Starry Research | "BOI Series": Conditions and Criteria for Applying for Investment Promotion
When it comes to investing and establishing operations in Thailand, the topic of "BOI" is almost always unavoidable. However, most people do not have an accurate understanding of what BOI is, and there are quite a few misconceptions about it. Xingrui will publish a series of articles on "BOI" to provide a detailed introduction to all aspects of BOI and help more businesses understand it.
In the previous issue, we introduced what BOI is, the incentives offered by BOI, and the content of the Investment Promotion Certificate. In this issue, we will introduce the conditions and criteria for applying to BOI for investment promotion.
1. Conditions and Criteria
for Applying for Investment Promotion
When reviewing investment promotion applications, BOI applies different rules and requirements to different categories of businesses. The specific criteria are set out in detail in the officially published Investment Promotion Guidelines (published by BOI from time to time. Each industry must meet specific eligibility conditions before an application may be submitted. BOI divides the industries and businesses it encourages into four major categories, each with multiple sub-sectors.
Nevertheless, all projects must satisfy the following basic conditions prior to applying to BOI for investment promotion:
(1) In order to enhance
the competitiveness of the agricultural, industrial, and service sectors,
projects applying for BOI investment promotion must meet the following
conditions:
•The value added of the project must not be less than 20% of
total revenue; however, for projects involving agricultural products and
by-products, electronic products and components, and steel cutting and
distribution centers (coil centers), the value added must not be less than 10%
of total revenue.
•Advanced production processes or service procedures must be
adopted and must be recognized by BOI.
•New machinery must be used. If imported second-hand machinery is used, it must comply with the additional conditions set by BOI.
(2) Projects involving metal smelting processes must obtain certification under the ISO 14000 quality management standard or an equivalent standard prior to benefiting from the corporate income tax exemption incentive. If a project does not benefit from or has not yet obtained the income tax exemption incentive, the required certification must be obtained before the deadline for commencement of full operations.
(3) Environmental
Protection
•Projects must implement
adequate and effective measures for environmental protection and mitigation of
environmental impact. For projects that may have an environmental impact, BOI
will pay particular attention to their location and pollution treatment systems.
•Projects or activities of
a type and scale requiring an Environmental Impact Assessment (EIA) must comply
with the relevant environmental laws and regulations or Cabinet resolutions.
•Projects located in Rayong Province must comply with the provisions of Announcement No. Por. 1/2554 on Industrial Promotion Policy for Rayong Province, issued by BOI on May 2, 2011.
(4) Minimum Investment
Capital and Project Feasibility
•The minimum investment
capital for each project is THB 1,000,000 (excluding the cost of land and
working capital), unless otherwise stipulated by BOI in its published List of
Eligible Activities for Investment Promotion. For knowledge-based projects, the
minimum investment capital shall be determined based on the minimum annual
salary expenditure requirements as prescribed in BOI announcements.
•For newly established
projects, the debt-to-equity ratio must not exceed 3:1. For expansion projects,
the ratio will be considered on a case-by-case basis.
•If the investment amount of a project exceeds THB 2,000,000,000 (excluding the cost of land and working capital), a project feasibility study must be submitted, the content of which must comply with BOI's prescribed requirements.
2. General Requirements
In addition to the conditions and criteria described above, companies and projects submitting investment promotion applications to BOI must also satisfy the following requirements:
•At the time of
application, the type of project must fall within the list of projects eligible
for investment promotion as announced by BOI at that time, and must comply with
the conditions prescribed for each category of project.
•Investment promotion will
be approved on a project-by-project basis, and the project must be a new
investment using entirely new machinery on a new production line. Projects
already in operation are not eligible to apply for investment promotion.
•Modern production
processes must be adopted.
•A minimum investment
capital of not less than THB 1,000,000 (excluding the cost of land and working
capital) must be maintained.
•For newly established
projects, the ratio of liabilities to registered capital must not exceed 3:1;
for expansion projects, the reasonableness of the ratio will be assessed on a
case-by-case basis.
•The value added of the
project must not be less than 20% of total revenue; however, for projects
involving agricultural products and by-products, electronic products and
components, and metal processing, the value added must not be less than 10%.
•Adequate and effective
environmental protection and pollution prevention measures must be established.
For projects that may affect environmental quality, BOI will conduct a special
review with respect to location selection and pollution management.
