Digital Industry in Thailand: BOI Incentives

BOI’s role in promoting the digital industry

In the digital industry, The BOI is dedicated to encouraging investments in Thailand. The agency provides a range of incentives to facilitate the establishment and expansion of businesses in the digital industry. These incentives are designed to attract foreign investors and enhance the country’s competitiveness in the global market. For legal firms assisting clients in navigating the Thai market, understanding these incentives is crucial for advising on the benefits of investing in Thailand. By streamlining regulatory processes and offering comprehensive support services, the BOI ensures that businesses can thrive and contribute to the country’s economic development. 

What are the categories of digital industry supported by BOI?

The BOI promotes projects in the digital industry across three main categories, each offering specific incentives and support mechanisms. This structured approach ensures that businesses can find the most suitable support for their specific needs.

1. Software Development, Platform Service, or Digital Content

• This category encompasses activities such as the development of digital content, digital services, and e-commerce platforms. Startups engaged in creating innovative software solutions can significantly benefit from BOI incentives. Adhering to regulations related to intellectual property and software licensing is vital for success in this category.

2. Digital Infrastructure

• Investments in digital infrastructure are vital for the expansion of the digital industry. This encompasses projects such as digital parks, data centers, cloud services, and submarine cable systems. Ensuring compliance with infrastructure regulations and environmental laws is essential for the success of these projects.

3. Digital Ecosystem Supported Businesses

• Businesses that support the digital ecosystem, including innovation incubation centers, maker spaces, and co-working spaces, also qualify for BOI incentives. These facilities are crucial for fostering innovation and collaboration, which are essential for the growth of the digital industry. Obtaining proper business registration and operational permits is critical for the success of these ventures.

What are the eligibility requirements for companies?

Eligible companies under the digital industry must meet certain conditions to qualify for incentives. Each project must have a minimum annual investment of 1,500,000 baht, primarily based on employee salary expenditures. The project should involve business activities related to software, digital platforms, or digital content creation in Thailand.

The corporate income tax exemption is limited to 100 percent of the actual expenditure in the application year. This expenditure includes:

• Salaries for newly hired Thai information technology personnel that exceed the amount spent on IT staff salaries before the application date for investment promotion
• Costs related to training courses for IT development to enhance employee skills.
• Expenses for obtaining certifications such as ISO 29110 or CMMI Level 2, or other equivalent international standards.

What are the types of incentives for the digital industry?

The BOI provides two primary types of incentives for the digital industry: tax incentives and non-tax incentives. It is important to understand the details of these incentives to navigate the application process successfully and comply with all regulatory requirements.

Tax Incentives

• Corporate Income Tax Exemption: Companies in the digital industry can benefit from up to 13 years of corporate income tax exemption, depending on the nature of their activities and compliance with specific conditions.  This incentive is especially advantageous for startups, allowing them to reinvest profits into growth instead of tax obligations.
• Additional Corporate Income Tax Reduction: An additional 50% reduction in corporate income tax is available for up to five years. This incentive further reduces the tax burden on digital companies, enhancing their financial stability and attractiveness to foreign investors.
• Exemption of Import Duties: There is an exemption on import duties for machinery and raw materials necessary for production. This reduces the initial capital expenditure for startups, making Thailand a more cost-effective destination for setting up digital operations.

Non-Tax Incentives

• Land Ownership: The BOI permits companies with foreign majority shareholders to own land for their promoted projects. This is a major advantage because foreign land ownership is usually restricted in Thailand, offering a rare opportunity for digital startups to secure prime locations for their operations.
• Foreign Experts and Skilled Labor: Permits to bring in skilled labor and experts to work on the projects. This allows companies to hire top talent from around the world, improving the quality and innovation of their digital solutions.
• Remittance of Foreign Currency: Permits for remittance of money abroad in foreign currency. his offers flexibility in financial operations and simplifies the repatriation of profits, which is vital for foreign investors.

What is the legal framework and compliance?

Investing in Thailand’s digital industry involves navigating a comprehensive legal landscape. Key areas of compliance include:

• Business Registration: All businesses must be registered with the Department of Business Development, Ministry of Commerce. For BOI-promoted businesses, the registration can be done through the Single Window for Visa and Work Permits.
• Visa and Work Permits: Foreign investors and employees require appropriate visas and work permits. The One Stop Service Center for Visa and Work Permits facilitates this process for BOI-promoted businesses.
• Intellectual Property: Protecting intellectual property rights is crucial, especially for startups in software development and digital content. Legal firms can assist in patent, trademark, and copyright registrations.
• Regulatory Compliance: Ensuring compliance with local regulations, including labor laws, tax obligations, and environmental standards, is essential for smooth operations.

How to apply for BOI promotion?

The application process for BOI promotion for the digital industry involves several detailed steps:

1. Submit Application via e-Investment Platform: Investors need to submit their application through the online e-Investment platform. Legal firms can assist in preparing and submitting comprehensive applications.

2. Project Presentation: Investors must schedule an interview and present their project to BOI officials. Legal advisors can help in preparing effective presentations

3. Project Analysis: BOI officials analyze the project and prepare a report for consideration. Ensuring all regulatory requirements are met is crucial at this stage.

4. Approval Process: The committee reviews and approves the project. Legal representation can facilitate this process.

5. Acceptance of Resolution: Investors must accept the resolution within one month of notification. Legal firms can ensure timely acceptance and compliance.

6. Promotion Certificate: Upon acceptance, investors prepare the necessary documents for the issuance of the Promotion Certificate within six months. The certificate is issued within ten working days, and legal assistance can expedite this process.

Thailand’s digital industry presents a lucrative opportunity for startups and established companies looking to expand in the region. With the support and incentives offered by the BOI, businesses can benefit from a favorable investment environment, access to cutting-edge technology, and a robust digital ecosystem. At our law firm, Benoit & Partners, we can assist you in navigating these complexities, providing expert guidance on legal compliance, securing necessary permits and licenses, and optimizing your business’s benefits from BOI incentives. Contact us and ensure a smooth and successful establishment and operation of your digital business in Thailand.