By Naddaporn Suwanvajukkasikij, Partner and Oramart Aurore Saardphak, Associate LawPlus Ltd
1. Industries Eligible to Investment Incentives
Thailand promotes investments by granting tax and non-tax incentives to investors in a variety of categories and locations of businesses under the Investment Promotion Act B.E. 2520 as amended (IPA) and the Eastern Economic Corridor Act B.E. 2561 (EECA).
As of January 2019, 8 investment categories under the IPA are (1) agriculture and agricultural products, (2) mining, ceramics and basic metals, (3) light industry, (4) metal products, machinery and transport equipment, (5) electronic industry and electric appliances, (6) chemicals, paper and plastics, (7) services and public utilities, and (8) technology and innovation development.
The Board of Investment of Thailand (BOI) is in charge of granting incentives under the IPA.
Under the EECA, 10 targeted industries located in the designated Special Economic Zones (SEPZ) in the Eastern Economic Corridor (EEC), i.e. Chachoengsao, Chonburi and Rayong are the next-generation automotive, smart electronics, affluent and wellness tourism, agriculture and biotechnology, food for the future, robotics, aviation and logistics, biofuels and bio-chemicals, digital and medical hub. The EEC Policy Committee has recently included national defence and educational and HR development industries in the targeted industries but their implementation rules have not yet been issued.
The EEC Office (EECO) operates as the Secretariat of the EEC Policy Committee in approving incentive under the EECA.
2. Tax Incentives under the IPA
If a project is promoted under the IPA, the promoted project can be granted these tax and duty incentives:
- exemption of the corporate income tax for 3 to 8 years;
- exemption of the import duties on imported machinery, imported raw or essential materials;
- deduction of the corporate income tax for a maximum period of 5 years after the end of the corporate income tax exemption period if the promoted project is located in the SPEZ;
- exemption of the withholding tax on income from the goodwill, royalties or fees remitted abroad for 5 years;
- exemption of the withholding tax on dividends distributed from profits during the corporate income tax exemption period.
3. Non-Tax Incentives under the IPA
The major non-tax incentives for promoted projects under the IPA are the following rights:
- to bring foreign nationals to undertake investment feasibility studies;
- to bring foreign technicians and experts to work under the promoted project;
- to own land for the promoted project;
- to own land for use as (a) offices of the promoted project (up to five rai), (b) as residence of executives or experts (up to 10 rai) and (c) as residence of workers (up to 20 rai);
- to get smart visas for foreign experts, executives, entrepreneurs and investors who work for or invest in promoted companies doing business in the 10 specially targeted industries to work in Thailand without a work permit.
4. Tax Incentives under the EECA
Projects promoted under the EECA are granted these tax and duty incentives:
- exemption or reduction of tax up to the maximum rates under the investment promotion law and the law on enhancement of competitiveness for the targeted industries;
- incentives available to business operators in free trade zones under the customs law, subject to approval of the EEC Policy Committee;
- exemption from compliance with the customs law in whole or in part for export and import in the SEPZ.
5. Non-Tax Incentives under the EECA
The major non-tax incentives for projects promoted under the EECA are the following rights:
- to own land in the SEPZ for business operation or own condominiums for residential purposes;
- to lease or sublease of land and other immovable properties in the SEPZ for 50 years plus a one-time renewal for not more than 49 years;
- to bring into Thailand skilled labors, executives and specialists to work in the SEPZ, including their spouses, children and dependents and they will be granted tax reduction, smart visa, work permit and other rights by the Secretary General of the EECO;
- to be exempted from compliance with the exchange control law in whole or in part;
- to use foreign currencies for payment of goods and services within the SEPZ, subject to the conditions imposed by the EEC Policy Committee;
- to receive permission as licensed foreign professionals to practice in the SEPZ, subject to the requirements and conditions to be imposed by the EEC Policy Committee.
6. Other Incentives
In addition to the above, the EEC Policy Committee can also grant other rights and privileges under the investment promotion law and the law on enhancement of competitiveness for the targeted industries on a case-by-case basis.
