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Thailand’s Legal and Strategic Support for the Green Industry in Thailand
The green industry in Thailand is rapidly emerging as a major force in Southeast Asia, driven by a comprehensive legal and policy framework specifically designed to foster sustainable economic development. This transformation is driven by ambitious national strategies such as the Thailand 4.0 Policy, which explicitly identifies the bioeconomy, circular economy, and green economy as core pillars of future industrial growth. Moreover, Thailand’s commitment to achieving carbon neutrality by 2050 and net zero greenhouse gas emissions by 2065 is enshrined in national action plans and reinforced through legislative initiatives including the forthcoming Climate Change Act.
At the regulatory level, the Investment Promotion Act B.E. 2520 (1977) empowers the Thailand Board of Investment (BOI) to promote activities that contribute to sustainable development by offering tailored incentives for sectors such as renewable energy production, energy efficiency technologies, green mobility (including electric vehicles and related infrastructure), and waste recycling management. These incentives align with additional environmental regulations such as the Enhancement and Conservation of National Environmental Quality Act B.E. 2535 (1992), which sets national standards for pollution control, environmental protection, and sustainable resource use.
Furthermore, Thailand’s Paris Agreement participation has incorporated greener principles nationally. Entities like the Thailand Greenhouse Gas Management Organization fall under the Ministry of Natural Resources and Environment to enact and track climate policies, strengthening the supportive ecosystem for investors.
This robust combination of forward policies, statutes, and support makes Thailand a legally secure, policy-driven platform for the sector’s growth, rendering it an increasingly attractive location for both regional and global investors aiming to enable sustainable transformation.
Table of Contents
Why is the Green Industry in Thailand Particularly Attractive?
Several factors make Thailand an exceptionally attractive destination for green industry in Thailand:
- Abundant natural resources: The country has strong potential for solar, wind, and biomass energy development.
- Advanced infrastructure: Well-developed industrial zones and efficient logistics networks facilitate project implementation.
- Skilled workforce: Government-supported education programs ensure the availability of technically trained professionals.
- Clear governmental commitment: Concrete targets for greenhouse gas emissions reduction and the promotion of clean technologies create a stable regulatory environment.
Together, these advantages position Thailand as a leading location for companies seeking to develop green technologies and sustainable solutions in Southeast Asia.
Choosing the right legal structure and complying with the Foreign Business Act for green industry in Thailand
When investing in the green industry in Thailand, foreign investors must strategically select the appropriate legal structure to ensure both regulatory compliance and operational efficiency. The choice of structure has direct implications for ownership rights, operational scope, and eligibility for investment incentives.
Thai limited company
The Thai limited company remains the most commonly used legal form for business incorporation. However, under the Foreign Business Act B.E. 2542 (1999) (FBA), foreign ownership is generally restricted to a maximum of 49% for businesses classified as “restricted activities.” Environmental services, waste management, and certain types of energy-related activities may fall within these restricted categories, unless an exemption applies.
Without BOI promotion, foreign-majority ownership would normally require the application for a Foreign Business License (FBL), a process that can be lengthy and discretionary, with approval subject to stringent criteria, including the benefit of the business to Thailand’s economy and environment.
BOI-promoted company
A more advantageous route for foreign investors is to apply for Board of Investment (BOI) promotion under the Investment Promotion Act B.E. 2520 (1977). Projects approved by the BOI—particularly those aligned with green energy, energy conservation, waste recycling, and low-carbon technologies—are granted full foreign ownership rights, without the need for an FBL. BOI promotion also confers additional benefits such as tax holidays, duty exemptions, land ownership rights for industrial purposes, and expedited work permits and visas for foreign personnel.
To benefit from these privileges, it is crucial that the intended business activities precisely match one of the promoted categories listed in the BOI Announcement No. Sor. 2/2564 on activities eligible for investment promotion, particularly those under sectors related to “Environmental Management,” “Renewable Energy Production,” and “Energy Conservation Technology Development.”
Sector-specific environmental compliance
In addition to general corporate regulations, companies operating in the green industry in Thailand must comply with sector-specific environmental laws. These include obligations under the Enhancement and Conservation of National Environmental Quality Act B.E. 2535 (1992), the Energy Conservation Promotion Act B.E. 2535 (1992) for energy-efficient industries, and, if applicable, permits under the Factory Act B.E. 2535 (1992) for manufacturing or recycling operations.
Depending on the type of project, investors may also be required to conduct an Environmental Impact Assessment (EIA) pursuant to the Notification of the Ministry of Natural Resources and Environment issued under Section 46 of the Environmental Quality Promotion Act.
Strategic legal and corporate planning
Given the complexity of the regulatory environment, a thorough legal feasibility analysis is highly recommended before committing to any investment. This analysis should evaluate:
- Eligibility for BOI promotion and full foreign ownership.
- Potential need for an FBL if the project falls outside BOI-promoted categories.
- Environmental licensing requirements.
- Land ownership or lease structuring for industrial projects.
- Tax optimization strategies under the Thai Revenue Code and BOI promotional privileges.
Choosing the correct structure from the outset and ensuring strict regulatory compliance not only reduces legal risks but also enhances the long-term sustainability and financial viability of the project within the economy of green industry in Thailand.
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BOI incentives and eligibility for the green industry in Thailand
The Thailand Board of Investment (BOI) offers an exceptionally attractive range of fiscal and non-fiscal incentives designed to encourage investment in green and sustainable projects, in line with the country’s commitments under the Thailand 4.0 strategy and its obligations pursuant to the Paris Agreement. These incentives are structured to support innovation, accelerate the deployment of clean technologies, and promote the transition to a low-carbon economy.
Corporate Income Tax (CIT) Exemption
Eligible green projects may benefit from a corporate income tax exemption of up to eight years under Section 31 and Section 35 of the Investment Promotion Act B.E. 2520 (1977). The duration and extent of the tax holiday depend on the classification of the promoted activity:
- Category A1 activities (such as the production of renewable energy from solar, wind, biomass, or biogas) typically enjoy an eight-year CIT exemption with no cap on the exemption amount.
- Category A2 or A3 activities (such as the manufacturing of EV components or energy-saving systems) receive slightly shorter periods of exemption or capped benefits.
Additionally, certain projects within green industry in Thailand may be eligible for a 50% reduction of CIT for five years following the expiration of the initial tax holiday if the project is located in designated promoted zones (e.g., Eastern Economic Corridor).
Import Duty Exemption
Under Section 28 and 30 of the Investment Promotion Act, promoted green projects are entitled to:
- Exemption from import duties on machinery, essential equipment, and raw materials necessary for the approved operations.
- Exemption from import duties on raw materials used in manufacturing products for export.
These exemptions significantly reduce upfront capital expenditure, improving project viability and return on investment.
Non-Tax Incentives for green industry in Thailand
Beyond tax benefits, the BOI provides critical operational advantages, including:
- Full Foreign Ownership: BOI-promoted companies are exempt from the restrictions of the Foreign Business Act B.E. 2542 (1999) and may be 100% foreign-owned.
- Land Ownership Rights: Under Section 27 of the Investment Promotion Act, foreign-owned entities are permitted to own land specifically for business operations approved by the BOI.
- Repatriation of Profits: Companies can freely remit profits, dividends, and loan repayments abroad in foreign currency without restrictions.
- Expedited Visas and Work Permits: Simplified procedures for obtaining and renewing visas and work permits for foreign executives, engineers, and technical experts, facilitating the rapid mobilization of specialized personnel.
Eligible activities under the green industry in Thailand promotion
Activities that typically qualify for these incentives include, but are not limited to:
- Production of Renewable Energy: Solar farms, wind energy projects, biomass and biogas energy generation facilities.
- Manufacturing of Electric Vehicles (EVs) and Components: Including battery production, EV assembly, and development of EV charging infrastructure.
- Industrial Waste Management and Recycling: Projects involving advanced waste sorting, material recovery, and energy generation from waste.
- Development and Manufacturing of Energy Efficiency Technologies: Such as smart grid solutions, high-efficiency cooling systems, LED technologies, and smart building technologies.
- Production of Eco-Friendly Materials: Including bioplastics, biodegradable packaging, and sustainable construction materials.
All eligible projects must demonstrate a clear environmental benefit, either by reducing greenhouse gas emissions, improving resource efficiency, or contributing to the circular economy principles outlined in Thailand’s Bio-Circular-Green Economy (BCG) Model.
How to Apply for BOI Promotion for Green industry in Thailand?
General Requirements and Eligibility
Projects must demonstrate clear innovation, contribute to environmental sustainability, and align with national development strategies. A minimum investment of THB 1 million (excluding land and working capital) is required. Compliance with environmental and safety standards is mandatory.
Pre-Application Consultation
It is highly recommended to arrange a meeting with BOI officers to confirm project eligibility and receive guidance on structuring the application.
Online Application and Required Documents
Applications are submitted through the BOI’s e-investment platform and must include:
- Detailed business plan outlining the green technology or process.
- Company registration documents and ownership structure.
- Environmental impact assessment or mitigation plan (if applicable).
- Investment budget and financial projections.
- Staffing plan, including skilled Thai and foreign personnel.
BOI Review and Approval
The BOI reviews the technical, environmental, and economic feasibility of the project. Smaller projects (under THB 200 million) are evaluated internally, while larger investments require approval at the Board level.
Post-Approval Compliance
After approval, companies must:
- Commence operations within the timeline stated in the promotion certificate.
- Submit regular progress and compliance reports to the BOI.
- Maintain transparency regarding the use of tax exemptions and other benefits.
- Stay compliant with Thai labor, environmental, and industrial regulations to maintain their status within green industry in Thailand.
Legal framework supporting the green industry in Thailand
Thailand’s regulations foster investments that are environmentally-conscious. The Investment Promotion Act of 1977 establishes incentives from the Board of Trade to encourage eco-friendly ventures. Seeking to safeguard the land and air, the Environmental Quality Promotion Act of 1992 oversees practices that minimize pollution. This preservation push will be fortified when the forthcoming Climate Change Bill solidifies commitments to reducing emissions. As the Factory Act of 1992 and manufacturing directives from the Ministry of Industry bring additional oversight, green production and industrial works must still adhere to safety and cleanliness standards.
Public agencies such as the Thailand Greenhouse Gas Management Organization (TGO) and the Ministry of Industry actively support green investments within green industry in Thailand through diverse programs, various sources of funding, and a range of policy initiatives to promote green industry in Thailand.
Conclusion
Thailand offers a highly conducive environment for sustainable investment and green industry in Thailand, built on robust incentives, world-class infrastructure, and clear commitments to environmental protection. Anchoring legislation supporting green development includes key instruments like the Investment Promotion Act, the Enhancement and Conservation of National Environmental Quality Act, and impending climate change law, collectively establishing a predictable, amenable regulatory landscape.
Prioritizing sectors aligned with the Bio-Circular-Green economic model endorsed in 2021 reinforces national efforts promoting renewable energy, efficiency, green transport, and sustainable production. The National Energy Plan and Power Development Plan also establish clean energy targets, providing visibility and certainty.
Foreign businesses can benefit from generous incentives under the BOI, including eight years tax exemption, duty waivers, full ownership, free profit repatriation, and land rights for promoted activities.
Additionally, participation in accords like the Paris Agreement and ASEAN frameworks guarantee regional alignment, making Thailand ideal for targeting Southeast Asian markets.
However, navigating intricate local regulations demands careful strategy. These include environmental licensing, energy conservation obligations, and potential environmental assessments.
To fully leverage promotion benefits and ensure compliance, engaging experienced legal counsel with extensive knowledge of investment, corporate, and environmental law is strongly advised.