Thailand Board of Investment’s New Strategy for Investment Promotion from 2023

2. Summary of key revisions and measures in response to the New Strategy

2.1 The revisions of promoted business categories

The BOI has introduced the list of categories of promoted business activities. The new list of categories of promoted business activities (“New List”) is described in the new BOI Notification No. 9/2565 Re: Investment Promotion Measure for Industries which are Important for Country Development dated 8 December 2022 and also in the Investment Promotion Guide as of 2023 (“BOI Guide”). The promoted business activities will be re-categorized into ten (10) categories i.e. (1) agriculture, food and biotechnology industry, (2) medical industry, (3) machine and vehicle industry, (4) electric appliances and electronics industry, (5) metal and materials industry, (6) chemical and petrochemical industry, (7) utilities, (8) digital industry, (9) creative industry and (10) high-value service.

There is no substantial change to the promoted business activities and incentives in the New List. Most remain the same. However, business operators are advised to check the New List for updated information relating to their investment promotion application.

2.2 The key measures under the New Strategy

There are nine (9) measures which are proposed by the BOI to drive the New Strategy※1. The key measures are as　follows:

(1) New scheme of incentives under the New Strategy

The BOI enacted the BOI Notification No. 8/2565 Re: Policy and Criteria for Investment Promotion dated 8 December 2022 (“BOI Notification 8/2565”) to replace the former BOI Notification No. 2/2557 dated 3 December 2014 which had been used for eight (8) years (“BOI Notification 2/2557”).

Under the BOI Notification 8/2565, the BOI does not substantially change the fundamental criteria for approving the investment promotion, for instance, the criteria continue to require not less than twenty per cent (20%) of income growth projection, use of new machines, having not less than One Million Baht (THB 1,000,000) of investment capital, etc.

In terms of the incentives based on business activities, under the BOI Notification No. 8/2565, there are still two (2) main groups, i.e. Group A and Group B with the following details:

• Group A – which is divided into five (5) sub-groups, namely Group A1+, A1, A2, A3, and A4, which are entitled to the following incentives:

1. The Corporate Income Tax (“CIT”) exemption;
   Under the BOI Notification No. 8/2565, the range of the CIT exemption is from three (3) to thirteen (13) years depending on each sub-group. Please note that Group A1+ (concerning mainly the technology development such as biotech, nanotech, advanced material tech, upstream industry using high level of technology and innovation) is newly added and will be entitled to the CIT exemption from ten (10) to thirteen (13) years, while, formerly, under the BOI Notification 2/2557, the CIT exemption for eight (8) years for Groups A1 and A2 was the maximum;
2. Import duty exemption for machinery;
3. Import duty exemption for raw materials or necessary materials only for manufacturing for export; and
4. Non-tax incentives※2.

• Group B – which is entitled to the same incentives under item (ii) to (iv) of Group A above but not including the CIT exemption. Under the BOI Notification 8/2565, Group B does not have any sub-groups.

Under the BOI Guide, each type of business activities will be specified with the entitled incentive either under Group A (each relevant sub-group) or Group B※3.

(2) Additional incentives under the New Strategy

Other than activities-based incentives under the new BOI Notification 8/2565, the BOI issued several other notifications in regard to additional incentives which include:

(a) Merit-based incentives

The BOI crafted out incentives for enhancement of competitiveness in the former BOI Notification 2/2557 and included it in the newly issued BOI Notification No. 10/2565 Re: Measure for Enhancement of Competitiveness dated 8 December 2022 (“BOI Notification 10/2565”). Business operators are able to apply for additional incentives under the BOI Notification 10/2565 provided that the project invests in (i) technology and innovation, (ii) human resource development (e.g. high technology training, work-integrated learning (WiL), co-operative education program), or (iii) suppliers’ potential development.

The additionally granted incentive is an additional exemption of CIT in the amount of two hundred per cent (200%) of the investment or expenses. Also, such project will be granted additional incentives in relation to CIT exemption for the following additional period if the amount of investment or expense is as in the table below.

In case the project invests in research and development (R&D) not less than one per cent (1%) of the first three (3) year sale or Two Million Baht (THB 2,000,000), whichever is lower, the amount of CIT exemption will have no limit. In addition, the duration of addition CIT exemption shall not exceed eight (8) years in total except for Group A1+, A1 and A2, for which the exemption shall not exceed thirteen (13) years in total.

(b) Area-based incentives

The BOI also issued the BOI Notification No. 18/2565 (2022) Re: Investment Promotion Measure in Special Economic Corridor Area dated 8 December 2022 (“BOI Notification 18/2565”) which prescribes the following provinces to be designated as Special Economic Corridor Areas:

• Northern Economic Corridor: NEC-Creative LANNA – Chiang Rai, Chiang Mai, Lamphun and Lampang provinces;
• Northeastern Economic Corridor: NeEC-Bioeconomy – Nakhon Ratchasima, Khon Kaen, Udon Thani and Nong Khai provinces;
• Central-Western Economic Corridor: CWEC – Ayutthaya, Nakhon Pathom, Suphan Buri and Kanchanaburi provinces; and
• Southern Economic Corridor: SEC – Chumphon, Ranong, Surat Thani and Nakhon Si Thammarat provinces.

The BOI Notification 18/2565 attaches the list of targeted industries in the Special Economic Corridor Area which can obtain additional incentives such as business activities in digital industry, agriculture and food industry, etc. If the project carries out human resource development or technology and innovation research and development, the additional incentives, e.g. additional two (2) years of CIT exemption for business activities in Group A1+, will be granted provided that the required conditions are fulfilled.

Furthermore, in addition to the BOI Notification 18/2565, the BOI issued other notifications regarding New Strategy to grant additional incentives in certain areas, for example, medical innovation area, science and technology area, etc. Business operators can apply for these additional incentives for the project carried out in these specific areas.

(c) Agenda-based incentives

The BOI issued the BOI Notification No. 15/2565 Re: Measure for Industry Elevation (Smart and Sustainable Industry) dated 8 December 2022 which specifies measures and incentives which will be granted thereunder, for example, measure for automatic and robot system in manufacturing process or measure for industry 4.0 elevation for business activities under Group B, etc.

3. Conclusion

From 2023, investors in Thailand can benefit from BOI’s new scheme of investment promotion under the New Strategy. Thus, business operators applying for investment promotion from 3 January 2023 onwards are advised to check the details of such new investment promotion scheme and avail of the incentives under these newly issued BOI Notifications.