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.

In line with the ASEAN Economic Community (AEC) which will take effect in 2015, the Thai government aims to become center for Regional Operating Headquarter (ROH) for multinational companies who would like to setup their ROH to expand their operation within the ASEAN region or to prepare itself for the upcoming AEC. Being strategically located within the Southeast Asia region with networks of modern infrastructures, quality skilled labor, easy access to raw materials and attractive tax incentives significantly represent as a cost-effective investment for any companies who want to save costs and at the same time, still remain competitive. Government policies also contribute to Thailand’s apparent strengths in its position as a strategically located business hub and center for production and regional outsourcing.

The Thailand Board of Investment (BOI) act as a focal point for the investors in dealing with different government agencies by bringing together under one roof the representatives from different relevant ministries. The Thailand BOI offers assistance on applications for business licenses, factory certification, environmental impact assessments and many other matters. Besides Regional Operating Headquarter, the Board of Investment of Thailand is also promoting the following related activities with tax and non-tax incentives vary depending on the activities.

• International Procurement Offices, involving sourcing, quality control and packaging
• Trade and Investment Support Offices
• International Distribution Centers
• Distribution Centers
• Research and Development

For investors who are interested in establishing the Regional Operating Headquarter in Thailand, please visit the BOI’s website www.boi.go.th for more details on incentives and conditions in setting up a ROH. Need further assistance in setting up Regional Operating Headquarters and other business forms in Thailand, contact English speaking ThaiLawyers for business registration, license application, visa and work permit services.

The Board of Investment of Thailand has approved a 2 more year permission for 101 promoted companies to employ foreign unskilled labor.

Under the relief measure on foreign unskilled labor employment, the BOI permits 101 promoted companies to continue hiring foreign unskilled laborers until December 31, 2014. However, these 101 companies are required to propose a concrete plan to gradually reduce the number of foreign unskilled workers to BOI within February 28, 2013. During the extended period, they must implement a plan to reduce the number of foreign unskilled workers by 25% every 6 months until no foreign unskilled labor is hired by January 1, 2015. Any of these 101 companies that fail to implement the plan as proposed will have their corporate tax exemption terminated.

Inquire now with MSNA about Thailand BOI promotion and other options in doing business in Thailand.

Thailand is working out a new investment promotion strategy which will focus on industrial restructuring toward knowledge-based or high-technology industries.

Five seminars have been prepared to offer opportunities for business operators across the country to express their opinions. Suggestions and recommendations offered at the seminars will be included in the proposal on the new investment promotion strategy to be presented to the Board of Investment’s board meeting. The new investment promotion policy under this new strategy is likely to be implemented in June 2013 and is believed to push for the development of Thailand as a leading production base I the world.

It is expected that BOI would place more emphasis on investment which promoted a good balance between economic growth and social and environmental development, as well as a balance between agricultural, industrial and service sectors. This includes the industries in which Thailand has good potential, such as those involved with food processing, rubber products, health care and creative industries. Other industries to receive greater attention are those related to future global trends, such as alternative energy, biotechnology and high-value-added services.

While basic incentives will be minimized, BOI will offer additional incentives for companies that have more investment in research and development, human resource training and environmental protection. It will also adjust investment rules and regulations on non-tax benefits and services to improve the business environment while encouraging Thai investors to invest more in other countries.

Interested in doing business in Thailand? ThaiLawyers can help you in business set up, work permit application and Thai visa extension. Contact now for further consultation.

The Thai BOI has decided to extend a flood relief measure on machinery replacement until 31 December 2012 allowing more than 150 companies in Pathum Thani and Ayutthaya to have access to this incentive and to help entrepreneurs who need assistance to renovate their facilities.

The Board considered that many BOI-promoted companies that had been seriously affected by the massive flood were preparing to make or were making decisions to apply for the investment incentives both for replacement of damaged equipment or as new investments.

As of 30 June 2012, the Board has found that the total number of projects receiving approval for import duty exemption for machinery replacement is 490 projects with the total imported machinery value of Baht 108.65 billion.

Further details of this extended flood relief measure have yet to be announced. Contact MSNA for expert advice on BOI promotion and Thai taxation.

In order to improve the work permit and immigration processes, the Board of Investment (BOI) has recently introduced the e-Expert System. This system allows for online processing of expatriate work permits and immigration formalities, including review and approval, through the Thailand BOI’s website whereas a user ID and password will be provided to BOI promoted companies for access and uploading of supporting documents.

This initiative towards an online environment is aimed to lessen the lead time at the One Stop Service Center and minimize paperwork. However, once approval is granted, the expatriate is still required to be physically present at the One Stop Service Center to collect and sign for the work permit and attend a short interview with the Immigration officer.

Furthermore, the benefits of this initiative can be summarized as follows:

1. Greater transparency in the consideration process for work permit and visa extension
2. Real time tracking of the status of applications
3. Reduced time spent by expatriates at the One Stop Service Center

The twist is that users will need to have knowledge of the relevant BOI, work permit and immigration regulations.

MSNA team has broad range of experience assisting clients to understand the complex rules and regulations involved as well as dealing with the relevant officials. Contact us for more information and expert advice.

In addition to the recent implemented measures by the BOI of Thailand, it has been approved that incentives for machinery and technology improvement for increased production capacity will also be extended until the end of this year, 31 December 2012.

This is a part of the government’s efforts to help manufacturers affected by the massive flood last year. Since it will promote machinery and technology improvement to boost production capacity, this policy is viewed as a significant step in enhancing the country’s competitiveness and investment.

With the aim of encouraging entrepreneurs to invest in new machinery for production improvement – automated production systems, for example – the government offers import duty exemption for machinery imported for this purpose. Additionally, participating investors will be entitled to three-year corporate income tax exemption, which is subject to a 70% cap on total investment (not including land and working capital). The tax exemption is based on existing business revenue and it will be effective until 31 December 2012.

Contact MSNA for your Thailand BOI and its flood relief measures questions.

The BOI has recently announced that it would allow 101 companies registered with the Ministry of Labour to continue hiring unskilled foreign workers until 31 December 2012, extended from an earlier announced deadline 31 May 2012. This is a part of the government’s efforts to help manufacturers affected by the massive flood last year.

This measure will also help reduce the impact from the labour shortage in the country although it is just for temporary period only because the BOI also considered Thailand to be moving from labour-intensive to high technology industries so that the need for unskilled labour would be less in the long run. As a result, the board resolved to maintain its policy of not promoting the employment of unskilled foreign workers.

As the BOI had earlier announced its measures allowing the 101 BOI-promoted companies which have registered with Ministry of Labour to hire unskilled labour until 31 May 2012, it further extended this period until the end of this year. The extension was aimed at giving the entrepreneurs sufficient time to prepare for the changes and ease the burden caused by last year flood.

Considering this as a significant agenda for the country, the Board will further discuss this issue with related government agencies in order to prevent or find a solution to possible future labour shortage problems.

Contact MSNA for more information on this recent measure.

Here is the summary of the recent tax incentives offered by Thailand Board of Investment for directly flood-affected companies.

I. Tax incentives for directly flood-affected companies

Conditions:

• Existing BOI-promoted projects directly affected by flood
• Still have remaining unused corporate tax exemption period

REMARK: An official announcement is to be issued soon.

Tax Incentives:

1. Projects subject to a corporate income tax exemption cap

Remaining at original province

-8 year corporate income tax exemption (subject to 150% cap on new investment * + remaining unused cap)

Relocation to another province

-8 year corporate income tax exemption (subject to 100% cap on new investment * + remaining unused cap)

* All fixed assets (except land) including repairs of existing machinery and replacement machinery previously imported under the BOI scheme

2. Projects not subject to a corporate income tax exemption cap

Companies can use option 1 above or the following scheme.

II. Tax incentives for flood-affected industrial estates

Conditions:

• All industrial estates/zones
• Invest in flood-prevention infrastructure and system

Incentives:

• 8-year corporate income tax exemption with cap of 200% of investment excluding costs of land and working capital.

Contact MSNA for Thailand BOI questions and information.