Introduction
When embarking on the journey of establishing a company in Thailand, one should seriously consider the merits of seeking a promotion from the Board of Investment (BOI). As a dedicated government agency, the BOI’s primary goal is to attract foreign investment by offering a host of exclusive incentives and benefits that aren’t accessible to regular companies. These incentives include tax exemptions, streamlined visa procedures, infrastructure support, etc. Securing a BOI promotion can accelerate market entry in Thailand and cultivate a business-friendly environment.
This blog post aims to shed light on the BOI and the steps involved in obtaining a coveted BOI promotion.
Key Points
- 100% foreign ownership of the company is possible.
- Tax benefits include temporary income tax exemptions for specific business activities.
- Reduced requirements to support work permits for hiring skilled foreign experts.
- The ability to own land.
Why Should Investors Apply for a BOI Company Formation in Thailand?
As previously mentioned, companies that receive BOI company formation promotions stand to gain special incentives. It’s important to note that the nature of tax incentives varies depending on the specific BOI promotion granted. Therefore, not all BOI promotions guarantee tax benefits.
These incentives can be a game-changer for foreign companies seeking a foothold in Thailand. The incentives include:
100% foreign ownership
For regular Thai Limited companies, foreign ownership is typically limited to 49.9%, owing to the constraints imposed by the Foreign Business Act. BOI-promoted companies, however, are exempt from these restrictions and can be wholly foreign-owned.
BOI Companies and the Foreign Business Act
Companies receiving a BOI promotion are granted a Foreign Business Certificate, effectively removing the shackles imposed by the Foreign Business Act (FBA). This certificate permits these companies to engage in business activities in Thailand that would otherwise be restricted to foreigners or foreign-owned entities.
Reduced Quota for Hiring Foreign Employees
Unlike other business structures, BOI-promoted companies face no quotas when hiring foreign skilled employees. Thai Limited Companies, for instance, must adhere to stringent hiring ratios, such as a 4:1 Thai-to-foreign employee ratio. This removal of quotas is a significant advantage offered by a BOI promotion.
Other incentives
BOI-promoted companies enjoy a host of non-tax incentives, including
- land ownership permits,
- streamlined visa and work permit processes,
- the ability to remit money abroad in foreign currency.
The BOI frequently announces additional, often time-sensitive, incentives for companies already operating under a BOI license.
Tax incentives
Tax incentives for BOI-promoted companies may include exemptions or reductions in import duties, income tax exemptions for juristic persons, and double deductions for transportation, electricity, and water supply costs.
The duration of corporate income tax exemptions varies, with options for eight-year, five-year, and three-year exemptions based on the nature of the business activities.
Who Can Apply for a BOI Promotion?
Various types of companies are eligible to apply for BOI promotions in Thailand. The BOI promotes investments in specific target sectors, encompassing manufacturing, technology, research and development, tourism, agriculture, renewable energy, and more. Eligibility criteria and incentives can vary based on the sector and the specific activities undertaken by the company.
The following sections outline the areas in which companies may be eligible for promotion:
Section 1: Agriculture, Food, and Biotechnology Industry
Section 2: Medical Industry
Section 3: Machinery and Vehicles Industry
Section 4: Electrical Appliances and Electronics Industry
Section 5: Metal and Material Industry
Section 6: Chemical and Petrochemical Industry
Section 7: Public Utilities
Section 8: Digital Industry
What is the Process of Registering a BOI Company in Thailand?
In order for a company to successfully navigate the application procedure, it must undertake the following steps.
Feasibility Study (Timeline: 3 Business Days)
In order for a company to successfully navigate the application procedure, it must undertake the following steps.
A feasibility study helps companies assess a BOI application’s viability and potential success. This crucial step can save considerable time and effort in the long run.
BOI Application and Interview Process (Timeline: 3 to 5 Months)
During this phase, companies must submit application forms tailored to their specific business category. Information required includes details on capital, project, employee forecasts, management team expertise, and financial projections. A BOI officer reviews the application and may seek additional information. A meeting is held at the BOI office for project presentation after submission.
BOI Approval and Acceptance of Terms (Timeline: 1 Month)
The BOI notifies the applicant of its decision within seven days, outlining the approval criteria, privileges, and conditions. The applicant has 30 days to accept these terms or request extensions if needed.
The approval may take longer for some specific BOI categories with requirements of high capital.
BOI Company Registration in Thailand and BOI License (Timeline: 1 Month)
Upon approval, a limited company must be registered in Thailand within six months. An existing Thai company can be used for BOI promotion if its capital is increased to meet BOI requirements. Various documents must be submitted for BOI license acquisition.
Foreign Business Certificate (Timeline: 2 Weeks)
If the company’s BOI activities include those regulated by the Foreign Business Act, a Foreign Business Certificate is necessary.
BOI Work Permits and Visa (Timeline: 1 Month)
For foreign staff recruitment, company registration in the single window platform is required. Work permits and visas can then be processed at the BOI one-stop service center.
BOI Reporting and Compliance
Promoted companies must meet specific requirements related to machinery import, construction, operation cessation, and more. Failure to comply may result in warnings or promotion withdrawal.
BOI Accounting
BOI-promoted companies must adhere to special accounting requirements based on their promotion category. Mandatory reporting for VAT, WHT, SSF, and auditing applies.
