The Industrial Estate Authority of Thailand (IEAT) operates under the Ministry of Industry and was created by the Industrial Estate Authority of Thailand Act (‘the IEAT Act’) to expand the industry sector. The IEAT’s mission is to develop and enhance the management of industrial estates and industrial ports so that they operate as ideal strategic production and service bases with the necessary infrastructure and facilities. The IEAT aims to contribute to the competitive advantage of entrepreneurs while balancing economic growth and social prosperity as well as environmental concerns and the quality of community life.
An industrial estate (‘IE’) can be classified as a general industry zone or a free zone. It is an area of land that is allocated solely for industrial factories so that they can be located together in a systematic and proportional manner. The areas generally consist of all of the necessary industrial facilities and utilities such as roads, sewers, central wastewater treatment plants etc.
The General Industrial Zone
The General Industrial Zone (‘GIZ’) is designated for the operation of industrial activities, service activities or other businesses which are beneficial to, or in connection with, operation of industrial or service activities.
The IEAT provides the operators with services that are essential for industrial operation such as transportation and training centers, as well as permission to own the land required for the operations. Investors in the GIZ are able to operate service businesses from within the zone.
The IEAT Free Zone
In the IEAT Free Zone (‘Free Zone’), operators can import merchandise or raw materials and export products without restrictions. Tax and duty privileges are applied to supplies brought into the Free zone, which include tax burden relief for:
✓ Products made for domestic use taken out of the Free Zone; and
✓ Raw material components produced domestically.
Operators also have permission to import merchandise and raw materials for production, trade or service offering without restrictions on materials. Further, supplies or raw materials brought into the zone by export goods producers do not require import permits or seals and symbols, and are exempt from standard and quality control requirements prescribed by all laws except customs law.
Setting Up a Business Within an Industrial Zone
To operate a business in an industrial estate, a person must have been granted a permit from the Governor or a person authorized by the Governor.
The IEAT is the authority that approves operations within IEs and provides the relevant privileges, incentives, and facilitation of industrial operations. In line with this, the IEAT supports private individuals to establish IEs and provides essential services to accommodate the IE’s operation, such as ensuring the space has all necessary public utilities and facilities systems.
Further, to assist businesses that wish to set up operations in an IE, the One Stop Service Centre (OSS) offers assistance regarding buying or renting land and recommending suitable areas to build or establish a factory.
The IEAT provides both tax and non-tax incentives.
Table 1. IEAT tax and non-tax incentives.
Privileges Afforded by the IEAT Notifications
Notification one (N1) prescribes that the foreigner’s spouse and dependent can stay in the Kingdom of Thailand for the same length of stay as the foreigner. Evidence must be submitted to prove the relationship between the spouse and the dependent.
The IEAT will consider approving work positions for foreigners (business operators) who stay in Thailand to work on industrial estates. The positions that can be approved, subject to conditions, are; director, president and financial or administrative or general affairs, executive assistant and factory assistant and marketing, export and sales. Any additional persons brought in by the business operator must first be granted permission.
Anyone wanting to bring any materials into the IEAT Free Zone must apply for permission to the IEAT in the prescribed form. The permission will specify the specific purposes for which the permission is granted, such as export, use or distribution in Thailand, transfer to the business operator which has been granted tax and duty privileges, or destruction. Permission can also be granted for any other purpose on a temporary basis or for general purposes.
Any materials can be brought into an IEAT Free Zone if the application and details of these materials are deemed correct and reasonable. This permission will be valid for two years. For destruction, the Governor needs to find the materials appropriate for destruction outside the IEAT Free Zone. For any other purpose and general purposes, foreigners must seek approval from the Governor.
Business operators must apply to the IEAT to hold land ownership in an industrial estate for business operations in the prescribed form. Once the business operator receives permission for operations in the industrial estate, the business operator must plan for specific areas to make up parts of the land. These include areas for the construction of a factory building or an office building, areas for proper security and environmental protection arrangements (water treatment system, accident prevention system, etc.) as well as an area for the purpose of landscape architecture. The plan must also include useful areas for business operations as necessary and appropriate (storage spaces, parking spaces, etc.) and vacant area for future expansion.
Holding land ownership in an industrial estate for residential purposes is prohibited except when permitted according to the rules prescribed. When permission is granted, some land in the industrial estate can be reserved or permitted for allocation for accommodation for staff and workers and their families. In this scenario there are certain conditions that must be complied with, including the land size and number of condominiums allowed on the site.
Notification 5 as amended by Notification No. 6 prescribes materials exempt from special fees under the law on investment promotion (LIP), import duty, value added tax and excise tax, and materials which are eligible for tax exemption or refund.
(1) Machinery, equipment, tools, and supplies including parts essential for production of goods or for commercial purpose must be used for the prescribed purposes:
✓ direct production;
✓ production support;
✓ production management or service;
✓ quality control or inspection of products or raw materials;
✓ product quality improvement or development;
✓ rectification or mitigation of environmental impact;
✓ enhancement of production efficiency or staff training;
✓ production control or safety measures for certain industries;
✓ accident and risk prevention; and
✓ any other related purposes.
(2) Materials for factory or building construction, assembly, or installation in the IEAT Free Zone for:
✓ building or factory construction;
✓ installation of electrical, lighting and power systems;
✓ installation of water supply system;
✓ installation of indoor transport system;
✓ other parts of factory building; or
✓ any other related purposes.
Anyone who wishes to bring materials under subsection (2) must apply for duty, tax and fee privileges under the IEAT Act. A certificate will be issued if the application is approved. If the Board doesn’t approve the application, the materials will not be exempt from special fees.
Consumables, automobiles, motor vehicles and motorcycles of all types and sizes subject to registration are not exempt from special fees under the LIP, import duty, value added tax and excise tax.
Industrial or commercial operators must submit a report on bringing materials into the IEAT Free Zone within fifteen days from the end of each month.
Materials for production of goods and those for commercial purpose are exempt from special fees under the law on investment, import duty, value added tax and excise tax under the IEAT Act
Materials for commercial purpose are defined as:
✓ Imported materials;
✓ Materials of the industrial or commercial operators in the same or different IEAT Free Zone;
✓ Materials of the producers which have been granted investment promotion under the LIP;
✓ Materials from bonded warehouses under the law on customs;
✓ Materials under the rights and privileges;
✓ Materials from the free zone under the law on customs; and
✓ Materials in the Kingdom which are legally eligible for tax exemption or refund what they are exported.
To apply for the exemption from special fees under the LIP, import duty, value added tax and excise tax for materials for production of goods or for commercial purpose, industrial or commercial operators must fill out Form IEAT-I-01 with copy of the Company Affidavit issued by the Department of Business Development, the Ministry of Commerce, less than 6 months from the date of issuance. The operator will report to the IEAT when bringing any material into the IEAT Free Zone with Form IEAT-I-02R or Form IEAT-1-07R.
Any party who is not an industrial or commercial operator in the IEAT Free Zone wishing to bring any materials into the IEAT Free Zone on behalf of others must submit Form IEAT-I-07. See descriptions of forms below.
Forms of applications, certificates, reports and letters of certification under the:
Notification of the Board of Directors of the Industrial Estate Authority of Thailand Re: Rules, Procedures and Conditions for Exemption from Special Fees under the Law on Investment Promotion, Import Duty, Value Added Tax and Excise Tax on Machinery, Equipment, Tools and Supplies, and Raw Materials, including Parts thereof which are Essential for Production of Goods or for Commercial Purpose, dated June 10, 2008
Table 2. IEAT application forms for tax exemptions.
Applications, certificates, reports and letters of certification under the:
Notification of the Board of Directors of the Industrial Estate Authority of Thailand Re: Rules, Procedures and Forms of Permission to Bring Materials in the IEAT Free Zone out of the IEAT Free Zone, dated June 10, 2008
Table 3. IEAT Rules for use or distribution in the Kingdom