Key Points on Thailand's BOI: Clear Implications for Factory and Warehouse Operators

Board of Investment of Thailand (BOI) has the core responsibility in promoting foreign direct investments and domestic investments in Thailand. Their initiatives aim to enhance the competitiveness and attractiveness of our country for investments. As a result, their program helps elevate Thailand's economy beyond the middle-income trap for sustainable economic growth.

There are many advantages to obtaining BOI to support your business. Here, we explain the benefits of BOI in a simplified and easy-to-understand description specifically for factory and warehouse businesses.

What are the advantages of investing in Thailand?

Thailand offers many opportunities for investors. A vast array of natural resources, low rates of natural disasters, strategic geography to other south-east Asian nations are some of the country's strengths that contribute profits for public and private sectors. The country's geography is ideal for investment since it is the center of the ASEAN region. The transportation modes, whether land, sea, or air, are felicitous for both domestics and foreign markets.

Moreover, business operators can benefit from a generous supply of skilled workers. They can utilize an extensive amount of agricultural products as raw materials, such as rice, rubber, sugarcane, vegetables, and fresh fruits in their manufacturing processes. Consequently, Thailand offers countless investment opportunities.

The Benefits of BOI

There are numerous benefits when your investment gains support from BOI. We separate them into two areas: tax-related benefits and non-tax-related benefits.

Tax benefits

The BOI can grant you an exempt of corporate income tax up to thirteen years, depending on the type of your business and conditions.

You will further receive a reduction of 50% corporate income tax for another five years. You will only receive this benefit when your facility is in the BOI designated zone.

You will gain the exemption of import duty on your machinery.

You will benefit from the tax exemption of import tariffs on the raw materials used for export.

The tax authorities will waive your charges on imported goods used for your research and development purposes.

Non-tax-related advantages

Foreigners are allowed to hold 100% of shares, except certain businesses subjected to specific laws imposed by the Foreign Business Act.

Another key benefit is that 100% foreign-owned company is entitled to land ownership.

Foreign employees and professionals working in BOI approved companies can conveniently come and work in Thailand.

There are eight types of businesses that BOI encourages.

1) Companies that engage in agriculture and agricultural products, such as plantations, farmings, biofertilizer, and chemical fertilizer businesses are some of the firms which BOI promotes.

2) Minerals, ceramics, metals, mining, metal manufacturing, glass, and ceramic, are industries recognized by the BOI.

3) Light industries such as textiles, bags or shoes, and toys are sectors with BOI benefits.

4) BOI accepts metal-manufactured products, machinery, and transportation equipment (i.e., the production of automobile parts and machinery.)

5) Electrical appliances, software businesses, and electronic components are BOI approved.

6) BOI supports the chemical industry: chemicals, plastics, paper packaging, pharmaceuticals, and polymers.

7) Public utility services, such as the production of electricity either from steam, waste or fuel, can gain recognition from BOI. Also, industrial development projects- industrial estates and warehousing projects can gain support from BOI.

8) Technological developments and innovations such as biotechnology businesses, nanotechnology businesses, digital technology can obtain BOI's privileges.

Project approval criteria

The Board of Investment (BOI) has specific rules for approving projects as follows:

1. Your project can help elevate the competitiveness of agricultural, industrial, and service sectors.

Your company must have value-added processes in manufacturing your products. For most sectors, the value-added processes must contribute at least 20% of income extra, compared to procedures without such methods. Businesses in electronics, metal components, and metal cutting can have value-added processes that contribute at least 10% of income.

2. Your company must have modern production methods.

3. Your company must use new machinery. If you wish to use old machines from abroad, you have to follow this assessment criterion:

3.1 You can account for your used machines as part of the overall capital investment when you apply for the corporate tax exemption. However, you will not gain the benefit of import tax duties for these machines. Also, they have to be less than five years old from the manufacturing year to the importing year. You have to obtain a certificate from an esteemed institution for its operational efficiency, environmental impact assessments, and energy consumption.

3.2 Only when you relocate your factory, your used machinery, which between five to ten years old from the manufactured year, can be counted as an investment for the overall corporate income tax exemption. You have to obtain the value assessment by entrusted institutions, and the BOI board would recognize only 50% of its value accounted toward your overall capital investment. Moreover, you have to acquire a certificate for its efficiency, environmental impacts, and energy usage. Finally, you have to pay the import duties for these used machines in this category.

3.3 For the air transportation industry, the BOI will allow the used machines that are less than fifteen years old in the project. In this class, you can enjoy free import duties as well as the full value recognition in the corporate tax exemption benefit.

4. Minimum capital investment and project feasibility

Your firm must have a minimum investment of at least 1 million baht for each project (excluding the cost of land acquisition and working capital) except specified by the BOI.

For the service sector, these businesses use the information and financial capital as their core business operation. As a result, the BOI would accept the collective annual salaries of your entire workforce as the size of your capital investment. The BOI has thoroughly described the activities and requirements for this category.

Additionally, for all industries, businesses must have a debt-to-equity ratio of less than 3: 1 for the initial phase. The BOI Board would evaluate further expansion projects on a case-by-case basis.

Finally, for projects with more than 750 million baht investments (not including the cost of land acquisition and working capital), you must present a detailed feasibility study report of the project as determined by the Board.

In the diagram below, you can follow the steps for your BOI application as well as the benefits when they approve your projects.

The difficulty in gaining the promotion from the BOI

The application process is straightforward. But, the real challenge of applying for a company is that it requires careful thoughts and considerations. You have to prepare the documents supporting your application. Also, you can self-assess whether your business fits the BOI's requirement or not.

If your project suit the conditions stipulated by the BOI, you can submit the request reassuringly. The most crucial thing here is to prepare the necessary documents under the BOI's Handbook. In this guide, you will find that the specific rules and conditions, which are simple to follow. You only need to be attentive to its various requested documents.

In sum, BOI offers many prevalent benefits, whether you are a business owner, an entrepreneur, or a business executive of a large MNC. You have to ensure that your business qualifies the conditions set by the BOI. Once they have approved your project, the many outstanding benefits can help your business thrive competitively.

If you wish to learn more about the subject, please visit BOI's website.

https://www.boi.go.th/

If you are interested in renting a high-quality factory or warehouses in Thailand, please feel free to contact us anytime. Our properties have complete functions, and they are in excellent locations. Plus, we support our customers with free repair services throughout the leases as well as a full range of customer support services. Our projects have high-security systems with 24-hour security guards, and CCTVs.

Sources :

https://www.boi.go.th/index.php?page=what_we_do2

https://www.boi.go.th/upload/content/BOI_A_Guide_TH.pdf