Starry Research  | "BOI Series": What is BOI

When it comes to investing and operating a business in Thailand, the topic of "BOI" is almost unavoidable. However, most people do not have an accurate understanding of what BOI actually is, and there are quite a few misconceptions about it. Starry will publish a series of articles on "BOI" to provide a detailed introduction to all aspects of BOI, helping more enterprises gain a better understanding of it.

1. Introduction to the Thailand Board of Investment

In practice, most people regard"BOI" as the qualification/certificate for preferential investment policies in Thailand. In fact, the full name of BOI is the "Board of Investment." The Thailand Board of Investment is a government agency under the Office of the Prime Minister of Thailand. Its primary duties and responsibilities are to promote investment within Thailand as well as Thai outbound investment, with the main objective of attracting foreign investment and driving the development of domestic industries. To achieve this goal, BOI offers a range of incentives to enterprises intending to invest in Thailand, including various tax incentives and non-tax incentives.

BOI's headquarters is located in Bangkok, Thailand, with multiple offices both within and outside Thailand, including 7 branch offices within Thailand (Chiang Mai, Nakhon Ratchasima, Khon Kaen, Chonburi, Songkhla, Surat Thani, and Phitsanulok) and multiple overseas offices (Beijing, Shanghai, Guangzhou, Taipei of Taiwan Province, Paris, Frankfurt, New York, Los Angeles, Seoul, Sydney, Stockholm, Tokyo, Osaka, Jakarta, Mumbai, Hanoi, and Riyadh).

2. BOI's Operating Model

BOI's operating model involves providing support by approving investment promotion applications submitted by enterprises. Approvals and incentive support are granted on a "project" basis rather than a "company" basis. Therefore, the same company may apply to BOI for investment promotion support separately in respect of different investment projects.

BOI has four specific investment promotion offices responsible for evaluating and reviewing investment promotion applications for four categories of industries:

·        Investment Promotion Division 1: Responsible for agriculture, biotechnology, and medical  industries;

·        Investment Promotion Division 2: Responsible for advanced manufacturing industries (e.g., automotive, aviation, electrical and electronic products, automation and robotics, etc.);

·        Investment Promotion Division 3: Responsible for basic and supporting industries (e.g., steel, petrochemicals, and utilities);

·        Investment Promotion Division 4: Responsible for creative and digital industries, as well as high value service industries.

BOI applies different review criteria for different types of businesses. Once BOI investment promotion approval is obtained, enterprises will enjoy a range of preferential treatments. Upon approval, BOI will issue a document to the approved enterprise called a "Promotion Certificate," which sets out the specific incentives available to the project. In addition, after an enterprise obtains investment promotion status and receives the Promotion Certificate, it must apply for a "Commencement of Operations" permit within 36 months to formally commence the project.

3. The "Promotion Certificate"

The "Promotion Certificate," also known by most people as the "BOI Certificate," is a document formally issued by BOI upon approval of an enterprise's investment promotion application.

The "Promotion Certificate" will set out in detail the approved incentives and the corresponding conditions. In addition, the Promotion Certificate will include a "Certificate Number" in a specific format, consisting of 6 parts, as follows:

·        Part "1" is the year code, representing the last two digits of the Buddhist Era (B.E.) year in which the Promotion Certificate was issued — for example, "68" represents B.E. 2568 (2025 CE).

·        Part "2" is the serial number, representing the sequential issuance number of the Promotion Certificate — for example, "0001."

·        Part "3" is the principal policy framework, indicating under which policy the investment promotion  is granted. "0" represents the original investment promotion policy applicable to applications submitted before B.E. 2558 (2015 CE), while "1" represents the new investment promotion policy.

·        Part "4" is the specific policy applicable at the time of project approval (see table below).

·        Part "5" indicates the type of incentive under Section 31 of the Investment Promotion Act (see table below).

·        Part "6" indicates the nature and category of the Promotion Certificate obtained (see table below).

4. BOI's Incentive Measures

Once an enterprise obtains BOI investment promotion status, it will be entitled to a range of preferential treatments. The incentives offered by BOI mainly include the following:

(1) Tax Incentives

·        Exemption from / reduction of import duties on machinery

·        Reduction of import duties on raw materials or essential supplies used in production

·        Exemption from import duties on goods imported for research and development purposes

·        Exemption from corporate income tax on net profits and dividends derived from promoted activities

·        50% reduction in corporate income tax

·        Transportation costs, electricity costs, and water costs may be deducted at double the actual amount

·        Expenditures on the installation or construction of infrastructure may be deducted at up to 25% of the investment amount

·        Exemption from import duties on raw materials or essential supplies used in export-oriented production

(2) Non-Tax Incentives

·        Permission for foreign nationals to enter Thailand to investigate investment opportunities

·        Permission for skilled workers and professionals to work in BOI-promoted enterprises, with exemption from paid-up capital requirements for work permit applications and from the requirement to maintain a ratio of Thai employees

·        Permission to own land

·        Permission to remit foreign currency funds

Furthermore, the incentives available may vary depending on the type of business. For example, certain types of businesses may be entitled to both tax and non-tax incentives, while others may only be entitled to non-tax incentives.