Thailand established the Board of Investments (BOI) to provide incentives to foreign and local businessmen to invest in targeted industries in Thailand. The product or enterprise must value added to the product must be 20% or more from the original materials. There are exceptions for the manufacturers of electronic products, agricultural products, or projects granted special approval by the BOI. The BOI applicant must use modern production processes and new machinery. In addition, there are financial sufficiency and environmental protection requirements that have to be met prior to consideration by the Board of Investments.
However, the investment promotions, incentives, and privileges are large. There are many incentives for companies that are granted to BOI companies.
- BOI companies are exempted from corporate income tax for a maximum period of eight years.
- There is a 50% reduction of the normal corporate income tax rate for up to 5 years after the period of tax exemption.
- Double deductions from the cost of transportation, electricity, and water supply.
- Additional 25% deduction of the cost of installation or construction of facilities.
- Exemption of import duty on raw or essential materials for use in production for export.
- A BOI company can carry losses forward to the period of when they are required to pay taxes.
- Any dividends distributed during the income tax period are also exempt from income tax.
- There are tariff exemptions or reductions on the important of new machinery or raw materials.
- Work permits are provided for the foreign national owners and BIO companies may also bring skilled foreign workers and experts to work.
- BOI companies can own land for the purpose of their business operation.
- BOI companies can also take out or bring money into Thailand using a foreign currency.
There are additional protections provided by the Board of Investments to reduce the risks associated with investing in Thailand. There are also protections against government activities such as nationalization or price controls. To protect against private companies, the Board of Investments will limit the entry of a private company who attempts to compete with an approved BOI company that is involved in the same or similar activity. In addition, there are special BOI government agencies which help to fast track bureaucratic requirements for BOI companies.
The Board of Investment?s application procedure is very complex. For this important process, it is recommended a company interested in applying for a Board of Investment?s exemptions seek the assistance of an experience corporate attorney.