Electrical & Electronics Industry in Thailand: BOI Incentives

Business Opportunities for Smart Electrical and Electronics Products

The electrical and electronics industry in Thailand offers numerous business opportunities for investors and manufacturers. Backed by government support and strategic incentives, this sector is set for significant growth and innovation. Key opportunities include:

• Automotive Sector: As the 11th largest automotive producer in the world, Thailand presents substantial business opportunities for electronic component manufacturers in the automotive industry.
• Consumer Electronics: The increasing demand for smart devices, fueled by advancements in IoT and 5G technology, presents vast potential for businesses in consumer electronics.
• Telecommunication Equipment: The need for advanced telecommunication devices and infrastructure supports growth in this sub-sector.
• Renewable Energy Systems: The global transition to renewable energy solutions creates new markets for electronic components used in solar panels, wind turbines, and other sustainable technologies.

Government and BOI Support for the Electrical and Electronics Industry

The Thailand Board of Investment (BOI) is crucial in promoting the electrical and electronics industry by offering attractive investment incentives, including:

• Exemption of import duties on machinery: This allows businesses to import necessary machinery without incurring additional costs.
• Exemption of import duties on raw materials: Companies can import raw materials used in production for export without paying import duties.
• Non-tax incentives: These include business facilitation services provided by the BOI to help companies navigate the regulatory landscape.
• Corporate income tax (CIT) exemptions: Projects that emphasize research and development (R&D) can receive CIT exemptions for up to eight years if they meet certain R&D expense criteria.

Detailed BOI Investment Incentives

The BOI offers tailored incentives to support different segments of the electrical and electronics industry. Key incentives include:

1. Manufacture of Smart Electronics

• Requirements: Must include sensors and be able to connect to other devices or wireless communication systems. Must feature an operating system or embedded software.
• Incentives:
  • 8-year CIT exemption for projects with R&D expenses of at least 0.5% of total sales during the first three years or a minimum of 100 million Baht.
  • 5-year CIT exemption for assembly line projects without significant R&D expenditure.

2. Manufacture of Emission, Transmission, and Reception Devices

• Requirements: Must invest in Surface Mount Technology (SMT) line for PCB assembly.
• Incentives:
  • 8-year CIT exemption for projects meeting R&D expenditure requirements.
  • 8-year CIT exemption for assembly line projects without significant R&D expenditure.

3.Manufacture of Other Telecommunication Products

• Requirements:
  • Must invest in SMT line for PCBA assembly process.
  • Must have expenses for R&D not less than 0.5% of total sales during the first three years or not less than 100 million Baht, whichever is lower.
• Incentives:
  • 8-year CIT exemption for projects meeting both conditions.
  • 5-year CIT exemption for projects investing in SMT line for PCBA assembly process.
  • 5-year CIT exemption for projects meeting the R&D expenditure requirement.
  • 3-year CIT exemption for assembly line projects without significant R&D expenditure.

4. Manufacture of Electronic Control and Measurement Instruments

• Requirements: Must include high precision sensors.
• Incentives:
  • 8-year CIT exemption for projects with R&D expenses of at least 0.5% of total sales during the first three years or a minimum of 100 million Baht.
  • 5-year CIT exemption for assembly line projects without significant R&D expenditure.

5. Manufacture of Audio Visual Products and Office Electronics

• Requirements:
  • Must invest in SMT line for PCBA assembly process.
  • Must have expenses for R&D not less than 0.5% of total sales during the first three years or not less than 100 million Baht, whichever is lower.
• Incentives:
  • 8-year CIT exemption for projects meeting both conditions.
  • 5-year CIT exemption for projects investing in SMT line for PCBA assembly process.
  • 5-year CIT exemption for projects meeting the R&D expenditure requirement.
  • 3-year CIT exemption for assembly line projects without significant R&D expenditure.

6. Manufacture of Other Electronics Products

• Requirements:
  • Must invest in SMT line for PCBA assembly process.
  • Must have expenses for R&D not less than 0.5% of total sales during the first three years or not less than 100 million Baht, whichever is lower.
• Incentives:
  • 5-year CIT exemption for projects meeting both conditions.
  • 3-year CIT exemption for projects investing in SMT line for PCBA assembly process.
  • 3-year CIT exemption for projects meeting the R&D expenditure requirement.

7. Manufacture of Semiconductors

• Requirements:
  • Front-end semiconductor manufacturing (e.g., electronics design, silicon wafers, wafer fabrication).
  • Back-end semiconductor manufacturing (e.g., wafer sorting, die bank, assembly, IC testing).
• Incentives:
  • 10-year CIT exemption for front-end semiconductor projects involving advanced technology and innovation.
  • 8-year CIT exemption for back-end semiconductor projects with machinery investments of at least 1.5 billion Baht.
  • 5-year CIT exemption for back-end semiconductor projects with machinery investments less than 1.5 billion Baht.

8. Manufacture of Advanced Printed Circuit Boards (PCBs)

• Requirements:
  • Flexible PCBs or multi-layer PCBs (PCB fabrication, fab lab, SMT, PTH, PCBA testing).
• Incentives:
  • 8-year CIT exemption for projects with machinery investments of at least 1.5 billion Baht.
  • 5-year CIT exemption for projects with machinery investments less than 1.5 billion Baht.

9. Manufacture of Printed Circuit Board Assembly (PCBA)

• Requirements:
  • Box build, product testing, packing/shipping.
• Incentives:
  • 5-year CIT exemption for projects with machinery investments of at least 500 million Baht.
  • 3-year CIT exemption for projects with machinery investments less than 500 million Baht.

Capital Requirements and Incentives Based on Project Type

The BOI provides a range of incentives tailored to the capital requirements and nature of different projects within the electrical and electronics industry. 

• High-tech manufacturing projects, such as smart electronics and advanced semiconductor production, that involve significant capital investment (e.g., over 1.5 billion Baht) generally qualify for the highest incentives, including extended CIT exemptions.
• Projects that focus solely on assembly lines, even without extensive R&D or high capital investment, can still receive substantial incentives, like 5-year CIT exemptions, if they meet the BOI’s basic requirements.

Step-by-Step Procedures and Required Documents

The process of establishing a business in the Electrical and electronics industry in Thailand and obtaining BOI incentives involves several critical steps. Below is a detailed guide to help you navigate through each stage.

1. Register Your Entity

• To establish a business in Thailand, you must register your entity with the Department of Business Development (DBD) under the Ministry of Commerce. This process involves multiple steps to ensure your business is legally recognized.
  • Required documents: Company registration form, articles of association, list of shareholders, and business operation details.

2. Apply for BOI Incentives

• To take advantage of the incentives provided by the Thailand Board of Investment (BOI), you must submit an application detailing your investment plan.
  1. Complete the BOI application form with detailed information about your project.
  2. Prepare a comprehensive business plan including financial projections and a feasibility study.
  3. Submit the application and supporting documents to the BOI.

3. Obtain the Certificate of Investment Promotion

• Once the BOI reviews and approves your application, you will receive a certificate of investment promotion. After approval, obtain the certificate from the BOI, which will detail the specific incentives and benefits granted to your project.

4. Operationalize Your Site

• Once you have the investment promotion certificate, you can begin setting up your site. This involves obtaining necessary permits and connecting utilities.
  1. Required documents: Building permit applications, utility connection forms, environmental impact assessment (if applicable).

5. Import Machinery and Raw Materials

• Utilize BOI incentives to import machinery and raw materials needed for your production process without incurring import duties.

6. Recruit Workforce

• Hiring a skilled workforce is essential for your operation. Ensure compliance with Thai labor laws and take advantage of any available incentives for skill training.

7. Commence Production

• With your site operational, machinery installed, and workforce ready, you can start production. Make sure to meet all regulatory requirements and BOI conditions. Regularly monitor compliance and report to the BOI as specified in your investment promotion certificate.

Specific Licenses and Permits Required: 

• Building Permit: Issued by the local Civil Works department, necessary for constructing your facility.
• Factory Operation License: Issued by the Industrial Estate Authority of Thailand (IEAT) or the Ministry of Industry (MOI), required for operating a manufacturing facility.
• Environmental Impact Assessment (EIA): Mandatory for projects with potential environmental impacts.
• Foreign Business License: Required for foreign-owned businesses engaging in activities restricted under the Foreign Business Act.
• Import/Export License: Necessary for importing machinery and exporting products, facilitated through the e-Customs system.

The support from the BOI and the Thai government, coupled with attractive investment incentives, positions Thailand as an ideal destination for investors in the electrical and electronics sector. At Benoit & Partners, we can offer expert guidance on regulatory compliance, obtaining necessary permits, and maximizing BOI incentives. Our legal expertise ensures that your business operations in Thailand are smooth, compliant, and successful, allowing you to focus on growth and innovation.