THAILAND – Thailand seeks to introduce new tax incentives in a bid to attract more foreign investments as it looks to elevate its economic status in ASEAN amidst the threats of a slowing economy as a result of the current trade tensions between the US and China.
Several economic programs established by the previous administration have been set to continue driving its economic growth. One example is the $55 billion Eastern Economic Corridor (EEC) Development Plan under the Thailand 4.0 initiative, aimed at spurring technological advancement and boosting infrastructure. It is expected that the Thailand 4.0 plans will lead to significant development and transformation of investments in Thailand, increasing its attractiveness to foreign investors looking to incorporate within Thailand.
Boosting Foreign Direct Investments (FDI) and Moving Forward to Thailand 4.0
The Thai Baht grew into one of the strongest emerging-market currencies against the US dollar in 2019. Concomitantly, Fitch Ratings’ recent upgrade of Thailand’s outlook to BBB+ is a testament to the growing confidence of Thailand’s economic resilience in times of market uncertainty [Nation Thailand]. This, along with the EEC development plan and various tax incentives, have made Thailand an attractive investment destination.
According to the latest report from Thailand’s Board of Investment (BOI), the total value of foreign investor applications doubled to $4.8 billion in the first half of 2019 as compared to the previous year [PRNewswire] with Japan leading the applications with 114 projects worth $1.3 billion (THB 42.45 billion). China follows behind with 81 projects worth $793 million (THB 24.28 billion), a clear sign of increasing confidence of investors in Thailand.
Tax Incentives and Investment Packages
There are restrictions with regard to the business activities that companies may perform and these can be found in the Foreign Business Act, B.E. 2542 (1999). With these regulations in place, we summarise some of the incentives foreign businesses can enjoy in Thailand:
I. Tax incentives
Source: Thailand Board of Investment (BOI)
To propel Thailand’s economic growth, the government has introduced incentives in key industries to attract investments. Foreign companies that engage in R&D activities, infrastructure and high technology are eligible for corporate income tax exemptions, import duties and many other non-tax incentives. The Thailand BOI provides a full list of details on their website.
II. Non-Tax Incentives
As listed in List One of the Foreign Business Act B.E. 2542 (1999), non-restricted foreign business activity owners are eligible for 100% ownership. In addition, foreigners can obtain a permit to own land and bring experts to work in Thailand. A One-Stop-Services-Center (OSSC) has also been set up to provide services related to visa and work permits [Thailand BOI].
III. Investment Incentives on Eastern Economic Corridor (EEC)
Foreign investors investing in the EEC can enjoy the following privileges:
- Five-year work visa for investors, specialists and scientists
- Rights for 50-year state’s land lease agreement, renewable by another 49 years (subject to approval)
- Corporate income tax exemption for up to 13 years
- Exemption of import duties machinery, raw or essential materials
DesFran – The Company Formation Experts
Thailand’s influx of FDI can be attributed to the shift in the supply chain to the ASEAN region. That is why the new administration is aggressively improving its incentive packages to continue to attract foreign investments and companies into the country.
As company formation in Thailand is a complex process, it is highly advisable to consult a company formation expert. At DesFran, we have a wide network of local specialists to guide you in setting up an offshore company in the country. Contact us now to learn more.
Supply chain shift to ASEAN, Theaseanpost.com
New Thai Government to Pursue Policies Championed by Junta, Startribune.com
Investment Benefits on EEC, Eeco.or.th
Foreign investment soars as trade war escalates, Bangkokpost.com
FDI Applications More Than Doubled in First Half of 2019, Thailand BOI says, Prnewswire.com
About the Author
Terence Tay is Strategic Communications and Research Executive at DesFran. Terence has more than six years of experience in the banking industry, with a keen interest in wealth and customer relations management. Having committed more than 15 years in the entertainment and performing arts scene in Singapore, Terence wishes to develop himself further in both the finance and communications realms by pursuing career and academic opportunities related to strategic and business communications. Terence holds a Bachelor’s degree in Management and Human Resource Management, and will be studying Master of Science in Communication Management at the Singapore Management University in 2020.