Exploring the benefits of the IEAT in Thailand

Exploring the benefits of the IEAT in Thailand

Table of Contents

Introduction

Thailand has positioned itself as a hub for international business, and the Industrial Estate Authority of Thailand plays a pivotal role in its success. Offering a unique blend of strategic location, infrastructure, and incentives such as 100% foreign ownership of a business and land, the provides a unique opportunity for foreign companies to establish and expand in Southeast Asia. 

This blog post delves into the key reasons why it presents itself as the ideal partner for your business’s next chapter in Thailand.

Key Points

  • 100% foreign ownership of land and companies within an industrial zone is permitted
  • Foreign skilled workers can be easily hired
  • Companies operating with an IEAT zone are exempt from the majority of import tax and duties typically imposed when importing/exporting goods.

What is the Industrial Estate Authority of Thailand?

The Industrial Estate Authority of Thailand is a state enterprise operated by the Ministry of Industry of Thailand. Its aim is to develop and enhance the management of industrial estates and industrial ports in order to operate as strategic production and service bases with the necessary infrastructure and facilities already in place. It aims to provide a competitive advantage for entrepreneurs while balancing economic, social and environmental growth.

It operates a one-stop service center (OSS), which provides a complete service from the beginning to the end of the process of doing business with the it. This includes the acquisition of land, whether purchased or rented, and establishing a business within one of the free zones.

The Industrial Estate Authority of Thailand, provides both tax and non-tax benefits to eligible companies, and industrial estates are divided into two zones: General Industrial Zones and Free Zones. Within these zones there are no export conditions imposed in accordance with WTO obligations.

What are the Industrial Estates established by the IEAT?

There are currently two distinct types of industrial estates in Thailand. 

The General Industrial Zone

The General Industrial Zone (‘GIZ’) is an area that has been designated for industrial activities, service activities or other businesses which are related to the operation of industrial or service activities.

As part of GIZ’s the Industrial Estate Authority of Thailand provides a host of services that have been deemed essential for industrial operation such as:

  • transportation within the GIZ
  • training centers, 
  • permission to own the land required for the operations. 

The Free-Trade Zones in Thailand

In the Industrial Estate Authority of Thailand Free Zone, operators are permitted to import merchandise or raw materials and export products without any restrictions imposed upon them.

Tax and duty relief applies to the following:

  • Products made for domestic use taken out of the Free Zone; and
  • Raw material components produced domestically.

Businesses operating within an Industrial Estate Authority of Thailand Free zone may also import merchandise and raw materials for production, trade or services without any restrictions on materials e.g. Amount or value of the materials. 

Furthermore, supplies or raw materials brought into the zone do not require import permits/licences, and are exempt from the standard and quality control requirements typically imposed on any imports to Thailand.

What are the Benefits of the Industrial Estate Authority of Thailand for Foreign Investors?

Companies who are eligible to operate within one of the Free-Trade Zones in Thailand are eligible for a wide variety of unique advantages and benefits that can significantly assist their business.

100% Foreign Ownership

Companies who are eligible to operate within an Industrial Estate Authority of Thailand zone are eligible for 100% foreign ownership of their business. Furthermore,  foreign investors may purchase and own land within these zones. Typically, it is not possible for foreign owned companies to own land (unless a BOI promotion has been obtained).

Freedom to Import/Export goods within Industrial Estate Authority of Thailand zones

Businesses within the Industrial Estate Authority of Thailand Free Zone (‘Free Zone’) enjoy the freedom to import goods or raw materials and export finished products. Additionally, supplies imported into the Free Zone benefit from tax and duty advantages. Such supplies includes:

  • Products manufactured for domestic use that are taken out of the Free Zone.
  • Raw material components produced domestically.

Furthermore, businesses have the flexibility to import items and raw materials without any restrictions for production, commerce, or service provision. Additionally, supplies or raw materials brought into the zone by exporters of goods are exempt from the need to obtain import permits, seals, or symbols. These transactions are also exempt from all regulations, unless specifically stipulated by customs law and quality control requirements.

The Industrial Estate Authority of Thailand also provides both tax and non-tax benefits to promote investment and facilitate industrial operations. Tax incentives include exemptions from: 

  • import duties, 
  • VAT on machinery and raw materials, and 
  • exemptions or refunds of duty on eligible materials. 

Permission for foreigners to stay in Thailand

The IEAT permits companies operating within their zones to hire qualified foreign individuals, in practice will happily approved a variety of roles including, 

  • directors, 
  • presidents, 
  • finance and administration personnel, 
  • executive assistants, 
  • factory assistants,  
  • marketing, 
  • export, and 
  • sales professionals.

As per the Industrial Estate Authority of Thailand, the spouse and dependents of a foreign skilled employee are allowed to stay in Thailand. Spouses and dependents are entitled to stay in Thailand for the same amount of time as the foreigner. However, the relationship between the spouse and the dependent must be proven through evidence, such as a valid marriage certificate or a birth certificate.

Can foreigners buy industrial land in Thailand?

Typically, foreigners are generally prohibited from owning land in Thailand, but there are some exceptions. One such exception is the ability for foreign entrepreneurs to own land within an industrial estate to conduct business, as the Industrial Estate Authority of Thailand may deem appropriate. 

It is important to note that foreign ownership of land within an industrial estate will still be possible even if the land area limitations prescribed by the Land Code have been exceeded .

Foreign investors who wish to purchase industrial land in Thailand must obtain a license from the Industrial Estate Authority of Thailand to use the land for business operations. The application to obtain a license is called Form Industrial Estate Authority of Thailand 01/1, and the following information is required:

  • the specific land plot that the applicant is interested in purchasing and from whom, 
  • basic information regarding the applicant’s corporation, and 
  • the precise dates as to when the factory will begin construction and
  • the precise dates of when it will begin operations.

Once the foreign investor has obtained the license to use the land for business operations, they may proceed with the application to actually own the land. In order to own the land, the applicant is required to submit Form Industrial Estate Authority of Thailand 15 S, a copy of the Industrial Estate Authority of Thailand license, a copy of the title deed, and other relevant documents.

Our Thoughts

Foreign companies who undertake industrial or import/export business activities and are looking to expand into Thailand and Southeast Asia may find the Industrial Estate Authority of Thailand an invaluable option. With the option for 100% ownership of your business, tax and import benefits, the ability to hire foreign skilled employees and being able to own land, the Industrial Estate Authority of Thailand provides significant advantages to your company which are not available to other companies.

Book a Call with our expert

Up to an hour consultation on the process of starting and running a business in Thailand.

During this session, our lawyer will provide insights into key areas, including company structure, outsourced employment services, taxes, accounting, and other general facets of running a business in Thailand. Additionally, we are here to address any other legal queries you might have, ensuring you have a comprehensive understanding of the topic at hand.

Our responses will be pragmatic, breaking down both the legal aspects and local practices in a manner that’s easy to grasp.

Should your questions require additional research, our experts will delve deeper and follow up with further insights via email.

This consultation is offered by legal experts fluent in English, French, or Thai.

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