BOI Promotion for Manufacture of Metal Products or Metal Parts

The Board of Investment provides incentives and benefits for doing business in Thailand within the metal manufacturing industry. In order to qualify for the benefits, the project must have metal forming process continuing from iron/steel casting process (using induction furnace) or iron/steel forging process, i.e. machining and stamping within the same project. Incentives for doing business in the manufacturing of metal products or parts includes corporate income tax and import duty exemptions.

The BOI incentives granted to the business of Manufacture of Metal Products or Metal Parts are summarized below:

1. Exemption from corporate income tax for 5 years.
2. Exemption of import duties on new machinery.
3. Exemption of import duties on raw materials used in production for export.
4. The company can be owned 100% by foreigners.
5. You can own land enough for your business use.
6. Getting many work permits for your skilled expat employees.

Let’s discuss your Thailand’s business plan today. Contact MSNA Group for expert advice in setting up your BOI company.

BOI Promotion for Plant or Animal Breeding

The BOI provides incentives and benefits for doing business in Thailand within the plant or animal breeding industry. This incentive aids those companies that are not eligible for biotechnology activity. In order to qualify for the benefits, plant or animal breeding operations must meet certain conditions as set forth below.

The BOI conditions and incentives are summarized below:

• Conditions:

1. Projects must have research and development activities.
2. For breeding of sensitive plants according to the policy of the Ministry of Agriculture and Cooperatives, projects must have Thai nationals holding shares not less than 51 percent of the registered capital.
3. Projects must have expenses for salaries for R&D personnel of at least 1,500,000 baht per year.
4. Projects located in the science and technology park promoted by BOI or one that is approved by the Board will receive an additional 50 percent reduction of corporate income tax for 5 years after the end of its corporate tax exemption period.
5. Revenue derived from plant propagation after plant breeding in the project shall be regarded as revenue of promoted projects, except for the propagation of cassava.

• Incentives:

1. Exemption from corporate income tax for 5 years.
2. Exemption of import duties on new machinery.
3. Exemption of import duties on raw materials used in production for export.
4. 100% foreigner ownership.
5. Permit to own land.
6. Permit to bring in skilled workers and experts to work in the Kingdom.

Contact MSNA Group to set up your BOI company in Thailand now.

Thailand BOI for Digital Service and Software Platforms

The BOI provides incentives and benefits for doing business in Thailand within the expanding digital services industry. Such business operations include:

• Software platform
• Managed service
• Digital architecture design service
• Digital services such as FinTech, DigiTech, MedTech, AgriTech, etc.

The BOI conditions and incentives are summarized below:

• Conditions:

1. The project must hire digital specialists
2. The project must have capital investment (excluding cost of land and working capital) not less than 1,000,000 baht.
3. It must include digital service processes as approved by the Board.
4. The project with an investment of 10 million baht or more (excluding cost of land and working capital) must be certified with ISO 20000 or other quality standard certificate as approved by the Ministry of Information and Communication Technology within 2 years from the full operation start-up date, otherwise the corporate income tax exemption shall be reduced by 1 year.
5. Revenue derived from sales or the provision of services that are directly related to a promoted digital service business shall be regarded as revenue of such promoted business.
6. Projects must gain approval from the Ministry of Digital Economy and Society before applying for investment promotion.

If you work with MSNA Group in applying for the BOI promotion, we will walk you through the process and make it very easy for you to write the details for the BOI application. You may want to read some of our BOI testimonials from our clients that we help get the investment promotion.

If you get the BOI for this business, the benefits are as follows:

1. Corporate income tax exemption for 5 years
2. Exemption of import duties on new machinery.
3. Exemption of import duties on raw materials used in production for export.
4. 100% foreigner ownership.
5. Permit to own land.
6. Permit to bring in skilled workers and experts to work in the Kingdom.

Contact MSNA Group now to start the BOI process.

One of the businesses promoted by BOI Thailand is trade and investment support offices. Thai Lawyers have helped a lot of foreign clients own their business 100% by obtaining the BOI certificate. This category is for those clients who provide services in advisory, engineering and technical, International business process outsourcing, etc. The main condition for Trade and Investment Support Offices is That the company must spend at least Baht 10 million in selling and administrative expenses per year for as long as it has the BOI promotion. If not, the BOI status will be cancelled.

Regarding the Selling and Administrative expenses, they include office personnel expenses, Electricity, water, internet and telephone expenses, air fares, travelling and accommodation, freight and transportation costs, rents, repair and maintenance, entertainment expense, commission, advertising, sales promotion, interest payments (both domestic and overseas), consultancy service fees, legal fee, accounting fee, audit fee, depreciation of assets and other selling and administrative expenses.

Note that salaries of the people you hire that are the direct cost of providing services to your client are in the category of cost of services (which is not to be counted in the Baht 10M selling and administrative expenses). Salaries of the managing director, secretary, and personnel in the accounting, IT and other administration side of the business are in the category of selling and administrative expenses.

Let MSNA Group help you set up your Thailand BOI company. Contact us today.

This question of “how long it take to set up a BOI company in Thailand?” is actually not very relevant to many people. The question we should try to answer is “how soon do you need your BOI company?”. To set up a Thai limited company, it takes about 1 week which includes reserving a name, preparing all the forms, having the directors sign them (which may add days or weeks to the process if the directors are overseas) and filing the forms with the Department of Business Development. However, to set up a BOI company, we have to add months for getting the BOI approval. If your business activity is one which is promoted by the Board of Investment of Thailand, it takes 4 months to a year. The BOI may say that it needs 40 days to approve your project, but that is only in theory. While planning for the timing of things, you should allow 4 months to a year, depending on the business activity, to get the BOI company ready to operate (have bank accounts, hire employees, invoice customers, etc.) So in total, it may take you 4 – 12 months to set up a BOI company in Thailand.

MSNA Group has BOI companies ready for sale. You can start your business right away. Why wait many months to start your business operation when you can start making money now and get the work permits for your foreign employees. You will not have to have 4 Thai employees for each work permit. You will not need a paid up capital of Baht 2M for each expat employee. Buying a ready BOI company is the best and fastest way to set up your business in Thailand.

Talk to us today and start invoicing your clients right away.

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:

Pros:

• You can start hiring 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 system in place;
• You can get your work permit and visa extension processed in a very short time;
• You may take over the employees if the company is in operation;
• etc.

Cons:

• 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;
• etc.

Ask MSNA Group. We may 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.

A client who uses payroll outsourcing service of MSNA Group consulted with us on how much to increase the salaries of his employees in Thailand.

Question:  Our new Thai company is considering giving salary increase to our employees. We would like your advice on the practice of salary increase in Thailand. What is the average percentage increase in salary in our industry? Maybe there is a different increase for different levels of staff, for example technicians, executives and managers?

Answer: Regarding the practice of salary increase in Thailand, there are companies that give 3 – 10% increase depending on whether they make profits in the previous year. However, from the experience of many clients who use MSNA Group for payroll outsourcing service, we have learned that salary increase by percentages does not work for every employee. Like bonuses, the employers may want to give a less salary increase to the employees that they can replace easily and/or do not perform that well and a bigger salary increase to the employees that they really need and/or perform well (or to the employees that are in high demand and can find another employer so easily).

Contact MSNA Group for payroll outsourcing service and advice on human resource issues.

One of MSNA’s payroll outsourcing clients asked us about the bonus scheme to be given to employees in Thailand.

Question: Our Thai company is currently still operating at a loss. We are studying into a variable bonus scheme to be given to the employees in Thailand and would like to seek your opinion on this matter.  Do you know of any company in our industry or any M&E construction company which pays variable bonuses? If so, what is the average bonus quantum in terms of months? I guess the bonus should be peg to the company profits.

Answer: Regarding bonus scheme, it depends on many factors. For example, companies with western culture usually have a different bonus scheme from the companies with the Thai culture. In many cases, if the monthly salaries are already high, then the number of months for bonus is often lower than if the salaries are low. When you want your company to be an attractive employer, you can pay an attractive salary plus 13th month bonus or you can pay normal salaries plus many months of bonus. Also it depends on the quality of employees. The ones that are very good and can demand higher compensation will stay if the overall remuneration is better than other companies. The ones that are not in high demand will stay even though you do not pay them bonuses. We would suggest having different agreements on the numbers of months for bonus with different employees depending on the levels of performance and the difficulties of finding replacements.

However, if you peg the bonus on company’s profits, it is a non-tax deductible expense. That means all the bonus you pay that is dependent upon the company’s profits will get added back to the bottom line and treated as if it was never an expense of the company for the purpose of calculation of corporate income tax.

Consult MSNA for your questions regarding your doing business in Thailand.

Getting Thailand BOI for service business is possible, especially if you want to operate a Trade and Investment Support Office (TISO). Your business activities must be one of the following:

2.1  Monitoring and/or servicing associated enterprises including providing or letting office or factory building to company’s associated enterprises
2.2  Advisory services on business operations, except those engaged in buying and selling securities and foreign currency exchange. As for accounting, legal, advertising, architectural and civil engineering businesses, business licenses must be obtained from the Department of Business Development or related government agencies prior to submitting the investment promotion application
2.3  Information services on goods sourcing
2.4  Engineering and technical services, except those related to architecture and civil engineering services
2.5  Business activities related to machinery, engines, tools and equipment, such as:
(1)  Importing for wholesaling
(2)  Training services
(3)  Installation, maintenance and repair
(4)  Calibration
2.6  Wholesaling products manufactured in Thailand
2.7  International business process outsourcing whose services are provided through telecommunication networks, such as administrative services, finance & accounting services, human resource services, sales and marketing services, customer services, data processing, etc.

Because TISO is such a multipurpose category, businesses in a wide variety of fields may qualify for BOI promotion. Although the BOI does not provide any taxation benefits for TISO, the right to own 100% of a TISO company makes it very attractive to foreign service providers and traders who may not be eligible for other investment promotion. Because the requirements are wide-ranging, the BOI has set 10 million baht in annual selling and administrative expenditures as the minimum qualification. This ensures that only companies that will have the greatest impact on Thailand trade and investment qualify.

General Conditions

1. Annual selling and administrative expenses must be at least 10 million baht
2. Must have a business plan and scope of business as approved by the Board

Benefit Incentives:

• No import duty on raw or essential materials used in manufacturing export products for 1 year or more as deemed appropriate by the BOI
• Other non-tax incentives, including getting many work permits for your expat employees

MSNA is available to assist you in numerous ways, including offering consultations and resources.

For complete information, read Thailand BOI information and contact MSNA for consultation on getting Thailand BOI for service business.

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:

1. 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.

2. Projects that use modern technology (e.g. color sorter, vapor heat treatment to kill fruit fly eggs, seed coating); or
3. 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.