Call us now:
What is the BOI: understanding the unavoidable milestone for every foreign investment in Thailand
Thailand remains a premier destination for foreign investment in Southeast Asia, with the Thailand Board of Investment (BOI) playing an instrumental role in enticing businesses through extensive perks. Established under the Investment Promotion Act B.E. 2520, the BOI aims to encourage both domestic and foreign investment into industries that support Thailand’s economic development goals. By providing an extensive array of tax and non-tax incentives, the BOI in Thailand simplifies market entry while aligning projects with national development priorities.
Operating as a government agency of the Prime Minister’s office, the BOI constructs a transparent legal framework for foreign investors. This includes exemptions under the Foreign Business Act B.E. 2542 (1999), which allows for foreign participation in otherwise restricted sectors Additionally, the BOI supports the government’s “Thailand 4.0” vision, emphasizing innovation, technology, and sustainability. The agency’s efforts target diversifying the economy and urge enterprises to adopt modern methods while satisfying social and Earth-friendly ethics. With an emphasis on streamlining bureaucratic and promoting sustainable growth, the BOI remains pivotal in shaping Thailand’s investment landscape.
This article scrutinizes the key categories of BOI-promoted activities, the incentives offered, the conditions for eligibility, the minimum investment requirements, and the application ritual. With meticulous comprehension of the BOI in Thailand, investors can unlock opportunities while ensuring conformity with Thai laws.
Table of Contents
The Nine Key Sectors promoted by the BOI in Thailand
The BOI in Thailand promotes industries across diverse sector, compartmentalized to align with Thailand’s economic strategy. These categories consist of nine key promoted activities reflecting Thailand’s push towards industrialization, sustainability, and novelty.
Agriculture and Agricultural Products
Modern agricultural practices, biotechnology, and food processing are emphasized under this sector. The BOI in Thailand aims to enhance food security and develop value-added products to boost exports. This includes not only traditional farming techniques but also cutting-edge approaches such as vertical farming and genetic engineering, which play a key role in advancing Thailand’s agricultural industry.
Mineral, Ceramics, and Basic Metals
Priority is given to industries involving mining, metal processing, and ceramics production, focusing strongly on added-value innovation and sustainable practices. Advanced processing methods demonstrating reduced waste and energy usage are particularly encouraged under this category to futureproof these vital industries.
Light Industries
Textiles, furniture creation, and other light manufacturing are supported by the BOI in Thailand, especially when adopting environmentally friendly production methods. Preference is given to businesses incorporating recycled materials or sustainable practices to align with global trends in ethical output.
Metal Products, Machinery, and Transport Equipment
This category aligns with Thailand’s ambitions to become a regional leader in manufacturing and engineering, including the fabrication of automotive parts and aerospace components. The BOI in Thailand also promotes advanced robotics and automation ensuring Thailand remains competitive on the global stage.
Electronics and Electrical Appliances
This sector focuses on semiconductors, renewable energy components and smart devices to back Thailand’s digital economy goals. Companies developing 5G infrastructure, IoT devices, and energy-efficient appliances are given priority by the BOI in Thailand.
Chemicals, Paper, and Plastics
The BOI in Thailand encourages petrochemical industries and the manufacturing of environmentally friendly materials to align with global sustainability trends. Breakthroughs including biodegradable plastic alternatives and water-saving paper production processes are particularly promoted.
Technology and Innovation Development
Activities such as research and development (R&D), software engineering and cloud computing are supported. This sector aids Thailand’s aspirations to be a technology hub. Investments in artificial intelligence, machine learning and blockchain technology are especially encouraged to foster pioneering solutions.
Services and Public Utilities
Logistics, medical services, renewable energy, and education projects are key focuses under this sector, aiming to improve infrastructure and quality of life across Thailand. Smart logistics solutions, telemedicine initiatives, and innovative green energy programs align closely with the nation’s strategy for long-term sustainable development.
Special Economic Development Zones (SEZs)
SEZs are established to stimulate growth in less developed regions, narrowing economic disparities between areas while also offering additional incentives. Businesses located inside these zones tend to benefit from enhanced infrastructure and a more streamlined regulatory process.
By classifying industries, the BOI in Thailand can customize its approach to attracting investments that match strategic national priorities. Each category is crafted to provide a competitive advantage for investors and contribute to the country’s long-term development vision.
Incentives Offered by the BOI in Thailand
The BOI in Thailand offers numerous incentives to promote investment and lure overseas and domestic financiers under the Investment Promotion Act. Their incentives are categorized into tax and non-tax incentives, confirming both financial and operational advantages for companies.
Tax incentives offered by the BOI in Thailand
The BOI in Thailand offers substantial tax-related benefits aimed at reducing the financial burden on businesses. These include:
- Exemption or Reduction of Import duties: Imports machinery employed in boosted activities benefits from lessened or waived import duties (Sections 28 and 29 of the Investment Promotion Act). Import duties on fundamental materials and indispensable elements can moreover be reduced or waived (Section 30 of the Investment Promotion Act). Materials brought in for research and progress aims are entirely exempt from import responsibilities (Section 30/1 of the Investment Promotion Act).
- Corporate Income Tax (CIT) Advantages: One of the main tax incentives is complete exemption from CIT on net profits and dividends (Sections 31, 31/1, and 34 of the Investment Promotion Act). Furthermore, A 50% reduction in CIT for eligible businesses can also be applied under specific conditions (Section 35(1) of the Investment Promotion Act).
- Additional Tax Deductions: Businesses can twofold the deduction of expenses related to transportation, electricity, and water supply (Section 35(2) of the Investment Promotion Act). A further 25% deduction is accessible for the costs incurred in installing or constructing facilities (Section 35(3) of the Investment Promotion Act). Import tariff exemptions for raw materials utilized in goods produced for export can also be applied (Section 36).
Non-tax Incentives offered by the BOI in Thailand
The BOI in Thailand also puts forth several non-tariff benefits that facilitate smoother business operations and enhanced mobility for investors and skilled personnel:
- Visa and Work Permits: Foreign nationals are granted permits to enter Thailand for the purpose of inspecting investment chances (Section 24). Capable workers and experts requisite for BOI-boosted activities can receive visas and work permits more easily (Sections 25 and 26).
- Property Ownership: Certain BOI-promoted projects allow foreign financiers to own land for investment aims (Section 27).
- Financial Flexibility: Investors are allowed to remit funds abroad in foreign currency without restrictions (Section 37).
Need help navigating the BOI application process?
Eligibility Criteria to be promoted by the BOI in Thailand
To qualify for BOI promotion, applicants must adhere to strict eligibility criteria.
Alignment with the Activities promoted by the BOI in Thailand
The proposed activity must align with the BOI’s regularly updated list of promoted industries. This ensures that the granted incentives are directed toward sectors crucial to Thailand’s economic growth, such as technology, manufacturing, and renewable energy.
Minimum Value Addition Requirements
Foreign project seeking incentives must meaningfully contribute to Thailand’s prosperity. Applicants shall demonstrate at least a 20% increase to total revenues generated. Exceptions exist, though, as sectors like agriculture and electronics face relaxed conditions of a 10% boost. This ensures investments substantially aid the nation’s advancement economically.
Modern Production Processes
Businesses must implement production practices in line with worldwide benchmarks for performance and safety. They must incorporate automation, energy-efficient solutions, and waste-reduction strategies, which align with Thailand’s goals for sustainability.
Observance of Environmental Regulations
Adherence to environmental laws, most notably completing an Environmental Impact Assessment, is compulsory to be promoted by the BOI in Thailand. This confirms ventures respect Thailand’s strict environmental standards while limiting harm to nature.
ISO Authorization Expectations
Those investing over 10 million baht must gain ISO 9000 certification or a comparable worldwide accreditation within two years of starting operations. This displays the company’s commitment to quality administration and operational excellence.
By satisfying these terms, companies guarantee eligibility for BOI incentives while harmonizing with Thailand’s aims for sustainable progression.
Minimum Investment Requirements to be promoted by the BOI in Thailand
General Investment Requirements to be promoted by the BOI in Thailand
For investments, a minimum of 1 million baht, excluding land and working capital, is necessary. This ensures solely serious investors with sufficient financial backing can benefit from BOI advantages.
High-Tech Ventures
High-tech fields, frequently involving innovative technologies, are encouraged through a lower threshold of 500,000 baht. This reduced need aims to foster innovation and attract startups in cutting-edge arenas like artificial intelligence and biotechnology.
Special Economic Zones (SEZs)
Projects located in SEZs take advantage of even more relaxed requirements to stimulate growth in underdeveloped areas. These decreased thresholds are intended to encourage investment in regions requiring economic revitalization.
Knowledge-Based Activities
For knowledge-based activities, thresholds are assessed based on annual salaries rather than fixed capital. This approach incentivizes businesses that prioritize intellectual and technological contributions, such as extensive research and development initiatives.
Large-Scale Projects
Massive projects exceeding 2 billion baht must include a thorough feasibility study as a mandatory part of the application. This ensures that these substantial investments align with Thailand’s strategic priorities and deliver widespread economic advantages.
The Application Process to Be Promoted by The BOI in Thailand
There are five pivotal steps to applying for BOI promotion :
- Develop an exhaustive business plan outlining the project’s scope, investment specifics, employment creation, and adherence to environmental regulations. This serves as the foundation for the application.
- Submit an online application through the BOI’s e-Investment platform requiring supporting documentation like financial statements and feasibility studies.
- Present to the BOI Committee where applicants must illustrate their project’s benefits and alignment with national goals, addressing any issues raised by the committee.
- The BOI issues a certificate after the approval, detailing the incentives granted and compliance conditions.
- Consistent compliance monitoring through regular reports are necessary to maintain BOI benefits, ensuring that projects adhere to the specified terms.
Conclusion
The BOI in Thailand serves as a cornerstone for attracting and retaining foreign investment. By providing comprehensive tax and non-tax incentives, clear eligibility standards, and a transparent application process, the BOI ensures that investments align with Thailand’s vision for a sustainable and innovation-driven economy. Whether you are a startup or a multinational corporation, comprehending the BOI’s framework and leveraging its incentives can considerably enhance the success of your investment in Thailand. By complying with BOI guidelines and embracing Thailand’s dynamic economic opportunities, investors can secure long-term achievement while contributing to the nation’s progress.