Having your own production in Thailand creates competitive advantages through low trade costs without customs
duties in Asia, long-term tax exemption, well-trained specialists and a superior infrastructure.
BOI Thailand – Incentives and Procedure
A Production in Thailand is massively promoted by the Thailand Board of Investment (BOI). The financial incentives are high, yet the ISO-regulated procedure for a BOI Approval requires good knowledge of the BOI Thailand’s expectations towards the investor and a thorough application process.
Since 2023, Thailand has been in the spotlight for foreign investment into a production facility: SMEs from Europe find a safe haven for cost-effective production, a well-trained workforce, affordable personnel costs, an excellent infrastructure and duty-free exports to 10 ASEAN countries as well as China, Japan, South Korea, Australia and New Zealand. Even Chinese manufacturers are investing heavily in the Kingdom because their production in Thailand is not subject to any boycott in the USA.
A legal system similar to German law, a high level of protection for intellectual property, a strong domestic market and a broad range of highly qualified suppliers also speak in favor of investing in Thailand.
But what are the particular benefits that a BOI promotion in Thailand offers to investors, and how exactly does the application process work?
The Sanet Group, which has been a reliable partner for Western companies since 2004 when it comes to finding a strategy and setting up sales or production in Thailand, explains the main features:
First of all, the BOI differentiates between tax incentives and non-tax incentives:
- Depending on the industry, the Thailand Board of Investment (BOI) grants a full or partial waiver of corporation tax for between three and 13 years. Initial losses can be carried forward to the end of the incentive period.
- The free repatriation of profits.
- Machines can be imported duty-free; used machines require certification.
- Materials or components for production can also be imported duty-free over a variable period.
- Those who import a maximum of 59% of their materials and components from countries not linked to Thailand by a free trade agreement also receive a Thai certificate of origin, which enables their customers in almost all of Asia to import their products duty-free.
The non-tax incentives include in particular
- The right to acquire ownership of land outside and inside industrial estates
- Acquisition of land ownership also for the investor’s private use
- Facilitation of visa and work permits for employees
- Greater depreciation opportunities for certain measures, such as employee training or infrastructure (“merits”)
In addition, most of the obstacles of the Foreign Business Act no longer apply to investors in sales and technical services.
If you want to produce cost-effectively in Thailand with a “BOI Approval”, obtain important components duty-free and also repatriate your profits tax-free to the parent company, then of course you also need to present your business plans professionally as part of an application process.
BOI-Approvals for Foreign Investment in Thailand requirement among other things
- that 25% of the planned investments must be provided by own funds;
- that this capital must be imported from abroad;
- a detailed three-year business plan must credibly demonstrate which products and which potential customers will be expected to generate a positive result by the end of this period;
- that the plan must state which local employees and their qualifications will be employed and which foreigners will receive work permits and for what functions;
- that the production itself, the products to be produced and the production processes are presented in a comprehensible manner.
All of this follows legally defined criteria.
A particularly positive aspect is that the Board of Investment works absolutely free of corruption and acts in the best interests of the investor. This business-friendly government agency is also aware that business plans may be subject to deviations. Changes or delays in plans should be submitted to the BOI Thailand, which must approve major deviations. In most cases, the requests are successful if the reasons are explained transparently.
The procedure also does not require the investor to disclose all of his “know-how”, as is the case in China, for example. A coherent business plan is sufficient.
However, for a smooth procedure, it is helpful to have an experienced investment consultant with a good network and knowledge of the procedures in the BOI Thailand.
The Sanet advisory group, which has been active in Thailand since 2004, with its lawyers and investment experts, provides professional support in the preparation, submission and follow-up of the application through to project management for your investment.