Board of Investment 201 The New Thailand Investment Promotion
The new legal environments for investmentpromotion in Thailand - in a nutshell• The Ministry of Economics of Thailand, Board of Investment published a new “5-Year Investment Promotion Strategy (2013-2017)” which shall be enacted and effective commencing mid of 2013.• The new rules significantly modify the criteria of investment promotion rights and benefits in response to the changing situation and investment incentives of other countries as well as the general corporate income tax reduction.• Starting 2013, Thailand concentrates investment promotion to ✓Knowledge-based economy and creative industry, ✓Green industry and alternative energy, ✓Hospitality & wellness, and ✓Thailand as logistics hub for the ASEAN markets• The current draft legislation is subject to public hearings in Bangkok and the regions and further developments and could be modified or delayed.
Fundamental changes in theGovernmental approach toinvestment promotion• From a broad-based to a focussed and prioritized investment promotion• From sector-based to a merit- based incentives• From zone-based incentives to the promotion of new regional clusters• From a tax incentives oriented promotion to a facilitation No zoning map any more! oriented promotion• From the promotion of inbound investments to an inclusion of outbound investment promo- tion
Consequences for future investments. Whathappens with the Exit Group?• There is no Zone 3 any more - and no Zone 1 and 2 as well. In general this results in a leveled playing field all over Thailand. There will some local clusters but these are not defined yet.• With a unique minimum salary of THB 300 per day all over Thailand commencing 2013 and now the same investment promotion from North to South, from West to East, the provinces "upcountry" may lose its attrac- tiveness for foreign investments.• There are approximately 80 of the former 240 activities no longer subject to an investment promotion by the BOI. The destiny of this so-called "Exit Group" is still unclear.• Existing BOI promotions are most likely grandfathered and remain in place. However, any new investment in BOI companies is at risk regarding BOI promotion - even in the case of regularly expansions and scheduled follow-up investments.• A quick application under the old BOI policy might be advisable to secure a BOI promotion under the old rules now. Ask us!
The new list of ten promoted industries(1) Basic infrastructure and logistics (e.g. industrial zone, transportation and mass transit, commercial airport and logistics center)(2) Basic industry (e.g. steel, petrochemicals, pulp and paper, machinery)(3) Medical device and scientific equipment (e.g. medical device, medicine)(4) Alternative energy and environmental services (e.g. power generation from renewable energy, bio-fuel, recycling, wastewater treatment)(5) Services that support industrial sector (e.g. R&D, HRD, ROH, TISO)(6) Advance core technologies (e.g. biotechnology, nanotechnology, etc.)(7) Food and agricultural processing industry (e.g. processed food, food additive, herbal extract, plant propagation and development)(8) Hospitality & Wellness (e.g. tourism and sports promotion activities)(9) Automotive and other transport equipment (e.g. cars, motorcycle, train, electric train, aircraft, shipbuilding and maintenance)(10)Electric and electrical appliances (e.g. electronic design, organics & printed electronics, HDD & SSD and parts, solar cells)
How does the BOI check whether an activity isworth to be promoted?Test 1: Does the activity fall into any of the 10 target groups? No promotion, if not one of theCriteria are value added, industrial linkage, level of technology, labour- ten groupsintensive, etc.Test 2: Does the activity fall into any of the negative categories? No promotion, if one of theCategories are environmental problems, energy consummation, categoriesconcession or monopoly business, conflicts with related regulations,etc.Test 3: How high is the sophistication of the productionprocess? No promotion, if low. Tax incentives only when high.High, medium or low.
The new list of eight types of investmentpromotions in Thailand(1) Eight-year corporate income tax exemption (so-called tax holidays) without being subject to a corporate income tax exemption cap(2) Eight-year corporate income tax exemption + merit (removing a corporate income tax exemption cap)(3) Five-year corporate income tax exemption + merit(4) Three-year corporate income tax exemption + merit(5) Exemption of import duties on machinery, exemption of import duties for raw or essential material for use in production for export and non-tax incentives(6) Exemption of import duties on machinery and non-tax incentives(7) Exemption of import duties for raw or essential material for use in production for export and non-tax incentives(8) Only non-tax incentives (Permission to bring in skilled workers and experts, to own land, to take out or remit money abroad in foreign currency, etc.)
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