Foreign direct investments in Thailand’s industry are governed by a restrictive foreigner legislation (Foreign Business Act, Land Code, etc.). Under this regime, foreign businesses are not permitted to do business in Thailand or to acquire legal ownership in real estate. The handling of work permits, licenses, etc. could be felt as slow and certain bureaucratic hurdles and red-tape might slow down the investment process.
BOI promoted foreign investments
Thailand is well aware that these restrictions limit the scope of foreign direct investments. Therefore, an investment promotion agency (BOI, Board of Investment) allows qualified foreign investments by foreign-owned companies and grants additional fiscal and non-tax incentives. The devil is in the details, but in general, these investments can benefit from the BOI promotion:
- Technology and innovation development
- Electronic industry and electric appliances
- Metal products, machinery, and transport equipment
- Light Industry
- Chemicals, paper, and plastics
- Agriculture and agricultural products
- Mining, ceramics and basic metals
- Services and public utilities
The Board of Investment puts its primary focus on those investments, which are classified as activities of particular importance and benefits to the country:
- Electronic design, software and cloud services
- Research and development, creative product design and development centers
- Biotechnology, engineering design, scientific laboratories and calibration services
- Manufacture of airframes, airframe parts, and major aircraft appliances, e.g. engines, aircraft parts, propellers and avionics
- Production of electricity or steam power from waste or refuse-derived fuel and Energy Service Company (ESCO)
Scope of investment promotion
The incentives granted can be distinguished into fiscal incentives and non-tax incentives.
Tax incentives are the exemption of corporate income tax on the net profit and dividends derived from the promoted activity for a specified period. Also, import duties on machinery are exempted or reduced, or on raw or essential materials imported for use in production for export. A double deduction from the costs of transportation, electricity and water supply.
As non-tax incentives, the promoted company can have 100% foreign shareholders. The permit for foreign nationals to enter Thailand to study investment opportunities., the permit to bring in skilled workers and experts and the permit to own land are just some of the other advantages.
Without going into details, it can be summarized that each foreign investment should carefully be screened for the possibility to obtain an investment promotion by the Board of Investment. The Consulting House is experienced to guide foreign companies through the required decisions and steps to get their investments promoted by the BOI.