The Board of Investment
The Board of Investment (BOI) is Thailand’s principal government organization encouraging investment opportunities in Thailand. The BOI offers incentives to its certified companies by way of major tax waivers, easing of foreign equity restrictions and increased land ownership opportunities for foreign entities. Through these incentives, the BOI aims to develop and innovate business and technology in Thailand, as well as to increase economic growth.
Why Apply for a BOI Promotion?
BOI promoted companies may enjoy certain tax and non-tax incentives. Such incentives can be particularly attractive to foreign investors who may otherwise be subject to stringent rules and regulations when conducting business activities in Thailand.
Tax Incentives
BOI certified companies may be eligible for an exemption of Corporate Income Tax for up to eight years, an exemption or reduction of import duties for raw materials, as well as a decrease of taxes on dividends payable to shareholders. Further tax incentives include deductions on transportation, electricity, water and project’s infrastructure installation costs.
Non-Tax Incentives
Non-tax privileges allow a promoted company to hire foreign skilled workers and experts without having to hire four Thai employees for each foreign employee. The BOI further provides for an express procedure for non-immigrant visas and work permits through its ‘One-stop Visa’ process. Non-tax incentives also permit 100% foreign ownership of the company, as well as the option for foreign companies to own land in Thailand.
Figure 1. BOI Tax and Non-Tax Incentives.
Eligibility
Companies wishing to apply for a BOI promotion must meet the following eligibility criteria:
1. Possess a capital investment of at least 1,000,000 Thai baht;
2. Have a minimum of three registered shareholders;
3. Be a registered company in Thailand; and
4. Apply in one of the eligible industries.
Eligible Industries
Activities eligible for Promotion include:
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
8. Technology and Innovation Development
More information regarding eligible activities can be found on Mahanakorn Partners Group’s website: Thailand BOI Company.
How to Obtain BOI Promotion
There are seven essential steps to successfully applying for a BOI promotion. The process can be complex, and companies should always ensure to obtain legal advice prior to applying for a BOI promotion certificate.
Figure 2. How to Obtain BOI Promotion.
Step 1 – Application Submission
Companies must submit application forms pertaining to the company’s business category. These forms may be obtained in person from the BOI headquarters in Bangkok, or through the BOI’s e-investment platform.
Generally, the information required by the BOI includes:
✓ The total amount of registered capital and how the company will leverage the investment in its business
✓ Information on the company’s project
✓ Employee details including the number of foreign and Thai employees the company anticipates hiring
✓ Information regarding the management team’s skills and experience
✓ The estimated earnings and expenses of the company for its initial three years
Step 2 – Project Evaluation
Upon submission of all relevant forms, business owners must contact officials within 10 working days to schedule an interview. Typically, this interview is with the BOI officer who has charge over the company’s account.
Occasionally, companies may be required to attend a second interview (depending on their business category) with relevant government bodies.
After the interview(s), the BOI will consider the application and evaluate the business’ project. The company’s forms will be assessed and considered based on its investment capital. Occasionally, the BOI may request more information from the applying company.
Step 3 – Approval / Rejection
The BOI will inform the company whether their application has been approved within 40-90 days of receiving the application. The time period is usually determined by the amount of investment value as follows:
✓ Investment value less than 200M THB- Promotion received within 40 working days after the application is accepted
✓ Investment value of 200M-2B THB- Considered by the sub-committee within 60 working days after submission of required documents
✓ Investment value of more than 2B THB- Considered by the sub-committee and approved by the BOI board within 90 working days after submission of application
Step 4 – Company Registration
In order to receive the BOI promotion certification, the applying business must establish a Thai company within six months of the approval of its application. Certain documents must be submitted to the Office of the Board of Investment including:
✓ Application form for BOI promotion certification
✓ Company registration certificate
✓ Memorandum of Association
✓ List of shareholders
✓ Investment certificate by the bank of Thailand or evidence of transfer of funds from a foreign country
✓ A technology transfer contract, franchise agreement and/or JV contract
✓ A form including all human resource requirements
Step 5 – BOI Certificate
The BOI will issue the investment promotion certificate within 10 working days after the company has submitted all necessary documents and completed its registration in Thailand. Generally, the certificate will detail certain conditions required to be observed by the company.
Step 6 – Visa and Work Permit
Following obtaining a BOI promotion certificate, the company must register the business into the e-expert system. This is required to be executed before the hiring of any foreign employees. Upon approval, the foreign applicants may then apply for the work permit and visa through the BOI ‘One-Step’ process.
Step 7 – BOI Progress Report and Compliance
After the company has received its BOI promotion certificate, it must ensure compliance with all BOI regulations. This includes regular reporting to the BOI within the following timelines:
✓ In order to benefit from the reduction of taxes and duties; importation of the machinery and equipment within 30 months
✓ Construction of the company or factory, including installation of all machinery and equipment within 36 months
The company is obliged to seek permission from the BOI should these operations be halted. Further, the BOI must give written permission where a company is trying to mortgage, sell, lease or transfer machinery which is imported at the exempted or reduced duty rate, or if the company wishes to use the machinery for non-approved purposes.
BOI promoted companies must also ensure to follow Thai regulations in relation accounting and reporting. This includes meeting reporting requirements for the Social Security Fund, Withholding Tax, Value Added Tax and yearly auditing.