Open a factory in Thailand with a BOI

What are the regulations to open a factory in Thailand with a BOI ?

To open a factory in Thailand with the support of the Board of Investment (BOI), specific regulations and requirements must be met. The BOI has guidelines to ensure investments align with the country’s economic development goals and contribute to sustainable growth. There are seven regulations to be aware of:

• Eligibility Criteria: The BOI has specific criteria regarding the types of industries and projects eligible for investment promotion. These criteria may include factors such as the industry’s potential for technological advancement, environmental impact, export orientation and regional development.

• Investment capital requirements: The BOI usually sets minimum requirements for each eligible activity. The specific capital threshold varies depending on the industry and type of activity.

• Application Process: To take advantage of BOI privileges and incentives, companies must submit an investment application to the BOI. The application should include details of the proposed project, investment plans, financial projections and other relevant information. The BOI will review the application and assess its feasibility and eligibility for support.

• Promoted activities and incentives: The BOI offers a range of incentives and benefits for promoted activities. These may include tax incentives such as exemptions or reductions in corporate income tax, exemptions or reductions in import duties on machinery, raw materials and components, and permission for foreign ownership in restricted industries.

• Performance requirements: The BOI may impose specific performance requirements on promoted projects to ensure they meet specified targets. These requirements may relate to export volumes, research and development (R&D) expenditure, employment generation or other performance indicators. These requirements must be met to maintain the benefits provided by the BOI.

• Environmental and social impact: The BOI prioritises sustainable development and expects investors to comply with ecological and social impact assessment requirements. Projects must comply with environmental standards and regulations to mitigate any adverse impact on the environment and local communities.

• Reporting and compliance: Once the factory is operational, companies must fulfil reporting obligations to the BOI. This includes submitting regular reports on financial performance, production output, export volumes and other relevant data. Compliance with Thai laws, regulations, and labor standards is also essential.

It is essential to consult with the BOI or seek professional advice to understand the regulations and requirements applicable to your industry and investment project. The BOI provides guidance and support throughout the application and investment process to ensure a smooth and compliant establishment of a factory in Thailand.

What is the BOI?

The BOI stands for the Board of Investment, a government agency in Thailand. The Board of Investment promotes and facilitates domestic and foreign investment. It operates under the Ministry of Industry and is vital in driving Thailand’s economic development and attracting investment in various industries.

The BOI’s primary objective is to promote targeted investments aligned with Thailand’s economic development policies. The agency focuses on attracting investment in industries and sectors that are considered strategic and contribute to the country’s growth, innovation and competitiveness.

The BOI offers a range of incentives, benefits and support to eligible companies and investors. These incentives are designed to enhance the competitiveness of investments and facilitate the establishment and operation of projects in Thailand. Some key incentives the BOI offers include tax concessions, import duty exemptions or reductions, foreign ownership in restricted industries, streamlined bureaucratic procedures, and assistance with permits and licenses.

The BOI also acts as a one-stop service center for investors, providing guidance, information, and support throughout the investment process. It helps investors navigate regulatory procedures, obtain necessary permits and licenses, and facilitate interaction with other government agencies. The agency aims to create a business-friendly environment, enhance transparency and ensure a smooth experience for investors looking to establish a presence in Thailand.

Overall, the BOI plays a crucial role in attracting investment, promoting economic growth and facilitating the development of critical industries in Thailand. Its efforts contribute to job creation, technology transfer, innovation and the expansion of Thailand’s export capabilities.

What law applies?

The primary law that applies to opening a factory in Thailand with the assistance of the Board of Investment (BOI) is the “Investment Promotion Act B.E. 2520” (amended in 2017). This Act serves as the legal framework for investment promotion in Thailand and sets out the powers and responsibilities of the BOI.

The Investment Promotion Act outlines the eligibility criteria, incentives and privileges the BOI offers to promote investment in various industries and sectors. It sets out the requirements for obtaining investment promotion, the conditions for eligibility, and the obligations that investors must fulfil to maintain their promoted status.

Some other laws and regulations apply depending on the factory’s nature and the specific industry. These may include:

1. Factory Act: The Factory Act governs the establishment, operation, and safety standards of factories in Bangkok. It sets guidelines for factory registration, working conditions, occupational safety and health, environmental protection, and related matters.
2. Labor Protection Act: The Labor Protection Act provides regulations and protections for workers in Thailand. It covers employment contracts, working hours, wages, holidays, social security, termination of employment, and employee rights.
3. Environmental Laws and Regulations: Thailand has various laws and regulations related to environmental protection, pollution control, waste management, and conservation. Compliance with these laws is essential to ensure environmental sustainability and minimize negative impacts when operating a factory.
4. Tax Laws: Thai tax laws, including the Revenue Code, govern matters related to corporate income tax, value-added tax (VAT), customs duties, and other tax obligations. The BOI offers specific tax incentives and exemptions, which are granted under the provisions of the Investment Promotion Act.

It is essential to consult with legal advisors, experts, or professional services to ensure compliance with the relevant laws and regulations when establishing factories in Bangkok. They can provide specific guidance based on the nature of your business and industry, ensuring you meet all legal requirements and obligations.

What are the legal requirements to open a factory in Thailand? 

To open a factory in Thailand, several legal requirements must be fulfilled. These requirements are in place to ensure compliance with Thai laws and regulations, promote safety, protect the environment, and safeguard workers’ rights. There are seven legal requirements to consider:

• Company Registration: Before commencing operations, it is necessary to register a legal entity in Thailand. This involves incorporating a Thai company or registering a branch or representative office, depending on the chosen business structure. The company registration process involves submitting the necessary documents to the Department of Business Development, Ministry of Commerce.

• Factory Registration: Under the Factory Act, factories in Thailand must be registered with the local authorities. The registration process involves providing details about the factory’s location, activities, machinery, processes, and safety measures. Registration ensures compliance with safety standards, occupational health regulations, and environmental requirements.

• Environmental Permits: Depending on the nature of the factory and its potential impact on the environment, specific permits and licenses may be required. These include Environmental Impact Assessment (EIA) and Environmental Health Impact Assessment (EHIA) approvals. Obtaining these permits involves conducting assessments, submitting reports, and complying with environmental regulations.

• Labor Laws: Compliance with labor laws is essential when operating factories in Bangkok. The Labor Protection Act governs various aspects of employment, including employment contracts, working hours, wages, holidays, social security contributions, termination of employment, and employee rights. Employers must adhere to these laws to protect the rights and welfare of their workers.

• Occupational Health and Safety: Factories in Thailand must comply with health and safety rules to ensure a safe working environment for employees. This includes implementing safety measures, providing protective equipment, conducting risk assessments, and complying with specific rules related to hazardous substances, machinery safety, and workplace conditions.

• Tax Compliance: As a business entity in Thailand, it is essential to comply with tax laws and regulations. This includes registering for taxes such as corporate income tax, value-added tax (VAT), withholding tax, and social security contributions. Meeting tax obligations and maintaining proper accounting records is crucial to ensure compliance and avoid legal issues.

• Intellectual Property Rights: It is significant to protect intellectual property rights when operating factories in Bangkok. Registering trademarks, patents, or copyrights can provide legal protection and prevent unauthorized use or infringement of intellectual property.

These are some of the general legal requirements when opening a factory Thailand. However, it is essential to note that specific industries or activities may have additional regulations and requirements. Seeking legal advice and consulting with relevant authorities will help ensure full compliance with all applicable laws and regulations.

How to open a factory in Thailand with a BOI?

Opening a factory Thailand with the support of the Board of Investment (BOI) involves several steps and procedures. There are nine steps to consider:

Step 1 – Determine Eligibility

Start by assessing whether your business and proposed project are eligible for BOI promotion. The BOI provides incentives and benefits to specific industries and activities that align with Thailand’s economic development goals. Review the BOI’s eligibility criteria and identify the relevant investment category for your project.

Step 2 – Prepare a Business Plan 

Develop a comprehensive business plan that outlines your investment project, including details on the nature of the business, investment capital, employment generation, technology transfer, export plans, and other relevant information. The business plan should highlight your project’s potential benefits and contributions to Thailand’s economy.

Step 3 – Submit the Application

Submit your investment application to the BOI. Include all required documents, including the business plan, financial projections, company registration documents, and supporting information. The BOI provides a list of documents specific to your investment category, which you should carefully follow.

Step 4 – BOI Evaluation

The BOI will review your application and assess its feasibility, eligibility for promotion, and potential economic benefits. The evaluation process may involve further inquiries or requests for additional information.

Step 5 – Negotiation and Approval

If your application meets the BOI’s requirements, you may negotiate with the BOI to discuss specific investment privileges and conditions. Once the terms are agreed upon, you will receive an official approval letter from the BOI.

Step 6 – Company Registration

Following BOI approval, proceed with the company registration process. This involves registering your company with the Department of Business Development, Ministry of Commerce, and obtaining a Tax ID and Value Added Tax (VAT) registration.

Step 7 – Obtaining Permits and Licenses

Depending on the factory’s nature, you may need additional licenses. These may include factory registration, environmental permits, construction permits, and other industry-specific licenses. Contact relevant authorities to ensure compliance with all requirements.

Step 8 – Factory Setup and Operations

Once all necessary permits and licenses are obtained, open your factory. This includes acquiring premises, procuring machinery and equipment, hiring and training staff, and implementing essential safety and operational procedures.

Step 9 – Reporting and Compliance 

After the factory is operational, fulfill reporting obligations to the BOI per the agreed terms. This includes providing regular reports on financial performance, production output, export volumes, and other relevant data. Comply with Thai laws, regulations, and labor standards to maintain BOI privileges.

It is significant to consult with legal advisors, industry experts, or professional services throughout the process to ensure compliance with requirements and optimize the benefits of opening a factory Thailand with BOI support.

Is it necessary to obtain a license when opening a factory in Thailand with a BOI

When opening a factory in Thailand with the assistance of the Board of Investment (BOI), obtaining a Factory Licence in Thailand is necessary. The BOI issues this Factory Licence Thailand and it is an essential requirement to qualify for the incentives and benefits offered by the BOI.

The BOI licence, also known as an Investment Promotion Certificate, is issued to companies that meet the BOI’s eligibility criteria and have their investment projects approved. The Factory Licence Thailand proves the company’s eligibility for BOI privileges and allows them to enjoy the incentives specified in the licence.

The Factory License Thailand provides various benefits, including tax incentives such as exemption or reduction of corporate income tax, exemption or reduction of import duties on machinery, raw materials and components, and permission for foreign ownership in restricted industries. These incentives significantly reduce operating costs and increase the competitiveness of companies operating under BOI promotion.

In addition, the BOI license provides a streamlined process for obtaining permits and licenses from other government agencies. It facilitates the establishment and operation of the factory by simplifying bureaucratic procedures and reducing administrative burdens.

It’s important to note that the specific requirements, conditions, and privileges granted under the BOI license may vary depending on the industry, project, and investment category. Therefore, it is advisable to consult with the BOI and seek professional advice to understand the licensing requirements and benefits applicable to your project to open a factory in Thailand.