Board of Investment Proposes “Thailand’s Next Step” - Good News for Foreign Investors

Thailand's Board of Investment (BOI) is proposing a plan to attract foreign investors by focusing on creating an ecosystem and enhancing the ease of doing business in five target industries:

1. Bio-circular-green (BCG)
2. Electric vehicles (EV)
3. Smart electronics
4. Digital infrastructure, equipment, and services
5. Creative economy

The plan, dubbed "Thailand's Next Step" will feature non-tax privileges to promote the building of an ecosystem and infrastructure that facilitate investment in Thailand. The BOI will also organize roadshow activities overseas to attract potential investors from China, Japan, the United States, and more.

The goal of "Thailand's Next Step" is to make the country a hub for international businesses and skills with strong supply chains, especially in smart and sustainable industries. The BOI will also promote area-specific investment under the global minimum tax rate to reduce reliance on tax privilege measures.

Over the past three years (2020-2022), the five target industries have applied for investment privileges from the BOI to the tune of more than 680 billion baht. They are:

• BCG industry applied for 287.8 billion baht worth of privileges, mostly in renewable energy, waste processing, and green technology. Click to start your business, or learn more about the BOI benefits for BCG Industry in Thailand.
• The EV industry applied for 78 billion baht worth of privileges, mostly in EV infrastructure, charging stations, and battery manufacturing. Read our previous edition on BOI Benefits for EV Industry to learn more.
• Smart electronics applied for 210.3 billion baht worth of privileges, mostly in wafer fabrication, automotive electronics, electronic design, research, and development. Read our BOI Thailand newsletter on benefits for Smart Electronics business.
• The digital industry applied for 60.85 billion baht worth of privileges, mostly in data centers, cloud services, and digital ecosystems. Click the link to learn about the new announcement of BOI benefits for Digital and Software Businesses in Thailand.
• The creative industry applied for 52.81 billion baht worth of privileges, mostly in film, games, animation, gems, and jewelry. Learn about the benefits of starting a gems and jewelry business in Thailand.

From January to June this year, 891 applications were submitted to the BOI seeking tax and other investment privileges for investments worth 364.42 billion. The number of projects rose by 18% from the same period last year while the value of the projects increased by 70%.

Let us walk you through the series of BOI announcements and revision of measures that enabled this “stepping forward” of the kingdom towards the new realm of development that is expected to create jobs, attract investment, and boost economic growth.

On 8 December 2022, the BOI issued 17 announcements (No. 8/2565 to No. 24/2565) relating to the following:

(i) new policies and criteria for investment promotion, and

(ii) relevant measures, which became effective on 3 January 2023.

One additional announcement issued on 16 December 2022 (No. Por.4/2565) prescribed the activities which are not eligible for incentives under the BOI announcements No. 11/2565 to 15/2565, and No. 17/2565).?

According to these new BOI announcements, the goal is to not only promote “Thailand 4.0”, but to also promote investment in specific areas and to stimulate investment in target industries in Thailand.?

Here's a clearer summary of the key points in the recent BOI announcements:

New BOI Policies and Criteria for Investment Promotion

• The BOI Announcement No. 8/2565 for Policies and Criteria for Investment Promotion will replace the previous policies and criteria approving projects requesting investment promotion.?
• The BOI Announcement No. 9/2565 for Measures for Promoting Investment in Industries Significant to National Development
• The BOI Announcement No. 10/2565 for Measures for Competitiveness Enhancement
• The BOI Announcement No. 11/2565 for Support Measures for Establishment of High-Potential Personnel Development Institution refers to the BOI announcement No. 8/2565.?

These are the main highlights of the four BOI announcements:

1. Criteria for project approval have been updated. The new incentive Group A1+, includes incentives such as 10 to 13-year corporate income tax exemption (with no cap), exemption of import duty on machinery, and other non-tax incentives, etc.
2. The incentives under Group B have been updated, and Groups B1 and B2 have been removed.
3. The list of promoted activities and the conditions required of each activity for the application submitted with the BOI from 3 January 2023 onward has been updated, and new promoted activities have been added.
4. Many projects can be eligible for additional incentives for competitiveness enhancement. To be eligible, these projects should invest in technology and innovation, human resources development, and business operators’ development. Incentives include additional CIT exemptions, either with a cap of up to 200% in proportion to investment or expenditure, or without a cap for businesses with investment or expenditure in R&D or technology and innovation of not less than 1% of total sales of the first three years, plus a CIT additional exemption period of not more than 13 years in total, subject to conditions provided therein.
5. For businesses of high-potential personnel development institutions, incentives include non-tax incentives and CIT exemption for a period of five years, which shall not be more than 100% of investment (excluding land and working capital) for an existing project. New projects will be exempted from import duty for machinery and granted non-tax incentives.

Special Incentives Applications

BOI Announcement No. 12/2565

Re: Measures for Retention and Expansion Program.

Significant Criteria include the following

(i) applicant must be a person who has been promoted in the past for projects under the same juristic person in the past 15 years (between 2008 - 2022) for not less than three projects, with the investment value at the approval stage of not less than 10 billion baht in total (excluding the cost of land and working capital)

(ii) the expansion project must have an investment value of not less than 500 million baht (excluding the cost of land and working capital).??

Incentives include the following:

?(i) CIT exemption for an additional period of three years, but not more than 13 years in total for businesses within Group A1+?

(ii) a 50% reduction of the normal rate of CIT on the net profit derived from the investment for a period of five years from the end of the CIT exemption period for businesses within Groups A1 and A2, etc.

BOI Announcement No. 13/2565

Re: Measures for Comprehensive Relocation Program

Significant Criteria include the following:?

(i) New projects must apply for investment promotion in manufacturing business together with the International Business Center (“IBC”);?

(ii) must carry out essential activities of being a Regional headquarters and/or R&D Center, etc. Existing projects under Group A can also apply.

Incentives include the following

CIT exemption for net profits derived from business investment in addition to basic incentives according to the type of activity for a period of three or five years, but not more than eight years in total, subject to the details of the project.

BOI Announcement No. 14/2565

Re: Investment Stimulation Measure for Economic Recovery

Significant Criteria include the following

(i) must be businesses under Groups A1, A2, A3, and A4, except certain types of businesses e.g., air transportation businesses, businesses located in the Southern Border Provinces or Special Economic Development Zones, etc.;?

(ii) having an actual investment of not less than one billion baht (excluding the cost of land and working capital) within 12 months from the issuance of the BOI certificate, etc.

Incentives include the following

A 50% reduction of the normal CIT rate on the net profit derived from the investment for a period of five years from the end of the CIT exemption period.

Measures for Enhancing Industry (Smart and Sustainable Industry) under the BOI Announcement No. 15/2565

Re: Measures for Enhancing Industry

Significant Criteria include the following:

(i) Certain existing businesses, can apply for incentives under this announcement regardless of whether they are promoted under the BOI Promotion or not, are subject to criteria and conditions provided therein, and must have investment for the development of at least one million baht (excluding the cost of land and working capital); or

(ii) for new investment projects, they can apply for incentives under this announcement if the businesses are under Group B.

Incentives include CIT and machinery import tax exemption, depending on the type of investment promotion measure.

Nine Other Promoted Measures

1. Measures for promoting investment for specific groups, i.e., Small and Medium Enterprises (SMEs) (No.16/2565);
2. Measures for promoting investment in the Eastern Economic Corridor (EEC), i.e., Chachoengsao, Chonburi, and Rayong provinces for businesses under Groups A1+, A1, A2, A3, and A4 (No.17/2565), in other economic corridors of other regions e.g., Northern Economic Corridor: NEC-Creative LANNA which comprises of Chiang Rai, Chiang Mai, Lamphun, and Lampang. (No.18/2656), in the Southern Border Provinces and Special Economic Zones (Nos. 19 -21/2565), in the Science and Technology Parks (No.22/2565), and in the Medical Innovation District (No. 23/2565); and
3. Measures for Promoting Investment for Community and Social Development (No.24/2565).

In summary, existing projects regardless of whether they are promoted under the BOI Promotion or not, or newly promoted projects under the BOI, and new projects may apply for additional incentives available under these BOI announcements. The applications for such incentives must be made within the deadlines, either by the end of June 2023 or the end of December 2023, as the case may be. The projects must meet criteria and conditions as stated under each BOI announcement and not fall under the non-promoted business activities under BOI announcement No. Por. 4/2565.

If you are planning to start your business in any of the mentioned industries, never forget to apply for BOI Thailand promotions. To ease the process, we are here. Simply email us your business plan at [email protected] and our team of BOI-specialized corporate lawyers will get in touch with you within one working day.