BOI Thailand Incentives for Software Development Companies and Data Centres

This article is for both business owners and aspirants planning to register their business in Thailand, particularly in the Information Technology industry. Board of Investment (BOI) Thailand has made certain replacements in benefit schemes in the existing eligible service categories to boost the Information Technology industry.???

On March 15, 2024, Thailand's Board of Investment (BOI) implemented a new set of investment incentives for software development and data centers. This regulation replaces the previous categories of software or platforms for digital services or content (category 8.1) and data centers (category 8.2.1).

Software and Platform Development

The BOI's new promotion policy distinguishes between "development" and "improvement" of software or platforms by creating separate subcategories with unique incentives for each. The forthcoming announcement from the BOI is expected to provide further clarification regarding the specifics of these two activities. Notably, qualifying development efforts are eligible for a corporate income tax (CIT) exemption for a limited duration of eight years, whereas improvement activities do not qualify for any CIT exemption.

Several changes have been made to the eligibility requirements for creating digital services or content platforms and software. Specifically, these include:

• Effective immediately, salary expenditures for Thai IT personnel hired temporarily after applying for investment promotion can be included when calculating the total salary expenditures for Thai IT personnel hired after applying for investment promotion.?
• For calculating actual expenditures, the project can include salary expenses related to the temporary hiring of Thai IT personnel in the year it intends to avail of the CIT exemption.
• The promotion certificate's issuance starts a 12-month clock for projects to begin operations. Extensions are not an option.
• The period of machinery importation has now been discontinued for projects.

The eligibility requirements for the development of software, platforms, and content for digital services remain consistent.

Projects related to the enhancement of software and platforms for digital services or content within the new BOI subcategory are not entitled to CIT exemption. However, they are eligible for alternative incentives. To qualify for these incentives, projects must adhere to specific criteria.

• Expenditures on salaries for Thai IT personnel hired (including temporarily) after applying for investment promotion must be at least THB 1.5 million per year.
• Projects must propose a plan for improvement of the software, digital platform, or digital content to be sold or provided, as stipulated by the BOI.
• Projects may not amend the category in which they benefit from investment promotion.
• Projects must commence operations within 12 months of the promotion certificate being issued. No extensions are allowed.
• Projects may not extend the machinery importation period.
• Projects may not own land.

Furthermore, projects within this subcategory are uniquely permitted to utilize previously owned machinery or leverage existing machinery associated with the project, deviating from the typical BOI prohibition against such practices.

Data Centers

Qualifying data centers are still eligible for CIT exemption (no cap) for eight years, but there are minor updates to the eligibility criteria:

• Projects must install an electrical system of at least two megawatts to support the power consumption of computer equipment.
• Projects no longer require an area of at least 3,000 square meters.
• Projects must still obtain ISO/IEC 27001 certification before they can receive CIT exemption. Still, there is no longer an explicit requirement that they get the certification before the full operation deadline.

In addition, projects in the data center category are exempt from the general BOI requirement that projects benefiting from investment promotion obtain ISO 9000, ISO 14000, or other equivalent international certifications.

If you are already running a software development company or data center in Thailand, in addition, to being eligible for the general BOI Benefits, the ones mentioned in this article also add to the list. If you still haven’t applied for the Board of Investment of Thailand promotions for your existing company in Thailand, we can help. Furthermore, we can also help you in the process of starting a BOI company in Thailand.

Email us at [email protected] to get in touch with our team specializing in supporting companies to avail of the Board of Investment privileges in Thailand.