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Do you have a great idea for a business and wonder if Thailand is the right place to register your company?
Do you run an existing company in Thailand and are you looking for tax breaks and other benefits?
Fortunately, you can register your company with Thailand’s Board of Investment and own 100% of your company while getting plenty of benefits.
This guide shows you how to setup your company with Thailand’s Board of Investment, the advantages and disadvantages of the promotion, and how to keep your promotion active.
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- What is Thailand’s Board of Investment?
- Promotion Advantages
- Is Your Company Eligible for Promotion?
- BOI Promotion Disadvantages
- Applying for Your Investment Promotion
- Application Cost
- Keeping Your Investment Promotion Active
- Cancelling Your Investment Promotion
- Now, on to You
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What is Thailand’s Board of Investment?
Thailand’s Board of Investment, or BOI, is a government organization that:
- promotes investment opportunities in Thailand and overseas
- brings innovation and technology into Thailand
- increases economic growth in Thailand
The BOI’s role is to help you invest in and open businesses in Thailand while providing you with benefits along the way, including up to 13 years of tax exemption, 100% foreign ownership, and work permit and visa help.
If your company gets promoted by the BOI your company gets both tax and non-tax benefits.
The tax benefits include:
- exemptions or reductions on corporate taxes
- exemptions import duties on machinery and raw materials in research and development businesses
- exemptions on production for export
The non-tax benefits include:
- 100% foreign ownership
- visas and work permits
- land ownership
You should keep three things in mind when considering BOI promotion benefits.
First, investment promotion benefits don’t apply to your whole company but only a section of your business.
For example, if your company deals with software and food, and you get the investment promotion for your software business, you can’t apply the BOI benefits to your food business.
Second, benefits start when you get your investment promotion certificate, which the BOI gives you after they approve your case.
Third, the BOI must approve each benefit in writing.
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Your company doesn’t have to pay corporate income taxes and import duties or gets reduced corporate income tax rates or import duties.
Your company in Thailand must pay an annual corporate income tax rate on net profits based on your company’s size and the industry you do business in. Check the Revenue Department of Thailand’s website for more information.
When your company is promoted by the BOI it doesn’t have to pay corporate income tax for up to 13 years. The number of years depends on your company’s location and line of business.
Some companies can get a three-year exemption on corporate income taxes while some businesses might not get any exemption.
You usually get a corporate income tax exemption of 50% of the total amount invested in your company. The limit can be more or less depending on your business category.
Even with a tax exemption cap of 50% your company benefits from the lower cost of doing business in Thailand.
“A1” groups and “Section 8” can get 100% corporate income tax exemption status. More information about these groups can be found in the Incentive Group section.
To start getting the full corporate income tax exemption benefit, you must have an approval from both certified audits and the BOI within 120 days after the end of your accounting period.
If your company can’t get full corporate income tax exemption status you can get up to a 70% deduction on corporate income taxes for five years if you do business in a key investment area listed by the BOI.
Import Duty Exemptions
If you run a manufacturing company that exports raw products or does research and development your company doesn’t have to pay import duties on manufacturing machines and raw goods.
Your company gets three non-tax incentives if it’s promoted by the BOI.
- 100% foreign ownership
- visas and work permits
- land ownership
100% Foreign Ownership
If you register a company in Thailand you can own only 49% of the total company shares. But you can own 100% of your company when your company is promoted by the BOI.
You have to find two other shareholders because you need at least three shareholders on a company’s registration. Shareholders can be family members of friends.
Visas and Work Permits
You and your staff can get visas and work permits without having to go to the Immigration Center at Chaengwattana.
You and your workers don’t have to go back and forth between the Immigration Center and the Ministry of Labour when applying for, extending, and renewing visas and work permits. You can do these things at the same place, on the same day, and at the same time.
If you’re married or have children, your spouse and kids are also entitled to visas. The BOI gives you the necessary documents to apply for your relative’s Non-O visas so they can live in Thailand while you work.
You can’t own land as a foreigner in Thailand under Thai law. But your company can own land in Thailand if it has a BOI promotion.
According to the Investment Promotion Act, Year 1977 Section 27, BOI promoted companies are allowed to own land to run promoted businesses deemed necessary by the BOI.
You can use this land for building factories, offices, or living spaces for workers. If you close your company, you must sell the land within one year.
Is Your Company Eligible for Promotion?
Your company is eligible for BOI promotion if it:
- falls under one of the eight business categories
- performs eligible activities
- has the minimum capital investment
- has the right debt-to-equity ration
- meets the business-type specific requirements
- is a new or existing company
Your company might also be responsible for technology transfers, minimum salaries, and more, which you can read about in the Applying for Your Investment Promotion section.
These requirements could change based on Thailand’s needs in the future.
Check BOI’s List of Business Categories
To get a BOI promotion you must first check if the type of business you do or plan to do is listed as one of the eight business categories.
These eight business categories are:
- Agriculture and Agricultural Products
- Light Industry
- Electronics and Electronic Appliances
- Services and Public Utilities
- Mining, Ceramics, and Basic Metals
- Metal Products, Machinery, and Transport Equipment
- Chemicals, Paper, and Plastics
- Technology and Innovation Development
Check BOI’s List of Eligible Activities
If your company does business in one of the eight categories above, you next have to check if the activities your company does are listed as eligible on the BOI’s website.
If your company does business in the Technology and Innovative Development business category, for example, your eligible activities are:
- biotechnology development
- nanotechnology development
- advanced material technology development
- digital technology development
If your company performs one of the eligible activities it’s one step closer to BOI promotion.
You can’t get a BOI promotion if your business falls under one of the eight business categories but doesn’t perform any of the eligible activities.
You can read through the 70+ eligible activities within the eight business categories to find out if the activities your company performs makes it eligible for BOI promotion.
The noteworthy eligible activities are logistics service, digital technology development, digital park, and manufacture of garments, jewelries, metals, papers, or plastic products
If your company is eligible on one of the BOI’s activities, fill out the form on this page to get in touch with a lawyer who can set up your company with BOI promotion.
Build Capital Investment
Capital investment is the funds you or other people invest in your company to further its business goals.
Your company must have at least one million baht in capital when you apply for BOI promotion.
You must have at least ten million baht in capital if you run a logistics company or international trading center.
You don’t have to show the capital in cash. The capital can include cost of construction and machinery, company assets, rental contract, and other business expenses.
But you can’t apply land value and money used for payroll, to produce goods, and to perform daily operations toward the capital.
Balance Debt-to-Equity Ratio
Debt-to-equity ratio is a calculation that shows how much financial leverage your company has.
Your company’s debt-to-equity ratio can be a maximum of three to one. This means your company’s debt can’t be three times higher than its capital.
The BOI wants to be sure you don’t take out a loan to run your company, which increases the chance of bankruptcy later on.
If your company’s debt-to-equity ratio is higher than three to one, you must increase your company’s equity or decrease your company’s debt.
But this three-to-one ratio rule only applies to new companies. If you run an existing company, the BOI considers applicants on a case-by-case basis.
Meet Business-Type Conditions
Your company must also adhere to conditions specific to each business category. Below are a few examples of specific conditions for a few business categories.
Two universal conditions are:
- If you run a company that’s prone to damage the environment you must have solid standards in place to minimize environmental damage.
- If you run a company that produces value-added products, you must meet a minimum percentage.
You can calculate this using the formula:
- Added value = ((revenue – materials – expenses) x 100%) / revenue)
Agriculture and Agricultural Products
If you run an agricultural business your products must have an added value of at least 10%. An example of an agricultural value-added product is coconuts for producing coconut water.
Technology and Innovation Development
If you run a software company you must pay your IT employees at least one-and-a-half million baht each year, and your company must develop software listed by the Digital Economy Promotion Agency of Thailand.
If you run a digital services company, on the other hand, you don’t have to pay your IT professionals a minimum salary each year.
Metal Products, Machinery, and Transport Equipment
If you run a manufacturing business you have to get your machinery approved from related government organizations before applying for your BOI promotion.
If you run an industrial company your products must have an added value of at least 20%. An example of an industrial value-added product is coconuts for producing coconut water.
If your company doesn’t meet the conditions listed in this section, you have to go back to the drawing board and work toward these requirements.
If your company is eligible for a BOI promotion read the next section, BOI Promotion Advantages.
If you’re not sure whether your business is eligible for BOI promotion or not, contact a BOI officer or lawyer who is experienced with BOI promoted companies.
The BOI separates companies into six groups, which all get the same non-tax incentives but different tax incentives.
The BOI categorizes these six groups based on Thailand’s current demand, required technology level, competitiveness, and impact to existing investments.
A1 is the highest group and comes with an eight-year corporate income tax exemption. Companies categories in this group include:
- research and development
- product design
- technology businesses that deal with cloud services, software parks, and digital infrastructures
A2 is the second-highest group and comes with an eight-year corporate income tax exemption. A majority of businesses in this group are manufacturing companies that produce value-added products.
A3 is the third-highest group and comes with a five-year corporate income tax exemption. Companies in this group include:
- software companies
- manufacturing companies
A4 is the third-lowest group and comes with a three-year corporate income tax exemption. Companies in this group are like companies in the A1 through A3 groups but deal with lesser technologies.
B1 is the second-lowest group and comes without any corporate income tax exemption. But companies in this group don’t have to pay import duties on machinery. Companies in this group include:
- logistics services
- plastic manufacturers
- electrical products manufacturers
B2 is the lowest group and doesn’t get any tax exemptions. Companies in this group usually do business in e-commerce.
Your company can also get a 10-year uncapped tax benefit if you do business in one of the four core technologies for developing Thailand, including:
- advanced material technology
- digital technology
These technologies are listed as Section 8. That means your company must cooperate with BOI recognized research centers or educational institutes to get tax incentives when doing business in one of the four core technologies.
Merit Based Incentives
The BOI gives you merit based incentives, or privileges, to encourage enhanced competitiveness. Some of these merit based incentives are:
- up to three years of corporate income tax exemption
- up to five years of tax deductions
tax deductions for infrastructure and utility costs
To qualify, your business needs to be at one of the three locations in need of investment:
- one of the 20 provinces in Thailand that have the lowest capital
- industrial zones
- four provinces in Southern Thailand
Your company must have the minimum number of workers or investment value listed by the BOI for your location.
The BOI’s website has an infographic summarizing the incentive groups and merit-based incentives.
BOI Promotion Disadvantages
If your company gets promoted by the BOI your company faces a few disadvantages, including a complicated setup process, detailed accounting, and regular BOI inspections.
It can take three to six months or more to apply for a BOI promotion because of the bureaucracy involved, documents needed, and back and forth trips to the BOI headquarters.
Because of the time and resources needed, lawyers firms charge you more to apply for a BOI promotion than they would to do a standard company registration in Thailand.
Take a look at the Applying for the Investment Promotion section to find out more.
Benefits you get from the BOI only apply to certain areas of business within your company, not your entire company.
This complicates your company’s accounting. Your accountant has to define and separate income and expenses between the part of your company that’s promoted by the BOI and the part that’s not.
The BOI also asks for financial reports every three months, six months, one year, and two years, depending on your promotion duration. Your accountant must answer the long list of accounting and tax questions clearly, accurately, and in detail.
This means you’ll pay more for accounting services than you would if you were running a non-BOI promoted company.
So be sure to hire an accountant in Thailand who knows how to report finances for BOI promoted companies.
The Revenue Department closely inspects your company if it’s promoted by the BOI. They want to make sure you’re applying your tax incentives only to the areas of your business that are related to the your BOI promotion.
If you give the wrong answer to one of their inspection questions it could trigger a misunderstanding and you could end up in court. Then you need to hire a lawyer in Thailand to prove you meant no wrongdoing.
To prevent this from happening you should:
- know the details of your BOI promotion
- make sure your business is operating 100% legally
- use an accountant experienced with BOI promoted companies
Applying for Your Investment Promotion
It could take you anywhere from three to six months to apply for a BOI promotion if you hire a lawyer to apply for you. It can take even longer if you do it yourself.
You can apply yourself but you need to be familiar with the Thai legal system and the way government offices in Thailand work.
This is why it makes sense to get an additional help when applying for a BOI promotion.
If you decide to use a lawyer, hire a lawyer who has successfully helped companies not only get BOI promotions, but also get BOI promotions in the business category your company is listed under.
Filing the Forms
The forms are eight to ten pages long and filled with questions about your company’s status, shareholders, investment plan, product development, targeted customers, technology transfer, and more.
The BOI wants to know the following information:
- the total amount of registered capital and a plan on how you’re going to use the investment in your business
- details about your project, such as the type of software or machinery you’re going to use and the processes involved
- the number of Thai and foreign employees you plan to employ and their yearly salaries; in some instances, the BOI provides a minimum salary for key personnel per year
- a training plan for Thai employees, specifying training courses and/or a plan for technology transfer
- details of the management team, including their skills and qualifications
- the estimated revenue and expenses of your business for the first three years of operation
The BOI places a lot of emphasis on knowledge transfer, so you write on your forms how you plan to transfer knowledge to your Thai employees.
Three questions to keep in mind are:
- What teaching modes is your company going to use?
- Which technologies is your company going to transfer to your Thai employees?
- How long will it take your company going to transfer this knowledge to your Thai employees?
It’s important to fill out every part of the form. If you don’t, you might have to visit the BOI several times, re-submit the forms online, or even have your forms rejected.
After you submit the forms, you have to contact the BOI within ten working days to make an appointment for an interview.
You should prepare and dress formally for all interviews.
The interview is usually a one-on-one interview with the BOI officer in charge of your account. But it could involve other BOI officer.
The interview helps the BOI provides an opportunity for the BOI to ask you questions about your company and clarify any points that weren’t clear in your application.
In addition to the first interview with the BOI officer, you may have a second interview with related government organizations. The second interview is usually more intimidating than the first one.
For example, if you apply under the software or ecommerce business categories, you must go for a second interview with representatives from Thailand’s Digital Economy Promotion Agency under Thailand’s Ministry of Digital Economy and Society.
After you interview with the BOI and related government organizations, your forms are evaluated and considered according to your company’s investment amount.
It’s not unusual for the BOI representative in charge of your case to contact you to clarify anything on your application before submitting your application for evaluation.
If your investment is below 80 million Thai baht the BOI handles your case.
If your investment is between 80 to 750 million Thai baht a subcommittee handles your case.
If your investment is above 750 million Thai baht a subcommittee and the BOI’s board of directors handle your case.
The BOI lets you know if your forms are approved in between 40 and 90 working days and tells you when you can start running your business.
If your forms get rejected then you have to adjust your business plan and reapply or apply with a new project that meets the BOI’s criteria.
Once the BOI approves your application, you have to go to the BOI headquarters and get your approved documents and promotion acceptance form.
You have one month to submit your promotion acceptance form. If you don’t submit it within one month you could lose your BOI promotion.
Registering Your Company
You can skip this step if your company is registered with the Department of Business Development.
Applying for Visas and Work Permits
After you register your company, you can apply for visas and work permits at the One-Stop Service Center for Visas and Work Permits at Chamchuri Square.
BOI promoted businesses aren’t bound by the four-to-one ratio of Thai to foreign workers, nor the amount of paid capital you need to hire foreign employees.
Getting Your BOI Certificate
Once you submit your promotion acceptance form and register your company with the Department of Business Development, you must register for a company account on the BOI’s e-investment platform. This is the last step in your application process.
You have to submit the following documents:
- your company’s memorandum of association
- your business registration certificate
- the certificate of the Office of the Company Limited and Partnership Registration
- a list of shareholders and their nationalities, certified by the Office of the Company Limited and Partnership Registration
- documents showing the transfer of funds from overseas (in the case of foreign investment)
- a joint venture contract, licensing agreement, and technical assistance contract (if any)
- the Utility and Manpower Requirements Form
The BOI gives you six months to register your company and submit the documents.
Once you submit the promotion certificate form and the documents, the BOI issues the your certificate within ten working days.
If for any reason you can’t register your company and submit the documents within the six-month period, you can extend it to another four months, with a maximum of three, four-month extensions.
You don’t pay any government fees for applying for a BOI promotion. But that doesn’t mean applying is free. You pay in the form of time and resources you use when applying for your BOI promotion.
Keeping Your Investment Promotion Active
After you get your BOI promotion certificate your responsibilities don’t end. Requirements and restrictions, which are listed on your investment promotion certificate, vary based on your business category.
The BOI has the right to cancel your promotion if you don’t follow their rules or you abuse the benefits.
You can find a list of common requirements and restrictions in the following sections.
Submitting Your Permission for Operation
Three years after you get your investment promotion, you must submit the Permission for Operation form to the BOI along with financial documents, your company affidavit, and a list of your company’s shareholders.
The BOI wants to make sure that you’re using your investment as planned, including reaching the investment amount as specified on your investment promotion certificate.
The BOI may send their staff to inspect your company during this process.
If you can’t submit the Permission for Operation form, you can do it later if the BOI says it’s okay.
Using Benefits for BOI Promoted Businesses Only
You must apply benefits for workers, land, machinery, raw materials, and taxes only to your BOI promoted businesses.
You can’t sell, lease, or transfer machinery and land unless you get the BOI’s approval.
If you use these benefits for other business outside of your investment promotion, you run the risk of getting your investment promotion certificate cancelled indefinitely.
Hiring Foreign Workers
You aren’t limited to how many foreign employees you can hire in your company.
But the number of foreign employees you hire should be appropriate to the size of your company size.
And you must have reasonable supporting documents and explanations on why you need each foreign employee.
You must have Thai employees in your company even if your company is promoted by the BOI.
Before you hire foreign employees you must get an approval from the BOI through the e-Expert system.
Your foreign employees must also regularly transfer skills and knowledge to your Thai employees. The BOI calls this “technology transfer.”
Each time you hire a new foreign employee or renew your current foreign employee’s visa, you must write a clear plan on how your foreign employee is going to transfer technology to your Thai employees.
Your plan must include a purpose and time frame for transferring technology.
Once you get approval, the BOI gives you the approval letter for your employee’s visa and work permit application. With this document, you can almost guarantee the success of your employee’s application.
If the BOI rejects your request to hire a foreigner you can re-submit your application online until they approve it.
Firing or Losing Foreign Workers
If you fire or lose a foreign employee you must tell the BOI within 15 days. You can this through the BOI’s e-Expert system.
You must make separate financial reports between your BOI promoted business and non-promoted business, if any, and report your finances to the BOI every six months, 12 months, and 24 months from the date you get your BOI certificate.
You also have to file annual finance reports by July 31 of each year. Your finance reports should be prepared by an accountant who has experience dealing with BOI promoted companies.
You can have an accountant who is not familiar with the BOI report your finances for you. But you run the risk of penalties for any mistakes included in the report.
Updating Your Company’s Info
You also need the BOI’s approval if you don’t run your business for two or more months.
Caption: All company updates must be done at The Board of Investment Thailand Headquarter.
Cancelling Your Investment Promotion
If you want to cancel your BOI promotion contact the BOI and let them know. You don’t need anyone to tell the BOI for you.
But cancelling your BOI promotion immediately cancels your tax and non-tax incentives.
If you cancel your BOI promotion in the first three years without getting your Permission for Operation, you need to refund all exempted tax and import duties to the government with fines and interests.
If you have the Permission for Operation, you don’t have to pay any back-taxes with fines and interest. But you have to pay import duties for imported machinery. And you can no longer export raw materials without paying taxes.
Now, on to You
We wrote this article based on our experience with doing business in Thailand and applying for a BOI promotion.
The BOI may change the requirements we’ve mentioned in this guide at any time. So, it’s always best to check with the BOI or a lawyer who is experienced with BOI promotions.
If you need our help with applying for a BOI promotion, contact us through this form.