Thailand offering more incentives under new investment laws

May 9, 2017

BANGKOK – Thailand’s Investment Promotion Act has been amended to broaden the scope of exemption of import duties. The former Investment Promotion Act granted exemption of import duties only for materials used for manufacture for re-exports.

This has now been revised to include materials imported for use domestically in R&D activities and related testing.
The BOI may also now grant corporate income tax (CIT) exemption for a period of up to 13 years for certain R&D and advanced technology and innovation activities.
Previously, the maximum period of CIT exemption provided by the BOI for various activities was limited to eight years.

In a Client Alert, lawyers BakerMcKenzie say the new Act empowers the BOI to grant CIT rate reduction privilege instead of only CIT exemption, and that this will allow some businesses that may not qualify for CIT exemption to get some tax reduction benefit.
“Moreover, even for projects that are neither eligible for CIT exemption nor CIT reduction, the BOI is empowered to (allow) the project to deduct 70% of the amount invested in the promoted business from the net profits derived from the promoted business (in addition to deduction of normal depreciation) for a period of up to 10 years in calculation of the CIT to be paid,” BM says.

The new Investment Promotion Act is also more favourable in terms of duration for the payment of dividends derived from the promoted business.
The exemption of tax for dividends extends to dividends that are declared within the exemption period and paid within six months from the expiration of such exemption period.
The previous Act only offered this benefit for dividends that were actually paid within the exemption period. (ATI).