Board of Investment

What is the BOI?

The Board of Investment of Thailand (BOI) is a government agency established as early as 1966 to promote investments in Thailand. It operates directly under the Prime Minister’s Office and promulgates investment promotion policies under the Investment Promotion Act B.E. 2520 (1977) and Official Announcements.

The BOI aims to promote private sector investments by offering various investment incentives based on the type business activity to be performed, as well as providing the necessary facilities and assistance for investors. For foreign investors, the BOI also functions as the primary gateway to invest in Thailand and Thai Government has been taking incremental measures over the years to facilitate foreign investment in Thailand. It is, however, important to note that a BOI investment promotion is not a business license for investors to operate a business in Thailand but rather investment incentives granted by the Government for a particular business (or businesses) eligible per the list of businesses issued by the BOI. Once the investor successfully applied for the BOI investment promotion, the investor can enjoy several investment incentives and benefits including:

  1. Tax incentives – such as corporate income tax exemptions up to 8 years, and exemption or reduction on import duties of raw materials, machineries and equipment;
  2. In case of foreign investors – to be able to operate as of 100% foreign owned companies and may not require to apply for the foreign business license under the Foreign Business Act B.E. 2542 (1999), as well as the right to purchase and possess land to be used for the BOI project;
  3. One-stop Service Centre for work permit application for foreign employees as well as exemption from capital and Thai-to-Foreign employee quota requirements (varies from industry to industry);
  4. Investors can apply for BOI investment promotion prior to registering a local entity in Thailand; and
  5. Other incentives as stipulated in the BOI Announcements.

Governing Body

The BOI operates directly under the Prime Minister’s Office of Thailand with the Prime Minister acting as the Chairman of the Board.

Ministries of Industry, Finance, Commerce, Agriculture are all members of the BOI along with the Chairman of the Bank of Thailand, the Stock Exchange, Thai Chamber of Commerce and other apex trade organizations of the country. The management and executives of the BOI consist of members from different businesses and trades, all leaders in the respective fields. The different industries are homogeneously represented in the BOI to ensure that maximum benefits and services can be offered to investors in their interested field.

The governance of BOI is strategically distributed under numerous wings to adequately represent the investors through different channels and divisions. Aside from the different departments and divisions that entrusted with individual aspects of investment promotion, the offices of the BOI are strategically placed in different regions of Thailand, bearing in mind the areas that are either susceptible to inward investments, or areas that the BOI is willing to promote to investors. Numerous offices have also been stationed around the world to extend co-operation and support to the investors to ensure smooth passage for investments in Thailand.

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BOI Policies and Current Focus

In order for applications to move on fast track and gain ready approval, it is important understand the areas that BOI is currently promoting and are ripe for investment. A glance at the investment promotion strategy will reveal that essentially BOI is looking at overcoming the “Middle Income Trap” through competitiveness and sustainable growth.

The current investment promotion policies promulgated by BOI are:

  1. Promote investment that helps enhance national competitiveness by encouraging R&D, innovation, value creation in the agricultural, industrial and services sectors, SMEs, fair competition and inclusive growth.
  2. Promote activities that are environment-friendly, save energy or use alternative energy to drive balanced and sustainable growth.
  3. Promote clusters to create investment concentration in accordance with regional potential and strengthen value chains.
  4. Promote investment in border provinces in Southern Thailand to help develop the local economy, which will support efforts to enhance security in the area.
  5. Promote special economic development zones, especially in border areas, both inside and outside industrial estates, to create economic connectivity with neighboring countries and to prepare for entry into the ASEAN Economic Community (AEC).
  6. Promote Thai overseas investment to enhance the competitiveness of Thai businesses and Thailand’s role in the global economy.

The policies stipulated above are a broad stroke of the mission objectives of the BOI. Industries such as economic forest plantations, software and electronic design, technology and research and development are some of the industries to receive maximum incentives including corporate income tax exemption.

A huge emphasis is placed on the automotive manufacturing and assembly and electronics industry. The latest focus on “green automotive production” has made Thailand to be most desired country within the ASEAN and globally. The biggest automotive manufacturers from around the world, like Honda, Yamaha, Toyota, GM, Ford Motors and BMW have their factories and production facilities in Thailand. The BOI has been steadfast in promoting this industry and accommodating investors with support, harmonization and equal platform for all investors, strong infrastructure and skilled labor. The private sector complements the growth of this industry through forming a supply chain for the auto parts and machinery. In addition to the continuous support from the public and the private sectors in the stages of production and assembly, it is worth noting that Thailand provides with a huge consumer market for the finished products of this industry. Thus the manufacturers, suppliers, retailers and consumers all benefit from the growth of this sector. The nation’s GDP also benefits through contribution in the form of remittance as the automotive manufacturing industry thrives to be one of the largest export sectors of the country.

In addition to the industries listed above, the recent trend in terms of volume and interest reveals that the BOI is also promoting two other emerging industries at present time, namely trade and e-commerce.

The boom in usage of the internet, smartphones, online trading and logistics have yielded into a massive growth of e-commerce in Thailand. All ranges of e-commerce and trade related startups and corporations have identified Thailand as a major hub given the predominant tech savvy consumer market. The BOI as the government portal for investments has a thorough understanding of this emerging market and well aware of the investors’ interest in these fields. To match this interest, the BOI has been playing an active role in processing applications related to these industries on a fast track and complementing the growth of the country’s economy.

In spite of promotion and reciprocation of interest of the above-mentioned industries by the BOI,, the other industries are not under prioritized in any way. In line with the broad policies and mission objectives, the BOI paves the way for any and all forms of industries that promote growth and sustainability for Thailand. As long as the investors are willing to operate business in a permissible field in compliance with the laid conditions, all forms of assistance and guidance are provided by the BOI for setting up, expansion and growth of such business.

BOI’s criteria for project approval:

1. Development of competitiveness in the agricultural, industrial and services sectors

1.1. The value added of the project must not be less than 20% of revenues, except for projects in agriculture and agricultural products, electronic products and parts, and coil centers, all of which must have value added of at least 10% of revenues.

1.2. Modern production processes must be used.

1.3. New machinery must be used. In case of imported used machinery, criteria are as follows:

a) In case of used machinery not over 5 years old, counting from the manufacturing year to the importing year, the machinery shall be allowed to be used in the project and counted as investment capital for the calculation of the cap on corporate income tax exemptions; however, they shall not be granted import duty exemption. A machinery performance certificate issued by a trusted institute identifying efficiency, environmental impact and energy usage for the machine, as well as its fair value, must be obtained.

b) In case of used machinery over 5 years old but not exceeding 10 years old, counting from the manufacturing year to the importing year, only press machines shall be allowed to be used in the project and counted as investment capital for the calculation of the cap on corporate income tax exemptions; however, they shall not be granted import duty exemption. A machinery performance certificate issued by a trusted institute identifying efficiency, environmental impact and energy usage for the machine, as well as its fair value, must be obtained.

c) For sea and air transport activities and molds and dies, used machinery over 10 years old, counting from the manufacturing year to the importing year, may be allowed to be used in the project as deemed appropriate, counted as investment capital for the calculation of the cap on corporate income tax exemptions and granted machinery import duty exemption.

d) Criteria shall be as specified by the Office of the Board of Investment.

1.4 Projects that have investment capital of 10 million baht or more (excluding cost of land and working capital) must obtain ISO 9000 or ISO 14000 certification or similar international standard certification within 2 years from the full operation startup date, otherwise corporate income tax exemption shall be reduced by one year.

1.5 For a concession project and the privatization of a state enterprise project, the Board’s criteria shall be based on the Cabinet’s decisions dated May 25, 1998, and November 30, 2004, as follows:

a) An investment project of state enterprise according to the 1999 State Enterprise Corporatization Act shall not be entitled to investment promotion.

b) For Build-Transfer-Operate or Build-Operate-Transfer projects, the state agency that owns the project must submit its project to the Board for consideration prior to any invitation to bid, and bidders shall be informed of any promotional privilege entitled to them, prior to the bidding. In principle, the Board will not promote a project where the private sector pays the state for a concession, unless such payment is deemed reasonable in comparison with what the state has invested in the project;

c) For Build-Own-Operate projects, including those leased to or managed by the private sector, which in return pays rent to the state, the Board shall use normal criteria for investment promotion.

d) For the privatization of state enterprises according to the 1999 State Enterprise Corporatization Act, in case of expansion after the privatization, only the expansion investment shall be eligible for promotion. Incentives shall be granted according to normal criteria for investment promotion.

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2. Environmental protection

2.1 Adequate and efficient guidelines and measures to protect environmental quality and to reduce environmental impact must be installed. The Board will give special consideration to the location and pollution treatment of a project with potential environmental impact.

2.2 Projects or activities with type and size that are required to submit environmental impact assessment reports must comply with the related environmental laws and regulations or Cabinet resolutions

2.3 Projects located in Rayong must comply with the Office of the Board of Investment Announcement No. Por 1/2554 dated May 2, 2011 on Industrial Promotion Policy in Rayong Area.

3. Minimum capital investment and project feasibility

3.1. The minimum capital investment requirement of each project is 1 million baht (excluding cost of land and working capital) unless specified otherwise on the list of activities eligible for investment promotion that is attached to this announcement. As for knowledge-based services, the minimum capital investment requirement is based on the minimum annual salaries expense specified in the list of activities eligible for investment promotion that is attached to this announcement.

3.2. For newly established projects, the debt-to-equity ratio must not exceed 3 to 1. Expansion projects shall be considered on a case-by-case basis.

3.3. For projects with investment value of over 750 million baht, (excluding cost of land and working capital), the project’s feasibility study must be submitted with details as specified by the Board.

Procedures for Obtaining Promotional Privileges

The chart that appear on this and the following pages identify, in detail, the procedural aspects of applying for BOI privileges. The major steps along the road to approval are:

workflow

(source: http://www.boi.go.th/index.php?page=procedures)

Action required after a project is approved for promotion

  1. In order to receive the investment promotion certificate, the applicant must set up the company within six months of accepting the approval, and submit all of the following documents to the OBOI:
  2. If the applicant is unable to reply within the stated time limit, a letter of clarification should be sent to the OBOI, which will consider extending the deadline by not more than one month at a time, up to a maximum of three times
  3. Upon receipt of the OBOI letter approving the project, the applicant must reply by completing the form of promotion acceptance and sending it back to the OBOI within one month. If any changes or special conditions and privileges are sought, they should be requested at that time
  4. The OBOI will inform the applicant in writing within 7 working days of the approval date, detailing the conditions, privileges and benefits granted. An application form for the promotion certificate will be attached, together with the notification of approval
    1. Application form for promotion certificate
    2. The memorandum of association
    3. The certificate of business registration
    4. A certificate stating the registered capital, a list of directors indicating those empowered to bind the company, and the address of the head office
    5. A list of the shareholders and their nationalities
    6. A document showing the transfer of funds from overseas, or a certificate of investment from overseas issued by the Bank of Thailand for foreign investors
    7. A joint venture contract, licensing agreement, technical assistance contract and/or technology transfer contract (if any)
    8. Form of utility and manpower requirements.
  5. If the applicant is unable to submit the documents within the required time frame, an explanatory letter must be sent to the OBOI, which will consider extending the deadline by four months at a time, up to a maximum of three times
  6. The OBOI will issue the investment promotion certificate after receipt of all specified documents, and the promoted company must follow the conditions laid out in the Certificate.
  7. If there are any discrepancies or errors, or if an amendment is sought, the OBOI must be notified in writing, with all relevant documents attached.

Procedures for Obtaining Promotional Privileges

The chart that appear on this and the following pages identify, in detail, the procedural aspects of applying for BOI privileges. The major steps along the road to approval are:

obtaining priviledges p3obtaining priviledges

obtaining priviledges p2

(source: http://www.boi.go.th/index.php?page=procedures)

Action required after a Project is approved for Promotion

After receipt of the investment promotion certificate, the promoted company must meet the following conditions and inform the OBOI at each stage

  1. Within 30 months, the machinery and equipment must be imported to benefit from the reduction of, or exemption from, taxes and duties.
  2. Within 36 months, construction must be completed, the machinery and equipment installed, and the factory ready to begin operations.
  3. The Promoted company must ask for written permission from the OBOI if the operation has to be halted for more than two months.
  4. The OBOI must give written permission before a promoted company may mortgage, sell, transfer, or rent machinery which was brought into the country either exempt from, or at a reduced rate of tax. Similar permission must be obtained to use machinery for non-approved purposes.
  5. If an inspector finds that the promoted company is not meeting the prescribed conditions, the OBOI will send an official warning note. If there are insufficient reasons why the conditions are not being met, the OBOI will recommend to the Board that the promotion certificate be withdrawn, and inform the Ministry of Finance and other related agencies accordingly.

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