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The Board of Investment (BOI) is the government agency responsible for providing incentives to stimulate investment in Thailand.
In addition to investment incentives, the BOI offers investment-related services to both foreign and Thai investors. The day-to-day investment promotion activities are carried out by the Office of the Board of Investment under the Office of the Prime Minister.
Companies, foundations or co-operatives established under Thai law are eligible for BOI promotion. Foreign investors typically establish a Thai company if they wish to seek BOI promotion. Thai shareholders may be necessary in some cases if foreign ownership limits are imposed by the BOI.
Investment Promotion Act
The current legislation governing investment promotion in Thailand is the Investment Promotion Act B.E. 2520 (1977), as amended by the Investment Promotion Act (No. 2) B.E. 2534 (1991) and the Investment Promotion Act (No.3) B.E. 2544 (2001). These Acts provide investment incentives in the form of guarantees, protection measures, tax incentives and permissions.
The current activities eligible for investment promotion are broken down into seven sectors: agriculture and agricultural products; mining, ceramics and basic metals; light industry; metal products, machinery and transport equipment; electronic industry and electrical equipment; chemical, paper and plastics; and services and public utilities.
The BOI constantly reviews the investment incentives offered and their success in meeting the BOI's objectives. A potential investor is therefore advised to confirm details of promoted activities and investment incentives.
Incentives for investment promotion
Depending on a project’s characteristics, eligible foreign, domestic or joint-venture investment projects may be assisted by incentive packages comprising the following:
1. Tax incentives:
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exemption or reduction of import duties on imported machinery;
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exemption or reduction of import duties on imported raw materials and components;
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exemption from corporate income tax for three to eight years with permission to carry forward losses and deduct them as expenses for up to five years after expiry of the tax
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exemption period; and
exclusion from taxable income of dividends derived from promoted enterprises during the corporate income tax holiday.
2. Guarantees:
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against nationalisation;
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against competition from new state enterprises;
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against state monopolization of the sale of products similar to those produced by promoted firms;
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against price controls;
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against tax exempt imports by government agencies or state enterprises; and
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permission to export.
3. Permissions:
- to bring in foreign nationals to undertake investment feasibility studies;
- to bring in foreign technicians and experts to work on promoted projects;
- to own land for carrying out promoted activities; and
- to take or remit foreign currency abroad.
4. Protection measures (subject to justifications and needs):
- imposition of a surcharge on imports at a rate not exceeding 50% of the CIF (cost,
- insurance and freight) value for a period of not more than one year at a time;
imposition of import bans on competing products; and
- authority by the Chairman to order any assisting actions or tax relief measures for the benefit of promoted projects.
Additional incentives are available to enterprises located in special investment promotion zones:
- 50% reduction of corporate income tax for five years after the termination of a corporate income tax holiday or from the date on which income is earned;
- allowance to double the costs of transportation, electricity and water supply for deduction from taxable corporate income; and
- allowance to deduct from taxable corporate income up to 25% of the investment costs of installing infrastructure facilities for ten years from the date on which income is earned.
Additional incentives for export enterprises:
- exemption from import duties on imported raw materials and components;
- exemption from import duties on re-exported items;
- exemption from export duties; and
- allowance to deduct from taxable corporate income an amount equivalent to 5% of the increase in income derived from exports over the previous year, excluding the cost of insurance and transportation.
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