Thailand’s Board of Investment was established in 1997 to give investment incentives to local and foreign investors who are inclined to participate and invest on the government entity’s promoted business activities.
This prompted the government to change some of its policies for investment promotion in order to provide a more suitable business environment for foreign and Thai corporations. Aside from that, the BOI’s mandates are designed to respond accordingly on economic concerns in the future as well as it also aimed to decentralize the industry which were largely concentrated in central Thailand particularly in or around Bangkok.
With such, the BOI has established a standard for businesses which are applying for its incentives and privileges although it also relies on the location of the promoted activity and if such activity is among the priority list or not.
Investment Promotion Policies of the BOI
There are several policies that the BOI adopted in order to provide the Thai government with relief on fiscal burden and also to make the country’s investment climate more dynamic and viable for investments.
- Enhancing the efficiency and effectiveness of tax privileges.
- In order to allow development on quality and production standards, promoted activities with more than 10 million baht capitalization must secure ISO 9000, ISO 14000 or other international certifications similar to the previously mentioned ISO.
- Enhancing the criteria for promotion and make it compatible with international trade and investment agreements by annulling prior conditions on these industries which are using locally-sourced materials as well as the conditions set on exports.
- The highest tax and duties privileges will be given on companies investing in regions with lower income and insufficient facilities for investment.
- The lowest allowable capitalization for investors of promoted activities is just 1 million baht.
- Activities given due importance are: agriculture-related activities, public utilities infrastructure and environmental protection as well as on technological and human resource development.
Incentives if Promoted by the BOI
Business activities promoted by the BOI enjoy various incentives such as but not limited to:
- Duties related to importation of machineries will be reduced or exempted.
- Reduced importation duties for raw and or important materials sourced from abroad.
- Double deductions on transportation, electricity and water supply costs.
- The juristic person’s income tax and dividends will be exempted.
- Permit to own land.
- Permission to bring in foreign skilled and expert labor to work for the promoted business activity.
Investment projects promoted by the BOI will also enjoy guarantees such as:
- The Thai government will not nationalize the business activity.
- The Thai government will not undertake projects in direct competition with the promoted business entity.
- The Thai government will provide 100% guarantee that it will permit the promoted company to export all the time.
The incentives offered by the BOI for investors of promoted activities are really attractive and assuring but the involved process may not be that favorable for them as it involves a very complicated procedure. If it so happen that investor has difficulty in complying with the procedure then the need for hiring a Thai law firm with extensive background in investing in Thailand is highly recommended.