Thailand’s Incentives for International Business Centers

Authorized Operations for International Business Centers

The Thailand Board of Investment (BOI) has outlined various operations that International Business Centers can perform. These activities are intended to help companies establish efficient shared-service hubs in Thailand. The approved operations for International Business Centers include: 

• General Management and Business Planning: Involves overall administrative management, strategic planning, and coordination across various business functions.
• Procurement of Raw Materials and Components: Managing the acquisition of essential materials and parts for manufacturing and other business processes.
• Research and Development (R&D): Focused on innovation, product development, and improving existing products through scientific and technological advancements.
• Technical Support: Providing expert assistance and troubleshooting for technical issues related to products or services.
• Marketing and Sales Promotion: Developing and implementing strategies to market products and services and enhance sales.
• Human Resources Management and Training: Handling recruitment, employee development, training programs, and overall workforce management.
• Financial Advisory Services: Offering expertise in financial planning, investment strategies, and fiscal management.
• Economic and Investment Analysis and Research: Conducting detailed analyses to inform investment decisions and economic strategies.
• Credit Management and Control: Overseeing credit operations and ensuring effective credit control measures.
• Treasury Center Financial Management: Managing the financial operations, including cash flow, investments, and financial risk management.
• International Trade Activities: Engaging in global trade operations, subject to specific conditions and regulations.
• Lending to Associated Enterprises: Providing financial support to related businesses under certain legal frameworks.
• Rental Services for Associated Enterprises: Leasing office or factory space to associated companies.
• Additional Supporting Services: Other services as approved by the BOI that support the core business functions.

Eligibility Criteria for BOI Incentives

To qualify for BOI incentives, International Business Centers must meet specific requirements, which include:

1. Capital Requirements : A minimum registered and fully paid-up capital of THB 10 million.

2. Employment Criteria : Employing at least 10 skilled workers, or at least 5 skilled employees if the IBC is solely providing financial management services.

3. Operational Scope : For those involved in international trade, the IBC must also engage in at least one of the other authorized activities.

Tax Incentives for International Business Centers

International Business Centers must adhere to additional criteria to be eligible for tax benefits:

• Minimum Local Expenditure : Annual operational expenses in Thailand must be at least THB 60 million.

Failing to meet this requirement in any fiscal year will result in the loss of tax benefits for that year. Persistent non-compliance for more than one fiscal year will result in the permanent withdrawal of tax incentives.

Tax Advantages for Qualified International Business Centers

International Business Centers that meet the qualifying criteria are entitled to several tax advantages, including:

1. Reduced Corporate Income Tax (CIT): Depending on the annual expenses in Thailand, IBCs benefit from reduced CIT rates:

• 8% CIT for expenses of at least THB 60 million
• 5% CIT for expenses of at least THB 300 million
• 3% CIT for expenses of at least THB 600 million

2. Dividend Exemptions: Exemption from CIT on dividends received from affiliated companies.

3. Withholding Tax Exemptions: Exemption from withholding tax on dividends paid to foreign corporate shareholders and interest on loans provided to affiliates.

4. Specific Business Tax Exemptions: Exemption from specific business tax on income from financial management services.

5. Reduced Personal Income Tax (PIT) for Expatriates: A flat 15% PIT rate for foreign nationals working for the IBC, subject to specific conditions.

International Business Centers must obtain approval from the Director-General of the Revenue Department to avail of tax benefits. Existing ROH, IHQ, and ITC companies can apply to register as IBCs to benefit from the new incentives.

Qualified Activities for CIT Reduction

Only income generated from certain activities qualifies for CIT reduction under international business centers, including:

• Intercompany Services: Activities such as general business management, procurement, R&D, technical support, marketing, HR management, financial advisory, economic analysis, and credit management.

• Royalties from R&D: Income from royalties on technology developed in Thailand, whether conducted internally or outsourced.

Activities related to international trading are permitted but do not qualify for the CIT reduction.

Thailand promotes International Business Centers through BOI incentives and tax benefits to attract foreign investors. This environment and tax advantages position Thailand as a competitive hub for international business operations. For expert advice on establishing International Business Centers in Thailand, contact Benoit & Partners. Our team will guide you through compliance and help maximize your investment opportunities.