At a meeting on Wednesday 30 June 2021, the Board of Investment (BOI) approved a series of enhanced incentives in research and development (R&D) and human resource (HR) development. Further incentives were also approved to attract more investment in the semiconductor, digital and packaging industries.
In a bid to encourage companies to set up their R&D, under the new incentives, projects that invest or spend at least 200 million baht or 1% of their total sales of the first three years will be entitled to longer tax breaks (maximum 13 years) without a corporate income tax exemption ceiling. The amount of R&D spending or investment will determine the number of additional years of tax holidays available to companies. The BOI further approved companies that engage in apprenticeship programs or spend on advanced technology, as eligible for greater tax incentives.
According to Ms Duangjai Asawachintachit, the Secretary General of the BOI, the BOI sees R&D and HR development as being critical to strengthening Thailand’s competitiveness and integral to driving innovation in the country.
The COVID-19 pandemic has emphasized the significance of high-quality technology in business practice and the importance of the digital economy. Due to the pandemic, the semiconductor industry has seen a substantial increase in demand. As such, the country aims to attract more semiconductor manufacturing. This is particularly important as electronic products are one of Thailand’s top exported products. Consequently, the BOI will give front-end capital and technology-intensive manufacturing 10-year tax holidays. Additionally, advanced integrated circuits, IC substrate and printed circuit board projects with a machinery investment of over 1.5 billion baht will be offered an eight-year tax break.
Further approvals were made for the redesign and improvement of the BOI promotion policy for businesses operating on the supply side of the digital economy. Changes include a new focus on hiring and developing the IT workforce and upgrading companies to relevant international standards. In line with the revamp of the policy, companies who apply for BOI privileges under the activity ‘Development of Software, Digital Services Platform or Digital Content’ are eligible for 8-year tax holidays. The yearly ceiling will reflect the additional hiring of Thai IT personnel, training expenses and costs of international standard certifications.
Ms Duangjai emphasized that the improved investment promotion policies aim to encourage the development of a broader range of Thai IT specialists and create a more competitive local market for IT operations.
Approval was also given to the enhancement of investment incentives for the production of smart and environmentally friendly packaging, including the use of recycled materials. Through this the BOI aims to encourage the packaging industry to invest in technology and environmental sustainability and to keep updated with global sustainability trends.
The BOI also aims to allow more flexible operations by foreign multinationals operating offices in Thailand, through the revised scope for the International Business Center (IBC) and Trade and Investment Support Office (TISO). This redrafted scope allows companies that don’t operate a treasury centre to provide lending to affiliated firms in and outside Thailand under relevant exchange control regulations.