Updates on BOI Investment Promotion Packages and Conditions in Q1 and Q2 2022

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As we will continue to do so, we would like to summarize updates regarding the Board of Investment of Thailand’s (the “BOI”) material investment promotion packages and conditions from time to time.

Please find below our summary of the updates that occurred during the 1st and 2nd quarter of 2022.

1. Changes to the conditions of certain eligible activities

1.1 Charging stations for electric vehicles1

To enable small businesses and startups to be eligible for Activity 7.35: Electric Vehicle Charging Stations, the BOI has removed some binding requirements as follows:

  • the requirement to obtain ISO 18000 certification within three (3) years from the date of issuance of a BOI certificate; and

  • the restriction ensuring that the project cannot obtain additional incentives from other authorities.

Therefore, as a result of such an amendment, projects may receive additional incentives from other authorities and will no longer have to comply with the ISO requirement.

In addition, the BOI added the following conditions:

  • As an alternative to the project requirement to have a plan for developing a smart EV charging system, the applicant can choose to submit either a plan to connect a smart EV charging system to an integrated platform, either a central platform for the management of a charging network operator for EV System; and

  • the project must comply with the laws and regulations concerning standards and safety of the competent authorities (for example, Ministry of Energy, Metropolitan Electricity Authority, Provincial Electricity Authority and Ministry of Industry).

Regarding tax incentives, the BOI has added an alternative tax incentive scheme in case a project cannot meet the minimum requirement for the number of charging stations2, under which the project will obtain at the place a three (3) year CIT3 exemption.

1.2 Manufacture of high energy density battery (EV battery)4

In principle, the BOI will grant a 90% reduction of import duty on raw and essential materials to the applicant for a maximum period of two (2) years in accordance with Section 30 of the Investment Promotion Act 1979 Under this amendment, the BOI further granted an additional reduction of three (3) years, giving a total reduction of five (5) years for both existing and new projects. However, it will only apply to projects involving cell and module production processes.

Other material conditions and incentives will be released later in the official announcement.

1.3 Zones or smart industrial zones5

Previously, to be eligible for the activity of smart industrial zones or zones, the BOI required the project to provide the mandatory smart system services in seven (7) key sectors, namely smart facilities, smart computing, smart energy and smart energy. Economy, Smart Good Corporate Governance, Smart Living and Smart Workforce. According to the amendment, the BOI has relaxed this requirement to have at least five (5) key smart systems, which must include four (4) mandatory sectors, namely, smart facilities, smart computing, smart energy and smart economy, and at least one of the following three (3) optional smart systems, namely Smart Good Corporate Governance, Smart Living and Smart Workforce.

Other material conditions and incentives will be released later in the official announcement.

1.4 Manufacture of natural extracts or products from natural extracts6

Previously, the manufacture of natural extracts or products based on natural extracts, which is eligible for BOI promotions, did not cover products such as medicines, soaps, shampoos, toothpastes and cosmetics. Based on recent amendments, the BOI removed this condition and extended the scope of product coverage to cover herbal medicines, dietary supplements, cosmeceuticals and other products that use herbs as raw materials .

In this regard, the BOI has revised scope 1.11.1: Manufacture of natural extracts, or products made from natural extracts on a continuous basis within a single project and added the following new conditions :

Tax incentives will remain unchanged where the project will be entitled to corporate tax exemption for five (5) years.

In addition, the BOI has added new requirements for activity 1.11.2: Manufacture of products from natural extracts without the use of processed extraction for natural raw materials as follows:

  • the product must be registered as a herbal product, or equivalent, with the Food and Drug Administration or other authorities that have an international or equivalent standard before receiving the first revenue from the project;

  • the project must obtain certification of the production facility, such as GMP certification, in accordance with PIC/S guidelines or equivalents before the planned start date of operations; and

  • if the applicant uses research conducted by the public sectors, or research conducted in collaboration with the public sectors for commercial manufacturing, he will be entitled to an additional one (1) year CIT exemption.

Regarding tax incentives, the BOI has extended the additional tax incentive to exemption from corporate tax for five (5) years7 .

2. New eligible businesses

The following activities have been added as new businesses eligible for BOI promotions:

3. Others: Measure allowing foreign companies promoted by the BOI to own land for use as office and residence11

The BOI has reinstated the measure allowing foreign companies promoted by the BOI to own land to be used as project office and the residence of foreign executives and experts, including the residence of employees, to further facilitate the business operations of investors. foreigners in Thailand – which previously expired on December 31, 2017. Basically, the main conditions, as follows, are almost the same as the previous measures:

  • the applicant must have a paid up share capital of at least THB 50,000,000;
  • the surface use requirements for the project are as follows:
    • the land to be used as the project office should not exceed five (5) rai;
    • land intended for the residence of foreign executives and experts should not exceed ten (10) rai; and
    • the land intended for the residence of the employees must not exceed twenty (20) rai.
  • the land must be sold within one (1) year from the date of termination of the project.
  • the applicant must submit their application to the BOI before December 31, 2027.

Other important details and conditions will be published later in the official announcement.

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