Thailand Investment Promotion for Software Park Business
Thailand Investment Promotion for Software Park Business
As the digital way of life has now been touching all corners of the Thai society, the software industry is a very crucial driver for the country’s technological, social and economic development. With a very competitive market, Thailand is a very attractive software investment location for its skilled and affordable workforce, with programmers with a strong suit. If you are planning to invest in a Software Park business in Thailand, then the conditions and incentives below might help you.
- Project must have high-speed fibre-optic main communication system throughout the area.
- The main telecommunication system must have a high-speed cable from the software park to domestic and international telecommunication centre.
- Continuous back-up of electricity supply must be installed.
- The total area must not be less than 5,000 square meters.
Incentives to set up a software park in Thailand promoted by the board of investment are:
- An 8 year exemption from corporate income tax
- Exemption of import duties of machinery such as computers and software
- Exemption of import duties on raw materials used in production for export
- 100% foreign ownership
- Permit to own the land
- Permit to bring skilled workers and experts to work in Thailand.
For further queries, please feel free to read the Thailand BOI information and contact MSNA to help you with your BOI company registration.
Buying a BOI Company – Pros and Cons
Foreigners who want to own their business in Thailand 100% can choose to set up or buy a BOI company. If you decide to set up a new company and get a BOI promotion, most of the time, you will have to go through a long gruesome process for months before you can get your project approved by the Board of Investment. A perfect alternative is buying a BOI company which will allow you to start your business operation right away.
Here are some pros and cons of buying a BOI company:
- You can start hiring you’re your employees right away;
- You can start invoicing your clients and making money immediately (yes, why wait for months before you can start making money?);
- You may take over all the existing clients if the seller agrees;
- In many cases, the company already has accounting in place;
- You can get your work permit and extend your visa processed in a very short time;
- You may take over the employees if the company is in operation;
- If the company has been operating, you may need to hire an accountant to do due diligence to see the financial health of the company;
- You may have to check for pending cases with the Revenue Department, Social Security Office, and the Department of Business Development.
- You have to hire a law firm to check if there is any pending court cases (including the labor court);
- You may want to check if the company has been in compliance with all the BOI conditions;
- If you take over the employees, please note that their length of employment started before you really become their employer. Thus, if you need to let some go later, think about the severance payment rates, which depend on how long they have been hired by the company;
At MSNA Group, we have BOI companies for sale. And we make sure the buyer and the seller get a fair deal. If you are considering buying a BOI company, especially for software business, contact us now.
BOI for Grading, Packaging and Storage of Plants
Foreigners can own the business 100% if their business is eligible for Thailand BOI. For grading, packaging and storage of plants, vegetables, fruits or flowers, it is possible if your business have one of the following features:
- If your project uses advanced technology (e.g. fruit ripeness sensor, radio frequency pest control, nuclear magnetic resonance) then for this business activity, the BOI benefits that you will get are:
- 8 year corporate income tax exemption, not more than 100% of investment (excluding cost of land and working capital);
- Exemption of import duty on machinery;
- Exemption of import duty on raw or essential materials used in manufacturing export products for 1 year, which can be extended as deemed appropriate by the Board of Investment;
- Permit for foreign nationals to enter the Kingdom for the purpose of studying investment opportunities;
- Permit to bring into the Kingdom skilled workers and experts to work in investment promoted activities (meaning many work permits without the ratio of 4 Thais per expat);
- Permit to own land; and
- Permit to take out or remit money abroad in foreign currency.
- Projects that use modern technology (e.g. color sorter, vapor heat treatment to kill fruit fly eggs, seed coating); or
- Project of rice grading (with advanced technology only)
For the business activities in 2 and 3, the BOI benefits that you will get are the same as in 1 above, but the corporate tax exemption is only 5 years and capped at100% of the investment (excluding cost of land and working capital).
Consult with MSNA Group for setting up your BOI promoted business in Thailand.
Thailand BOI for tourism related businesses
If you are interested in getting Thailand BOI promotion for Amusement Parks, Open Zoos, Hotels, Hostels, Race Tracks, Convention Halls, Exhibition Centers, now is the time. As we all know, Thailand is one of the most visited countries in South East Asia. It only makes sense that many foreign investors think about having a business out of tourism in Thailand.
The government makes a lot of effort in bringing and attracting more tourists all over the world. This opens a lot of opportunities and growth in the tourism related businesses. Thailand Board of Investment is offering both tax and non-tax incentives to foreigners who want to invest in Amusement Parks, Open Zoos, Hotels, Hostels, Race Tracks, Convention Halls and Exhibition Centers in the country. The benefits includes owning land for your business, import duty exemption for machineries, corporate tax exemption, dividend tax exemption, big number of work permits for foreign employees, etc.
Take a look at Thailand BOI promotion for more information and contact Thai lawyers at MSNA Group who are BOI experts and knowledgeable in assisting foreigners to set up their business. Contact us and explore the possibilities of owning your tourism related business 100% without a Thai partner.
International Trading Company Buying and Selling in Thailand
If your company outside Thailand buys goods from a Thai supplier and you have someone in the country (your agent, employee or supplier) deliver it to your Thai customer, you are considered doing business in Thailand, which according to the Foreign Business Law, your company needs to apply for a Foreign Business License in order to operate as such legally. The business activity is considered retail or wholesale of goods in Thailand, which are in List three of the Foreign Business Law.
However, if you pay the Thai supplier from your country and have it delivered to your country before you send it back into Thailand to your Thai customer, then it is considered an international trade and you do not need to get a Foreign Business License before you can operate such business.
MSNA Group of companies helps international clients in the areas of foreign business registration, be it representative office, branch office, BOI company, and accounting and taxation. Our clients include the American Chamber of Commerce (AMCHAM) and international groups of companies having an affiliate in Thailand. Contact us for any questions regarding your doing business in the land of smiles.
Tax on Branch Profit
When we have a branch office in Thailand, are we liable to pay taxes to the Thai government on overall income?
No, branches of foreign companies in Thailand are liable to pay income tax at the normal Corporate Income Tax rate on locally earned income only. Hence, branch incomes that are remitted to the head office overseas are subject to an additional tax of 10%.
Branches of foreign commercial banks however are exempt from this tax in respect of their profits derived from the “out-out business”.
Contact MSNA for your Thai accounting and tax questions.
Foreign Currency Account in Thailand
Are foreigners allowed to open foreign currency bank account in Thailand? How about a bank account in Thai Baht currency?
Yes, foreigners or non-residents may open and maintain foreign currency bank accounts with authorized banks in Thailand without limit. The accounts can be freely credited with funds coming from abroad. Payments from Thai residents or borrowing from authorized banks can be deposited subject to supporting evidences. Moreover, balances on such accounts may be freely withdrawn.
Non-residents may also open Thai Baht accounts with authorized banks in Thailand as follows:
1) Non-resident Baht Account for Securities (NRBS): The account may be debited or credited for the purpose of investment in securities and other financial instruments such as equity instruments, debt instruments, unit trusts, derivatives transactions traded on the Thailand Futures Exchange and the Agricultural Futures Exchange of Thailand;
2) Non-resident Baht Account (NRBA): The account may be debited or credited for general purposes (i.e. other than investment in securities) such as trade, services, foreign direct investment, investment in immovable assets and loans.
The total daily outstanding balances for each type of account shall not exceed THB 300 million per non-resident. However, transfers between different types of accounts are not allowed.
Contact MSNA if you need assistance in preparing the requirements to open a bank account in Thailand.
Thailand BOI – Policies for Investment Promotion
In order to relieve the fiscal burden of the government and to respond to current and future economic situations, the Board of Investment prescribes investment policies as follows:
1.1 The efficiency and effectiveness of tax privileges given shall be enhanced. Privileges shall be granted to projects that actually benefit the economy and good governance shall be used for managing and supervising the application of tax and duty privileges. Promoted entities shall report the operating results of their promoted projects to the Board of Investment for review prior to the application of tax and duty privileges for that year.
1.2 Every promoted project that has investment capital of 10 million baht and upwards (not including land and working capital) must obtain ISO 9000 certification or similar international certification. This is to promote development of quality and production standards in Thai industries and, thereby, to enhance the competitiveness of Thai industry in the world market.
1.3 Previous conditions on exports and use of local material are repealed so that the criteria for promotion will be in line with international trade and investment agreements.
1.4 Special promotion shall be given to regions or areas with low income and inadequate investment facilities. Maximum tax and duty privileges shall be given to these regions or areas.
1.5 Importance is given to small and medium industries by applying a minimum level of investment capital of 1 million baht (excluding cost of land and working capital) for projects eligible for promotion.
1.6 Priority is given to activities in agriculture and agricultural products, projects related to technological and human resource development, public utilities and infrastructure, environmental protection and conservation and targeted industries.
Know more about Thailand BOI promotion and its privileges. Contact ThaiLawyers for consultation.
Thailand BOI – Research and Development Activities
Can a company providing R&D activities apply for BOI promotion in Thailand?
Thai companies providing research and development business can apply for BOI promotion. Qualifying R&D activities are defined as follows:-
- Basic research – involves theoretical or operational activities that are conducted to explore new knowledge from basic natural phenomena and factual observation, without initially considering the application.
- Experimental development – involves a systematic operation based on the knowledge from research and/or experience with the objective of producing new materials, products or inventions; to install new procedures, systems and services; or to substantially improve the existing products.
- Applied Science – involves research to explore new knowledge with an objective to put it in practice for specific use.
Interested in getting Thailand BOI, contact ThaiLawyers for application requirements and procedures.
VAT Implication on a software application
Today, we got a question from one of our accounting clients whom we also assisted in getting BOI promotion for their software business in Thailand.
Question: As you may have already known, our sister company (which is not BOI promoted) has proposed to develop an application that will enable users to download e-books in exchange for payment on a monthly basis. Would this activity be considered as sales of goods which I believe are VAT-exempt or will this be qualified for zero rate VAT in case our customer downloaded and used the e-book abroad.
We verified it with the Thai Revenue Department and according to them, downloading of e-books is not categorized as sales of newspaper, magazine and textbook but it should be treated as a service which is subject to VAT. Hence, the zero rate VAT applies if such service is used overseas.
Contact MSNA, English speaking Thai accountants for your Thai accounting and tax questions.