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Legal Landscape of the Sustainable Industry in Thailand
Due to the increasing trend of the global focus on the sustainable industry, Thailand is a leading country in this area in Southeast Asia. The Thai Board of Investment has provided extensive encouragement by offering numerous incentives granting a variety of advantages to entrepreneurs and businesses in the desire of sustainable activities and environmental-friendly technologies. This article is intended to provide readers with extensive guidance on the legal, tax, and accounting aspects of establishing and running a sustainable company in Thailand.
Table of Contents
How does the BOI support the sustainable industry in Thailand?
The BOI provides a combination of tax and non-tax incentives designed to lower the barrier to entry and operational costs for sustainable industries. This information has been organized based on the provided images into clear categories, each including specific groups, eligible projects, and their respective incentives:
Tax Incentives for Bioenergy
- Group A1:
- Eligible Projects: Manufacturing of electricity or electricity and steam from garbage or refuse-derived fuel.
- Incentives: 8 years of corporate income tax exemption and exemption of import duty on machinery and raw materials used in production of export products.
- Group A2:
- Eligible Projects: Manufacturing of electricity or renewable energy including solar energy, wind energy, biomass, or biogas, etc., except from garbage or refuse-derived fuel.
- Incentives: 8 years of corporate income tax exemption and import duty exemption.
Tax Incentives for Biofuels
- Group A2:
- Eligible Projects: Manufacturing of fuel from agricultural products and manufacturing of fuel from agricultural scrap or garbage or waste.
- Incentives: 8 years of corporate income tax exemption and import duty exemption.
- Group A3:
- Eligible Projects: Manufacturing of biomass briquettes and pellets.
- Incentives: 5 years of corporate income tax exemption and import duty exemption.
Tax Incentives for Bioplastics
- Group A2
- Eligible Projects: Manufacturing of eco-friendly chemicals, polymers or products from eco-friendly polymers or chemicals those are consolidated within the same activities as the manufacture of eco-friendly polymers or chemicals.
- Incentives: 8 years of corporate income tax exemption and import duty exemption.
- Group A3
- Eligible Projects: Manufacturing of products from eco-friendly polymers.
- Incentives: 5 years of corporate income tax exemption and import duty exemption.
Tax Incentives for Biotechnology Research and Development
- Group A1
- Eligible Projects:
- Research and development activity
- Manufacturing using biotechnology of seed industry
- Improvement of plants, animals, microorganisms using biotechnology
- Biopharmaceutical agents using biotechnology
- Diagnostic kits for health, agriculture, food and environment
- Bio-molecule and bioactive substances using microorganisms, plant cells and animal cells
- Manufacture of raw materials and/or essential materials for molecular biological research and development, experiments, testing or quality control services, and/or production of biological substances
- Biological substance analysis and/or synthesis services and/or quality control services and/or product validation services
- Incentives: 8 years of corporate income tax exemption and import duty exemption.
- Eligible Projects:
Non-Tax Incentives
- Permit to bring in expatriates: Allows companies to bring in foreign experts necessary for their operations.
- Permit to own land: Enables foreign investors to own land in Thailand, which is normally highly restricted.
- Permit to take or remit foreign currency abroad: Facilitates the movement of money in foreign currencies, which is essential for international businesses.
These incentives are aimed at encouraging the development and investment in sustainable technologies and practices, aligning with Thailand’s goals for economic development and environmental sustainability.
Legal Compliance and Investment Guidelines
The specific legal requirements and laws for investments under BOI in Thailand are designed to streamline and encourage foreign and domestic investment in various sectors, particularly those that contribute to economic development, innovation, and sustainability. Here’s an overview of some key legal requirements and considerations:
Legal Entity Setup
- Company Registration: Investors need to establish a legal entity in Thailand, usually a limited company, under the Thai Civil and Commercial Code.
- Foreign Business License: If foreign investors hold majority shares, they may need a Foreign Business License unless specific exemptions apply under the BOI.
Compliance with BOI-Specific Requirements
- Sector-Specific Eligibility: Projects must align with the sectors and activities eligible for BOI incentives, such as technology, renewable energy, and advanced manufacturing.
- Minimum Capital Investment: There is often a minimum capital investment requirement, which must be met before the operation starts.
- Technology Transfer and R&D: Projects that involve technology transfer, research and development, or use of local materials may be favored for approvals and incentives.
Environmental and Safety Regulations
- Environmental Impact Assessment (EIA): For large-scale projects or those likely to impact the environment, an EIA approved by the Ministry of Natural Resources and Environment is required.
- Compliance with Industrial Standards: Compliance with Thai industrial standards, particularly for safety, health, and environmental protection, is mandatory.
Employment and Labor Laws
- work permits for Foreign Employees: The BOI provides facilitation in obtaining work permits and visas for foreign experts and executives.
- Compliance with Labor Laws: Companies must comply with Thai labor laws, including those related to wages, working hours, and employee welfare.
Tax Compliance
- Corporate Income Tax: While BOI projects may receive tax incentives, companies must still comply with tax registration and reporting requirements.
- Customs and Import Duties: For companies importing machinery or raw materials, compliance with customs regulations is crucial, even if exemptions or reductions are granted.
Reporting and Monitoring
- Annual Performance Reporting: BOI companies are required to submit annual performance reports and sometimes regular updates on their operations and development progress.
- Maintaining Investment Privileges: Compliance with the specific conditions under which BOI incentives were granted, such as job creation or export targets, is monitored.
What are the steps to start a company in the sustainable industry with BOI support?
Starting a sustainable company in Thailand with the support of the BOI involves a clear sequence of steps. Below is a step by step guide to navigate this process effectively:
- Assess Eligibility and Strategic Fit : Check if your business falls under the list of sectors that are eligible for BOI incentives, such as bioenergy, biotechnology, or bioplastics, consult legal advisors to understand the specific criteria
- Prepare the Application : Develop a comprehensive business plan including financial projections and environmental impact assessments, and gather necessary documentation such as company registration papers and proof of financial stability.
- Submit Application to the BOI: Submit the application along with all required documentation through the BOI’s electronic submission platform, ensuring all submissions comply with legal requirements.
- Application Processing by the BOI: The BOI will assess the application and may conduct a site inspection to verify the information provided and the impact of the project on the environment and local communities.
- Approval and Certification: If the BOI approves the application, you will receive a certificate that will detail incentives granted and additional conditions. Legal support will help you finalize any remaining formalities.
- Implementation and Compliance: Begin setting up operations in compliance with BOI guidelines and Thai law, with ongoing legal support to maintain adherence to all conditions and regulations.
- Utilize BOI Incentives: Implement strategies to use tax incentives, such as an exemption from corporate income tax and import duty, and non-tax benefits, such as easier expatriate work permits.
Each of these steps involves critical legal considerations and procedural compliance, where Benoit & Partners can provide crucial guidance and support. This ensures not only the successful establishment of your sustainable business in Thailand but also its sustainable growth and compliance in the long term.