The U.S. – China trade war has significantly impacted both Chinese and international corporations that have either invested in China or have vested corporate interests in the People’s Republic. Therefore, it is no surprise that many of them are opting to relocate from China to other viable countries of operation in the region.
Seeing this as an opportunity to attract investment into the country, Thai economic ministers have endorsed a new investment promotion package promoted by the Board of Investment (“BOI”) on 6th September 2019 that specifically targets investors relocating their operations from China. The “Thailand Plus” stimulus aims to expedite investments into Thailand and support prospective entrants by providing manpower development, deregulation, as well as improved pre- and post-investment services.
The benefits provided by “Thailand Plus” can be summarized into three primary areas:
Tax incentives
Investment projects involved in the Board of Investment’s targeted industries will be eligible for an additional five-year 50% reduction of corporate income taxes provided that they submit their application for BOI promotion by the end of 2020. In order to qualify for this, however, investment projects must be worth at least THB 1 billion which must be put in place before December 2021.[1]
Support for manpower development
In addition to the above-mentioned, projects and business operators that provide training for advanced technologies endorsed by the Ministry of Higher Education, Science, Research and Innovation will be entitled to special tax deductions that are capped at up to 200%.[2] This will likewise be the case when hiring highly skilled labor in areas related to science technology, and advanced engineering where salaries of personnel can be considered deductible expenses.[3] Moreover, the Board states that operators establishing human resource development institutions will be eligible for a five-year tax exemption for 100% of their total investment so long as submit their application for BOI application before 2021.[4]
Improved administrative efficiency
The Board has established a steering committee chaired by the Prime Minister that will coordinate activities related to establishing investment projects in Thailand. This committee has been established with aim of expediting the approval process and empowering the BOI office to resolve issues that may occur.[5]
Closing remarks
Policy makers in Thailand are optimistic that “Thailand Plus” will bring in investment into the Kingdom, particularly given its proximity to not only China, but also to other emerging markets in Asia. The BOI is currently working with other government agencies to further embolden the new stimulus and reduce limitations faced by foreign investors seeking to participate in the Board’s target industries. Part of its efforts include the extension of the ‘smart visa’ program to attract foreign talent into Thailand as well as a review of the Foreign Business Act.
Silk Legal will continue to monitor developments on this matter and will provide updates accordingly.
[1] “Thailand announces new promotion package to attract investment,” Investment Services Center, The Board of Investment, Office of the Prime Minister (9th September 2019), (available at https://www.boi.go.th/upload/content/No.136_2562_5d77143b7a0ef.pdf).
[2] “BOI approves Thailand Plus incentives to expedite investment relocation,” Investment Services Center, The Board of Investment, Office of the Prime Minister (20th September 2019) (available at https://www.boi.go.th/upload/content/No.148_2562EN.pdf).
[3] “Thailand announces new promotion package to attract investment,” Investment Services Center, The Board of Investment, Office of the Prime Minister (9th September 2019), (available at https://www.boi.go.th/upload/content/No.136_2562_5d77143b7a0ef.pdf).
[4] “BOI approves Thailand Plus incentives to expedite investment relocation,” Investment Services Center, The Board of Investment, Office of the Prime Minister (20th September 2019) (available at https://www.boi.go.th/upload/content/No.148_2562EN.pdf).
[5] “Thailand announces new promotion package to attract investment,” Investment Services Center, The Board of Investment, Office of the Prime Minister (9th September 2019), (available at https://www.boi.go.th/upload/content/No.136_2562_5d77143b7a0ef.pdf).
