The Board of Investment (BOI) has unveiled 9 measures as part of its five-year (2023-2027) investment-promotion strategy, including support for high-tech industries and tax breaks for companies relocating to Thailand.
The 2023-2027 Investment Promotion Strategy aims to help restructure the country’s economy and ensure Thailand is innovative, competitive, and inclusive as it competes in the post Covid-19 world. The strategy sets to encourage technological advancement, the transition to green and smart Industries, talent development, as well as creativity and innovation, to strengthen the country’s status as a regional hub for business, trade and logistics.
The strategy also sets five sectors of strategic importance to industrial development as priority industries, namely the bio- circular-green (BCG) sector, the EV supply chain, electronics manufacturing, the digital economy, and creative industries.
The strategy includes new measures as well as the extension of existing measures. 9 measures are:
- New industries Categories:
BOI approved the creation of new promoted industry sectors especially sustainable activities, that will receive special incentives. The new categories include the manufacturing of hydrogen vehicles, the setup of electric vehicle (EV) battery swapping stations, novel food, organic food, etc. With regards to renewable energy, the new types of promoted businesses include hydrogen production and related activities, such as green ammonia, as well as power and steam generation from hydrogen.
Tax, land, and hiring incentives for businesses related these new industries categories.
- Research and development:
Up to 13 years of tax exemption on R&D costs from 1%, to increase Thailand’s competitiveness. Five years tax exemption for companies setting up education/training institutions for high technology skills.
- Retention & expansion:
Special incentives for companies that have been granted BOI investment benefits for at least three projects in the past 15 years with a combined value of at least 10 billion baht, and are seeking approval for a new project or project expansion worth 500 million baht-plus. The incentives include exemption from corporate income tax (CIT) for up to three years or 50% CIT reduction for up to five years depending on the type of activity. All the CIT exemptions apply only to revenue from the relocated manufacturing activities.
- Relocation program:
CIT exemption for five years for companies that relocate factories, regional headquarters and R&D centers to Thailand. Those that relocate just their regional headquarters and factories will receive a three-year CIT exemption.
The companies relocating their manufacturing and regional headquarters will receive additional 3 years of CIT exemption while those moving their manufacturing and R&D center will additionally receive between 1 and 5 years of CIT exemption, depending on the industry.
- Investment for economic recovery:
Large projects investing 1 billion baht or more over 12 months to receive 50% CIT reduction for five years.
- Smart & sustainable industry:
New 4.0 industrial projects including automation to receive CIT reduction of 50-100% depending on business type.
- SMEs promotion:
CIT exemption for 3-8 years depending on business type. To qualify, firms must invest at least 500,000 baht (down from 1 million baht), have debt-to-capital ratio not exceeding 4:1, and invest in machinery worth at least 10 million baht, 50% of which must be new.
- New special investment zones:
Numerous incentives for investment in four regional economic corridors (16 provinces), border special economic zones (10 provinces), southern border zones (four provinces), low-income per capita provinces (20), promoted industrial estates, and science and technology zones .
- Community and social development:
Three-year CIT exemption on up to 200% of investment for non-BOI projects or an additional 200% exemption for existing BOI projects.
Moreover, the board go BOI also approved the setup of a Sub-Committee on the Resolution of Obstacles and Facilitation of Investment, which, in cooperation with the Prime Minister’s Office and other state agencies, will serve as a special mechanism to further improve the ease of doing business by addressing specific pain points flagged by investors.
The new incentives will be effective from January 2023.
