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Board of Investment (BOI) promotion update

10 May 2023

An Enhanced Focus on International Business Center (“IBC”)

Thailand has been active in providing the necessary regulatory landscape to house regional headquarters in the country. The government offers both tax and non-tax incentives to investors establishing IBC companies in Thailand as it continues to promote the country as a hub in the region. 

An IBC company is engaged in the provision of managerial and technical support or financial management services to its associated enterprises located in Thailand and overseas. The incentives available include:

  • Import duty exemption on machinery to be used for R&D and training activities.
  • Permission to bring in foreign skilled personnel and experts to work on the IBC investment promoted activities.
  • Majority or 100% foreign ownership of the IBC company.
  • Ability to own land for use in the IBC business.
  • Lending foreign currency to associated enterprises in foreign countries, Thai Baht to associated enterprises in Thailand, Vietnam and other countries bordering Thailand.

The Foreign Business Act (FBA) restricts foreign owned businesses from lending funds to group entities overseas unless a license is obtained. BOI, as the government agency in charge of promotion of foreign investments, grants permission to IBC and Trade and Investment Support Office (TISO) businesses to engage in lending business to related companies, subject to certain conditions.  

In December 2022, BOI has issued an Announcement promoting the so-called “Relocation Program”.  The program offers various incentives to foreign businesses that would relocate to Thailand. However, existing promoted businesses engaged in the manufacturing activity can also benefit from the program.  Thus, the program covers the following two categories:

  1. New manufacturing businesses and BOI promoted companies under Group A activities. For new businesses, both manufacturing and IBC businesses shall be applied, and the promoted company must submit the applications by the end of 2023.
  2. For existing manufacturing promoted companies, an IBC promotion application must be submitted by the end of 2023.

An additional 3-year income tax holiday (ITH) benefit awaits successful applicants engaged in both manufacturing and IBC businesses.  For companies setting up an R&D center together with an IBC business, an additional 5-year ITH will be granted.