Benefits of BOI Promotion for Company Establishment in Thailand

Located at the heart of ASEAN, Thailand is the second-largest economy in Southeast Asia. It is the entry point to a large network of trade opportunities and investment potential. One of the most compelling reasons to start a company in Thailand is the chance to apply for the Board of Investment (BOI) promotion. As the only Southeast Asia country with a BOI, Thailand actively enacts policies to escape its middle-income trap. Thailand’s BOI keeps the country attractive to foreign investors, allowing it to challenge higher-value competitors.

In this article, we’ll break down the key benefits of BOI promotion and explain why it could be a game-changer for your company setup in Thailand.

What is BOI Promotion?

The Thailand Board of Investment is a government agency that supports and promotes private sector investment in Thailand. By granting BOI promotion, the agency offers incentives to foreign companies in priority sectors like agriculture, mining, machinery, tech innovation, and public services.

These incentives are designed to make it easier and more profitable for companies to do business in Thailand. 

To delve deeper, there are two types of BOI promotion benefits, one that is around tax incentives, and one that isn’t. Let’s take a look at both of them.

Tax incentives from Thailand’s BOI

  1. Corporate income tax (CIT) exemption 

Thanks to BOI, you can waive your company’s income tax for up to thirteen years, depending on the business sector. Here is the breakdown so you can discover which category you fall into.

  • 10-13 years: You cover upstream industries utilizing biotechnology, nanotechnology, or advanced material technology, collaborating with academic institutes.
  • 8 years: Your company is involved in Thailand’s infrastructure development, R&D, and design.
  • 5 years: You conduct high-technology activities important to Thailand’s development, such as electric motorcycles.
  • 3 years: Your business adds value to Thailand’s domestic resources and supply chain, but uses lower-end technology.
  1. 50% CIT reduction

If you want to extend your tax incentive, there is an option to exchange the CIT exemption for a 50% reduction. In some cases, the period can reach up to 5 additional years.

  1. Exemption of import duties

BOI promotions are only offered to companies that operate in specific areas of business activities identified by the BOI. This comprises Special Economic Zones (SEZs) such as Chiang Rai, Nakhon Phanom, Nong Khai, Songkhla, and more. These are areas situated mainly in border regions, strategically selected for boosting cross-border trade. Because of that, there are import tax breaks for machinery and essential materials used for R&D purposes.

  1. Double deduction of infrastructure and utility costs

For 10 years, your company can receive double deduction in transportation, electricity, and water supply costs, with an additional 25% deduction of the cost of installation or construction of facilities.

Non-tax incentives from Thailand’s BOI

  1. 100% foreign ownership

BOI allows foreign companies to bypass typical restrictions imposed by Thailand’s Foreign Business Act. One of them concerns the ownership of businesses. This means that you can maintain full control of your foreign-owned business without a Thai partner or shareholder.

  1. Easier to hire workers and get permits

BOI-promoted companies enjoy streamlined access to work permits and visa procedures. You’ll be able to skip the long and complicated red tape of hiring skilled foreign workers and getting long-term visas for executives, experts, and family members. The BOI also speeds up approvals and minimizes bureaucratic delays. What’s more, there’s no mandatory foreign-to-Thai employee ratio, meaning that you’ll be able to hire foreign skilled workers without limit or bias.

  1. Land ownership rights

Regular foreign businesses are unable to own land in Thailand. However, BOI-promoted companies earn the lucky privilege of owning land for operational use. The catch is that they have to use that land for factory setup, office, or other business purposes.

  1. Exclusive government backing

Thailand’s BOI has no local content requirements, meaning that you don’t have to source a specific percentage of materials from Thai suppliers. This gives you flexibility in choosing the best materials and partners for your operations, whether local or international, rather than prioritizing arbitrary rules. 

It also protects the nationalisation of your business, maintaining your company’s values and identity intact. Additionally, being approved by the BOI positions your company as a credible and legitimate business in the eyes of Thai nationals, both authorities and potential partners.

Drawbacks of BOI Promotion

Despite the many benefits provided by BOI promotion, there are certain drawbacks to take into account.

  1. Long application procedure

The BOI application procedure can take between three and nine months to complete. It can be very complex and time-consuming if the initial application is not prepared well. Companies can also fail to meet the necessary criteria even after applying.

  1. Hefty investment requirement

A minimum capital of USD 30,891 is mandatory unless considered eligible in special cases. For projects with investment capital of USD 308,832 and above, you have to obtain certain ISO certifications. This might be a significant barrier to entry for certain foreign investors.

  1. Consistent performance oversight

Companies that have successfully received BOI promotion still have to achieve targets for export and job creation. Normally, the project added-value must not be less than 20% of revenues, and the ratio of debt-to-equity must not exceed 3 to 1 for new projects. Failure to reach the performance requirement may result in losing the BOI promotion.

Take full advantage of Thailand’s BOI promotion with Double M

Thailand’s Board of Investment can significantly lower your operational costs and improve your ROI (if you comply with the set standards). The benefits provided are hard to ignore. From tax breaks to 100% foreign ownership, the BOI offers a powerful incentive package that makes Thailand one of the most investor-friendly countries in Asia.

However, if you want to make the most of what Thailand has to offer, it’s a good idea to consult with an experienced advisor in legal or business who is familiar with the BOI application process. Get in touch with Double M to fast-track your company setup in Thailand and skip the busywork. With a wealth of market entry experience, we have business matchmaking services to connect you with locals and a dedicated team prepped to guide you pass your BOI application process with flying colors.