Data Center is classified as one of the priority activities by the Thai Board of Investment. In order to promote investment in Data Center, develop information technology infrastructure, and enhance efficiency and to reduce costs of doing business which are crucial to the development of Thailand as center for regional operating headquarters and information technology, the BOI has set the following conditions and privileges of activities eligible for investment promotion as follows:

1. There must be hi-speed fiber optic telecommunications connection throughout data center.
2. The main hi-speed telecommunications system must link data center with domestic and international telecommunications centers.
3. There must be continuous power distribution backup system and backup power generator to support normal operation of information technology system.
4. There must be high-efficiency air conditioning and filter system to support efficient device operation.
5. Area of data center must not be less than 5,000 square meters.
6. Complementary services for customers located in the project e.g. server co-location, managed service, customer’s server backup service, disaster recovery services (DRC), data center professional consultation etc. must be provided.

Contact MSNA for your Thailand BOI company registration, visa and work permit, accounting, tax and other business needs.

Can we set up a call center business in Thailand and get the Thai BOI promotion? What benefits can we get from the BOI?

Answer:

Yes, you can set up a call center business in Thailand. You can also be eligible for BOI promotion under the category of international business process outsourcing activity.

Per the BOI conditions, IBPO services must be provided through the telecommunications network. Services may include administrative support, finance and accounting, human resources, sales and marketing, customer support, international call centers, data processing, etc.

However, only non-tax incentives shall be granted to promoted IBPO companies.

Interested in getting BOI promotion for your company in Thailand, contact ThaiLawyers for company registration, BOI application, visa, work permit and your other business needs.

To encourage foreign investors to invest more in Thailand, the Thailand Board of Investment (BOI) is working out its road show plan and new investment strategy.

The BOI’s investment promotion activities will be adjusted in line with the BOI new investment strategy, which will be implemented in 2015. The new strategy will focus on the industries in which Thailand has good potential.

These industries include basic infrastructure and logistics, basic industry, medical devices and scientific equipment, alternative energy and environmental services, services that support the industrial sector, advanced core technologies, food and agricultural processing industry, hospitality and wellness, automotive and other transport equipment, and electronic and electrical appliances.

Apart from building confidence among foreign investors, the BOI overseas offices will publicize Thailand’s new investment policy, which emphasizes promoting knowledge-based industries and research and development. Thailand still welcomes foreign investment and the current political situation will not have an impact on the implementation of the new investment policy.

The BOI would also improve services for investors, facilitate their operations, and create a conducive investment climate to attract quality investments into the country. For instance, it would coordinate and push for law and regulation improvement, reduce investment obstacles, and ease investment problems.

Furthermore, the BOI would also play an increasingly important role as a center for providing investment information and counseling services. It will promote the development of personnel to cope with the growing industrial sector in Thailand, as well.

It is expected that more foreign investors are likely to use Thailand as their investment base for the franchise business upon the arrival of the ASEAN Economic Community in 2015. ASEAN countries stand to benefit from intra-regional investment activities. Many of them are now in need of investment to increase their potential growth rates.

Contact ThaiLawyers for company registration, work permit, visa and other business services in Thailand.

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.

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:-

1. 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.
2. 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.
3. 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.

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.

Answer:

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.

The Thailand Board of Investment may grant promotion to the investment project which incorporates appropriate measures for the prevention and control of harmful effects to the quality of the environment in the interest of the common good of the society and for the protection of mankind and nature. The BOI may also grant promotion to the investment project which is economically and technologically sound. Consideration will be given to:

(1) The existing number of producers and production capacity in the Kingdom and the size of production capacity to be created under promotion compared with demand estimates;

(2) The prospect for which such activity will expand the market for the products or commodities produced or assembled in the Kingdom and will encourage the production or assembly in the Kingdom;

(3) The quantity and proportion of the resources available in the Kingdom including the capital. Raw or essential materials and labor or other services utilized;

(4) The amount of foreign currency which may be saved or earned for the Kingdom;

(5) The suitability of the production or assembly processes;

(6) Other requirements which the Board deems necessary and appropriate.

Interested in Thailand BOI company registration, contact us for expert advice today.

Software industry continues its strong growth in Thailand due to strategic government policies, an increasingly high-technology infrastructure and an expanding technical labor force. The Thai government offers many benefits for firms engaged in software development, data center management and the production of animation and games. Inventors benefit from the country’s central location in Southeast Asia with competitive labor costs, educated and experienced workforce and domestic market with high growth potential.

Thailand is helping companies to grow through sound policies that provide critical infrastructure, ongoing training for IT professionals, and internship experience for recent software and animation graduates and access for financing for investors to undertake capital and labor upgrades.

There are great opportunities for investment in software, animation and gaming and data centers in Thailand due to strong government and private sector support which includes:

1. Business software
2. Animation and computer-generated imagery
3. Web-based applications and interactive applications
4. Entertainment software for mobile platforms, online games or Windows-based games
5. Multimedia video conferencing applications
6. E-learning content via broadband or multimedia
7. Embedded software
8. Data centers

The Thai government is committed to promoting the software, animation and gaming and date center sectors through incentives for foreign investment, direct support of software start-ups, ongoing professional training for developers and engineers and flexible loan programs that allow digital content firms to expand without capital constraints. This includes a range of fiscal and non-tax incentives for investors offered by the Board of Investment of Thailand.

Interested in setting up a software business in Thailand, contact ThaiLawyers Ltd. for Thailand BOI company registration.

In general, some companies that receive Thailand BOI promotion get only non-tax incentives. Among those companies which can get both tax and non-tax incentives is ROH or Regional Operating Headquarters.

A Regional Operating Headquarters (ROH) can be incorporated in Thailand provided that it will provide the following services as well as other supporting services to ROH’s foreign branches or associated enterprises:

• General administration, business planning and coordination
• Procurement of raw materials and components
• Research and development of products
• Technical support
• Marketing and sales promotion planning
• Personnel management and regional training
• Financial advisory services
• Economic or investment research and analysis
• Credit control and administration
• Any other activities stipulated by the Director-General of the Revenue Department

A ROH can apply for BOI promotion. The criteria for ROH in order to qualify for tax privileges under the old scheme are as follows:

1. Minimum paid-up capital must not be less than 10 Million Baht at the end of each accounting period;
2. Provide services to its branches or associated enterprises in at least 3 countries;
3. Half of its total income is derived from administrative, technical and other supporting services provided to its branches or associated enterprises in other countries and royalties received from outside of Thailand for the use of ROH’s Research and Development (R&D). The criteria can be mitigated to one-third of the total revenue in the first three accounting periods of its operation as ROH. In the case of force majeure, the Director-General of the Revenue Department may lower the income threshold for one accounting period; and
4. Notify the Revenue Department of its incorporation as ROH. The benefits will be given starting from the notified accounting period onwards

ROH incorporated in Thailand can receive the following tax privileges under the old scheme:

1. Corporate income tax at the rate of 10 % of net profits for income derived from services provided to ROH’s foreign branches or associated enterprises;
2. Corporate income tax at the rate of 10 percent of net profits for royalties derived from ROH’s foreign branches or associated enterprises for the use of R&D done by ROH in Thailand. This benefit is also extended to royalties received from a third party providing services to ROH’s branches or associated enterprises using ROH’s R&D.
3. Corporate income tax at the rate of 10% of net profits on interest received from ROH’s foreign branches or associated enterprises for loans granted, provided that such loans are made from other sources and extended to ROH’s branches or associated enterprises;
4. Tax exemption for dividends received by ROHs from associated enterprises;
5. Tax exemptions for dividends paid out of ROH’s concessionary profits to its shareholders not carrying on business in Thailand;
6. Accelerated depreciation for buildings at the rate of 25% on the date of acquisition. The residual value can be depreciated within 20 years.

Privileges for foreigners working for ROH under the old scheme:

1. Foreigners may opt to be taxed at 15% of gross income. By doing so, the income received must not be calculated together with other income and cannot claim for refunds. This privilege is available only to foreigners employed by ROH and are limited to their first four years of employment in Thailand. It does not matter how extensively the beneficiaries have to travel abroad during the employment period. To be entitled for the benefits once again, foreigners have to discontinue employment with any ROH in Thailand for more than 365 days.
2. Foreigners who are sent to work in another country by ROH will receive a tax exemption in Thailand on their income paid by the foreign company for services rendered abroad, provided that such income is not directly or indirectly deducted as ROH’s nor its associated enterprise’s expenses in Thailand.

Interested in setting up a Regional Operating Headquarters in Thailand, contact for Thailawyers further consultation.

Some companies that receive Thailand BOI promotion get only non-tax incentives. The following are non-tax incentives given by the BOI (Board of Investment):

1. Under Section 25, BOI promoted companies can bring in foreign technicians or experts, spouse and person under the guardianship of such foreign technicians or experts, into Thailand. The number of foreign technicians or experts and the period to work and stay in Thailand will be fixed as the BOI Committee deems appropriate.
2. Under Section 27, BOI promoted companies are permitted to own land according to the criteria approved by the BOI Committee.
3. Under Section 37, BOI promoted companies are allowed to transfer money to overseas in foreign currency.

For more information on BOI in Thailand, contact MSNA.