Thailand Board of Investment launched the Cluster-based Special Economics Development Zone Policy to enhance investment potentials and competitiveness. There are Super Cluster and other targeted clusters. Software is one of the activities granted highest incentives under Super Cluster policy.
Without the cluster policy, embedded software development business normally can get 8 years of corporate income tax exemption while enterprise software and digital content can get 5 year income tax exemption.
Under Super Cluster policy, all types of software development are granted 8 years corporate income tax exemption without cap plus 5 years 50% income tax reduction and import duty exemption on machinery if operating in either Chiangmai or Phuket.
Additionally, the international specialist may enjoy the personal income tax exemption, details of which will be announced soon by the Ministry of Finance.
Apart from the above tax related benefits, other incentives include consideration of granting Permanent Residence to the leading specialist and permission for foreigners to own land to implement the activities that receive Thailand BOI promotion. – However, we checked with the Immigration Office and they do not really have any special treatment regarding permanent residence yet.
General Conditions for BOI incentives
- The business have to spend THB 1.5 M in IT employees’ salaries per year.
- Projects must include software development process specified by the Software Industry Promotion Agency (SIPA).
- Projects with an investment of 10 million baht or more (excluding cost of land and working capital) must obtain a quality standard certificate from SIPA or receive a Capability Maturity Model Integration (CMMI) quality standard certificate or any equivalent standard within two years from the full operation start-up date. If the project fails to meet such conditions, one-year corporate income tax exemption shall be withdrawn.
- Revenue derived from sales or the provision of services that are directly related to a promoted software business shall be regarded as revenue of such promoted businesses.
Additional condition for special incentive under Super Cluster
- The business must have a cooperation with academic institutions / research institutions / centers of excellence in the designated areas e.g. Talent Mobility / Work-integrated Learning / Co-operative Education / Dual systems or Cooperation in development of human resource or technology as approved by Thailand Board of Investment
- The BOI applications must be submitted by the end of 2016.
- The production or operation must start by the end of 2017. (Extension is possible if deemed appropriate.)
Read Thailand BOI promotion process for more information.
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