BOI Introduces New 7-year Investment Promotion Plan
As part of wider efforts to restructure the Thai economy and help support long-term sustainable growth, Thailand’s Board of Investment (“BOI”) announced a new 7-year investment promotion strategy, marking a shift from wide-ranging to more focused investment promotion. The new policy will be effective from 1st January 2015 until the end of 2021.
Promotional privileges will still be offered in the same seven sectors – (1) agriculture and agricultural products; (2) minerals, ceramics and basic metals; (3) light industry; (4) metal products, machinery and transport equipment; (5) electronics and the electrical appliances industry; (6) chemicals, paper and plastics; and (7) services and public utilities – but greater priority will now be given to high technology, high value added, R&D or design, and environmentally-friendly activities.
Tax incentives offered to promoted entities by the BOI can be separated into two categories: (i) activity-based incentives that depend on the type of activity; and (ii) additional merit-based incentives that are provided to projects benefitting the country, such as R&D, high level skills development, and wealth distribution to regional areas. Businesses will be encouraged to invest in the replacement of machinery to save energy, use alternative energy sources, reduce environmental impacts, and there will be greater investment in R&D and engineering design for the purposes of improving production efficiency.
In this respect, tax incentives granted vary from corporate income tax exemptions for a minimum of 3 years to a maximum of 8 years. The income tax exemption may or may not be capped to the amount of actual capital investment in the BOI promoted project, depending on the BOI categorized industry group.
Another significant amendment concerns the previous zoning policy, where Thailand was divided up for investment purposes into three zones. These three zones will be replaced by regional clusters, so as to create concentrations of investment in each region, as well as stronger value chains. The new strategy will also concentrate on inbound and outbound investment to overcome the current limitations regarding domestic resources, provide new business opportunities for the Thai private sector – especially within ASEAN – and allow for the incorporation of new strengths and abilities from Thailand’s international partners.
Prospective investors should keep abreast of all updates regarding this policy, not least companies looking to apply for BOI promotion that benefit from additional incentives introduced by the BOI. Over the last 20 years, Blumenthal Richter & Sumet has established a successful working relationship with the Thailand Board of Investment, assisting local and foreign companies in the service, IT and manufacturing sectors with obtaining maximum BOI investment promotion for new or expansion projects.
For more information, contact Mr. Andreas C. Richter at: [email protected].