Bangkok, Thailand

Thailand’s Board of Investment (BOI) is a Road to Foreign Ownership, Even if Incomes Remain Taxed

By James Fraser, MBMG Group

The Board of Investment (BOI) offers a wide range of tax and, interestingly, non-tax incentives to promote targeted business initiatives in sectors across the board. To help reduce the initial investment costs and improve the overall rate of return to investor, the BOI offers an exemption or a reduction of import duties on new machinery, materials and components, and zero corporate income tax for up to 10 years, as well as exemption on dividend withholding tax and, in some cases, personal income tax.

The BOI also grants permission for foreign entities to own their company and land outright for carrying out the promoted activities; bring in foreign workers to work under a BOI-promoted project; and provides a permit to remit profits to a foreign country. As these rules are also applicable to a non-tax-exempt foreign-owned entity, this provides a road to 100% foreign ownership, even if the goods or services do not meet the tax-exempt criteria (a non-tax-exempt entity could be related to a tax-exempt entity).

A business settling in Thailand usually considers how it can remain foreign owned, and the BOI is one option for doing so.

One common error is that a factory will apply for a license to make a core product but not mention the by-products.

Tax Incentives

  • Exemption or reduction of import duties.
  • Exemption of a juristic person’s income tax and dividends.
  • Double deductions from the costs of transportation, electricity, and water supply.
  • Ten-year corporate income tax exemption for technologybased activities focusing on biotech, nanotech, advanced material, and digital.
  • Eight-year corporate income tax exemption for:
    – Knowledge-based activities focusing on R&D and design to enhance Thailand’s competitiveness, or
    – Activities in infrastructure for Thailand’s development, or
    – Activities using advanced technology to create value added.
  • Five-year corporate income tax exemption for high-technology activities that are important to Thailand’s development, with few investments already existing here.
  • Three-year corporate income tax exemption for activities with lower technology than above, but add value to domestic resources and supply chain.

Non-Tax Incentives

  • Permits to bring in foreign skilled workers and experts and those looking for opportunities.
  • Permit to own land.
  • Permit to remit money abroad in foreign currency.

James Fraser

James Fraser

GGI member firm
MBMG Group
Auditing & Accounting, Tax, Law Firm, Services, Advisory, Corporate Finance
Bangkok, Thailand
T: +66 2 665 2536
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W: mbmg-group.com

MBMG Group was founded in Asia in 1996 and has since grown steadily. It offers services in investment advisory, corporate advisory, tax advisory, family office, accounting and audit, legal, insurance, estate planning, and property solutions.

James Fraser has lived in Thailand for more than 25 years. He has gained vast experience in several areas of the Thai stock brokerage industry, as an analyst, in the field of corporate advisory and proprietary investment. Since 2015, Mr Fraser has worked for MBMG, specialised in corporate entity advice, tax, and wealth management services.
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Published: International Taxation Newsletter, No. 14, Spring 2021 l Photo: Travel mania - stock.adobe.com

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