI-application.php .
Still have a question for Sunbelt Asia about setting up a BOI or other business in Thailand? Ask the experts at Sunbelt Asia here .
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