On 16 September 2021 Thailand’s Board of Investment (BOI) announced that it will consolidate its list of promoted digital activities and combine them into a single category for development of software, platforms for digital services, or digital content under Category 5.10. Category 5.10 will replace the previously existing categories of ‘software’ (5.7), ‘e-commerce’ (5.8) and ‘digital services’ (5.9). These changes come amidst the BOI’s effort to upgrade its promotion policies regarding digital businesses with the aim of improving the skillset of IT specialists in Thailand so that they can adapt to international best practices.
In line with the announcement, the new category will be entitled to activity-based A2-level incentives. A2 level incentives include benefits such as a capped eight-year corporate income tax (CIT) exemption as well as tax incentives on import duties on raw materials used for producing goods for exports and non-tax incentives.
Eligibility for BOI promotion under the new promotional Category 5.10 requires applicants to meet the following conditions:
1. The prospective project must hire new Thai IT personnel whose annual salary expenses amount to at least THB 1,500,000; and
2. The prospective project must have substantial development processes for the software, platform for digital services, or content in Thailand under BOI approval.
The BOI has identified two allowances for the new category that are scarcely allowed in other promotional categories:
1. Promoted businesses under this category may use existing or used machines and are not required to invest in new equipment; and
2. The cap calculation for the annual CIT exemption is based on the actual amount of expenses, including salary expenses and training expenses for IT personnel and expenses for obtaining international standard certificates.
Further conditions of the promotional category include:
✓ The revenue generated from the project must be derived from the sales or services directly related to the business activity approved by the BOI.
✓ Activities pertaining to retail or wholesale business are not considered a BOI-promoted activity and are ineligible for this category.
✓ Investment projects under this category are not eligible for merit-based incentives or investment promotion measures under the competitiveness enhancement and SMEs investment promotion program.
✓ Applicants seeking to apply for the Eastern Economic Corridor (EEC) scheme for Human Resources Development must notify the BOI when submitting their application for BOI promotion. Upon approval of a promoted project, the request cannot be amended.