Have you ever heard about “BOI” before? If not, this article would help you to understand why BOI is one of the most important things that you should know before investing or expanding your business in Thailand.
BOI or “Board of Investment of Thailand” is a government body established in 1977 with the key purposes to promote and support business activities and investments in order to restructure Thailand’s economy into new economy. In other words, the BOI’s objectives are promoting the investment opportunities, developing innovation technology, and improving the economic growth in Thailand.
The eligible activities for BOI are summarized as per below picture:
Let’s get to the point, the reason why BOI is the best option for foreign direct investment in Thailand because it provides both tax and non-tax incentives. Some highlighted incentives are set out below:
Exemption/reduction of import duties on machinery
Permit for foreign nationals to enter the Kingdom for the purpose of studying investment opportunities
Reduction of import duties for raw or essential materials
Permit to bring into the Kingdom skilled workers and experts to work in investment promoted activities
Exemption of import duties on materials imported for R&D purposes
Permit to own land
Exemption of corporate income tax (subject to additional conditions) on the net profit and dividends derived from the promoted activity
Permit to take out or remit money abroad in foreign currency
50% reduction of the corporate income tax
Permit (most of the promoted investment) to establish an entity with 100% foreign-owned structure.
Double deduction from the costs of transportation, electricity and water supply
Additional 25% deduction of the cost of installation or construction of facilities; and
Step 1 – Pre-Consultation
Firstly, it would be advisable that the applicant carefully prepares a brief business plan and arrange the pre-consult meeting with the BOI officer in order to determine the type of potential eligible activity (as promoted by BOI) and what are the specific requirements or conditions for such activity.
This step would allow the applicant to understand what would the eligible activity that they can apply and what are the potential requirements and benefits prior to the formal submission process.
Step 2 – Formal Submission
Secondly, with the assistance of our specialized team, the BOI application shall be prepared and submitted. The BOI application shall contain the business and the details of the project, including without limited to estimated 3-year revenues and expenses, details of machinery and/or raw material, stage of operation, employment plan, and technology transfer plan. This step would normally take 3 – 6 weeks (depending on the complexity of the project).
Please note that if the applied BOI project involves more than THB 2 billion investment (excluding cost of land and working capital), the Legal Feasibility Study Report shall be also prepared and this would affect the estimate timeline as set out above.
Step 3 – Consideration and Approval
Thirdly, after the formal submission stage, the BOI would normally take 3 – 6 weeks to accept and issue the application number. Thereafter, different level of BOI approval and timelines would be applied based on the size of the investment value as follows:
Step 4 – BOI Promotion Certificate
Fourthly, the applicant (who has not yet established the company) shall set up a limited company with the minimum capital as approved by the BOI and open a local bank account. Please note that all capital shall be injected into the local bank account by the shareholders from overseas and in foreign currency, and the remittance advice shall be presented to the BOI offer prior to the issuance of the BOI Promotion Certificate.
Please further note that the applicant shall submit the routine project report every February and July of every year, and must perform the full operation within 36 months from the date of the BOI Promotion Certificate, which is extendable.