The Board of Investment (BOI) has become the most important organization and resource for investors wanting to conduct business in Thailand. With the current promotion strategy in effect for more than a decade, the Board of Investment (BOI) has decided to revise its promotion scheme. The focus of the new strategy is promoting sustainable development and overcoming the middle income trap – the period this revision is drafted for is four years, starting in 2013 and expiring in 2017.
The new investment promotion strategy departs from a broad-based investment promotion scheme to a more focused regime with prioritized promotion areas. This shall be achieved by a new incentive scheme and lower incentives for expansion products. In addition, the new promotion regime is no longer sector-based, but merit based. Furthermore, promotion will not be targeted any longer to specific zones, but promotion shall be realized by clusters. This means that the previously promoted zones one, two and three will be abolished and instead a to be established new regional industrial cluster development promotion sub-committee will determine industry specific clusters (e.g. aerospace cluster, medical cluster, food processing cluster etc.). Lastly, the Board of Investment (BOI) sees its own role beyond granting pure tax incentives – it aims to facilitate investments and business operations by more support activities, industry linking, human resource development, the promotion of Thai investments abroad etc.
The revised promotion strategy 2013-2017 will have some immediate consequences for both new, and expansion projects. In general, the tax incentives will be reduced. Formerly, a total of 49 activities could qualify for a corporate income tax exemption for eight years without cap; in the future this number will be reduced to 18 activities. Previously, a total of 80 activities were eligible for corporate income tax holiday for eight years with cap, in the future only 30 initiates will qualify for that. More severely, in total 80 activities are removed form the list of promoted activities. For expansion projects, 69 undertakings will get less tax incentives.
Over the next weeks, we will introduce you in greater details to the new Board of Investment (BOI) strategy 2013-2017. We will elaborate on the rational for changing the promotion strategy, discuss the overall direction of the new promotion scheme and highlight in detail changes proposed. We will talk about the time frame of the proposed changes, and compare Thailand’s promotion scheme to other countries’ in ASEAN and deep dive into a selection of sectors. Stay tuned!