Registering a company under the Thailand Board of Investment is a complex process that offers a variety of non-tax incentives for foreign companies. Our team has extensive experience helping business owners get BOI promotion and subsequently take advantage of the benefits.
Among the benefits are corporate income tax exemption and reduced import duties on machinery. However, it is important to note that there are conditions that must be met.
1. Requirements for a BOI Promotion
The Thailand Board of Investment (BOI) is a government organization that encourages business investment in the country. Companies that have a BOI promotion are eligible for special incentives, such as major tax waivers and reduced requirements for hiring foreign employees.
To be considered for a BOI promotion, your company must meet certain criteria. For example, it must have a minimum of one million baht in investment capital. This can be in cash or in physical assets such as land, equipment, and machinery. It is also important that the company’s business activities fall under a BOI category.
Other benefits of having a BOI promotion include the ability to remit money abroad in foreign currency, permission to bring in skilled workers, and protection against nationalization. In addition, BOI promoted companies can receive a range of fiscal and non-fiscal incentives, including tax exemptions and reductions and import duties on raw materials. These perks can make BOI promotion an attractive option for entrepreneurs and investors.
2. Requirements for a Foreign Business License
The Thailand Board of Investment offers a wide range of incentives to investors in the country. The BOI currently focuses on investments in high-tech and innovative fields, including digital technology, “smart agriculture” and biotechnology, aviation and logistics, and automation and robotics.
To qualify for a BOI promotion, a foreign company must also have at least two-fifths of its shares owned by Thai nationals. This is important because certain restricted business activities are only allowed for foreign majority-owned companies that hold a foreign business license.
The list of prohibited activities includes firearms and armaments; domestic transportation by land, water, and air; trading of traditional arts or folk handicrafts; and mining. If a foreign-owned company wants to engage in any of these activities, it must first apply for a foreign business license from the DBD. The application process for this may take up to four months. If the Minister decides not to approve a foreign-owned company operating in activities listed under List 2, he or she must give reasons for such refusal within 60 days.
3. Requirements for a VAT Certificate
When a company meets the minimum requirements for a VAT Certificate, it can enjoy a wide range of tax benefits. These include the waiver of export and import taxes on manufacturing machines, raw materials, and research and development. It also has access to three non-tax incentives.
To get a VAT Certificate, companies must register for a business tax ID card within 30 days after reaching the 1.8 million baht threshold. They must also submit quarterly reports and annual returns electronically.
It is important to submit all the required documents in a timely manner. If an applicant cannot meet the deadline, he or she can send a letter of explanation to BOI Thailand. This may allow them to extend the submission of all the required documents. However, this extension will not be granted more than three times. The applicant must also ensure that all the supporting documents are accurate.
4. Requirements for a Company Bank Account
The banking system is dominated by the Bank of Thailand, which prints and issues banknotes; promotes monetary stability and formulates monetary policies; manages government assets; acts as the registrar of government bonds; and provides banking facilities for financial institutions. Commercial banks perform deposit-taking, credit-granting, and other traditional services. They also provide other financial instruments for risk management, such as foreign-exchange derivatives.
In addition to the mainstream banking system, there are micro-savings groups, state village funds, and informal money lenders that offer limited but affordable financial services in rural areas. These alternative financial services are regulated by the state.
While the Thai government welcomes investments from all countries, it still maintains controls that limit majority foreign ownership of businesses in certain sectors, including telecommunications and aviation, although investors registered under the United States-Thailand Treaty of Amity and Economic Relations are exempt. The government is working to improve the business climate by streamlining regulations and eliminating red tape.