Thailand Board of Investment

The Thailand Board of Investment (BOI) is a pivotal government agency under the Office of the Prime Minister, mandated to promote domestic and foreign investment in sectors aligned with national development goals. As a quasi-autonomous body, the BOI operates under the Investment Promotion Act B.E. 2520 (1977) and subsequent amendments, with the authority to grant both tax-based and non-tax incentives, facilitate administrative approvals, and support investor services.

This article explores the structural, legal, and operational framework of the BOI, offering a deep look at the policy rationale, application mechanics, strategic sectors, and compliance responsibilities.

I. Legal Framework and Institutional Role

The BOI was established through the Investment Promotion Act, which authorizes it to:

• Identify priority industries and regions for development

• Offer fiscal and non-fiscal incentives to qualifying investors

• Coordinate with other government agencies to streamline administrative procedures

• Promote technology transfer, R&D, and employment

• Encourage decentralization and environmentally sustainable investment

The Act provides the BOI with discretionary authority to define promotion zones, determine eligible activities, and set performance conditions.

The agency operates independently but reports directly to the Prime Minister, reflecting its strategic importance in Thailand’s economic policy.

II. Types of Incentives Offered by the BOI

The BOI provides two main types of investment privileges:

A. Tax-Based Incentives

1. Corporate Income Tax (CIT) Exemption

   • Ranges from 3 to 13 years depending on sector and location

   • Capped or uncapped limits based on activity’s strategic importance

2. Exemption of Import Duties

   • Raw materials for export production (5 years)

   • Machinery (100% exemption)

   • R&D-related equipment

3. Deduction for Infrastructure and Utilities

   • Additional deduction of installation and construction costs

4. Double Deduction for Transportation, Electricity, and Water Costs

B. Non-Tax Incentives

1. 100% Foreign Ownership (even in sectors normally restricted by the Foreign Business Act)

2. Permit to Own Land for project use

3. Visa and Work Permit Facilitation

   • Including use of the One-Stop Service Center (OSSC)

4. Guarantees against expropriation or nationalization

5. Permission to remit funds abroad in foreign currency

These privileges are not automatic and are granted only upon BOI approval, based on industry alignment, economic contribution, and adherence to legal requirements.

III. Promoted Activities and Strategic Sectors

BOI promotion is not available for all business activities. Eligible sectors must align with Thailand’s Investment Promotion Policy, particularly under the Thailand 4.0 framework, which emphasizes innovation, high technology, sustainability, and inclusivity.

Examples of Promoted Sectors:

• Agriculture and Biotechnology

• Digital Technology and Software

• Automation and Robotics

• Aerospace and Aviation

• Medical Devices and Healthcare Services

• Renewable Energy and Biochemicals

• Advanced Manufacturing (e.g., electronics, automotive)

• Education, Research, and Innovation Hubs

Each sector has a BOI Announcement detailing sub-activities, conditions, and applicable incentives.

IV. Application and Approval Process

The application process is centralized through the BOI Investment Promotion Division, with electronic submission available via the BOI's e-Investment Platform.

Step 1: Pre-Consultation

Investors are encouraged to consult with BOI officers or submit a pre-application questionnaire to determine eligibility.

Step 2: Submission of Application

Key documents include:

• Project proposal with capital expenditure breakdown

• Business plan and financial projections

• Environmental and employment impact

• Technology transfer strategy

• Feasibility studies (for large-scale or environmentally sensitive projects)

Step 3: BOI Evaluation

The evaluation process differs by project size:

• Projects with investment < THB 200 million (excluding land/working capital): assessed by BOI officers

• Projects ≥ THB 200 million: reviewed by the BOI Subcommittee

• Projects ≥ THB 2 billion: must be submitted to the BOI Board chaired by the Prime Minister

The review may take 40–90 days depending on complexity.

Step 4: Promotion Certificate Issuance

Once approved, a BOI Promotion Certificate is issued. The investor must:

• Establish the legal entity in Thailand

• Inject capital and procure machinery within a set timeline

• Submit progress reports to maintain privileges

V. Post-Approval Obligations

A. Performance Conditions

• Commencement of operations within a fixed period

• Minimum capital expenditure and employment targets

• Use of local raw materials or supply chain linkages, where applicable

• Submission of periodic reports to the BOI on project progress and expenditures

Failure to comply may result in partial or full revocation of privileges.

B. Compliance Audits

The BOI may audit companies to verify:

• Import duty use for machinery aligns with declared purposes

• Machinery imported is not diverted for unrelated use

• Financial statements match claimed investments

Audits are especially common during VAT refund periods or before CIT exemption expiration.

VI. BOI and the Foreign Business Act (FBA)

BOI promotion allows exemptions from certain FBA restrictions, including:

• Foreign equity limits in restricted businesses

• Foreign Business Licenses

This means BOI-promoted entities may engage in activities that would otherwise require Thai majority ownership. However:

• Exemption applies only to the promoted activity

• Any non-promoted business must be structured separately or obtain an FBL

BOI does not override other licenses or sectoral regulations (e.g., for healthcare, education, aviation).

VII. BOI and Visa/Work Permit Support

BOI-supported companies benefit from:

• Expedited visa and work permit issuance through the OSSC

• SMART Visa eligibility for qualified executives, specialists, and foreign investors

• Waiver of traditional ratio requirements (e.g., 4 Thai staff per foreign employee)

Renewals and extensions are also simplified, but documentation must support the promoted activity.

VIII. BOI Promotion vs. Other Investment Vehicles

Companies must evaluate the cost-benefit balance, as BOI projects require strict compliance and reporting, which may not suit small-scale service providers or trading firms.

IX. Termination and Revocation of BOI Privileges

BOI privileges may be revoked for:

• Failure to meet performance conditions

• Submission of false or misleading information

• Use of BOI benefits for unauthorized activities

• Transfer of ownership without BOI approval

Revocation leads to retroactive tax assessments, loss of visa and land privileges, and potential penalties.

In some cases, companies may voluntarily relinquish BOI status if the incentives are no longer beneficial.

Conclusion

The Thailand Board of Investment is a cornerstone of the country’s economic strategy, offering a highly structured and legally enforceable incentive system for qualified investments. While the benefits—ranging from tax relief to regulatory exemptions—are substantial, the BOI process demands precision, planning, and ongoing compliance.

Investors should undertake legal and sectoral due diligence, structure their entities properly from the outset, and ensure that the intended activity aligns with national development goals and the published BOI criteria.