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
