ENERGY savings and beyond: New BOI incentives for Environment
On April 30th, 2024, Thailand Board of Investment introduced an updated policy framework targeting businesses seeking promotional benefits by giving the advantage of current tax and machinery import incentives such as tax exemptions and tax refunds. The guidelines serve as an attraction for enterprises to align with corporate responsibility and environmental principles. The BOI’s options demand compliance with one of three principal economic measures: energy saving, the adoption of renewable energy, and pollution reduction. These measures are critical requirements for businesses benefiting from the BOI’s incentives.
Under the energy-saving mandate, businesses must demonstrate that the cost savings from their energy conservation efforts surpass the tax exemptions they are willing to receive. This ensures that the financial benefits are directly tied to tangible environmental outcomes. For those focusing on renewable energy and pollution reduction, the BOI will precisely evaluate the initiatives to determine their conditions for incentives. The primary criterion for this evaluation is the positive environmental impact of the investment, underscoring the BOI’s commitment to genuine ecological benefits.
Boi has provided the three categories of criteria to be energy saving as the following:
The criteria and the evaluation have three main aspects:
Under the energy-saving mandate,
Businesses must prove that their energy conservation efforts result in cost savings greater than the tax exemptions they receive. This ensures that financial benefits are tied to tangible environmental outcomes.
The criteria are straightforward:
Energy Savings: The energy saved over five years must be at least equal to the value of the income tax incentives received over three years.
Embracing Renewable Energy
The second criterion focuses on the adoption of renewable energy. Businesses must demonstrate a shift from fossil fuels such as coal, oil, or natural gas to renewable energy sources.
The BOI will evaluate:
Renewable Energy Use: The extent to which renewable energy replaces previous fossil fuel consumption.
Reducing Environmental Impact
The third criterion involves reducing environmental impact through pollution reduction.
The BOI will assess:
Pollution Reduction: Measures that lower water and air pollution, or initiatives that employ eco-friendly technologies.
Meeting these criteria offers substantial benefits:
Machinery Import Tax Exemption: Customs tax exemption on imported machinery.
Income Tax Exemption: A three-year income tax exemption worth 50% of the investment, excluding land costs and working capital.
Why Invest in Thailand Now?
Thailand’s strategic location, coupled with the government’s commitment to sustainable development, presents a unique opportunity for foreign investors. By aligning with BOI’s innovative guidelines, businesses can tap into significant tax and customs incentives, making their investments more profitable. The emphasis on energy efficiency, renewable energy, and pollution reduction not only ensures a positive environmental impact but also enhances corporate reputation and competitiveness.
How to gain the incentives?
The applicant must prepare an application form for promotions and incentives, including a project plan and an investment plan that meet the Board of Investment (BOI) criteria. The investment plan can focus on one of the following areas: replacing machinery for energy-saving purposes, replacing machinery to use renewable energy, or replacing machinery to reduce pollution.
Sanet Legal & Accountancy, a Western-minded law firm based in Bangkok, provides consultation on BOI matters, leveraging the expertise of experienced lawyers to guide businesses through the BOI matter. By booking a consultation with Sanet Legal, companies can navigate the complexities of these new guidelines and maximize their benefits from the BOI’s sustainable development incentives. Book your consultation here.